Medicare Advantage Penetration Doesn’t Erode Hospital Margins, Report Says

The findings throw cold water on allegations from hospital groups that MA plans contribute to shrinking margins.

Sept. 9, 2025 via HealthCare Dive

Hospital trade groups have complained that growth in Medicare Advantage causes lower margins and threatens the viability of rural facilities. A new analysis (PDF) by the independent advisory group MedPAC suggests there’s no such connection, Healthcare Dive reports.

The details:

Higher MA penetration on average did not have a statistically significant effect on hospital profit margins, according to MedPAC. A 10 percentage-point increase in MA penetration was associated with both a 1.3% drop in revenue — but also with a 1.2% drop in costs.

For critical access hospitals, there was no relationship between MA penetration and profits, revenue or costs.

What they’re saying:

The analysis “makes clear that concerns about Medicare Advantage harming hospital finances don’t match the data,” a VP for the Better Medicare Alliance told Healthcare Dive.

The fine print:

MedPAC stressed that the analysis looks at associations, not causal relationships, and may be missing other variables related to changes in MA enrollment and hospital revenues.

Read the full article here: https://www.healthcaredive.com/news/medicare-advantage-hospital-finances-medpac/759535/