Whatever you think about Medicare Advantage plans, health plans administered by corporate health insurers, they can be deadly for both patients and providers. Insurers in Medicare Advantage use a number of tools to underpay providers, which in turn endangers patient access to care. A new bipartisan bill attempts to fix widespread insurer underpayments to providers in Medicare Advantage.
The Prompt and Fair Pay Act requires insurers to pay Medicare Advantage providers at least as much as they would be paid for the same services in Traditional Medicare, the government-administered program that covers care from providers throughout the US. The bill also requires insurers to pay in-network providers promptly when they submit clean claims.
Congressman Greg Murphy, MD, the Republican co-sponsor of the Prompt and Fair Pay Act, explains a fundamental problem with Medicare Advantage that the bill addresses: “Medicare Advantage was conceived with good intentions, but absent updates and reforms, insurers will continue to exploit and abuse the program to bilk the federal government at the expense of patients and physicians. Doctors who see MA beneficiaries not only experience major delays in reimbursement and senseless prior authorization denials, but often receive less compensation for services rendered than they earn through traditional Medicare. … [T]he Prompt and Fair Pay Act … guarantee[s] parity between MA reimbursements and Medicare Parts A and B, ensure[s] our physicians are treated with dignity, and preserve[s] access to high-quality, affordable care for patients.”
Problem: Medicare Advantage can impose undue and, sometimes, dangerous burdens on hospitals, physicians and other health care providers across the US; insurers too often do not pay providers promptly or fairly, as required. Insurers endanger access to care for older adults and people with disabilities enrolled in Medicare Advantage.
- Insurers often pay providers below Medicare rates, even though the government calculates insurer payments in Medicare Advantage based on Medicare rates.
- Insurers often deny payment for services that have been provided.
- Insurers often delay payment for services that have been provided.
- MA insurers pay providers in rural areas 90 percent of traditional Medicare.
- MA payments to hospitals fell 8.8 percent in five years.
- In rural communities, insurers do not pass along extra dollars set aside for rural communities to rural providers, paying them far less than traditional Medicare.Insurers often reduce payment for services that have been provided.
- Insurers often won’t pay for rehab services or don’t include rehab facilities in their networks.
Consequences:
- Insurers endanger the financial well-being of hospitals. Many hospitals, nursing homes, rehab facilities, home health agencies and other health care systems are at risk.
- It’s estimated that skilled nursing facilities lost nearly $14 billion in 2024 as a result of Medicare Advantage payments that were less than payments in traditional Medicare.
- Many Medicare Advantage enrollees can’t get the health care they need.
- Many Medicare Advantage enrollees are in plans with inadequate networks and cannot see the providers they need to see.
- Hospitals and physicians face huge administrative burdens in order to get paid, costing them substantial time and money.
- Many providers can’t afford to remain in-network and end up withdrawing from their Medicare Advantage contracts.
- Claims adjudication over denied claims cost providers $25.7 billion in 2023. Eventually 70 percent of the denials were overturned but at a very high price.
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- Many providers believe that insurers are harming their patients through inappropriate care delays and denials and for patient safety reasons leave the provider network and withdraw from their Medicare Advantage contracts.
- At least 41 hospital systems cancelled contracts with 62 health plans in 25 states in the past year.
- In 2025, at least 27 health systems have ended their Medicare Advantage contracts, reports Beckers.
- In 2024, 32 health systems dropped their Medicare Advantage contracts.
- In 2023, 19 percent of health systems cancelled Medicare Advantage contracts and 45 were thinking about ending their contracts.
- Many providers believe that insurers are harming their patients through inappropriate care delays and denials and for patient safety reasons leave the provider network and withdraw from their Medicare Advantage contracts.
Here’s more from Just Care:
- Medicare Advantage delivers unreliable coverage
- Don’t be fooled: Medicare Advantage can be deadly
- How to keep insurers from denying Medicare Advantage enrollees needed care
- Medicare Advantage needs an overhaul
- Medicare Advantage costs likely to increase significantly
