Susan Jaffe
Ever since Larry Wilkewitz retired greater than 20 years in the past from a wooden merchandise firm, he’s had a business Medicare Advantage plan from the insurer Humana.
But two years in the past, he heard about Peak Health, a brand new Advantage plan began by the West Virginia University Health System, the place his docs follow. It was cheaper and provided extra private consideration, plus extras equivalent to an allowance for over-the-counter pharmacy gadgets. Those advantages are extra necessary than ever, he mentioned, as he’s handled for most cancers.
“I decided to give it a shot,” mentioned Wilkewitz, 79. “If I didn’t like it, I could go back to Humana or whatever after a year.”
He’s sticking with Peak Health. Members of Medicare Advantage plans, a privately run different to the federal government’s Medicare program, can change plans by the tip of March.
Now getting into its third yr, Peak Health has tripled its enrollment since final yr, to “north of 10,000,” mentioned Amos Ross, its president. It expanded from 20 counties to 49, he mentioned, and moved into elements of western Pennsylvania for the primary time.
Although hospital-owned plans are solely a sliver of the Medicare Advantage market, their enrollment continues to develop, reflecting the general enhance in Advantage members. Of the 62.8 million Medicare beneficiaries eligible to hitch Advantage plans, 54% signed up last year, based on KFF, the well being info nonprofit that features KFF Health News. While the variety of Advantage plans owned by hospital techniques is comparatively steady, Mass General Brigham in Boston and others are increasing their service areas and varieties of plan choices.
Health techniques have dabbled within the insurance coverage enterprise for years, but it surely’s not for everybody. MedStar Health, serving the better Washington, D.C., space, mentioned it closed its Medicare Advantage plan on the finish of 2018, citing monetary losses.
“It’s a ton of work,” mentioned Ross, who spent greater than a decade within the business medical health insurance trade.
Like another well being insurer, hospitals getting into the enterprise want a back-office infrastructure to enroll sufferers, enroll suppliers, fill prescriptions, course of claims, rent employees, and — most significantly — guarantee state regulators they’ve a reserve of cash to pay claims. Once they get a state insurance coverage license, they want approval from the federal Centers for Medicare & Medicaid Services to promote Medicare Advantage insurance policies. Some techniques affiliate with or create an insurance coverage subsidiary, and others do a lot of the job themselves.
Kaiser Permanente, the nation’s largest nonprofit well being system by income, began an experimental Medicare plan in 1981 and now has practically 2 million individuals enrolled in dozens of Advantage plans in eight states and the District of Columbia. The Justice Department introduced Jan. 14 that KP had agreed to pay $556 million to settle accusations that its Advantage plans fraudulently billed the federal government for about $1 billion over a nine-year interval.
Last yr, UCLA Health launched two Medicare Advantage plans in Los Angeles County, probably the most populous county within the United States. Other new hospital-owned plans have cropped up in much less worthwhile rural areas.
“These are communities that have been very hard for insurers to move into,” mentioned Molly Smith, group vp for public coverage on the American Hospital Association.
But Advantage plans provided by hospitals have a well-known, trusted identify. They don’t have to maneuver into city, as a result of their homeowners — the hospitals — by no means left.
Bad Breakups
Medicare Advantage plans normally prohibit their members to a community of docs, hospitals, and different clinicians which have contracts with the plans to serve them. But if hospitals and plans can’t comply with renew these contracts, or when disputes flare up — typically spurred by cost delays, denials, or burdensome prior authorization guidelines — the well being care suppliers can drop out.
These breakups, plus deliberate terminations and repair space cuts, compelled greater than 3.7 million Medicare Advantage enrollees to make a troublesome alternative final yr: discover new insurance coverage for 2026 that their docs settle for or, if potential, preserve their plan however discover new docs.
About 1 million of those stranded sufferers had protection from UnitedHealthcare, the nation’s largest well being insurer. In a July earnings replace for monetary analysts, chief monetary officer John Rex blamed the corporate’s retreat on hospitals, the place “most encounters are intensifying in services and costing more.”
The turbulence within the business insurance coverage market has upset sufferers in addition to their suppliers. Sometimes contract disputes have been fought out within the open, with anxious sufferers within the center receiving warnings from all sides blaming the opposite for the upcoming finish to protection.
When Fred Neary, 88, realized his docs within the Baylor Scott & White Health system in central and northern Texas can be leaving his Medicare Advantage plan, he was afraid the identical factor may occur once more if he joined a plan from one other business insurer. Then he found that the 53-hospital system had its personal Medicare Advantage plan. He enrolled in 2025 and is maintaining the plan this yr.
“It was very important to me that I would never have to worry about switching over to another plan because they would not accept my Baylor Scott & White doctors,” he mentioned.
Eugene Rich, a senior fellow at Mathematica, a well being coverage analysis group, mentioned hospital techniques’ Medicare Advantage plans supply “a lot of stability for patients.”
“You’re not suddenly going to discover that your primary care physician or your cardiologist are no longer in the plan,” he mentioned.
A Health Affairs study that Rich co-authored in July discovered that enrollment in Advantage plans owned by hospital techniques grew quicker than conventional Medicare enrollment for the primary time in 2023, although not as quickly as the general rise in sign-ups for all Advantage plans.
The huge UCLA Health system launched its two Medicare Advantage plans in Los Angeles County in January 2025, despite the fact that sufferers already had a listing of greater than 70 Advantage plans to select from. Before rolling out the plan, the University of California Board of Regents mentioned its deserves at a November 2024 assembly. The meeting minutes supply uncommon perception right into a dialog that non-public hospital techniques would normally maintain behind closed doorways.
“As increasing numbers of Medicare-enrolled patients turn to new Medicare Advantage plans, UC Health’s experience with these new plans has not been good, either for patients or providers,” the minutes learn, summarizing feedback by David Rubin, govt vp of UC Health.
The minutes additionally describe feedback from Jonathon Arrington, CFO of UCLA Health. “Over the years, in order to care for Medicare Advantage patients, UCLA has entered numerous contracts with other payers, and these contracts have generally not worked out well,” the minutes learn. “Every two or three years, UCLA has found itself terminating a contract and signing a new one. Patients have remained loyal to UCLA, some going through three iterations of cancelled contracts in order to remain with UCLA Health.”
Costs to Taxpayers
CMS pays Advantage plans a month-to-month fastened quantity to take care of every enrollee primarily based on the member’s well being situation and placement. In 2024, the federal authorities paid Advantage plans an estimated $494 billion to take care of sufferers, based on the Medicare Payment Advisory Commission, which screens this system for Congress.
The fee mentioned this month that it tasks insurers in 2026 will probably be paid 14%, or about $76 billion, greater than it might have price government-run Medicare to take care of related sufferers.
Many Democratic lawmakers have criticized overpayments to Medicare Advantage insurers, although this system has bipartisan congressional help due to its growing reputation with Medicare beneficiaries, who are sometimes attracted by dental care and different protection unavailable by conventional Medicare.
Whenever Congress threatens cuts, insurers declare these beneficiant federal funds are important to maintain Medicare Advantage plans afloat. UCLA Health’s Advantage plans will want no less than 15,000 members to be financially sustainable, based on the assembly minutes. CMS knowledge signifies that 7,337 sufferers signed up in 2025.
A examine published in JAMA Surgery in August in contrast sufferers in business Medicare Advantage who had main surgical procedure with these coated by Medicare Advantage plans owned by their hospital. The latter group had fewer issues, mentioned co-author Thomas Tsai, an affiliate professor within the Department of Health Policy and Management on the Harvard T.H. Chan School of Public Health.
Smith, of the American Hospital Association, isn’t shocked. When insurers and hospitals will not be on reverse sides, she mentioned, care supply might be smoother. “There’s more flexibility to manage premium dollars to cover services that maybe wouldn’t otherwise be covered,” Smith mentioned.
But Tsai warns seniors that hospital-owned Medicare Advantage plans function underneath the identical guidelines as these run by business medical health insurance corporations. He mentioned sufferers ought to think about whether or not the additional advantages of Advantage plans “are worth the trade-off of potentially narrow provider networks and more utilization management than they would get from traditional Medicare.”
In Texas, Neary hopes the nearer relationship between his docs and his insurance coverage plan means there’s much less of an opportunity that payments for his medical care will probably be kicked again.
“I don’t think I would run into a situation where they would not provide coverage if one of their own doctors recommended something,” he mentioned.
