There’s a letter that could be sitting in a mailbox right now saying a hospital trusted for decades won’t take a family’s health insurance anymore. This year, dozens of America’s biggest hospital systems — Mayo Clinic, Johns Hopkins, the hospital half of New York depends on — have walked away from Medicare Advantage plans, and the list keeps growing.
“There’s one mistake seniors are making when you try to switch that locks you out for the rest of your life,” warns Neal Shah, CEO of CareYaya and chairman of Counterforce Health, a Johns Hopkins- and NIH-funded researcher on aging and dementia and author of “Insured to Death.”
Follow the payment cycle, not just the headlines
Becker’s Hospital Review, the hospital industry’s own trade publication, counts roughly 25 major health systems that have dropped or significantly narrowed Medicare Advantage this year, and the list is still growing. Mayo Clinic left most Advantage plans from UnitedHealthcare and Humana. UNC Health cut Humana, WellCare and old Cigna plans. And Johns Hopkins Medicine went out of network with UnitedHealthcare’s Advantage plans.
The dispute comes down to who pays, and how fast. Under the original government-run Medicare, a hospital does what it needs to do for the patient, sends the bill and just gets paid — very simple. But under many of these for-profit Medicare Advantage plans, the hospital has to beg the insurance company for permission first — a process called prior authorization — and then still often has to fight to get paid after they deliver the care.
The American Hospital Association says Medicare Advantage plans deny these requests at rates up to six times higher than regular Medicare. One health system in Oregon put real numbers on it: a denied rate under Medicare Advantage of 22%, versus 1% under traditional Medicare. When doctors appeal those denials, most get overturned — proof the care was actually necessary all along. The denial didn’t protect anyone; it just delayed the care and made someone fight for it.
That fight over money isn’t confined to network contracts — it’s now written into hospital accounting rules, too. Under a new accounting standard in effect this year, nonprofit hospitals have to weigh not just their payment history with an insurer, but current conditions — including whether an insurer’s payment behavior has changed — when deciding how much of what they’re owed they can actually count on collecting. A hospital locked in a standoff with an insurer, in other words, may have to set aside more of a reserve against money that might not show up on time, or at all.
To be fair, it’s a two-sided fight. Insurers say they have to keep their payments sustainable, and sometimes it isn’t the hospital walking away at all — sometimes the insurer cancels the contract while the hospital wants to stay. Either way, patients end up stuck in the middle.
Insurers say they’re feeling their own financial squeeze. Mark Warshawsky, Senior Fellow and Wilson H. Taylor Chair in Healthcare and Retirement Policy at the American Enterprise Institute, said in response to a Thomson Reuters question on August 3: “We are seeing rapid increases in health care costs showing up in Medicare, including from hospitals, so MA insurers are under pressure from customers and the government to reign in costs. These reimbursement tensions with hospitals are one consequence.” He put some of the responsibility back on hospitals, too: “The correct response from hospitals should be to improve productivity, which is low in the sector.”
The live test case
New York-Presbyterian, one of the biggest hospital systems in the country, has been in a standoff with UnitedHealthcare over its Medicare Advantage members. They’ve hit a deadline and pushed it back six separate times. As of now, the next cliff they face is at the end of August — and if they don’t sign a deal, hundreds of thousands of seniors could wake up to find their hospital suddenly out of network.
Imagine an elderly woman living by herself, waiting to find out if the hospital still takes her insurance.
The nuance nobody explains clearly
Shah’s original public warning, aimed at a general audience, simplified one important detail. Pressed on it, he acknowledged on August 4: “You’re right that it’s more nuanced than I covered in the general audience video.”
The distinction matters: Federal guaranteed-issue rights waive Medigap medical underwriting, but only based on what happens to the plan — not the hospital contract. If a Medicare Advantage plan itself terminates, isn’t renewed, or leaves someone’s area, that person generally gets a 63-day guaranteed-issue window to buy Medigap with no underwriting.
But when a hospital exits a network while the plan itself remains available, that’s a different situation — and one Shah says is driving this year’s wave. “That is not considered a plan termination,” he said, so federal guaranteed-issue protections don’t automatically apply — a senior would be choosing to leave a plan still on offer. That kind of network change may instead qualify someone for a Special Enrollment Period, which lets them switch plans — but an SEP is not the same as a Medigap guaranteed-issue right. In most states, someone who voluntarily drops a still-available plan to follow their hospital would typically still face medical underwriting to buy Medigap.
His advice: apply for Medigap and get acceptance in writing before canceling Medicare Advantage, so no one risks being stranded on Original Medicare with no supplement in between.
The bottom line
The dispute over who absorbs the cost of care — hospitals footing bills while waiting on approvals and payments, insurers trying to hold down reimbursement growth — is a genuine financial standoff playing out contract by contract, network by network. But for families, the practical stakes are simpler and more immediate than any ledger: whether the letter in the mailbox catches them off guard, or whether they already know their window, their rights, and their first move.
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