Over the past 15 years, Medicare Advantage (MA) plans have taken on an increasing role in our healthcare system. Enrollment in MA plans has grown from 11 million (25% of Medicare beneficiaries) in 2010 to a projected 35 million (56% of Medicare beneficiaries) in 2025, and that growth is expected to continue.1 At the same time, health systems are facing numerous challenges when it comes to realizing MA negotiated rates for services rendered, including denials and delayed payments.
As a result, many health systems are reconsidering their relationships with MA plans. Within the last year, at least 41 health systems dropped out of 62 MA plans serving 25 states.2 A recent survey conducted by HFMA suggests that number could grow, as 16% of hospital and health system CFOs surveyed plan to drop one or more MA plans in the next 24 months, with another 45% considering doing so.3
However, the decision to leave or stay in an MA plan is not one that should be taken lightly, given the wide-ranging impact on not only the organization and its employed physicians but also aligned community physicians. Any decision related to MA contract participation requires careful consideration of the options, estimation of the impact across the organization and its aligned physicians, and alignment with overall strategic goals. With this in mind, we recommend providers take an integrated approach when reviewing their portfolio of MA contracts to identify a path forward that helps improve performance for both the organization and its physician partners.
Addressing the Root Causes of MA Challenges
For many provider organizations, MA challenges present as a combination of inadequate rates and lower-than-anticipated yields from negotiated rates. In response, providers may undertake projects to improve revenue cycle performance, use insights from performance improvement efforts to address issues with MA plans in real time, and secure changes in contracting language in future negotiations—all of which are vital to improving short-term performance. However, if organizations stop here, they are likely only addressing the symptoms of financial underperformance related to MA plans.
To get to the root of their challenges, provider organizations must step back and evaluate whether they are working with the MA health plans that align with them from a quality and financial perspective. As organizations refresh their strategic plans, they should inventory their existing MA contracts to understand the strategy behind participating in each, how participation in a given MA contract supports (or doesn’t support) the organization’s physician alignment strategy (both employed and community), and whether the contract’s financial performance supports or detracts from the organization’s mission and strategic goals.
Successfully executing this process requires an experienced managed care contracting team supported by a strong analytics function and an interdisciplinary team that includes representatives from each of the following areas:
- Strategy: Supports alignment with overarching organizational goals
- Finance: Provides budgeting and modeling support
- Physician enterprise/clinically integrated network: Helps ground contracts in clinical workflow realities
- Utilization management/revenue cycle: Reviews contract terms for reasonability and how they fit into administrative workflows
Including stakeholders from across the organization promotes consideration of the myriad operational and strategic implications of partnering (or opting not to partner) with an MA plan. In addition, providers should consider how their approach to MA contracts aligns with the five core capabilities for achieving health outlined in our Healthcare Market Point of View: aligned growth, financial discipline, regulatory excellence, strategic agility, and talent optimization. Below, we explore key considerations within each core capability that providers should think through as they evaluate their portfolio of MA relationships.
Achieving Health Through Improving MA Contract Performance
Achieving Health Through Improving MA Contract Performance
Aligned Growth: Building Strategic Relationships With MA Plans
Building strategic partnerships with MA plans can help providers achieve growth objectives, expand access, and drive value for the communities they serve. When providers evaluate their portfolio of MA contracts with aligned growth in mind, they should consider three factors:
- Strategic Alignment: One important consideration is whether MA contracts align with the organization’s strategic goals. For example, if the organization is a safety net system focused on population health, do the contracts have a strong value-based component and provide resources to address social determinants of health? Strategic alignment also includes consideration of volume, rate, effective yield, and margin leakage. While leakage can be related to revenue cycle issues, it can also occur when a provider network is insufficient to capture anticipated physician referrals and/or realize value-based incentive payments.
In addition, providers should consider the quality of the relationship with the plan. To support strategic alignment, plans should be willing to work toward mutually beneficial solutions to inevitable challenges, rather than treating every interaction as a zero-sum transaction.
- Market Alignment: Providers should consider the current and anticipated penetration of MA in the markets they serve, as well as whether the plans in their market meet network adequacy requirements. There may be opportunities to partner more closely with plans in ways that are mutually beneficial.
- Change Pathway: Providers should identify the value proposition for narrowing (or expanding) their portfolio of MA plans. If there isn’t clear value in dropping one or more MA plans, the organization may instead be able to improve administrative workflows, clinical pathways, data analytics, and reporting capabilities to strengthen performance under existing contracts.
Financial Discipline: Addressing the Margin Impact of MA Contracts
To thrive financially and maintain market relevance, providers must pay close attention to the impact of MA contracts on their operating margins. This starts with understanding that it is rare for MA contracts to yield the full negotiated amount. Some amount of performance degradation should be built into financial models to determine whether the negotiated rates will help the organization achieve financial discipline and support access to care for the community.
In addition, providers need to pay close attention to contract language. For example, it is common for a plan and provider to agree to “Medicare rates,” but without contract language that specifically includes add-on payments such as uncompensated care for Medicare disproportionate share hospitals (DSH), which leads to the provider losing this revenue. When negotiating contracts for other product lines, plans often try to include language that would require providers to participate in a new MA plan. Providers need to review such language carefully to be sure that any new partnerships would be margin accretive.
Between contract reviews, providers should focus on improving performance to succeed under existing contracts and collecting data to support future negotiations. First, organizations should analyze medical necessity and other denials data to correct documentation issues and improve processes for utilization review (UR) and physician advisors. Second, revenue cycle and UR teams should provide data and context to the contracting team regarding issues that are decreasing yield. This will help the team resolve issues during monthly meetings and ultimately support the argument for changes in administratively burdensome terms during contract renegotiations. Finally, it is important to secure language in MA contracts that clearly defines turnaround times on prior authorization decisions to help prevent delays in admissions and discharges that pose risks to patient outcomes.
Regulatory Excellence: Making the Most of Performance-Based Incentives
Many MA contracts include meaningful performance-based incentives related to quality and cost metrics. However, most provider organizations struggle to realize these opportunities, which deprives them of not only revenue, but also a powerful mechanism for creating alignment with community-based physicians participating in the same contracts. Failure to secure incentives can be attributed to factors such as insufficient analytics capabilities, attempts to achieve too many metrics across too many contracts, and lack of clear communication to align goals and incentives with participating physicians.
Addressing each of these challenges is crucial to making the most of performance-based incentives. First, providers need a strong analytics function—either internal or sourced from strategic advisors—that can create and regularly update user-friendly performance dashboards for physicians and performance improvement teams. Second, they need to work with their physicians and clinicians to identify and define a realistic, focused set of quality metrics that aligns with the organization’s goals for improving health outcomes. Using this input, the managed care contracting team should pursue metric standardization across all MA contracts. Finally, they should communicate their value-based goals and incentive opportunities with physicians in a clear, understandable way that facilitates systematic clinical process improvement, helping the organization improve both patient and financial outcomes.
Strategic Agility: Fostering Physician Alignment With Strategic Goals
Agile organizations must understand how changes in strategic direction will affect all facets of the enterprise. As providers contemplate changes to their MA contract portfolio, they need to carefully consider the second-order impacts on both employed and aligned physicians. Terminating one or more MA contracts will likely impact panel size and productivity. If, for example, a health system terminates a contract with a plan that includes 20% of its panel, the organization will need a carefully orchestrated backfill strategy and subsidy plan (within the constraints of fair market value requirements) to allow for the backfill to ramp up.
In addition to productivity and backfill, provider organizations need to account for the yield that employed and aligned physicians are realizing from their contracts. This is particularly true for organizations with a strong value-based performance platform in which physicians receive significant bonus payments. Assuming incentives are aligned, and physicians are salaried, it is often possible to move employed physicians from a terminated contract to other contracts. For aligned physicians, it is important to focus the broader contracting strategy on creating win-win relationships with other plans to reduce revenue disruption.
Talent Optimization: Creating a Value Proposition for Physicians
How providers contract with MA plans will impact how they build exceptional teams and equip them to succeed in mission-aligned objectives. Organizations will need to make decisions around compensation models, network design, and MA contracting terms.
- Compensation Models: Instead of putting employed physicians directly at risk, employment contracts should move them toward value-based care. When an organization adjusts its MA portfolio, it may be necessary to revisit the compensation model for some or all members of the physician enterprise. Similarly, for aligned physicians, the contract should create shared savings opportunities that align with the network’s overall goal.
- Network Design: Organizations need to carefully consider their current provider complement and the network size and makeup necessary to reduce leakage and capture increased steerage that may result from new or renegotiated MA contracts. If organizations have employed physicians (particularly specialists) to help an MA plan meet network adequacy standards, they may need to account for the cost of helping plans meet this requirement.
- Physician Burnout: Compensation is just one component when developing a compelling value proposition for both employed and aligned physicians. Organizations should also use MA contract negotiations to help reduce the number of services subject to prior authorization requirements, implement “gold card” programs to streamline the physician advisor process, and secure other provisions that reduce unnecessary clinical denials, which create artificial barriers to patient care and contribute to physician burnout.
How Forvis Mazars Can Help
While the challenges of an aging population and growing MA enrollment may be daunting for providers, they also present opportunities for strategic alignment with MA plans, which need high-quality provider networks to promote access and meet network adequacy requirements.
At Forvis Mazars, we work with organizations across the care continuum to help them fulfill their role in achieving health for the communities they serve. Our healthcare consulting team has deep experience encompassing revenue cycle process improvement, managed care contracting, value-based care performance enhancement, physician enterprise improvement, and clinical network development, which positions us to help organizations succeed in MA through an integrated, multifaceted approach.
If you have questions about conducting a strategic review of your organization’s portfolio of MA plans, please reach out to a professional on our team.
- 1“10 Reasons Why Medicare Advantage Enrollment Is Growing and Why It Matters,” kff.org, January 30, 2024.
- 2“When Hospitals Ditch Medicare Advantage Plans, Thousands of Members Get to Leave, Too,” kffhealthnews.org, April 28, 2025.
- 3“HFMA Health System CFO Pain Points 2024,” hfma.org, March 2024.
- 4 “Mindsets 2025 Healthcare Executive Leadership Report,” Forvis Mazars, 2025.
- 5Ibid.