News: Medicare Advantage patients stay in hospital longer than those with Medicare

Medicare Advantage (MA) patients remained in the hospital 11.2% longer on average than those enrolled in traditional Medicare in fiscal year 2024, according to a June 15 report from the Medicare Payment Advisory Commission (MedPAC).

The structure of Fee-for-Service (FFS) Medicare’s uncompensated care (UC) payments may benefit hospitals with more MA patients, leading to mistargeted UC payments. The report estimated that if a hospital’s MA share of Medicare inpatients were 10 percentage points higher, the hospital would have had a 15 percent higher estimated FFS UC add-on per stay.

In its June report on the Medicare program to Congress, MedPAC noted how the Health and Human Services’ (HHS) financial report for fiscal year 2025 attributed Medicare for an estimated $56.7 billion in improper payments. These include overpayments, underpayments, and those lacking sufficient documentation.

More than half of that amount stemmed from fee-for-service Medicare, while $23.7 billion was driven by MA.

Six other notes from the report include:

1. Medicare spending was $1.1 trillion in 2024—3.8% of GDP and 18% of national healthcare spending—and is projected to exceed 5% of GDP by 2032. This is driven primarily by volume and intensity of services and items for beneficiaries.
2. Hospitals with up to 100 beds have lower costs and bring in less revenue as Medicare Advantage penetration increases. Hospitals with more than 250 beds saw stronger revenues associated with greater MA penetration but no correlation with margins, according to the report.
3. For hospitals that are not in a health system, a 10 percentage-point increase in market-level MA penetration was linked to a 3.1% decline in all-payer operating revenues, as well as a 3% decline in costs.
4. Audit results suggest that discrepancies with medical records, such as unsubmitted documentation, contributed to 85% of improper MA payments.
5. Agents make $208 more for enrolling a beneficiary in MA versus Medigap and a prescription drug plan. In the following year, agents could receive $347 when an enrollee either stayed in their initial MA plan or switched to a similar one. For enrollers who stay in their Medigap plan and PDP, agents would receive $243, according to the report.
6. The number of skilled nursing facilities dropped 5%, from 12,720 to 12,050, as median market-level MA penetration for SNFs grew to 54% from 2013 to 2024.

Editor’s note: To read the full report, click here. To read additional coverage from Becker’s Payer Issues, click here.