Hospitals' Medicare Advantage peril grows: S&P
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Hospitals are in an increasingly vulnerable position as Medicare Advantage enrollment surges and the federal government looks to take a harder line on health plans, S&P Global warns in a new report.
Why it matters: Financial pressures have already prompted providers like Scripps Health to terminate contracts with MA plans, leaving patients looking for new coverage arrangements or doctors.
Threat level: As Medicare Advantage coverage balloons, MA plans are tightening control of how health services are used by requiring preapprovals for care, denying claims and paying less than what providers bill for.
- The squeeze is expected to continue with more baby boomers aging into the program and insurers under pressure to make a profit in the MA segment, S&P says.
- Large health plans that already are adjusting benefits and prices for 2025 "will use their scale and market clout to limit provider rate increases over what will prove to be a challenging contract negotiation season," S&P adds.
- "We believe hospitals are the most negatively affected health care services subsector," the report states.
The bottom line: It's the latest warning about friction between hospitals and Medicare Advantage insurers that could affect care received by more than half of seniors now enrolled in the program.
- Medicare had made some recent changes favorable to providers, including requiring that MA patients be admitted if a clinician says hospital care is required beyond two midnights.
