Medicare Advantage enrollment is on the rise, but health systems are facing increasing challenges with the private plans. This has resulted in some systems opting to drop contracts with Medicare Advantage plans due to denied and delayed coverage. According to a joint report by the American Hospital Association and Syntellis, Medicare Advantage denials rose almost 56% for the average hospital from January 2022 to July 2023. The denials and inconsistent reimbursement led to a 28% drop in hospital cash reserves.

Despite these challenges, health systems are finding it difficult to work with Medicare Advantage plans that deny care to boost their earnings. UNC Health, for example, is developing partnerships with more reliable payers and potentially contracting with fewer 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 partnerships with payers to develop mutually beneficial solutions without interference from CMS or others.

In response to these challenges, CMS is proposing new 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 hope is that these regulations will lead to better partnerships and communication between health systems and Medicare Advantage plans.