Transforming Medicare Advantage: The Untapped Power of Hospital Financial Assistance   

In the fiercely competitive Medicare Advantage market, the significance of Medicare Star Ratings has never been more pronounced. These ratings, far more than mere indicators of quality, play a critical role in influencing beneficiaries’ plan choices — choices that are often maintained throughout their retirement years.  

The Centers for Medicare and Medicaid Services’ (CMS) annual Star Ratings judge Medicare Advantage and Part D plans on a five-star scale to determine whether a health plan is providing optimal quality of care. Plans rated four stars or above not only stand out in the market but also receive quality bonuses from CMS, enhancing their ability to further improve with more benefits and resources.  

The decline in average ratings seen in the 2024 Star Ratings can be largely attributed to CMS’s adoption of the Tukey methodology, a statistical approach that eliminates outliers from the data set before establishing cut points (the thresholds used to categorize data into different ratings). This change halved the number of 5-star plans compared to the previous year’s ratings, which will result in a reduction in Quality Bonus Payments by approximately $600 to $700 million in 2025. 

The recent recalculations of Star Ratings, which have placed more emphasis on customer experience, underscore the necessity for Medicare Advantage plans to differentiate themselves in a market where distinctions between health plans are narrowing. Looking ahead, the Star Ratings methodology will continue to evolve, with CMS adopting a health equity index for the 2028-Star Ratings, which will be based on data from 2024 and 2025 measurement years. Plans will be assessed on their performance in assisting members within low-income populations and underserved groups. For Medicare Advantage plans, especially those working to improve their Star Ratings, the opportunity is massive. 

Enter Hospital Financial Assistance (FA) Programs.  

These essential programs, federally mandated for nonprofit hospitals, offer either free or discounted hospital care to patients who meet certain income thresholds. Particularly beneficial to seniors on fixed incomes enrolled in Medicare plans, hospital financial assistance is determined by family or household income, with eligibility thresholds typically set at $102,000 for a two-person household and $75,000 for an individual. Despite the clear benefits of FA programs, there remains a significant lack of awareness and utilization. Surveys show that over half of Americans are unaware of these programs, even though up to 60% qualify under FPL guidelines.  

Underutilization of FA Programs is acutely notable among seniors who, despite typically having Medicare coverage, still face medical debt. In fact, according to a report from the Consumer Financial Protection Bureau, among the nearly four million older adults with medical debt, almost all have health insurance. The heavy burden of medical debt often leads patients to forego necessary medical care, leading to sicker and more costly care needs down the road—a dire situation for payers and patients that FA programs are designed to prevent. 

Directing Medicare members to hospital websites with hard-to-find applications is not enough. Medicare Advantage plans have an opportunity to integrate and streamline the FA application process. Innovative solutions are now available that make the process simple, enabling completion from eligibility verification to application submission in just a few minutes. By incorporating Hospital FA technology and services as a supplemental benefit, Medicare Advantage plans can revolutionize member care and directly tackle a critical, yet often overlooked, aspect of members’ financial health. 

As the Medicare Advantage landscape becomes more competitive, and with the evolving criteria for Star Ratings, we find ourselves at a critical juncture. The integration of Hospital FA programs into supplemental benefits emerges as a beacon of opportunity for Medicare Advantage plans. Amidst the challenges of new methodologies like the Tukey approach and shifting CMS priorities, the role of FA programs becomes increasingly pivotal. These programs, essential for aiding patients who can’t afford care, have remained underutilized, particularly among seniors grappling with medical debt despite Medicare coverage. By streamlining and integrating FA services, Medicare Advantage plans can bridge this gap, offering substantial relief to those in need. This move not only enhances member satisfaction but also aligns perfectly with CMS’s future direction of prioritizing underserved demographics. 

As Medicare Advantage plans adapt to the changing landscape, integrating Hospital Financial Assistance into their offerings is not just an option. It’s a strategic imperative that promises to boost their ratings, market prominence, and most importantly, the lives of those they serve. This approach goes beyond healthcare delivery. It represents a holistic commitment to the health and financial security of every member, setting a new standard in the Medicare Advantage domain. 


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