Amid a wave of health systems dropping Medicare Advantage plans over administrative and reimbursement issues, the Medicare Payment Advisory Commission has found no “statistically significant change in hospital profit margins” due to growing enrollment in Medicare Advantage plans, according to a report published by the group on Sept. 5.
MedPAC — a nonpartisan branch agency that advises Congress on Medicare policy — analyzed hospital cost reports from 2013 to 2023 and all-payer financial data. The agency also evaluated MA penetration — the share of eligible beneficiaries enrolled — by county to better understand a hospital’s exposure to MA.
While there was a slight dip in both revenue and costs when MA penetration was at least 10 percentage points higher in an inpatient prospective payment system hospital’s county, there was no significant association with profit margins.
Hospitals financially integrated with MA plans also saw no statistically significant revenue changes, according to the report. Critical access hospitals didn’t have any significant association between MA enrollment and their finances, as well. MedPAC considered per diem payments for longer stays and payment-per-unit increases amid declining patient volume as possible explanations.
Despite these findings, MA has been central to hospital-payer conflicts in recent years. According to data shared with Becker’s by FTI Consulting, so far this year, over 50% of contract dispute negotiations between payers and providers involved MA.
And hospitals have not shied away from critiquing MA. In 2024, an American Hospital Association report noted “skyrocketing” administrative costs as hospitals and health systems navigate MA and prior authorization, with care denials for MA claims increasing 55.7% from 2022 to 2023. Another report from the association addressed the financial pressures rural facilities may face amid MA growth, but there has been conflicting research on the matter.
Between 2024 and 2025, total enrollment in MA plans rose by 4%, down from 7% the year before. In 2025, 34 million Medicare beneficiaries (54% of the total Medicare-eligible population) are enrolled in MA plans, up from 33 million (53%) in 2024.
