Patients enrolled in Medicare Advantage (MA) are spending significantly more time in hospitals than beneficiaries covered by traditional Medicare, according to a recent report from the Medicare Payment Advisory Commission (MedPAC). The findings raise important questions about care coordination, post-acute care access, and the financial sustainability of Medicare programs.
The report found that, during fiscal year 2024, MA patients stayed in hospitals 11.2% longer on average than those enrolled in traditional Medicare. The trend highlights growing differences between the two programs as Medicare Advantage enrollment continues to rise.
Medicare Advantage Patients Stay Longer in Hospitals
MedPAC, an independent agency that advises Congress on Medicare policy, reported that hospital stays for MA beneficiaries now exceed those of traditional Medicare patients by more than 11%. This gap has widened in recent years.
Researchers believe several factors may contribute to the longer stays. These include prior authorization requirements, limited post-acute care networks, and delays in securing placements in skilled nursing facilities or home health services. Consequently, patients may remain hospitalized longer while providers coordinate their next phase of care.
Longer Stays Linked to Post-Acute Care Challenges
Studies have consistently shown that Medicare Advantage enrollees face challenges when transitioning to post-acute care settings. In some cases, MA patients remain hospitalized days longer than traditional Medicare beneficiaries before being discharged to rehabilitation centers or skilled nursing facilities.
Moreover, research from the University of Chicago’s NORC found that MA beneficiaries experienced hospital stays that were 40% longer on average before moving to post-acute care. These findings suggest that access barriers may be influencing discharge timelines.
MedPAC Highlights Rising Medicare Costs
Beyond hospital stays, the MedPAC report also underscored the growing financial burden of Medicare. Total Medicare spending reached $1.1 trillion in 2024, accounting for approximately 3.8% of U.S. GDP and 18% of all healthcare spending.
The agency projects Medicare expenditures will exceed 5% of GDP by 2032. Rising service utilization and increasing healthcare intensity are major drivers behind this growth.
Improper Payments Remain a Major Issue
The report also highlighted concerns surrounding improper Medicare payments. According to the Department of Health and Human Services’ fiscal 2025 financial report, Medicare accounted for an estimated $56.7 billion in improper payments.
More than half of these improper payments originated from traditional fee-for-service Medicare. Meanwhile, Medicare Advantage accounted for $23.7 billion. Notably, MedPAC stated that discrepancies in medical records and incomplete documentation contributed to approximately 85% of improper MA payments.
Financial Impact on Hospitals
Hospitals are also feeling the effects of increasing Medicare Advantage enrollment. Smaller hospitals, especially those with fewer than 100 beds, tend to report lower operating costs and revenues as MA penetration rises. However, many of these hospitals also experience improved profit margins.
Larger hospitals tell a different story. Facilities with more than 250 beds often generate higher revenues as MA enrollment increases, yet they do not necessarily see corresponding improvements in margins. As a result, hospital executives continue to monitor how MA growth affects their financial performance.
Independent Hospitals Face Additional Pressure
Independent hospitals appear particularly vulnerable. MedPAC found that a 10-percentage-point increase in Medicare Advantage market penetration was associated with a 3.1% decline in all-payer operating revenue for hospitals that are not part of a health system.
At the same time, these hospitals experienced a 3% reduction in costs. Although expenses declined, the revenue drop raises concerns about the long-term sustainability of independent healthcare providers.
What This Means for Medicare’s Future
Medicare Advantage now covers more than half of all Medicare beneficiaries, making its performance increasingly important to the nation’s healthcare system. As enrollment grows, policymakers will likely examine whether longer hospital stays stem from care management practices, post-acute care access issues, or administrative hurdles.
Furthermore, MedPAC’s findings could influence future policy discussions around payment reforms, care coordination, and oversight of Medicare Advantage plans. Policymakers may also focus on reducing improper payments and improving transitions to post-acute care.
Ultimately, the report illustrates a healthcare landscape in transition. While Medicare Advantage continues to expand, stakeholders across the industry must address the challenges that accompany its rapid growth. Improving patient outcomes, controlling costs, and ensuring timely access to care will remain top priorities in the years ahead.
