For a variety of reasons, hospitals can disagree with Medicare Advantage insurance providers and they part ways. When a hospital cancels or fails to renew its contract with a health insurer, the patients who had coverage with that insurer often have to choose between staying with that insurer and getting care from the shrinking network of providers or ditch the MA plan. Reports indicate that thousands of patients ditch MA plans once the health insurer and hospital fail to continue their relationship.
To understand why MA plan holders end up switching insurers or reverting to the government-run Medicare, consider an elderly policyholder who has longstanding doctor-patient relationships with doctors at a hospital near where he or she resides. Once that hospital terminates its contract with the MA plan insurer, the patient opts to quit the MA plan and find one which will allow them to continue seeing the doctors that they are used to seeing.
This is exactly what played out for Fred Neary who lives in Dallas, Texas. The Baylor Scott hospital network terminated its relationship with Humana. For the 87-year-old patient, it was either he maintains his relationship with his five doctors who work at a hospital just five minutes away from his home or starts from scratch to establish new relationships with doctors at another facility with a working relationship with Humana. Neary opted to exit the MA plan provided by Humana.
Neary’s example illustrates yet another reason why patients will switch plans once a hospital ends its relationship with an insurer: distance. Policyholders usually visit hospitals that are near their residences. Remember, Medicaid and MA plans are for those aged 65 years and above. For such elderly individuals, having to move long distances in order to access needed medical care is a big burden, so they will stick with a nearby hospital. For this reason, when a hospital is no longer able to work with an MA plan provider, enrollees usually have limited choice but to revert to Medicaid or find another MA plan insurer.
What happens when hospital-insurer relationships are terminated within the year? If the number of enrollees affected is large enough, CMS will usually grant a special enrollment period allowing policyholders to find another insurer or switch back to Medicaid. If such an enrollment period isn’t granted by CMS, individuals have to wait for the year to end before they can get an alternative policy.
Why would a hospital terminate its contract with an MA plan insurer? Nick Olson, the CFO at Sanford Health, a health system serving communities in seven states, says delays in prior authorizations and coverage denials frustrate hospitals so much because they stand in the way of a patient receiving the care that the hospital deems necessary. For Sanford Health, this was the final straw that drove them to terminate their relationship with Humana Health, an MA insurer.
The administrative burdens and disagreements about finances also play a role in causing some hospitals to exit their contracts with MA plan providers. The writing is on the wall; MA plan providers like Astiva Health need to look at what is happening to major insurers as cautionary tales and address the issues compelling hospitals to walk away from relationships with MA insurers so that they keep growing the clientele they serve.
NOTE TO INVESTORS: The latest news and updates relating to Astiva Health are available in the company’s newsroom at https://ibn.fm/Astiva
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