Medicare Advantage has long been viewed as a strong alternative to traditional Medicare, but the program has “deteriorated significantly” in recent years — benefitting commercial payers at the expense of patients and providers, according to Providence President and CEO Erik Wexler.
Mr. Wexler’s comments come shortly after Providence Clinical Network — which includes 15 hospitals in California — went out-of-network with UnitedHealthcare MA. But Providence is far from alone, as a rising number of hospitals and health systems take a firmer stance in contract negotiations with commercial MA plans, even if that means leaving networks they believe offer inadequate reimbursement.
“When it comes to UnitedHealthcare or any other commercial payer, if we are not seeing fair performance in how we are paid for the care we provide, and if denials and delays are not within a reasonable sphere of performance, then we are not going to continue working with that commercial payer,” Mr. Wexler told Becker’s. “It’s time for us to reset the way the program works. It’s essential for the federal government and Congress to get involved in correcting this deterioration in performance by commercial payers.”
Health systems push back: A wave of payer contract terminations
Over the last three years, Becker’s has reported on a growing list of hospitals and health systems that have gone out of network with commercial MA plans due to ubiquitous challenges that include rising denial rates, delayed payments and excessive prior authorization burdens.
Several systems started 2026 by going out of network with certain MA payers. Notable examples include:
- Rochester, Minn.-based Mayo Clinic going out of network with most MA plans from UnitedHealthcare and Humana.
- Tacoma, Wash.-based MultiCare no longer contracting with any MA PPO plans in the Puget Sound region.
- Chapel Hill, N.C.-based UNC Health dropping Humana, WellCare (Centene) and Health Care Service Corp. (formerly Cigna) MA plans.
The latest example came Jan. 26 when Allentown, Pa.-based Lehigh Valley Health Network — part of Jefferson Health — went out of network with UnitedHealthcare MA after a monthslong contract dispute.
It’s clear that this trend is showing no signs of slowing down.
Health systems are staring down the barrel of further Medicaid cuts in late 2026 and early 2027 and are preparing for significant access and operational challenges after the expiration of the ACA’s enhanced premium tax credits.
The ‘polycrisis’ squeezing hospitals’ finances
Many hospitals continue to operate on razor-thin margins and lack the financial cushion to weather a looming “polycrisis” — rising labor costs, extraordinary inflation in supplies and equipment costs and declining reimbursement from Medicare and Medicaid.
“Even before H.R. 1 came to life, the deterioration in commercial payer performance on Medicare Advantage was substantial,” Mr. Wexler said. “We see a fourfold denial rate in Medicare Advantage fee-for-service compared to traditional Medicare. We see requests for additional records or information from commercial payers related to Medicare Advantage that are 7.5 times higher than with Medicare fee-for-service. We’ve seen a 73% increase in payment denials and underpayments — a 10% year-over-year deterioration by commercial payers.”
Mr. Wexler argues that this pattern points to commercial payers using taxpayer dollars for financial arbitrage through delayed or denied payments.
Providence is pushing back by recalibrating its payer strategy with a renewed focus on sustainability.
“We’ve gained the intestinal fortitude to ensure that there’s a fair rate of reimbursement — provider by provider,” Mr. Wexler said. “Now, with price transparency, we’re able to demonstrate when a payer significantly under-reimburses Providence, and we use that data to help negotiate a fair rate of pay.”
While policymakers have attempted to patch the program with temporary fixes over the years, Mr. Wexler believes comprehensive reform is overdue.
The good news for providers is that — for the first time in history — they are armed with technology that can truly make a difference: AI. Mr. Wexler also emphasized the importance of collaboration to create a win-win-win for payers, providers and patients.
Can AI and legislation fix Medicare Advantage?
“With the advancement of AI, we should be able to create the perfect claim,” he said. “Payers and providers should authenticate that the technology is creating the perfect claim, and then use that going forward to align — to have a ceasefire between payer and provider — on the ongoing adjudication of claims.
If that alignment happens, Mr. Wexler said Providence could eliminate more than $200 million in administrative burden tied to denied claims and replenish more than $2 billion in delayed payments — a benefit that could also extend to rural hospitals at risk of closure.
A key piece of legislation that has gained bipartisan support to tackle these challenges is the Medicare Advantage Prompt Pay Act. This legislation would require MA plans to pay at least 95% of clean, in-network claims within 14 days, and out-of-network claims within 30 days.
“What this does is level the playing field. It holds commercial payers accountable and applies penalties for noncompliance,” Mr. Wexler said. “In healthcare, we face accountability every day — from the federal government, local governments, accrediting organizations, ourselves and our boards — for the quality and safety of the care we provide. We need more accountability on the part of commercial payers.”
During a Jan. 22 congressional hearing, Paul Markovich, president and CEO of Blue Shield of California parent company, Ascendiun, told lawmakers the U.S. healthcare system is “bankrupt and failing us.” He added that participants — including health plans — have put profits over patients or remained complacent in the face of mounting complexity.
“I’ve come to the conclusion that the system will not fix itself,” Mr. Markovich said. “The healthcare system needs some tough love and clear direction and the American government is in the best position to provide both.”
While many payers cite industrywide pressures, Mr. Wexler pushed back on the idea that hospitals are the ones in need of tough love.
“The healthcare system has made substantial changes: We’re reducing duplication of services, improving quality, removing administrative burden and enduring the cuts of H.R. 1. But commercial payers remain fundamentally driven by for-profit incentives and shareholder obligations,” Mr. Wexler told Becker’s. “What we should have heard [Mr. Markovich] say is that the commercial payers are the ones in need of tough love and clarity, and that the American government is best positioned to provide both.”
