Discontent with Medicare Advantage

Established in the 1990s, Medicare Advantage offered private insurers the opportunity to administer health plans for Medicare enrollees. The idea was that private insurers might be able to offer better service at a lower cost. For example, a private insurer might be more diligent in identifying and treating patients who are at greater risk of expensive treatments if the conditions of those patients were left unaddressed. Alternatively, private insurers might offer perks like gym memberships to encourage a healthier population. KFF Health News published an article about how an increasing number of providers are frustrated with the reimbursement from Medicare Advantage plans and are refusing their contracts.

Providers frequently complain about the reimbursement offered by traditional Medicare, but apparently, Medicare Advantage plans offer even less. One health system found that "traditional Medicare reimbursed Brookings Health System 91 cents for every dollar it spent on care in 2023, while Medicare Advantage plans paid 76 cents per dollar spent." That is, not only does the health system lose money when treating Medicare patients, they lose even more money treating Medicare Advantage patients. As some providers refuse to accept some Medicare Advantage patients, those patients might need to travel elsewhere for care, or transition back to traditional Medicare (which can be expensive for those who require supplemental insurance).