Introduction to the Issue
For several years, Fred Neary had been seeing five doctors at the Baylor Scott & White Health system, whose 52 hospitals serve central and northern Texas, including Neary’s home in Dallas. But in October, his Humana Medicare Advantage plan — an alternative to government-run Medicare — warned that Baylor and the insurer were fighting over a new contract. If they couldn’t reach an agreement, he’d have to find new doctors or new health insurance.
“All my medical information is with Baylor Scott & White,” said Neary, 87, who retired from a career in financial services. His doctors are a five-minute drive from his house. “After so many years, starting over with that many new doctor relationships didn’t feel like an option.”
The Problem of Losing Providers
After several anxious weeks, Neary learned Humana and Baylor were parting ways as of this year, and he was forced to choose between the two. Because the breakup happened during the annual fall enrollment period for Medicare Advantage, he was able to pick a new Advantage plan with coverage starting Jan. 1, a day after his Humana plan ended.
Other Advantage members who lose providers are not as lucky. Although disputes between health systems and insurers happen all the time, members are usually locked into their plans for the year and restricted to a network of providers, even if that network shrinks. Unless members qualify for what’s called a special enrollment period, switching plans or returning to traditional Medicare is allowed only at year’s end, with new coverage starting in January.
CMS Response to the Issue
But in the past 15 months, the Centers for Medicare & Medicaid Services, which oversees the Medicare Advantage program, has quietly offered roughly three-month special enrollment periods allowing thousands of Advantage members in at least 13 states to change plans. They were also allowed to leave Advantage plans entirely and choose traditional Medicare coverage without penalty, regardless of when they lost their providers. But even when CMS lets Advantage members leave a plan that lost a key provider, insurers can still enroll new members without telling them the network has shrunk.
At least 41 hospital systems have dropped out of 62 Advantage plans serving all or parts of 25 states since July, according to Becker’s Hospital Review. Over the past two years, separations between Advantage plans and health systems have tripled, said FTI Consulting, which tracks reports of the disputes.
Concerns Over Secrecy and Consumer Protection
CMS spokesperson Catherine Howden said it is “a routine occurrence” for the agency to determine that provider network changes trigger a special enrollment period for their members. “It has happened many times in the past, though we have seen an uptick in recent years.”
Still, CMS would not identify plans whose members were allowed to disenroll after losing health providers. The agency also would not say whether the plans violated federal provider network rules intended to ensure that Medicare Advantage members have sufficient providers within certain distances and travel times.
The secrecy around when and how Advantage members can escape plans after their doctors and hospitals drop out worries Sen. Ron Wyden of Oregon, the senior Democrat on the Senate Finance Committee, which oversees CMS.
Why the Increase in Breakups?
“Seniors enrolled in Medicare Advantage plans deserve to know they can change their plan when their local doctor or hospital exits the plan due to profit-driven business practices,” Wyden said.
The increase in insurer-provider breakups isn’t surprising, given the growing popularity of Medicare Advantage. The plans attracted about 54% of the 61.2 million people who had both Medicare Parts A and B and were eligible to sign up for Medicare Advantage in 2024, according to KFF, a health information nonprofit that includes KFF Health News.
Impact on Consumers and Providers
The plans can offer supplemental benefits unavailable from traditional Medicare because the federal government pays insurers about 20% more per member than traditional Medicare per-member costs, according to the Medicare Payment Advisory Commission, which advises Congress. The extra spending, which some lawmakers call wasteful, will total about $84 billion in 2025, MedPAC estimates. While traditional Medicare does not offer the additional benefits Advantage plans advertise, it does not limit beneficiaries’ choice of providers. They can go to any doctor or hospital that accepts Medicare, as nearly all do.
Sanford Health, the largest rural health system in the U.S., serving parts of seven states from South Dakota to Michigan, decided to leave a Humana Medicare Advantage plan last year that covered 15,000 of its patients. “It’s not so much about the finances or administrative burden, although those are real concerns,” said Nick Olson, Sanford Health’s chief financial officer. “The most important thing for us is the fact that coverage denials and prior authorization delays impact the care a patient receives, and that’s unacceptable.”
Calls for Reform and Greater Transparency
The National Association of Insurance Commissioners, representing insurance regulators from every state, Puerto Rico, and the District of Columbia, has appealed to CMS to help Advantage members.
“State regulators in several states are seeing hospitals and crucial provider groups making decisions to no longer contract with any MA plans, which can leave enrollees without ready access to care,” the group wrote in September. “Lack of CMS guidance could result in unnecessary financial or medical injury to America’s seniors.”
The commissioners appealed again in March to Health and Human Services Secretary Robert F. Kennedy Jr. “Significant network changes trigger important rights for beneficiaries, and they should receive clear notice of their rights and have access to counseling to help them make appropriate choices,” they wrote.
Conclusion
The issue of hospitals dropping out of Medicare Advantage plans and the subsequent impact on thousands of members highlights the need for greater transparency and consumer protection in the healthcare system. As the popularity of Medicare Advantage continues to grow, it is essential that regulators and lawmakers take steps to ensure that beneficiaries have access to necessary care and are not trapped in plans that no longer meet their needs.
FAQs
Q: What happens when a hospital drops out of a Medicare Advantage plan?
A: When a hospital drops out of a Medicare Advantage plan, members may be forced to find new doctors or switch to a different plan. In some cases, CMS may offer a special enrollment period allowing members to change plans or return to traditional Medicare.
Q: Can I switch to traditional Medicare if my hospital drops out of my Advantage plan?
A: It depends on the circumstances. If CMS determines that the provider network change triggers a special enrollment period, you may be able to switch to traditional Medicare without penalty. However, this is not always the case, and you should check with CMS or your plan administrator to determine your options.
Q: How can I protect myself from being affected by hospital dropouts?
A: It is essential to carefully review your plan’s provider network before enrolling and to monitor any changes to the network during the year. You should also be aware of your rights and options if your hospital or doctors drop out of your plan. Consulting with a healthcare advocate or counselor can also be helpful in navigating the system.
