Strategic Escalation in the Face of Rising MA Plan Denials 

Originally published on Becker’s Hosptal Review

Relationships between providers and Medicare Advantage (MA) plans have become more strained as payers aggressively deny claims. To ensure providers’ financial sustainability and patients’ access to care, health systems must implement new strategies to maintain their current revenue from MA plans and to generate new sources of revenue.  

During a Becker’s Hospital Review webinar sponsored by CorroHealth, Jerilyn Morrissey, MD, chief medical officer, and Sam Dominik, senior vice president — both of CorroHealth — described challenges providers face associated with Medicare Advantage and recommended strategies for dealing with these challenges.  

Five key takeaways:

1. As more Medicare beneficiaries enroll in MA plans, providers are experiencing revenue and cost pressures. Data from KFF shows that more than 50% of the Medicare population now opts for MA plans, which could grow to 60% in the next few years. Increased MA enrollment results in patient mix-driven revenue and cost pressures for providers.  

2. MA payer denials are escalating at an alarming rate. Payers have aggressively elevated denials to offset the erosion of their projects. “The key takeaway,” Dr. Morrisey said, “is we’ve seen 26% compound annual growth in denials for Medicare Advantage beneficiaries staying in the hospital for more than two midnights.” 

3. This increase in denials and costs of fighting these denials is unsustainable for providers. Dr. Morrissey cited an American Hospital Association article indicating nearly 15% of all claims submitted to private payers are initially denied. While more than half of denied claims (54%) were ultimately overturned, this only occurred after providers went through multiple rounds of costly appeals. “Hospitals and health systems spent an estimated $19.7 billion in 2022 just trying to overturn denied claims,” she said. “That’s money that didn’t go towards the care of our populations, our patients and our communities. It went to this administrative burden.” 

4. Aggressive strategic escalation initiatives are required to address the MA denials problem. According to Mr. Dominik, those health systems that have the “best and most durable financial outcomes are those that mount aggressive, judicious escalation strategies.” 

These aggressive strategies not only can help hospitals recoup lost revenue, but more importantly, secure better, long-term contracts with MA plans. “Very few health systems have successfully reversed or even significantly slowed the denial-driven revenue erosion without aggressive escalation,” he said. “The historical standard contract renegotiation for 1% to 3% increases year-over-year gets offset by those increasing denials; they aren’t enough to sustain even current revenue levels and haven’t yielded improvements. The most judicious systems are the ones going after payers aggressively and moving through their contractual rights.”

5. Health systems must develop strategies to hold payers accountable and establish more financially sustainable terms with MA plans. Although each health system must determine its own goals and priorities, the goals of pushing back against payers through escalation are threefold. 

“First you want to alter the go-forward dynamics of the payer-provider relationship,” Mr. Dominik explained. “You’re sort of putting the payer on notice that you’re going to stand up for yourself and go after what is fair and appropriate based on your contract. Second, you want to recover and recoup lost revenue for cases that were inappropriately denied, and finally, you want to establish more standard channels to address future conflicts and grievances.”  

To ensure they get paid appropriately by MA plans — which are actively denying claims — health systems must use strategic, aggressive escalation tactics. 

Hospital leaders can begin by examining how insurance companies often prioritize economic gains over patient access and wellbeing. Access our Payer’s Playbook to gain deeper insights into their tactics and equip yourself with strategies to strengthen your hospital’s financial health.