Today, more than half of Medicare-eligible beneficiaries—nearly 35 million Americans—are enrolled in Medicare Advantage (MA) plans. These plans promise efficiency and added benefits compared to traditional Medicare, but a growing trend of MA payment delays and care denials is fueling concerns about insurer overreach.  

What’s behind this surge in MA overreach, and what does it mean for providers and patients? 

Brad Gingerich, Vice President at Ensemble Health Partners, joins this episode to unpack the incentives driving these behaviors, the impact on care delivery, and the solutions that could restore accountability and transparency. With years of experience helping hospital systems navigate managed care and revenue cycle challenges, Brad is the perfect guide through this complex and urgent issue. 

Brad Gingerich (00:00) 

You would like to think that these Medicare Advantage plans, the way that they’re profitable making their money, it’s because they’ve found a way to keep their population of patients healthy. You would love to think that that’s the case, and they’re striving for that, and it’s a great incentive. You can generate profit by keeping your patients healthy and out of the hospital. It’s going to cost you less care for them, and that’s a great notion. But in reality, what we find is that these payers are very profitable, not by taking their patients’ health here, but by delaying and denying payment to their providers.  

So, they delay payment through, like I mentioned, the prior authorization process. They create numerous barriers to actually being the patient throughout and within the health system. But then they also deny payment or downgrade payment by operating in, which should be referred to them as degraded areas. And they really are that. And you have the areas that are more subjective in nature. So think things like medical necessity, utilization management, and independent physician decision making, for example. 

Narration (01:10) 

Welcome to Hospitals in Focus, from the Federation of American Hospitals. Here’s your host, Chip Kahn. 

Chip Kahn (01:19) 

Today, over half of Medicare’s beneficiaries are enrolled in Medicare Advantage. That’s nearly 35 million Americans. Medicare Advantage, or MA as it’s known, promises efficiency and added benefits in comparison to fee-for-service Medicare.  

But behind the curtain, those same plans are delaying or impeding care and frequently denying payment. And who pays the price? Providers and the patients they serve. Here to unpack this today for us is Brad Gingrich, Vice President at Ensemble. Brad knows this world inside and out. He spent years helping hospital systems navigate managed care and revenue cycle challenges. Brad, great to have you with us today. 

Brad Gingerich (02:18) 

Thanks, Chip. Happy to be here. Appreciate all the great work that you and the Federation are doing. 

Chip Kahn (02:23) 

Well, we really appreciate what you do for health systems every day and the patients they serve, Brad. Just to get started, let’s sort of lay out a foundation for our audience. Obviously, we’ve got people at all levels of knowledge about Medicare Advantage or MA, as we’re gonna refer to it here. Can you just explain how MA works for the beneficiaries and how that coverage works, and then we’ll get into some other issues about how the insurers who provide that MA use it. 

Brad Gingerich (03:00) 

Sure, yeah, happy to, thank you. So Medicare Advantage, Medicare Part C, is really just a privatized version of traditional Medicare. So, once a citizen is eligible for Medicare, they really have an option. And that option being, do they want to stick with traditional Medicare or do they want to opt into a privatized form of Medicare?  

Typically, in a privatized version, as we refer to as Medicare Advantage, is at no additional cost to the patient. It’s funded by CMS with the same $15 million that they otherwise would use for fee-for-service. What’s somewhat unique in this situation, making it appealing to patients, is that the benefits being offered in the privatized Medicare managed space can often be richer than traditional benefits under Medicare. So, this can create an appealing option to patients, particularly when you consider that the cost of a privatized plan, and it’s typically no cost at all to the member. 

Chip Kahn (04:02) 

So you’re describing a situation where upfront and particularly for lower income Medicare beneficiaries or Medicare beneficiaries that are eligible for Medicare and for Medicaid; that this can be an advantage to them in terms of out of pocket, in terms of belonging to a health plan that supposedly will provide them more health maintenance like care, at least in terms of the sales of that. 

But at the same time, a certain number of beneficiaries are gonna need care. And that’s sort of the other side. And there we see, and I referred to in my introduction, there are common strategies to delay services, to impede care, and then ultimately at the other end, even to deny payment to providers or clinicians who’ve served a patient. 

How does this all work in terms of the patient and in terms of those trying to serve that patient? 

Brad Gingerich (05:08) 

Yeah, so that’s a great question. With Medicare Advantage, really the privatized insurance companies serve largely as a gatekeeper. They gatekeep care. They do that by scanning up provider networks.  

So, if I want to compare this to traditional Medicare, by and large, all providers in our country accept Medicare with very, very few exceptions. In the case of Medicare Advantage, however, they go out and assemble networks of participating providers. A part of that is getting authorization. So you actually have to go through the plan to authorize the care that requires a physician to write a referral typically warranty or justifying the need for the care. And then you have to go to the Medicare based plan to actually agree that you do in fact require that particular service. And if the 

Medicare advantage point agrees they will grant that authorization. This is very different than traditional Medicare. And as much as traditional Medicare by and large does not have an authorization process, very few exceptions, just some things that may not actually mean a medical procedure, thinking things that might blur in the minds of say, a cosmetic type procedure. That’s really where you’re limited on the prior off process under traditional Medicaid. Other Medicare Advantage patients were subject to all these different rules, and restrictions, which again, serve as a feature for the determination and ultimately getting the care they need and the providers getting paid for the care they’ve rendered. 

Chip Kahn (06:44) 

So there’s an incentive there for the plans to try to keep utilization down because if the patients don’t use their coverage, then the plan obviously can keep the money and the beneficiary is sort of in the middle. What are these gray areas in terms of the rules that plans are using, frankly, to make it more difficult for patients? 

And, I think potentially to interfere with that incredibly important physician-patient relationship where the physician is both the broker and the navigator for the patient through the system when the patient is ill and needs care. 

Brad Gingerich (07:38) 

Yeah, that’s a great point. the plans you would like to think that these Medicare Advantage plans, the way that they’re profitable and making their money is because they found a way to keep their population patients healthier. You would love to think that that’s the case and they’re striving for that. And it’s a great incentive to generate profit and keeping your patients healthy. Now the hospital, it’s going to cost you less care from them. And that’s a great notion.  

But in reality, what we find is that these payers are very profitable, not by clicking their patient’s health here, but by delaying and denying payment to the providers. So they delay payment through like I mentioned prior authorization process. They create all these barriers to actually being the patient through and into the health system. 

But then they also deny payment or downgrade payment by operating in, should be referred to them as, as the gray areas. And they really are that. Any of the areas that are more subjective in nature.  

So think things like medical necessity, utilization management, independent physician decision-making, for example. Two physicians can have two different opinions on a matter. One of those physicians happens to be at the Medicare Advantage plan. That gives grounds for disagreement. And the Medicare Advantage plans will, based on that disagreement, choose not to pay claims. They will actually deny the claim. And again, it’s in these areas where it’s very subjective. 

There’s no really black and white prescribed rule from what is medically necessary, not a case if this is more of an art than a science and many as a citizen. So that does leave a lot of room for disagreement. And it’s within these margins, in these gray areas where the Medicare Advantage peers have been very successful in promoting our payment, particularly few from traditional Medicare. A typical provider collapsed around 88 cents on the dollar compared to traditional Medicare for the same patients. Through these denials, downgrades, the things you might make sure that we’re willing to see rise up to that amount in aggregate. 

Chip Kahn (09:55) 

So the patients are frequently not getting the care they need. It could be an admission to a hospital. It could be if they’re in the hospital, then an admission that would be paid for to a rehab hospital or other kind of post-acute setting. So that’s the effect directly on patients. Now, clearly in terms of the revenue and resources, that a hospital or other provider needs to provide and pay for the services and pay, you know, keep the lights on and pay the nurses and others who provide the critical care.  

If there’s either delay or denial of payment, that has an effect. Let’s take a deeper dive and talk about an example where this is the case. 

I’ll lay something out and then let you respond. So many years ago, and I was involved in this in negotiations that the hospital field had with Medicare on the fee-for-service service side, there was this issue of when is a patient when they’re, admitted through the emergency room, when they become an inpatient rather than in some kind of observation. And with many of these senior patients, they’ll come into a hospital and pretty rapidly be sent up to the floor and basically be an inpatient.  

But there was this gray area for Medicare in terms of when they went from observation, of waiting or being observed as to what kind of care they would need in the emergency room versus being on the floor and receiving what the kind of care and the kind of intensity that inpatients do. 

And so we came up with a compromise with CMS that this thing called the two midnight rule that if a patient was in the hospital for two midnights or basically 48 hours that Medicare would consider that inpatient. And it was a clean policy that made it very clear. It’s the physician serving that patient that helps make this decision. That rule is in fee-for-service Medicare. 

But it isn’t a rule for the other part of Medicare for Medicare Advantage. Now we believe that it’s part of the benefit and the Medicare Advantage ought to be doing it, but they’re not, they’re doing other things. So can you describe how this issue of observation versus inpatient admissions works? And then I’m gonna ask about a specific health plan.  

Let’s sort of start with your understanding of what happens on the health plan side in reality, regardless of the fee for service agreement that the hospital industry serving patients have with CMS about how this should be treated. 

Brad Gingerich (13:10) 

Sure. Well, CMS did offer guidance actually in January of 2024 that they expect Medicare Advantage plans to operate the same as CMS with respect to two midnight rule and the presumption that the patient will be an inpatient. And they go on to say that if they expect the patient to require hospital care that spans two or more midnights, the Medicare Advantage plan should treat that, just like traditional Medicare does, can be met in an inpatient.  

What we’re finding in practice is that the Medicare Advantage clients are not adhering to this, really in any regard. The reason being is there’s a bit of an area, a gray area as it were, left to dispute. And that is the determination on whether or not the patient require hospital care, the span to midnight. 

The magic word there is require and who’s to say that patient couldn’t have gone home. And well, in this case, it the attending physician who stated the patient couldn’t have gone home or they would have discharged him unless there’s a clear non-medical reason that they didn’t. However, the Medicare Advantage plan takes a dissenting view on that and thinks the patient could have gone home. They think services could have rendered out an allocation setting. And therefore, despite the fact that patients span two midnights, the payer still stands on that notion that the patient could have been discharged and therefore they will allow you to rebuild as an observation if you so choose because they will only increase the observation rate, but they will not pay the end patient. And we’re seeing that more and more. And yeah, I’ll just go one bit further on this point. 

I mentioned the gatekeepers before. In the actual process within a hospital, when we want to admit a patient’s inpatient status, we provide a notice of admission to a payer, Medicare and the doctor. We inform them that we’re admitting the patient. They come back with a response. Either they agree it or they do not agree and the patient should be in observation. Based on this real-time gatekeeper process,I find that providers actually admit Medicare Advantage patients at a much lower rate than they do traditional Medicare.  

You don’t have to go through a case management department out of care to agree that the patient, these are patients that is so keep in mind that hospitals are admitting Medicare patients and a less, for lack of a better term, aggressive rate than they do traditional Medicare.  

So a common example, see is traditional Medicare patients that span two midnights. Typically, you’ll see around 90% of the time, they’re Medicare Advantage, those same patients get admitted on average more around 80% of the time. So, they’re even admitted at a lower clip. Even despite this, Medicare Advantage denies a 3.6 times greater than even commercial claims, almost infinitely greater than a traditional Medicare, because you’re not being denied whatsoever. 

It’s astounding that through the gatekeepers that I keep referring to, we’re already self-centering, if you will, in terms of taking the path of least resistance and just going for an activation rate. And even despite that, payers are still denying at an extremely aggressive rate. So the providers are being conservative and are still being denied at a very extreme rate like this. 

Chip Kahn (17:02) 

So let’s talk about one example, Aetna, that thinks they’re helping hospitals by adopting their own version of a policy here, a correction here, to deal with this issue of observation versus inpatient, which on the one hand, it gets us really into the weeds in terms of discussing it, but frankly, it’s a real bread and butter issue for hospitalizations and the important revenue that hospitals need to be able to have the resources to provide the services.  

Let’s talk about what Aetna is planning to do and how they see that on the one hand as a solution. I’m concerned that it’s a little bit in this gray area, potentially. 

Brad Gingerich (17:47) 

Yeah, and you’re right, Chip. It is in the gray area. And this will get a little into the weeds for some. But I think it’s important to show how this, you know, the devil is in details here within this gray area. This is something that payers are doing.  

So, Aetna, for their Medicare Advantage product, is announcing a new policy that they have since delayed until January 1st. Originally, it was supposed to roll out on November 15th. The policy is such that any patient that it presents to the ER and is admitted and spends at least one midnight, Aetna will automatically approve that patient for an inpatient level of care, so long as the provider admits a patient to inpatient. They will not challenge it whatsoever. You will not have to prove medical necessity or anything along those lines. However, what Aetna will do is they will unilaterally make a determination on the level of severity of the omission. And if they deem this to be a lower-level severity, essentially, if they deem this to be the equivalent to an observation case, they’re going to pay you what they’ve calculated to be effectively the average observation rate.  

Now, the reason this is a sneaky policy is, well, it does a lot of things. One, this becomes a payment dispute, not a medical necessity dispute. So Aetna is not denying them grounds of medical necessity. They’re not doing that at all. Say we agree with you, the patient should be admitted. They are instead making this a payment dispute. And they’re saying this is the amount we want to pay you for this admission. And if you take exception to it, you can certainly challenge that. However, it’s not a formal medical necessity denial in a formal medical necessity appeal. 

And we have very different appeal remedies in the Medicare Advantage regulation for medical and assessing denials than we do what I would call payment denials or technical denials, this is. And so, for example, we are losing peer-to-peer rights. So a peer-to-peer review is when a physician advisor from a provider contacts the physician advisor from the insurance company and to have a clinical discussion about the merits of the patient being admitted. At a policy, you no longer have the opportunity to do peer-to-peer reviews. Instead, you can have what they’re calling a physician discussion, which sounds like the same thing, but there are technical differences. Our appeal remedies are different. Our first-level appeal remedies are different as is no longer a medical necessity to that. So what it’s doing is kind of in these gray areas that are not really specified. 

Aetna is implementing payment policies to usurp medical necessity decisions. And they’re being so bold as to do it as they are actually using Milliman care guidelines to make the payment determination. Even though CMS has come out and explicitly said Milliman should not be used for coverage and care determinations. Well, Aetna’s saying that I have an order in compliance with that. We’re not using it for coverage and care determinations. There’s no dispute about medical necessity. We’re utilizing bill and the care guidelines to determine whether this is a low severity and if so, a pay.  

So they’re shifting out of medical necessity disputes and over into technical payment disputes where on the provider side, our remedy to overturn those denials is much less. You don’t have, say, legal reports, regulatory or otherwise or appeal infrastructure to be successful on this. 

Chip Kahn (21:42) 

Well, I mean, the devil is in the details as you described. And from my years of experience in this, you get into these details, but at the end of the day, it actually does directly affect physician decision-making for their patients. Let’s move away from the MA side because this isn’t just an issue of Medicare Advantage or the Medicare program. This is also a major issue for the private sector coverage for the 165 million plus Americans that are covered by employer coverage, as well as those 24 million who are covered in exchanges across the country by private insurance.  

And let’s talk a bit about something that, Elevance, a Blue Cross plan that is in many states across the country, a policy they’re coming up with regarding hospital care and the billing process that would have a critical effect on hospital payment, but also ultimately boomerang back on patients because of the effect of this. Can we talk a bit about that and describe this Elevance Policy? 

Brad Gingerich (23:03) 

Sure, yeah, so Elevance recently announced a policy that’s going to be rolled out in several states where really what they’re attempting to do is curtail out of network utilization, particularly amongst what we refer to as invisible providers. So these are the -ologists, if you will, within hospitals. So anesthesiologists, radiologists, hospitalists, ER physicians. all the physicians that support the operations of the hospital.  

But when you seek to go to a hospital and you’re typically looking to see if the hospitals that now work in rarely does a consumer go down and laundry list, I see emergency room positions are participating radiologists, et cetera. And so there is still inevitably a certain amount of surprise out of network utilization.  

Well, during Donald Trump’s first term, he signed into law the No Surprises Act, which actually protects patients from this very issue. If a patient is a medical emergency situation, didn’t have the proper notices that they were seeking treatment from an out-of-network provider. So patient protections are already put into effect and enacted by law. And in fact, part and parcel to that is a dispute resolution process. 

So if the land up provider is out of network with the payer, they treat a patient on an out of network basis. And if the provider and the payer cannot agree mutually on a reasonable payment for that service, the patient does not get folded in the middle of the balance field. Instead, the payer provider enter into independent dispute resolution. And there’s a baseball style arbitration. And the arbitrator chooses one of two numbers, the provider puts forth an offer, the payer puts forth an offer, the arbitrator based on all the information presented chooses one of those money moffers, that’s amount that ultimately gets paid, the claim is done, the patient is not controlled and it’s resolved.  

Well, as data would suggest, 85 % of the time in these IDRs, independent dispute resolution process, it was found that the payer discounted the claim to aggressively insure paid the provider. So the provider brought it to the dispute resolution. The two parties each entered their offer 85 % of the time the providers offer was selected resulting in the payer paying additional amount. So from payer loss, provider went 85% of the time. What you’re seeing is Anthem’s new policy is in fact a response to the payers at large failing to prevail in the IDR process. Now they might again do this under the guise of protecting patients, or under the guise of trying to protect self-funded employer spend, right? They would argue that because now the network claims they’re paying too much for the IDR process. So they want to create a penalty on that. So they’re trying to it under the guise of trying to protect the patient or the employer.  

But the reality is, is payers are losing in the IDR process because providers are not accepting the global offers that they’re making. Arbitrators are seeing that as re-inciting with providers. And now it’s creating a situation. And I didn’t explain the policy, but what the policy is, is Anthem is suggesting that they will put a 10% payment penalty on a hospital for their hospital claim if any portion of that claim professional component was rendered by the other physician. So if you think about that hospitals have little if any control over contractual ability of independent physicians who might operate in their facility. In fact, it likely creates a conflict of interest to try to compel them to contract with a or to try to have a hospital interfere with those those business relationships.  

But lastly, you know, what needs to be known is many hospitals have to rely on third parties to operate there. They may not be able to staff and have an ER group manage that. So they’ll rely on a third party physician group to provide that ER service. And it may be that that physician group was not able to achieve a sustainable contract with an Anthem or United. 

And as a result, they had to make the tough decision to go out and now. And if that penalty is great enough that the hospital is going to want to entertain. Getting in the middle of that professional groups negotiation with that payer and try to compel them to negotiate.  

Well, at some point that’s when come back to the hospital, because in that scenario, as I just described many times, hospitals, these providers need to subsidize those physician groups, because of payer makes for otherwise just allowing them to operate as staff at the ER. And so the way it works, we’re already backfilling just the deficit. That deficit is going to grow in terms of you’re to force that physician group to sign an unfavorable contract with Anthem. You’re just going to increase the subsidies, that ultimately a hospital has to pay that physician. 

Chip Kahn (28:52) 

Yeah, so in the guise of helping the patients, know, having all the people the patients are served by in the hospital and network, instead what they’re actually doing is at the end of the day, probably increasing the cost of the hospital to provide the service because they’re going to have to subsidize the physician. When any physician who’s out of network right now, the patient is protected against an out of line balance bill because there’s the no surprises act, which limits what the physician can charge the patient. in a sense by apparently trying to solve a problem, they’re actually creating a new problem for the physicians and for the hospitals. 

Sort of getting to closing out our conversation. Brad, can you just sort of outline to sum up the real world consequences for patients, providers, clinicians and hospitals of the insurance techniques, the bending of the rules that are being experienced now really throughout the system, whether for Medicare patients, Medicaid patients, many of whom 70 % of whom are in managed care or the private employer insurance or even individual insurance patients who are also in managed care. 

Brad Gingerich (30:28) 

Yeah, so the real world is all of these pieces are interrelated. And particularly when you think of some of these insurance companies, and we name a few of them, so let’s just answer them, but they’re not unique. United is another good example. These are all very diversified organizations. And by that, I mean they offer exchange products, they offer Medicare Advantage products, they offer commercial products, and they offer the Medicaid. But all those organizations just have one ultimate bottom line, you know, that’s our largely control to their shareholders on what that means is they have the ability to think of some more fungible. And so the best example I can give of this is this in our country, commercial insurance page on average two and a half times Medicaid. 

Many have times what traditional Medicare pays. Medicare Advantage pays providers about 90 % of what traditional Medicare pays. Despite on paper it says they should pay them 100 through all the things we talk about, the gray area, the margins, they deny care, erode your revenue, all that. Traditional Medicare pays around 90 cents on the dollar. Commercial gets us at two and a half times that. 

Commercial insurance is really subsidizing all of them. You think about it. So I’m a managed care professional. And if I negotiate, want to negotiate a contract with one of those diversified entities, I just explain, I might come to it a United or an Anthem. I take exceptions from the fact that I’m getting 90 cents of the dollar from Medicare Advantage compared to Medicare. And I might make a really big deal about that and threaten to terminate Medicare Advantage contract. 

And eventually the payer is going to say something to say, we understand that’s the best we can do on MA. Look over here at this commercial product. We can fill that revenue need by giving you a healthy increase on the commercial. Okay. So that sounds good to a pragmatic hospital operator, but it’s not until you really realize the funding of these that you see what’s going on. 

That commercial product, 85% of those dollars, that 250 % of Medicare is funded dollar for dollar by the employer. They’re simply paying the negotiated rate at the United has worked the provider, but the funds are coming directly from the employer. Whereas in the case of Medicare, those funds are coming from the payer. So they will hold on to those in may funds, as long as they can to prevent those flows to the bottom line. And instead it will be more likely to concede on the commercials. And that’s no more evident than in the race.  

Why? It does not seem to reason that commercial pays two and a half times what traditional Medicare pays. And 2.7 times what Medicare Advantage pays. When commercial are the lowest cost patients we have to deal with, it’s a lower link to stay compared to traditional Medicare on a all equal basis. These are the cheap, the competition should be the lowest, but it’s all based on the estate. Those dollars come from the employer, the fully insured business, the Medicare advantages, the exchange that comes out of the insurance call first. They fight hard to protect those dollars and not spend and not paying out to providers, whereas they will be more lenient with employer dollars. And that’s what you see. And that’s why the rates are where they are. 

And so when there’s, uh, when providers establishing a ground within an end plan, let’s say under the two-minute rule, if we’re able to fall back revenue under that rule, you’re only going to see it off somewhere. They’re going to find a way to pull it back and then entail you see those commercial rates and that’s where we are. And at some point, it’s likely going to be unsustainable. 

 And so I think the solution is, we have to hold the Medicare insurance accountable. We have to keep it within those troches. Medicare needs to stand on its own. Those businesses need to pay those claims. We’re immediately out of business. And not making serious loans. Medicare is better safe than any. 

Chip Kahn (35:00) 

Brad, this has been great. I wanna thank you for your insights. So I think we’ve peeled back the layers on how MA plans, managed care generally, are using the system, whether it’s through policies like Aetna’s lack of use, a recognition of the two midnight rule, or Elevance’s approach to surprise billing to ignore the law and try to leverage out of the application of the law. We’ve seen the ripple effect that will have on providers and patients. The bottom line, these aren’t just administrative headaches. They’re real barriers to care. And they’re shaping the way hospitals operate every day. So this has been a great discussion, Brad, and I just really appreciate your taking time to be with us today. 

Brad Gingerich (36:11) 

Thank you, Chip. 

Narration (36:17) 

Thanks for listening to Hospitals in Focus from the Federation of American Hospitals. Learn more at fah.org. Follow the Federation on social media at @fahhospitals and follow Chip at @chipkahn. Please rate, review, and subscribe to Hospitals in Focus. Join us next time for more in-depth conversations with healthcare leaders. 

Brad Gingerich is a healthcare executive with 15+ years leading managed care and revenue cycle operations for multihospital systems. He develops payer strategies and negotiates agreements — from fee-for-service to complex shared savings and population management — that balance provider priorities, strengthen payer partnerships and deliver organizational value. As a data–driven executive, he brings deep skills in analytics, contract modeling and financial forecasting, and is a recognized speaker and thought leader in healthcare finance.