Medicare Advantage's Hidden Price Tag
Contributed by Bradley G. Gingerich
Hospitals are footing the bill for inefficiencies they didn’t create — and it’s adding up, fast.
Medicare Advantage plans are quietly driving up hospital costs that don’t show up in contract rates, but they’re felt every day on the floor. From delayed authorizations to denied claims, the hidden friction is significant.
In 2023 alone, hospitals absorbed $130 billion in underpayments from Medicare and Medicaid. And while general inflation rose 14.1% from 2022 to 2024, Medicare inpatient payment rates increased by less than half, at 5.1% — a gap that’s only widening.
These aren’t just numbers — they represent tangible strain on already stretched teams trying to deliver accurate and timely care.
Length of stay is a hidden cost driver hospitals can’t ignore, and it is compounding to critical level to address and prioritize. While MA plans often scrutinize short stays, it’s the high-acuity patients — those clearly meeting medical necessity — who face discharge delays due to prior authorizations and narrow post-acute networks. These delays extend length of stay by days, tying up beds, inflating labor costs, and eroding margins under fixed DRG payments — costs that traditional Medicare doesn’t impose.
Across dozens of health systems, Ensemble is seeing the same pattern: MA plans introduce friction that increases the cost and complexity of care. Sometimes, patients can’t be discharged on time because of issues like network inadequacy and prior authorization delays.
These delays aren’t caused by the hospital — but in the current system, it is still required to:
With MA enrollment on the rise, these challenges are scaling fast. What were once rare exceptions are now routine challenges. Health systems can’t afford to write these inefficiencies off as status quo. These extra days aren’t reimbursed and hospitals eat the cost — even though the delay is due to the payer’s process. This pattern of misaligned time, money and resources this creates financial strain and resource bottlenecks, especially for hospitals already operating on thin margins.
It’s time to follow the cost. Each added day, each administrative barrier, each payer-specific delay, those impacts add up. A rigorous payer analysis can uncover where systems are losing time and money, and help leaders make that invisible friction visible.
Ensemble is helping clients do exactly that — and push for change.
RN, Employee Services and Occupational Health
1moMedicare Advantage is anything but an advantage to the healthcare system and the member