Q2 2024 Update: Medicare Advantage: An Increasing Number of Disputes Between Payers and Providers
As the second quarter of 2024 comes to a close and the race for the White House approaches, a number of healthcare issues are expected to take center stage as candidates unveil their plans to address the nation’s most pressing challenges facing Americans and our nation’s health care system. Amid debates over the Inflation Reduction Act (IRA)[1] and increasing calls for pharmacy benefit manager (PBM) reform,[2] payers and providers continue to grapple with these policies and practices, the implications of which often factor into rate negotiations and contract disputes.[3]
Over the last two and a half years, FTI Consulting has been closely monitoring news coverage and paid and earned media on public negotiations between payers and providers over reimbursement rates and other contractual terms. These negotiations have often drawn a response from third-party players, including state and federal lawmakers, regulators, and local government officials.
Our 2023 research revealed a notable surge in media coverage of payer-provider rate negotiations, with the first half of the year showing significant increases compared to the same period in 2022. The first half of 2024 has remained consistent with the trend over the last six quarters, with media coverage revealing between 19 and 24 payer-provider contract negotiations per quarter.[4]
What we found: Q2 2024 saw the highest number of disputes involving Medicare Advantage (MA) plans since FTI Consulting began monitoring these negotiations in 2022. The media coverage of rate negotiations and contract disputes in Q2 2024 (20 disputes) was the same as in Q1 2024 and slightly less than in Q2 2023.
Q2 2024 Healthcare Quarter in Review
- In Q2 2024, 20 disputes became public and were covered in the media, consistent with our findings from Q1 2024.
- 30% of the disputes (or 6 out of 20) that became public in Q2 2024 went out-of-network (OON), failing to reach a timely agreement, creating health insurance gaps for thousands of patients seeking care at health systems and provider practices across the country.
- Of these disputes, 75% (or 15 of 20) involved MA plans. This increased significantly (37.5%) compared to the same period in 2023.
OON = Out of Network
Older adults and seniors are increasingly choosing to enroll in MA plans, many enrolling because they value the additional benefits and services, low-cost premiums, annual out-of-pocket limits and convenience of only navigating a single plan.[5] While Medicare Advantage is becoming more popular with eligible individuals, a growing number of providers are relinquishing MA plans against the backdrop of greater administrative requirements, workforce shortages and financial and operational challenges.
President Joe Biden faced harsh scrutiny over Medicare from his Republican adversary, former President Donald Trump, during the June 27 debate, despite the current Administration’s tightened stance on MA plans with payment cuts and stricter rules on utilization management, like prior authorization, and inpatient rates.[6] While these measures are intended to reduce Medicare spending, they also contribute to more challenging contract negotiations between MA plans and providers.[7]
The heightened scrutiny and ensuing policy debate on the national stage underscore the complexities of managing MA within the broader healthcare system. As the election cycle intensifies, these disputes are likely to remain in the spotlight, shaping the discourse on the future of Medicare and influencing voter sentiment on healthcare reform. During this period of elevated attention on Medicare, we should expect to continue seeing an increasing number of contract disputes involving MA plans and more public scrutiny of the potential impact on older Americans and seniors.
Research Methodology:
FTI Consulting searched multiple news databases for articles regarding negotiations over reimbursement rates between provider organizations and insurance companies. Those negotiations, which were publicly reported by a news outlet on April 1 or later, were counted for the quarter in which they were publicly reported. Negotiations that were resolved or failed to reach an agreement in one quarter but were first reported in another quarter were counted for the quarter in which they became public. Where providers no longer accept any Medicare Advantage plans, FTI Consulting has counted that decision as a single dispute.
Katie Keim, a Strategic Communications intern for the summer 2024 class, contributed to this article.
Related Practices
[1] Rachel Cohrs Zhang, Sara Owermohle, “Biden and Trump spar over Medicare and abortion in a presidential debate filled with mistakes and falsehoods,” Stat News (June 27, 2024), https://www.statnews.com/2024/06/27/biden-trump-medicare-abortion-presidential-debate/
[2] Ahmed Aboulenein, “Why are US pharmacy benefit managers under fire?” Reuters (April 16, 2024), https://www.reuters.com/business/healthcare-pharmaceuticals/why-are-us-pharmacy-benefit-managers-under-fire-2024-04-16/
[3] Caroline Hudson, “Provider, payer contract disputes are heating up,” Modern Healthcare (May 29, 2024), https://www.modernhealthcare.com/providers/health-plan-negotiations-inflation-claims-denials
[4] Citseko Staples Miller, Annika Chauhan, “Q1 2024 Update: Continued Media Attention on Payer-Provider Disputes,” FTI Consulting, Inc. (April 18, 2024), https://fticommunications.com/q1-2024-update-continued-media-attention-on-payer-provider-disputes/
[5] Tricia Neuman, Meredith Freed, Jeannie Fuglesten Biniek, “10 Reasons Why Medicare Advantage Enrollment is Growing and Why It Matters,” KFF (January 30, 2024), https://www.kff.org/medicare/issue-brief/10-reasons-why-medicare-advantage-enrollment-is-growing-and-why-it-matters/
[6] Bob Herman, “Medicare Advantage insurers face slight proposed cut to 2025 payments,” Stat+ (January 31, 2024), https://www.statnews.com/2024/01/31/medicare-advantage-2025-proposed-payment/
[7] Caitlin Owens, “Hospital and insurer battles over Medicare Advantage set to grow,” Axios (April 4, 2024), https://www.axios.com/2024/04/04/hospitals-insurers-medicare-advantage-seniors
The views expressed in this article are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.
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