What to Do if Your Hospital Drops Your Medicare Advantage Plan

Slightly more than half of Medicare-eligible people are enrolled in Medicare Advantage — but hospitals around the country have been dropping Medicare Advantage plans due to issues with prior authorizations and denials. Hospitals and health systems in at least 11 states announced in 2023 that they would be out-of-network for some or all Medicare Advantage plans in 2024, according to reporting from Becker’s Hospital Review, a medical industry trade magazine.

“It’s a real problem for people,” says Katy Votava, who holds a doctorate in health economics and nursing and is president and founder of Goodcare, a consulting firm focused on the economics of health care. “This has always been a problem, but it’s getting worse. It’s not only the reimbursement rates, but the approvals have become so onerous for providers to deal with.”

Among other things, Medicare Advantage plans require patients to get prior authorization for more services than Original Medicare. Prior authorizations require time on the part of a medical provider, and the requests aren’t always successful.

“It’s not like you get paid more to compensate for the fact that you spent all this doctor time jumping through hoops,” says Melinda Caughill, co-founder and CEO of 65 Incorporated, which offers guidance on Medicare. “Essentially, it is a huge money loser for medical practices.”

Nilsa Cruz, an administrator and patient advocate at a rheumatology practice in Milwaukee, recalls spending two hours trying to reach an insurance representative to advocate for a patient. “Many of the critical administrative and clinical functions have been outsourced by these plans,” she says.

Medicare Advantage companies say prior authorization has benefits, but they’ve taken steps to ease the burden on providers and patients. UnitedHealthcare, for instance, announced last year that it would eliminate almost 20% of its prior authorizations. “Prior authorizations help ensure member safety and lower the total cost of care, but we understand they can be a pain point for providers and members,” said Dr. Anne Docimo, chief medical officer of UnitedHealthcare, in a press release.

Hospitals are also frustrated by administrative delays and denials for care. In October 2023, St. Charles Health System in Oregon announced it would be dropping three Medicare Advantage providers in 2024. “We care deeply about our patients and the care they receive, which is why we are unwilling to continue with the status quo with Medicare Advantage plans that result in restrictions to patient care, longer hospital stays and administrative burdens for providers,” said Dr. Mark Hallett, chief clinical officer for St. Charles, in a press release.

It doesn’t make clinical sense for providers to have to go back to insurance companies multiple times, Votava says. “The cost of doing that — which is, by the way, extremely wasteful — it doesn’t gain anybody good care.”

If your preferred hospital stops accepting your Medicare Advantage plan, you might have to make a change. Tens of thousands of Medicare Advantage beneficiaries in California, for instance, had to scramble to switch their insurance or their providers when health care system Scripps Health announced that two of its medical groups would no longer take Medicare Advantage in 2024.

“Scripps tried to negotiate with private insurers for reimbursements that would cover our costs but was unsuccessful,” said Scripps spokesperson Janice Collins in an email.

If your hospital system drops your plan and there isn’t another Medicare Advantage plan that works for you, you may be in a predicament: You can switch back to Original Medicare during certain enrollment periods, but you may not be able to get an affordable Medicare Supplement Insurance, or Medigap, plan.

Except in a few states, Medigap is “guaranteed issue” — meaning an insurance company must offer you a plan and not charge you more for pre-existing health conditions — only for six months that start when you’re at least 65 and signed up for Medicare Part B.

Medigap covers many of the out-of-pocket costs that come with Original Medicare. Without Medigap, Original Medicare can be pricey. “For Original Medicare to work most effectively, you need a Medigap policy,” Caughill says.

Although Medicare’s fall open enrollment period has ended, Medicare Advantage open enrollment runs from Jan. 1 to March 31 each year. During that time, Medicare Advantage enrollees can switch plans or return to Original Medicare.

If you’re outside of an open enrollment window, you might be able to take advantage of a 5-star special enrollment period, which allows you to switch from your current Medicare Advantage plan to a 5-star plan in your area. You can do this once between Dec. 8 and Nov. 30 of the following year. “That hinges on whether you have access to a 5-star plan,” says Meredith Freed, senior policy manager for the Program on Medicare Policy for KFF, a health policy think tank.

Do your research before jumping to another plan, though. “If you’re considering switching because you’re concerned about having access to a specific provider or hospital, I would suggest calling [the provider] to make sure they’re in-network for any plan you’re considering,” Freed says.

If you’re outside of open enrollment and you don’t qualify for a special enrollment period, you’ll have to wait for the next open enrollment period to change plans — unless you move, which Caughill calls the “nuclear option.”

“When you move, you have a Medicare do-over,” Caughill says. “You just have to move out of your Medicare Advantage plan’s service area.” Not only can you change Medicare Advantage plans if you move, but you have another chance to sign up for Original Medicare and a Medigap plan with guaranteed issue rights.

The caveat: You do have to actually move — not just pretend you’ve moved. “Don’t commit insurance fraud,” Caughill says.