Dr. Katy discusses what to Do if Your Hospital Drops Your Medicare Advantage Plan with Nerd Wallet’s Kate Ashford
Why this might happen – and how to handle this change to your coverage if it happens to you.
By Kate Ashford, CSA
Slightly more than half of Medicare-eligible people are enrolled in Medicare Advantage — but hospitals around the country have been dropping Medicare Advantage plans due to issues with prior authorizations and denials. Hospitals and health systems in at least 11 states announced in 2023 that they would be out-of-network for some or all Medicare Advantage plans in 2024, according to reporting from Becker’s Hospital Review, a medical industry trade magazine.
“It’s a real problem for people,” says Katy Votava, who holds a doctorate in health economics and nursing and is president and founder of Goodcare, a consulting firm focused on the economics of health care. “This has always been a problem, but it’s getting worse. It’s not only the reimbursement rates, but the approvals have become so onerous for providers to deal with.”
Why are hospitals dropping Medicare Advantage?
Among other things, Medicare Advantage plans require patients to get prior authorization for more services than Original Medicare. Prior authorizations require time from a medical provider, and the requests aren’t always successful.
“It’s not like you get paid more to compensate for the fact that you spent all this doctor time jumping through hoops,” says Melinda Caughill, co-founder and CEO of 65 Incorporated, which offers guidance on Medicare. “Essentially, it is a huge money loser for medical practices.”
Nilsa Cruz, an administrator and patient advocate at a rheumatology practice in Milwaukee, recalls spending two hours trying to reach an insurance representative to advocate for a patient. “Many of the critical administrative and clinical functions have been outsourced by these plans,” she says.
Medicare Advantage companies say prior authorization has benefits, but they’ve taken steps to ease the burden on providers and patients. UnitedHealthcare, for instance, announced last year that it would eliminate almost 20% of its prior authorizations. “Prior authorizations help ensure member safety and lower the total cost of care, but we understand they can be a pain point for providers and members,” said Dr. Anne Docimo, chief medical officer of UnitedHealthcare, in a press release.
Hospitals are also frustrated by administrative delays and denials for care. In October 2023, St. Charles Health System in Oregon announced it would drop three Medicare Advantage providers in 2024. “We care deeply about our patients and the care they receive, which is why we are unwilling to continue with the status quo with Medicare Advantage plans that result in restrictions to patient care, longer hospital stays, and administrative burdens for providers,” said Dr. Mark Hallett, chief clinical officer for St. Charles, in a press release.
Votava says it doesn’t make clinical sense for providers to return to insurance companies multiple times. “The cost of doing that — which is extremely wasteful — doesn’t give anybody good care.”
How big an issue is it?
If your preferred hospital stops accepting your Medicare Advantage plan, you might have to make a change. For instance, tens of thousands of Medicare Advantage beneficiaries in California had to scramble to switch their insurance or providers when the healthcare system Scripps Health announced that two of its medical groups would no longer take Medicare Advantage in 2024.
“Scripps tried to negotiate with private insurers for reimbursements that would cover our costs but were unsuccessful,” said Scripps spokesperson Janice Collins in an email.
Suppose your hospital system drops your plan, and another Medicare Advantage plan doesn’t work for you. In that case, you may be in a predicament: You can switch back to Original Medicare during specific enrollment periods, but you may not be able to get an affordable Medicare Supplement Insurance or Medigap plan.
Except in a few states, Medigap is a “guaranteed issue” — meaning an insurance company must offer you a plan and not charge you more for pre-existing health conditions — only for six months that start when you’re at least 65 and signed up for Medicare Part B.
Medigap covers many of the out-of-pocket costs that come with Original Medicare. Without Medigap, Original Medicare can be pricey. “For Original Medicare to work most effectively, you need a Medigap policy,” Caughill says.
What can patients do?
Although Medicare’s fall open enrollment period has ended, Medicare Advantage open enrollment runs from January 1 to March 31 each year. During that time, Medicare Advantage enrollees can switch plans or return to Original Medicare.
If you’re outside of an open enrollment window, you might be able to take advantage of a 5-star special enrollment period, which allows you to switch from your current Medicare Advantage plan to a 5-star plan in your area. You can do this once between December 8 and November 30 of the following year. “That hinges on whether you have access to a 5-star plan,” says Meredith Freed, senior policy manager for the Program on Medicare Policy for KFF, a health policy think tank.
Do your research before jumping to another plan, though. “If you’re considering switching because you’re concerned about having access to a specific provider or hospital, I would suggest calling [the provider] to make sure they’re in-network for any plan you’re considering,” Freed says.
Suppose you’re outside open enrollment and don’t qualify for a special enrollment period. In that case, you’ll have to wait for the next open enrollment period to change plans — unless you move, which Caughill calls the “nuclear option.”
“When you move, you have a Medicare do-over,” Caughill says. “You just have to move out of your Medicare Advantage plan’s service area.” Not only can you change Medicare Advantage plans if you move, but you also have another chance to sign up for Original Medicare and a Medigap plan with guaranteed issue rights.
The caveat: You have to move — not just pretend you’ve moved. “Don’t commit insurance fraud,” Caughill says.
This article was written with the support of a journalism fellowship from the Gerontological Society of America, the Journalists Network on Generations and the Silver Century Foundation.
