Kate Ashford is a writer and NerdWallet authority on Medicare. She is a certified senior advisor (CSA)® and has more than 20 years of experience writing about personal finance. Previously, she was a freelance writer for both consumer and business publications, and her work has been published by the BBC, Forbes, Money, AARP, LearnVest and Parents, among others. She has a degree from the University of Virginia and a master’s degree in journalism from Northwestern’s Medill School of Journalism. Kate has appeared as a Medicare expert on the PennyWise podcast by Lee Enterprises, and she's been quoted in national publications including Healthline, Real Simple and SingleCare. She is based in New York.
Assigning Editor Holly Carey
Assigning Editor | Medicare
Holly Carey joined NerdWallet in 2021 as an editor on the team responsible for expanding content to additional topics within personal finance. She currently leads the Medicare team. Previously, Holly wrote and edited content and developed digital media strategies as a public affairs officer for the U.S. Navy. She is based in Virginia Beach, Virginia.
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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.
