Private Medicare drives more hospital inpatient care
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Medicare Advantage beneficiaries account for a growing share of patients admitted to hospitals, making facilities increasingly reliant on private insurers and subject to pre-treatment approvals or claims denials, according to a new KFF analysis.
Why it matters: The findings help explain the growing tensions between hospitals and insurers that have seen some health systems cancel their Medicare Advantage contracts, citing low reimbursements and administrative hassles.
- Hospital decisions about whether to drop out of an MA network could translate into fewer provider choices and benefits and higher costs for MA patients.
What they found: The analysis of hospital cost reports found Medicare Advantage's share of total hospital inpatient days grew from 13% to 23% between 2015 and 2022.
- Almost one-third of hospitals in 2022 had more MA patients than traditional Medicare patients.
- The share of inpatient care attributable to Medicare Advantage enrollees more than doubled in rural areas between 2015 and 2022, from 7% to 15%, even though MA enrollment is lower in rural areas than in metropolitan ones.
Context: Hospitals squeezed by labor shortages and rising costs say they've been hobbled by more MA plans that are denying claims or paying a fraction of what providers billed for, plus taking excessive time to review requests to authorize care.
- There also are complaints that MA plans put hospitalized patients on "observation status," without actually admitting them, which results in lower payments to the facilities and can drive up patient costs.
- The tension is likely to intensify since MA now accounts for more than half of all Medicare enrollees and is growing, meaning insurers will wield more negotiating power.
The other side: Insurers say their costs are surging as more seniors require care. And they defend prior authorizations that are required for virtually all inpatient hospital stays as necessary to control costs and make sure care is effective and efficient.
What we're watching: Whether more health systems stop accepting MA plans may be an issue. One industry survey this year found that nearly 1 in 5 health systems stopped accepting one or more MA plans in 2023.
- Congress also is eyeing ways to make Medicare insurers speed up reviews of requests to cover treatments.
