Maryland's Medicare Advantage Market Faces Crisis as Insurance Providers Consider Exiting
TL;DR
Maryland's Medicare Advantage market challenges offer opportunities for insurers to renegotiate terms or explore alternative coverage models as federal reimbursement rates remain misaligned.
Maryland's unique hospital payment system sets higher rates than federal Medicare Advantage reimbursements cover, creating financial losses that may force insurers to exit the state.
Thousands of Maryland seniors face potential loss of vital supplemental benefits like dental and vision care, threatening healthcare stability for vulnerable retirees.
Maryland has one of the nation's lowest Medicare Advantage participation rates due to its unique hospital payment model conflicting with federal reimbursement calculations.
The Medicare Advantage market in Maryland faces significant instability as major insurance providers consider terminating their plans for the upcoming year, potentially leaving tens of thousands of retirees without their current healthcare coverage. This crisis stems from Maryland's unique hospital payment system, which creates a financial disconnect between state-set hospital rates and federal reimbursement calculations for Medicare Advantage services.
Approximately 25% of Maryland's 1.1 million Medicare recipients participate in Medicare Advantage plans, representing about 295,000 seniors who rely on these private insurance options for supplemental benefits including vision, dental, and transportation assistance. Maryland's participation rate of under 27% ranks among the lowest in the nation, trailing most states where at least 50% of Medicare recipients use Medicare Advantage plans.
The core issue involves Maryland's Total Cost of Care hospital payment model, where the Health Services Cost Review Commission (HSCRC) sets hospital rates. Insurance carriers pay higher hospital rates than in other states while receiving lower federal reimbursement rates for Medicare Advantage services. According to industry experts, this system makes it more expensive to operate Medicare Advantage plans in Maryland while providing seniors with inferior benefits compared to other states.
Mark Puente, CEO of Alterwood Health, stated that Medicare Advantage has faced challenges in Maryland over the last five years, resulting in health plan exits and disruptions for beneficiaries. The financial losses for Medicare Advantage plans have continued to grow, creating unsustainable conditions for insurance providers.
Previously, the HSCRC offered grants to encourage insurance companies to continue providing Medicare Advantage coverage. Former HSCRC Commissioner Adam Kane explained that these grants were intended as a temporary solution while awaiting a permanent federal resolution to harmonize Maryland's hospital model with Medicare Advantage reimbursement. However, no permanent resolution has been achieved, and the grant program is ending.
The potential exit of major insurance carriers could force seniors to either select alternative Medicare Advantage plans or relinquish supplemental benefits that traditional Medicare fee-for-service doesn't cover. Andrew Rosenberg, president of Health Resource Advisors, emphasized that coverage changes can be particularly disruptive for seniors who rely on consistent healthcare services for significant health needs.
Maryland's healthcare system is undergoing a major transition with the States Advancing All-Payer Health Equity Approaches and Development (AHEAD) model, which may offer solutions to stabilize Medicare Advantage. Current negotiations between state and federal officials could result in significant changes to the state's Medicare rate-setting authority, potentially addressing the fundamental issues driving insurance providers from the market.
Curated from citybiz