Details on the report

For the report, KFF looked at the growth of MA as a share of hospital inpatient days between 2015 and 2022 using data from cost reports submitted to CMS.

KFF found that MA represents a growing share of hospital inpatient days, and that the share of total inpatient days attributed to MA enrollees increased from 13% in 2015 to 23% in 2022 among general short-term hospitals. In that same period, the share of inpatient days attributed to traditional Medicare enrollees declined from 34% to 25%.

The increase in share of inpatient days attributed to MA enrollees also coincided with an increase in MA enrollment as a share of all eligible Medicare beneficiaries, which grew from 32% in 2015 to 48% in 2022, KFF found. In addition, the share of hospitals with more inpatient days from MA beneficiaries than traditional Medicare beneficiaries increased from 5% in 2015 to 30% in 2022.

The share of inpatient days attributed to MA beneficiaries increased in all areas of the country, but more than doubled between 2015 and 2022 in nonmetropolitan areas.

The analysis found that, across all rural hospitals, the share of inpatient days attributed to MA enrollees increased from 7% in 2015 to 15% in 2022. Meanwhile, the MA share of inpatient days in micropolitan areas increased from 9% in 2015 to 21% in 2022.

While enrollment in MA is lower in rural areas than in metropolitan or micropolitan areas, it still increased significantly from 18% in 2015 to 40% in 2022.

Discussion

Hospitals seeing an increase in MA patients could have significant implications for beneficiaries and healthcare providers, including hospitals, according to KFF.

According to KFF, hospitals that see a greater share of MA patients than traditional Medicare patients "may be more reliant on revenue from these plans, and more affected by various plan rules and decisions, such as prior authorization requirements, denials of claims, observation stay designations, and network restrictions."

Some hospitals, health systems, and medical groups have recently raised concerns about the impact of MA on finances, and others have either terminated or threatened to terminate contracts with insurers over delays in payment, more restrictive coverage determinations, and payment rates, KFF noted.

According to Advisory Board's Max Hakanson, "hospitals are facing a compounding challenge when it comes to MA. At the same time that hospitals are vocally pushing back against cumbersome prior authorization processes put in place by MA plans and increased claims denial rates, they're also seeing more MA patients than ever before, putting significant pressure on hospitals and forcing them to rethink their current relationships with the MA plans they contract with."

Hakanson noted that there have already been many providers who have dropped at least one MA plan they previously contracted with and said, "this is a trend we'll likely see more of."

"There are several different approaches providers may take to changing their MA plan relationships, but we anticipate the most common strategies will be selectively terminating the plans they find the hardest to work with, while at the same time trying to more closely align with plans they continue to contract with around pain points, such as prior authorization and denials," he added.

However, Hakanson said, this isn't a "temporary trend that health systems need to adjust to." Given the aging demographics of the United States and the increase in MA enrollment, "systems need to prepare for a future where seniors, particularly those in MA, make up a greater portion of their inpatient visits. This worsening payer mix could increasingly strain the finances of health systems that are highly reliant on more lucrative commercial insurance reimbursement." (Godwin et. al., KFF report, 7/23)

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