Medicare Advantage Growth Could Normalize, but Nursing Home Leaders Call for Rate Floor and Other Changes

While Medicare Advantage (MA) has grown steadily in the last several years, leaders in the nursing home sector speculate whether increased federal regulation – and perhaps even more importantly, changes in the consumer experience – will slow its growth. This would come as a welcome development to many nursing home leaders, who have been struggling with the lower payment rates and steep administrative burdens posed by Medicare Advantage.

Managed care plans are still doing what they must to be competitive and offer compelling benefits – although many are protesting CMS’ 2025 benchmark rate increase as a “de facto cut.” Open enrollment in 2023 for 2024 was still strong, ATI Advisory’s Fred Bentley said, so slowed growth may look more like a normalization in MA numbers for future years.

Other experts joined Bentley in enumerating the factors that could change MA enrollment, including consumer choice, additional regulatory oversight and data transparency.


“The consumer aspect of it is probably going to have more influence, unless there is some sort of additional cost capitation that the federal government puts on [MA] reimbursement,” said Steve Przybilla, principal for Plante Moran Living Forward.

When it comes to nursing home residents who are on Medicare Advantage, if they go to a facility and their plan will only cover them for a 12-day stay and they feel they should be there longer – or were told they should have a longer nursing home stay – then that may affect enrollment in the future.

“The consumer, in time, will begin to see limited availability of places that they can go because of the insurance plan that they have, or they’re getting service limitation, essentially, [on] the amount of days that they get what’s covered,” said Przybilla. “I don’t think the consumer is fully aware of some of the impacts of managed care.”


For Chris Chirumbolo, CEO of Carespring Health Care Management in Ohio, it’s hard to say if one factor alone will slow or normalize MA growth. Such plans are influential at all levels of federal and state government, he said, and their potential to save government dollars is powerful. 

More than 50% of eligible beneficiaries are now enrolled in MA plans as of February 2024, with a forecasted rise to 60% by 2030, according to data compiled by Health Dimensions Group. That’s $454 billion in total federal Medicare spending since its inception as part of the Medicare modernization Act of 2003, a KFF report found.

Data transparency and CMS regulations

Talking to dozens of seniors in the past couple years, Przybilla said there isn’t a distinct separation for the public between traditional Medicare and Medicare Advantage, despite older adults being “pounded” with advertising for MA. People who do opt for Medicare Advantage may find it’s right for them, or they may find it no longer meets their needs.

“The more regulations that are applied to managed care, it is going to reveal additional information about the success or potential failures of the program,” said Przybilla. “When that type of data is collected, analyzed and publicized, that may have a larger impact on consumers slowing their roll to managed care than the actual regulation itself.”

Those using MA right now for nursing home care are what Przybilla calls the country’s “decision makers.” They will determine the path MA will take in the future.

Federal regulation will provide some level of transparency for providers and their patients and families. Nicole Fallon, VP of integrated services and managed care for LeadingAge, said action by the Centers for Medicare & Medicaid Services (CMS) for more MA oversight is particularly meaningful now given the market share that Medicare Advantage has grown to command.

As growth occurred at a breakneck pace, so too did issues for more than 30 million seniors enrolled, as well as nursing home providers. The CY2024 MA rule sought to clarify the use of prior authorizations, algorithm and artificial intelligence tools, and underscore MA plans’ need to comply with basic medicare regulations when it comes to coverage determinations.

“To date, we’ve seen little change in MA plans’ behavior. Greater oversight is needed, and we urge CMS to take action. Beneficiaries and providers lose when MA plans don’t comply,” Fallon said.

CMS is seeking to ensure that MAOs will not deceive beneficiaries when marketing their plans and seeking enrollment, will cover services offered to traditional Medicare beneficiaries without unnecessary barriers to services like prior authorizations, and not use AI to terminate coverage without first looking at specific needs and circumstances, along with the advice of caregivers.

Subpar MA reimbursement and enrollment

Coupled with these CMS rules, Fallon said it’s critical to establish a rate floor that MA plans must pay providers. MA payments are currently inadequate to cover the costs of delivering care to MA beneficiaries, she said.

Pay should also cover the corresponding administrative burden imposed by prior authorization and other processes, noted Fallon.

MA plans have to spend 85% of the premium dollar on health care services, said Bentley. One could argue that reimbursement rates aren’t going up as much as nursing home providers had hoped, perhaps with less than generous rate increases in future, particularly in light of trends in traditional Medicare.

Operators just have to look at the latest Medicare increase as part of the SNF Prospective Payment System – experts have said the proposed 4.1% increase for 2025 is not enough to cover inflationary pressures or a continuing hard economic environment, much less costly regulations like the federal minimum staffing proposal.

What’s more, there has been a lack of clarity on MA performance, with minimal data available on managed care programs compared to quality measures, said Przybilla.

“The transparency is not there,” he said, in terms of a difference in performance between MA and traditional Medicare.

Leaders at Zimmet Health Care Services have brought up this point as well.

“That’s where I think we’re going to begin to see some change within managed care, to make sure that they’re measured against typical [Medicare FFS],” said Przybilla. “How are they performing, compared to what you would see in a traditional [Medicare FFS] type situation? There’s a lot of complexities and moving pieces there.”

The future of Medicare Advantage

Nursing home administrators will continue to find themselves struggling financially to provide the same level of services under MA reimbursement, said Przybilla. In the last five to six years, the gap between traditional Medicare and MA has continued to get larger. 

It’s a story operators have heard before, with inadequate Medicaid reimbursement and Medicare usually being able to make up the difference. Although, balancing out payer sources is becoming harder to do with the rising cost of care and the lower rates offered by MA.

“If that trend continues, I’ve seen this with providers right now, there’s an increased desire to look for private pay, or go after [traditional Medicare] individuals as a priority,” said Przybilla. “There’s also a lot of providers out there that are saying, it’s not worth it anymore, we’re going to decrease our bed size … [or limit] who we’re going to contract with.”

Nursing home operators are getting more savvy, he said, with many resetting their operating models and staffing levels, and taking a close look at payer mix.

Still, Chirumbolo believes that despite headwinds tied to MA, providers must embrace value-based care. This includes ongoing involvement in Medicare Advantage – perhaps with nursing home operators even becoming payers themselves, through ownership in Institutional Special Needs Plans (ISNPs). Even if MA growth normalizes, CMS is pushing for 100% of Medicare beneficiaries to be in a value-based arrangement by 2030.

“Providers need to be efficient and effective while striving to improve outcomes,” said Chirumbolo. “This applies to both the short term MA business along with managing the [long-term] care population via a product like an I-SNP.”

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