Becker's Hospital Review

21 CFO / FINANCE Medicare Advantage woes pose growing threat to hospitals: S&P By Jakob Emerson A s Medicare Advantage continues to grow and health insurers prioritize their margins in the segment, hospitals are the most vulnerable healthcare provider to rising administrative and financial MA burdens, according to a new report from S&P Global. e Aug. 15 report shared with Becker's highlights the major growth Medicare Advantage has seen over the last several years, with 32.8 million people, or 54% of the eligible Medicare population, now enrolled in an MA plan. "is growth poses challenges to healthcare service providers' credit quality, given growing risks to reimbursement from MA plans relative to traditional Medicare, as well as the payment risk and higher complexity around prior authorization requirements," S&P's analysts wrote. "We also see future risks to providers if at some point CMS addresses the MA program's higher-than-expected spending." As MA enrollment has grown, so too have the financial headwinds facing major carriers — government scrutiny is rising, CMS regulations and payments are tightening, and the cost of care is going up. In response, Aetna, Humana and Centene are among the insurers that have said they will exit some markets in 2025 — and potentially reduce benefit offerings — to accommodate the changing reimbursement environment and rising costs. Notably, UnitedHealthcare and Elevance Health have said they are prepared to weather the changing landscape and priced their 2025 MA plans to reflect that. "However, if already elevated utilization rates remain high for an extended period we would expect payors to further squeeze payments to providers," S&P's analysts wrote. "Overall, we expect these challenges coupled with further expansion of MA as a percentage of total Medicare beneficiaries will continue to pressure margins on the Medicare portion of the provider payor mix." "us, we expect insurers to prioritize margin over membership, and we expect large insurers will use their scale and market clout to limit provider rate increases over what will prove to be a challenging contract negotiation season." In 2023, Becker's began reporting on hospitals and health systems nationwide that dropped some or all of their Medicare Advantage contracts in response to administrative and financial challenges. In 2024, at least 17 systems have ended an MA contract with an insurer. n Mass General Brigham profits slip; CEO touts need 'to ensure financial stability' By Alan Condon S omerville, Mass.-based Mass General Brigham reported an operating income of $47 million (0.9% margin) during the three months ending June 30, down from a $69 million operating gain in the same quarter last year. Operating revenue increased 7% year over year to $5.2 billion in the fiscal third quarter, with patient care revenue rising 5% to $3.4 billion. Mass General Brigham also posted $563 million in health plan premium revenue (+9%), $732 million in research and academic revenue (+4% increase) and $521 million in other revenue (+21%). Operating expenses totaled $5.2 billion, a 7% year-over- year increase, reflecting increases in medical claims (+9%), wages and benefits (+5%), and costs and use of pharmaceutical (+20%) and other clinical (+7%) supplies. The health system said it is making progress to reduce its expense growth to ensure long-term financial sustainability amid ongoing financial and workforce pressures. "Our ongoing work to promote responsible resource stewardship and diversify our revenue sources will enable continued investment in our mission-driven work to improve patient outcomes and support the health of our communities," CFO and Treasurer Niyum Gandhi said in an Aug. 15 news release. Mass General Brigham reported $277 million in net income for the three months ended June 30, 2024, including a nonoperating gain of $230 million. In the prior-year period, it reported $437 million in net income, including a nonoperating gain of $368 million. "Our ongoing work to ensure financial stability and access to high-quality affordable care will enable our long-term efforts to build a more impactful, patient-focused and equitable health system with the highest quality research-infused care that improves outcomes and experiences for all we serve," President and CEO Anne Klibanski, MD, said. n

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