Medicare Advantage disruptions hitting another 5,900 seniors in Minnesota

Two more health systems with hospitals and clinics in Minnesota are going out-of-network in 2025 for certain Medicare Advantage health plans, pushing the number of Minnesota seniors facing network disruptions next year to nearly 60,000 people.

Robbinsdale-based North Memorial Health, a two-hospital system in the Twin Cities metro, says it will go out-of-network starting in January with Kentucky-based Humana. South Dakota-based Avera Health, which operates three hospitals in southwest Minnesota, says it will drop out of the Humana network as well.

The effect of these changes is higher out-of-pocket costs next year if seniors stick with Humana Medicare Advantage coverage and visit doctors at North Memorial and Avera Health.

Since July, three other health systems with Minnesota operations -- Bloomington-based HealthPartners, South Dakota-based Sanford Health and Duluth-based Essentia Health -- all have announced they’ll go out-of-network next year with Medicare Advantage plans from Humana and/or Minnetonka-based UnitedHealthcare.

“We’ve never seen it this bad — never — where we’ve seen this number of providers that aren’t going to take specific plans in 2025,” said Kelli Jo Greiner, a health care policy analyst with the Minnesota Board on Aging. “There’s just a lot of changes that are going to affect a lot of beneficiaries.”

The network barriers could prompt seniors to jump to a new Medicare Advantage insurer during open enrollment, which starts Oct. 15 and runs through Dec. 7.

There’s been a sense for months now that more health care providers across the country are dropping from Medicare Advantage networks, although there aren’t comprehensive figures, said Jack Hoadley, a health policy researcher at Georgetown University.

In Minnesota, the health systems all say they’re choosing to leave the Medicare Advantage networks because of onerous policies and slow processing times, but the insurers have pushed back on those arguments. Negotiations on whether a health care provider will be in a health plan’s network involve confidential financial terms, so there’s not transparency about all the factors that drive disputes.

In general, analysts suspect health insurers might be pushing even harder to keep costs low because of changes in how the federal government pays Medicare Advantage plans.

With Medicare Advantage, seniors opt to receive their government benefits through a private managed care company and the government pays insurers a set fee per enrollee with adjustments for the health status of seniors.

Last year, the federal Centers for Medicare and Medicaid Services announced it would phase in changes to risk adjustment following allegations that some carriers were gaming the system. And carriers, while denying that any gaming occurred, say the changes are a hit to revenue.

“That may be leading to tougher negotiations with the hospitals systems, physician groups and so forth,” Hoadley said. “That part of it, of course, is behind the curtain, so we can’t directly see what’s going on there. But that would be a guess as to what’s happening and why some of these hospital systems are saying: Hey, we’re not willing to negotiate a lower rate, we’d just rather be out of network.”

Market power dynamics often come into play, as well, said Cheryl Damberg, a health economist at Rand Corp.

A large health system with a dominant market position might have leverage to hold out for higher rates, Damberg said, because insurers know they’ll have a tough time attracting enrollees without that heath care provider in the network. Conversely, health insurers use their size in a market when they can, she said, to keep rates lower.

In the Minnesota disputes, all five health systems say they’re leaving networks because the Medicare Advantage plans have excessive rates of claims denials and payment delays. Damberg speculated that health care providers might be more willing to put up with these hassles if payments rates from the health insurers were higher.

“We’ve seen such significant growth in Medicare Advantage over the past four or five years, it now represents more than half the market,” she said. “I don’t know whether we’ve reached a tipping point where health systems could deal with some of the administrative hassles when Medicare Advantage was a smaller sharer of your book of business, but now that it’s a very substantial portion it just creates too many headaches.”

Avera Health announced Sept. 19 it was dropping from Humana’s Medicare Advantage network, saying long waits for prior authorizations from the insurer as well as denials of necessary services were creating troubles for patients. The move impacts about 900 patients in Minnesota, according to the health system.

North Memorial sent notices about dropping from the Humana network to about 5,000 patients in early September.

“Humana’s application of onerous policies and procedures often require increased administrative resources compared to other health plans, due to staff members frequently needing to appeal coverage denials and negative payment adjustments,” North Memorial said in a statement. “Additionally, decreased Humana network coverage makes referrals difficult, preventing our team members and providers from giving these patients the care they need and deserve.”

Humana said in a statement that its goal is to help seniors receive high-quality care that’s affordable.

“When health systems demand significant rate increases during contract negotiations, which often far exceed rates for original, fee-for-service Medicare, it’s important to understand that these requests will ultimately increase health care costs for patients,” the insurer said in a statement. “Some health systems prefer to accept only patients in fee-for-service Medicare because it incentivizes ordering more procedures to increase their revenue, regardless of their value to patients.”

Sanford Health raised concerns about payment delays and claims denials when it announced in August that the health system would go out-of-network with Humana next year. Sanford says it sent letters to nearly 10,000 Minnesotans about the change.

Essentia Health cited delays and denials in September when notifying about 14,000 seniors that it was dropping Medicare Advantage networks at both Humana and UnitedHealthcare. HealthPartners announced in July that its hospitals and clinics would leave the UnitedHealthcare Medicare Advantage network next year, impacting roughly 30,000 patients.

Essentia Health and HealthPartners say that seniors in these Medicare Advantage plans won’t be able to schedule appointments with health system providers in 2025.

UnitedHealthcare said this week it still hopes to negotiate terms so Essentia Health and HealthPartners will remain in-network options for its Medicare Advantage plan next year.