Medicare Advantage enrollment is on the rise, with insurers seeing opportunity as more people become eligible for Medicare. Despite this, health systems have been experiencing increased challenges with Medicare Advantage plans over delayed and denied coverage. This has resulted in some systems opting to drop contracts with the private plans. Medicare Advantage denials rose almost 56% for the average hospital from January 2022 to July 2023, according to a joint report by the American Hospital Association and Syntellis. The denials and inconsistent reimbursement led to a 28% drop in hospital cash reserves.

Some health systems, like UNC Health, are finding it difficult to work with Medicare Advantage plans that are denying care to boost their earnings. This has led to the development of partnerships with more reliable payers, and a potential contraction with Medicare Advantage plans that are not good partners. Will Bryant, CFO of UNC Health, explained during a panel at the Becker’s 11th CEO+CFO Roundtable that health systems need better communication and partnership with payers to develop mutually beneficial solutions without the interference of CMS or others. He expressed hope that future payer-provider partnerships will help solve the problems that have arisen over the last 30-plus years.

In response to these challenges, CMS is proposing more regulations to address the issue. This includes prohibiting volume-based bonuses to third-party marketing organizations and requiring health plans to provide a mid-year notice for enrollees about any supplemental benefits changes enacted. The goal is that these regulations will lead to better partnerships and communication between health systems and Medicare Advantage plans.