Why Hospitals Are Dropping Medicare Advantage Plans: A Guide for Beneficiaries

What Is Happening With Hospitals and Medicare Advantage Plans

More than half of all Medicare beneficiaries, over 54% as of 2024, are enrolled in Medicare Advantage plans. Yet the very hospital networks these plans rely on are walking away at a pace that has caught many seniors off guard. Between 2023 and 2025, more than 50 major health systems publicly warned or terminated their Medicare Advantage contracts, according to Becker's Hospital Review. That number continues to grow in 2026.

The core tension is structural. Medicare Advantage enrollment has grown rapidly, drawing in millions of seniors with the promise of extra benefits and lower premiums. But that growth has placed mounting financial pressure on the hospitals and healthcare providers those plans are supposed to serve. The gap between what MA plans pay and what care actually costs has become a breaking point for many health systems.

Why Hospitals Are Dropping Medicare Advantage: The Financial Reality

The numbers tell a stark story. According to the American Hospital Association, Medicare Advantage plans pay hospitals roughly 84 cents for every dollar paid by traditional Medicare. That 16% shortfall sounds modest in isolation, but for hospitals treating thousands of MA patients each year, it translates to tens of millions of dollars in unrecovered costs. Over time, that gap is simply unsustainable.

This financial reality has led to strong statements from industry leaders. Rick Pollack, President and CEO of the AHA, has stated plainly: "Medicare Advantage plans are increasingly failing to pay hospitals what it costs to care for patients, while simultaneously burdening providers with excessive prior authorization requirements and payment delays that threaten access to care." Those words reflect a growing consensus among hospital leaders that Medicare Advantage reimbursement rates no longer reflect the real cost of delivering care. Understanding these perspectives can help you see why hospitals are making these difficult decisions.

The problem is not confined to smaller or financially struggling hospitals. UnitedHealthcare, which covers approximately 29% of all MA enrollees nationally according to KFF data, has been at the center of multiple major contract disputes with large regional health systems. When disputes involve the largest private Medicare plan in the country and some of the most prominent health systems in the nation, it signals a systemic breakdown, not isolated friction between individual parties.

The situation is clear for many hospital executives. Chip Kahn, President and CEO of the Federation of American Hospitals, put it directly: "When Medicare Advantage insurers systematically underpay and over-deny, hospitals have no choice but to walk away from contracts that threaten the financial stability needed to keep their doors open for all patients." This directly impacts your access to care if your hospital is forced to make such a decision.

Prior Authorization Delays and Claim Denials: The Administrative Burden on Hospitals

Below-cost reimbursement is only part of the problem. The administrative burden layered on top makes the financial picture even worse. According to the AHA, prior authorization denial rates for Medicare Advantage plans run up to six times higher than denial rates under traditional Medicare. That is not a minor inconvenience, it is a structural drag on hospital operations.

Every denied claim requires staff time to appeal. Every delayed authorization holds up a procedure, extends a hospital stay, or disrupts a patient's discharge timeline. Hospitals must maintain entire departments dedicated to navigating Medicare Advantage prior authorization requirements, costs that do not exist at the same scale under Original Medicare.

These administrative expenses add up quickly and further erode the already thin margins MA contracts provide. CMS has introduced new rules requiring greater prior authorization transparency and faster decision timelines from MA plans. These are meaningful steps.

However, hospital leaders and industry analysts broadly agree that regulatory changes have not yet reversed the financial pressure driving contract terminations. The structural incentives remain misaligned, and until MA reimbursement rates more closely reflect actual care costs, the trend of hospitals dropping Medicare Advantage is unlikely to reverse.

Which Hospitals and Health Systems Have Dropped Medicare Advantage

This is not a trend confined to small community hospitals operating on thin margins. Major regional and national health systems, including large academic medical centers and multi-facility networks, have publicly threatened or completed MA contract terminations. The breadth of the movement signals stress across the entire Medicare Advantage hospital network landscape, not just at its edges.

Becker's Hospital Review and Modern Healthcare have tracked these contract disputes closely and serve as reliable ongoing sources for updates on insurance plan hospital withdrawals. If you want to follow which health systems are involved, both publications report on new terminations and negotiations in real time.

• Use your MA plan's online provider directory and search for the hospital by name

• Call the hospital's billing or insurance department directly and ask whether they are currently in-network for your specific plan

• Review any contract termination notices mailed by your MA plan, which are required by CMS

• Confirm in-network status every year before Open Enrollment closes on December 7

Remember: a hospital may drop one insurer's MA plan while remaining in-network for another. Verify by plan name, not just by insurer brand.

What Happens to You When Your Hospital Drops Medicare Advantage

When your hospital exits your MA plan's network, you face three realistic options, and each carries different cost and logistical implications.

1. Stay in your MA plan and pay out-of-network costs. Many MA plans provide limited or no coverage for non-emergency care at out-of-network hospitals. In a worst-case scenario, you could be exposed to costs up to the 2026 Medicare Advantage maximum out-of-pocket limit of $9,250. That is a significant financial risk, particularly for beneficiaries managing chronic conditions or planning elective procedures.

2. Switch to a different MA plan that still includes your hospital in-network. If your hospital participates in other MA plans, you may be able to switch during Medicare Open Enrollment (October 15 to December 7) or through a qualifying Special Enrollment Period. This preserves your MA benefits while restoring access to your preferred hospital.

3. Transition to Original Medicare, ideally with a [Medigap supplement](/faqs/what-is-a-medicare-supplement-plan-and-who-needs-one/). This option restores access to any provider that accepts Medicare, without network restrictions. Tricia Neuman, Senior Vice President at KFF, has noted that "as more hospitals walk away from Medicare Advantage contracts, the practical consequences for beneficiaries, particularly those in rural or underserved areas, can be significant, forcing them to choose between switching plans or paying out-of-network costs." For beneficiaries in areas with fewer alternative in-network hospitals, this transition may be the most practical path to maintaining consistent care.

💡 Eddie's Pro Tip

I always tell people not to just renew their plan without checking their hospital's network status. If your hospital leaves your MA plan, you could face huge out-of-pocket costs. Take the time during Open Enrollment to confirm your doctors and hospitals are still in-network, or explore other options like Original Medicare with a Medigap plan.

Medicare Advantage vs. Original Medicare: Comparing Your Real Costs in 2026

Making a sound coverage decision requires looking beyond monthly premiums. Here is a transparent side-by-side framework using verified 2026 figures:

Medigap plans added to Original Medicare can dramatically reduce your cost exposure. Plan G covers the Part A deductible and most cost-sharing, while the 2026 High-Deductible Plan G carries a deductible of $2,950 before full benefits kick in, still well below the $9,250 MA MOOP. Plan L caps your out-of-pocket at $4,000 in 2026, and Plan K at $8,000.

These structures give beneficiaries a predictable ceiling on annual healthcare costs regardless of how many times they need hospital care.

While MA plans may still offer attractive extras, dental, vision, and fitness benefits, that Original Medicare does not include, it's crucial to understand the broader context. As Seema Verma, Former CMS Administrator, has observed: "The tension between Medicare Advantage plan payment rates and hospital cost structures has been building for years and reflects a fundamental need to realign incentives so that both payers and providers can sustainably serve Medicare beneficiaries." Growing network instability means those extra benefits must be weighed against the real risk of losing access to your preferred hospital. This is a key factor for you to consider when evaluating your coverage.

What Medicare Beneficiaries Should Do Right Now

The most important thing you can do is act before problems arise, not after. This may feel like a lot to track, but a few simple steps each year can keep you protected. Here is a practical checklist:

• Verify your hospital's in-network status now; do not wait until you need care to find out your plan no longer covers your preferred facility.

• Review your plan's Summary of Benefits for out-of-network cost rules, so you know exactly what you would owe if your hospital exits the network mid-year.

• Use Open Enrollment (October 15 to December 7) to compare MA plans that include your hospital in-network, or to evaluate switching to Original Medicare with a Medigap supplement.

• Check for Special Enrollment Period eligibility if a contract termination happens outside of Open Enrollment, certain disruptions qualify you to switch plans.

• Compare total annual costs, not just premiums, when evaluating Original Medicare vs. Medicare Advantage.

Switching from Medicare Advantage to Original Medicare outside of designated enrollment periods can be restricted, and Medigap plans may require medical underwriting depending on your state and timing. Acting during Open Enrollment or a qualifying Special Enrollment Period protects your options. Speaking with a licensed Medicare agent near you can help you compare real 2026 plan costs side by side, so your decision is based on complete information, not just what the premium looks like on paper.

The Outlook for Medicare Advantage Hospital Networks in 2026 and Beyond

CMS has implemented new prior authorization transparency requirements and increased scrutiny of MA plan payment practices. These regulatory moves reflect genuine awareness of the problem. But hospital leaders and independent analysts broadly agree: the structural financial pressure driving contract terminations has not been resolved.

With MA reimbursement rates still averaging only 84% of traditional Medicare rates and administrative denial burdens remaining high, the incentives for hospitals to exit MA contracts remain firmly in place. The number of health systems taking action is not shrinking. If anything, the trend is accelerating as multi-year contracts negotiated years ago come up for renewal in a different financial environment.

For beneficiaries, the broader implication is clear. The rapid growth of Medicare Advantage in 2026 has not been matched by the sustainable payment structures that hospitals need to remain in these networks. That mismatch creates ongoing instability in hospital access, and it affects real people trying to see their doctors, schedule procedures, and manage chronic conditions without disruption.

The landscape is genuinely shifting. But beneficiaries who verify their coverage annually, understand their cost-sharing options, and know how to evaluate alternatives are in a far stronger position than those who simply renew their current plan without reviewing what has changed. Staying informed is the most reliable protection available right now.

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