In an era where commercial insurers are enticing more Medicare beneficiaries to opt for Medicare Advantage plans, friction between health care providers and insurers has been steadily increasing. Doctors and hospitals are becoming increasingly frustrated with payment rates and stringent preapproval requirements imposed by Medicare Advantage plans, leading to a growing number of providers refusing to accept these plans. As a result, patients are caught in the middle, forced to either switch plans or revert to the traditional Medicare program, which may pose challenges in obtaining essential coverage.

The surge in enrollment for Medicare Advantage plans has prompted concerns among experts who closely monitor insurance markets. With over half of all Medicare beneficiaries, approximately 31 million individuals, choosing commercial plans over traditional Medicare, insurers and providers must grapple with the disagreements arising from payment rates and claim denials.

Doctors and hospitals argue that Medicare Advantage plans impose low reimbursement rates and place burdensome requirements for preapproval, hampering their ability to deliver care effectively. On the other hand, insurers assert that these policies are necessary to control costs and prevent inappropriate care. As the conflict escalates during the ongoing Medicare open enrollment period, patients are left facing the consequences of these disputes.

One significant consequence is the potential loss of preferred doctors and hospitals, as many medical groups sever their contracts with Medicare Advantage insurers. For example, San Diego residents are seeking new doctors after two medical groups affiliated with Scripps Health announced that they will no longer contract with Medicare Advantage insurers. Similarly, Baptist Health in Louisville, Kentucky, disclosed that it would cut ties with Advantage plans offered by UnitedHealthcare and Wellcare Health Plans Inc. Additionally, Southeast Georgia Health System in Brunswick warned it would terminate its contract with Centene Corp.'s Wellcare Medicare Advantage plans due to inappropriate payment of claims and unreasonable denials.

While these threats and counterthreats between health systems and insurers may serve as negotiation tactics, aimed at securing better payment rates and other concessions, the discord highlights a growing frustration among providers. Hospital and medical groups increasingly voice their dissatisfaction with certain cost-control measures implemented by Medicare Advantage insurers. Moreover, payment suspensions and reviews have further annoyed providers and may contribute to intensified pushback in the future.

The concentration of the Medicare market among a few dominant insurers may exacerbate these challenges. UnitedHealthcare and Humana Inc., the two largest Medicare Advantage insurers, hold approximately half of the nationwide enrollment in Advantage plans. Studies have indicated that Medicare Advantage plans cost taxpayers more per beneficiary, despite their popularity among lawmakers, especially Republicans.

To address concerns about coverage denials, the Centers for Medicare & Medicaid Services (CMS) proposed a rule to cap commissions for brokers selling Medicare Advantage plans. The rule also requires more detailed reporting on the impact of prior approval programs on low-income enrollees and individuals with disabilities. The Biden administration, responding to a report by the Health and Human Services Department's inspector general, will implement a rule in January that calls for Medicare Advantage plans to provide the same medically necessary care as the traditional program. The American Hospital Association has applauded the administration's efforts but calls for rigorous oversight to ensure compliance.

As the Medicare market continues to evolve, the clashes between health care providers and Medicare Advantage plans signify a critical issue that affects millions of beneficiaries. Striking a balance between cost control and quality care remains a significant challenge for insurers, providers, and policymakers alike, with patients ultimately being the ones impacted by these contentious dynamics.