When I first started working in a nursing home in 1978, Medicare Advantage did not exist. There was only traditional Medicare. In 1982, I began running my first skilled nursing facility. That same year, Congress passed the Tax Equity and Fiscal Responsibility Act (TEFRA). The law allowed Medicare beneficiaries to enroll in HMOs under risk contracts, marking the first structured step toward managed care. Today, in 2025, more than half of all Medicare beneficiaries (54%) are enrolled in Medicare Advantage plans!
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The Rise of Medicare Advantage
How did we get to this point? To answer that, we need a short trip down memory lane. Initially, managed care for Medicare beneficiaries did not gain traction.
In 1997, the Balanced Budget Act (BBA) established the Medicare+Choice program, which became effective in 1999. The BBA expanded private plan options for beneficiaries beyond HMOs, including PPOs and other arrangements. Then, in 2003, the Medicare Modernization Act (MMA) rebranded Medicare+Choice as Medicare Advantage, effective in 2006.
From this point forward, Medicare Advantage grew steadily as private plans received more incentives and improved payment structures. By the early 2010s, Medicare Advantage was a major player in the long-term care industry. These plans began to shape admission decisions, lengths of stay, and reimbursement for nursing homes across the nation. Today, in many markets, more than half of Medicare-covered skilled nursing facility days fall under Medicare Advantage instead of traditional fee-for-service.
Medicare Advantage and the Skilled Nursing Facility Challenge
As a former nursing home administrator, I understand the daily pressures facing today’s facility leaders. The post-acute care industry faces substantial headwinds. Staffing shortages, poor Medicaid service reimbursement, and rising operational costs are only a few of the obstacles.
On top of these challenges comes Medicare Advantage. Its reimbursement rates run 25%–33% lower than traditional Medicare. With enrollment now at 54% of all beneficiaries, more nursing home patients fall under Medicare Advantage. The result is clear: declining revenues across skilled nursing facilities.
The Impact of Medicare Advantage on Long-Term Care
What are some of the other impacts of Medicare Advantage plans? Recent research and trade analyses show that Medicare Advantage discharges patients to lower post-acute care acuity settings, such as home health services or an assisted living facility. Additionally, Medicare Advantage patients who receive skilled nursing care in the nursing home setting have a shorter length of stay compared to their traditional Medicare counterparts. In 2024, a Senate investigation criticized higher rejection rates by Medicare Advantage insurers in Medicare coverage decisions. Many skilled nursing facility providers report delays and denials when it comes to Medicare Advantage authorizations.
Traditional Medicare employs a three-day hospital stay rule. However, Medicare Advantage plans can waive this rule and thus, discharge a Medicare Advantage plan patient from the hospital to the nursing home more quickly. In addition to the friction that providers report when obtaining authorizations for nursing home stays with MA plans, there are also many instances of shortening or even ending coverage. This results in hurried discharge planning or an appeal to the Medicare Advantage plan while providing high-quality care. Even if the nursing home provider’s appeal is upheld, the process consumes valuable administrative and clinical time.
As I mentioned earlier, MA plan program reimbursement rates are substantially lower than those paid for traditional Medicare patients. This places a significant economic strain on long-term care service providers. With the growth in Medicare Advantage enrollees, this trend is expected to continue.
Utilization management by Medicare Advantage plans can and will either limit or shorten coverage for skilled nursing facility care. This creates instability in nursing home occupancy and further pressures the facility’s finances. And with delays in authorization or denials by Medicare Advantage plans, cash flow can become unpredictable.
MA programs can seek to bypass nursing home stays in favor of alternative post-acute care options such as home health services. This can cause instability in referral patterns to skilled nursing facility providers as well as lower census numbers.
Medicare Advantage Will Only Grow–So What’s a SNF Provider to Do?
While I know that the impact of Medicare Advantage may sound gloomy, there are measures that nursing home providers can take to mitigate these negative effects.
- Closely track your MA plan rates and the associated costs of caring for MA patients. Having concrete benchmarked data will be critical in deciding whether to continue with the association or renegotiate the rates for providing medical care to their Medicare Advantage enrollees. I signed my first Kaiser contract back in the early 1980s. We carefully tracked our costs and the rates we were paid for that first year. When it came time to renew the contract, I clearly articulated, and proved, our costs. I also showed that our reimbursement rates were insufficient. Ultimately, we reached an agreement to increase our rates.
- Establish frequent meetings between your clinical and administrative staff to discuss all Medicare Advantage plan patients. You know that the Medicare Advantage plan is employing utilization management, and so should you. Your team should seek to anticipate the discharge of an MA patient to a lower level of care, such as an assisted living facility.
- Technology can be assistive in not only streamlining your operations but also helping you navigate things such as more timely authorizations. Consult with your EHR provider to verify their capability to assist you in things such as eligibility checks and documentation compliance.
- You hopefully already have solid relationships with your acute care hospital discharge planners and case managers. But identify the ones that work with Medicare Advantage patients and approach them with your story. Tout your clinical pathways, your excellent clinical outcomes, and your lower lengths of stay for your Medicare Advantage patients. And don’t forget to point out your streamlined admissions procedures. Understand that discharge planners and case managers are under pressure to find rapid post-acute care placement.
- If you haven’t done so already, consider exploring an I-SNP (Institutional Special Needs Plan) partnership or launching one. While it is a type of Medicare Advantage plan, it provides some solid benefits to your facility. For example, the placement of a nurse practitioner or advanced care clinician to assist your staff in managing your I-SNP patients. Better in-house management can result in lower discharges, reduced disruptions to clinical care, and better patient outcomes. Plus, it can give you a competitive advantage over other facilities in your marketplace.
- Learn from Medicare Advantage denials and coverage decisions. Carefully track MA decisions and seek to understand the root causes for their decisions, whether it is a denial of coverage or a shortening of the coverage period. Get skilled at turning around an appeal within 48 hours. Build your database of information and use it to your advantage with the MA plan.
MA Plans Are Here to Stay
With health care spending on the rise, insurers, whether it is traditional Medicare or Medicare Advantage, will be looking to minimize their costs and maximize their outcomes. It stands to reason that traditional Medicare enrollees will continue to transition towards Medicare Advantage plans. Consequently, MA plans will continue to be a part of a nursing home administrator’s life for the foreseeable future.