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Medicare Advantage and Commercial Insurance Denials Rise

by BillingFreedom | Apr 16, 2024

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A Medicare Advantage plan, or Medicare Part C, is a type of health insurance plan offered by private insurance companies that contract with Medicare to provide beneficiaries with their Part A (hospital insurance) and Part B (medical insurance) coverage.

Medicare Advantage Plans as an Alternative to Original Medicare

Medicare Advantage plans are an alternative to Original Medicare (Part A and Part B) and often include additional benefits such as prescription drug coverage (Part D), vision, dental, and wellness programs. 

These plans may have different rules, costs, and coverage limitations from Original Medicare. While beneficiaries continue to pay their Part B premium, they may also have to pay an additional premium for the Medicare Advantage plan.

Individuals considering this plan should carefully review its specific details, including its network of providers, coverage options, and costs, to determine which plan best meets their healthcare needs.

Approximately 31 million Americans have embraced Medicare Advantage plans, introduced in 2003 as private-sector alternatives to Medicare. Congress initiated these plans to promote increased efficiency in healthcare, as reported by NBC News in 2023.

Several plans include additional services like dental and hearing care and wellness programs not included in traditional Medicare, requiring beneficiaries to pay additional fees.


List Of Medicate Parts Represents To:

  • Medicare Part A: Hospital
  • Medicare Part B: Medical
  • Medicare Part C: Advantage
  • Medicare Part D: Prescription

Original Medicare vs. Medicare Advantage

Original Medicare consists of Part A (hospital coverage) and Part B (medical coverage), providing basic health insurance for eligible individuals. It covers hospital stays, outpatient care, and some preventive services.

Most Medicare Advantage plans, approximately 98% in 2023, are either HMOs (58%) or PPOs (40%). It would help to use in-network providers with an HMO, while a PPO offers reduced costs for in-network services. Some plans may have an additional monthly premium, but many have none, and a few contribute to your Part B premium. Medicare Advantage plans generally have lower out-of-pocket expenses than Original Medicare. Additionally, they are mandated to limit annual out-of-pocket expenses to $8,000 in 2024, although some plans set even lower caps.

Original Medicare does not set a cap on out-of-pocket expenses, leaving beneficiaries potentially exposed to unlimited costs. In contrast, Medicare Advantage plans have an annual limit set at $8,000 for 2024, ensuring that once this threshold is reached, the plan covers 100% of Medicare-approved expenses for the remainder of the year.

Let’s explore the difference between both for better outcomes:

Aspect: Doctor & Hospital Choice

  • Original Medicare: Can go to any doctor or hospital that accepts Medicare nationwide
  • Medicare Advantage: Typically limited to in-network providers within the plan’s service area for non-emergency care

Aspect: Specialist Referral

  • Original Medicare: Generally, no referral is needed to see a specialist
  • Medicare Advantage: May require a referral to see a specialist

Aspect: Cost Structure

  • Original Medicare: Pays 20% coinsurance for Part B-covered services after deductible
  • Medicare Advantage: Variable out-of-pocket costs, potential additional premium

Aspect: Premiums

  • Original Medicare: Part B premium required; separate premium for Part D (drug coverage)
  • Medicare Advantage: Monthly Part B premium and potential plan premium; some plans have $0 premium

Aspect: Out-of-Pocket Limit

  • Original Medicare: No yearly limit on out-of-pocket expenses unless supplemented by Medigap
  • Medicare Advantage: Yearly limit on out-of-pocket costs for Part A and Part B services covered by the plan


Aspect: Supplemental Coverage

  • Original Medicare: Medigap, employer/union coverage, or Medicaid can help with costs
  • Medicare Advantage: No option to purchase Medigap; may have employer/union coverage or Medicaid support

Aspect: Medicare Drug Coverage

  • Original Medicare: Not included; requires separate enrollment in a Part D plan
  • Medicare Advantage: Often includes Medicare drug coverage (Part D) in the plan

Aspect: Provider Network

  • Original Medicare: Any doctor or hospital accepting Medicare nationwide
  • Medicare Advantage: Restricted to in-network providers within the plan’s service area (non-emergency care)

Aspect: Specialist Referral

  • Original Medicare: Generally, no referral needed for specialist visits
  • Medicare Advantage: May require a referral to see a specialist

Aspect: Coverage of Medically Necessary Services

  • Original Medicare: Covers most medically necessary services in various healthcare facilities
  • Medicare Advantage: Plans must cover all Original Medicare services and may offer additional benefits like vision, hearing, and dental services


Aspect: Dental and Vision Coverage

  • Original Medicare: Does not cover routine dental care, eye exams, or most dental care
  • Medicare Advantage: Some plans may offer extra benefits, including certain vision, hearing, and dental services

Aspect: Medicare Drug Coverage (Part D)

  • Original Medicare: Requires separate enrollment in a Medicare drug plan (Part D)
  • Medicare Advantage: Often includes Medicare drug coverage as part of the plan; separate Part D enrollment may not be allowed in most cases


Aspect:  Approval for Coverage

  • Original Medicare: Generally, no need for approval; services are covered without prior authorization
  • Medicare Advantage: Often requires approval before certain services or supplies are covered


Aspect: Coverage Outside the U.S.

  • Original Medicare: Generally doesn’t cover medical care outside the U.S.
  • Medicare Advantage: Plans may not cover medical care outside the U.S., but some may offer supplemental benefits for emergency and urgently needed services during international travel

Relationship Between Medicare Advantage And Commercial Insurance Denials Rise

The relationship between Medicare Advantage and the rise in commercial insurance denials refers to a notable trend where both types of insurance coverage experience an increase in claim denials. This phenomenon suggests a potential correlation or shared influencing factors affecting the claims approval process for Medicare Advantage plans and commercial insurance policies. Understanding and addressing the reasons behind this rise in denials is crucial for improving the efficiency and effectiveness of the claims processing system within the healthcare insurance landscape.

Commercial Insurance Denials Rise In Healthcare

The term “Commercial Insurance Denials Rise in healthcare” refers to an observed increase in the number of claim denials within the commercial insurance sector of the healthcare industry. Commercial insurance typically includes plans provided by private insurance companies, as opposed to government-sponsored plans like Medicare or Medicaid. When there is a rise in denials, more claims submitted by healthcare providers for reimbursement should be accepted or approved by commercial insurance companies. This can have various implications for healthcare providers, patients, and the healthcare system, including potential financial challenges and administrative burdens. 

The Rising Challenge of Claim Denials Within Medicare Advantage and Commercial Insurance Denials Rise

Over January 2022 to July 2023, a concerning trend has emerged in the healthcare landscape, particularly concerning claim denials from both Medicare Advantage and commercial insurance providers.

Escalating Medicare Advantage Denials

During this timeframe, the median hospital experienced a significant surge in Medicare Advantage denials, marking a 63 percent increase as a percentage of net patient service revenue. This upswing in denials poses a substantial challenge for healthcare providers seeking reimbursement for services rendered under Medicare Advantage plans.

Commercial Insurance Denials on the Rise

Simultaneously, there has been a noteworthy uptick in commercial insurance denials, witnessing a 20 percent increase. This dual escalation in Medicare Advantage and commercial insurance denials highlights a broader issue requiring attention and resolution within the healthcare claims processing system.

Implications and Concerns

The repercussions of these heightened denial rates are multifaceted, impacting the financial stability of healthcare institutions and raising concerns about the efficiency and fairness of the claims adjudication process. Understanding the underlying factors contributing to this trend is crucial for devising strategies to address and mitigate the challenges associated with claim denials in the healthcare sector.

Financial Ramifications of Increased Denials and Reimbursement Delays from Medicare Advantage and Commercial Insurance on Accounts Receivable

The increased denials and delays in reimbursement from Medicare Advantage and commercial insurance can significantly impact a healthcare provider’s Accounts Receivable (AR).

  1. Financial Strain

The foremost impact is financial strain. When claims are denied, or reimbursement is delayed, healthcare providers may experience a shortfall in expected revenue. This can hinder their ability to meet operational expenses, invest necessary resources, and maintain financial stability.

  1. Operational Disruptions

Delays in reimbursement can disrupt day-to-day operations. Healthcare providers rely on a steady cash flow to fund various services, from staffing to acquiring medical equipment. Increased delays may lead to challenges in maintaining optimal operational efficiency.

  1. Increased Administrative Burden

Dealing with more denials and delays necessitates increased administrative efforts. Staff must dedicate more time to appeals, resubmissions, and communication with payers. This diverts resources from other critical tasks, leading to higher operational costs.

  1. Cash Flow Challenges

The reimbursement delays impact a healthcare facility’s overall cash flow. This may result in the need for alternative financing solutions or lines of credit to bridge the gap between expected and actual revenue, potentially incurring additional costs.

  1. Patient Impact

Extended reimbursement timelines can indirectly affect patient care. A healthcare provider’s financial challenges may limit their ability to invest in new technologies, expand services, or enhance patient experiences.

  1. Strategic Planning Reevaluation

Providers may need to reevaluate their strategic plans and financial forecasts due to the uncertainties introduced by increased denials and reimbursement delays. This could impact long-term growth initiatives and capital investments.

  1. Focus on Denial Prevention

Given the impact on Accounts Receivable, healthcare providers may need to invest in proactive measures to prevent denials. This could include staff training, improved documentation practices, and enhanced communication with payers to address issues before submitting claims.

Impact Of Denial Management Services On Medicare Advantage And Commercial Insurance Denials Rise

The impact of Denial Management Services on the rise in Medicare Advantage and commercial insurance denials is substantial and multifaceted.

Reduction in Denial Rates

Denial Management Services are essential in identifying and addressing the root causes of claim denials. By implementing proactive measures, such as improved documentation practices and enhanced communication with payers, these services contribute to a notable reduction in denial rates.

Financial Recovery

Efficient denial management leads to a higher success rate in appealing denied claims. As a result, healthcare providers can recover a significant portion of the revenue that would otherwise be lost due to initial denials. This financial recovery helps mitigate the adverse impact on the provider’s revenue stream.

Operational Efficiency

Denial Management Services enhances operational efficiency by streamlining workflows and incorporating technology solutions. This contributes to the timely resolution of denials and optimizes overall revenue cycle management, reducing the strain on healthcare providers’ resources.

Preventive Measures

One of the significant impacts of Denial Management Services is their focus on preventive measures. By identifying trends and patterns in denials, healthcare organizations can implement proactive strategies to prevent future denials, thus addressing the root causes and creating a more sustainable claims processing system.

Data-Driven Insights

Denial Management Services leverage data analytics to provide valuable insights into denial trends. This data-driven approach allows healthcare providers to make informed decisions, adapt strategies based on evolving payer requirements, and continuously improve their processes to minimize denials.

Enhanced Payer Relationships

Efficient denial management fosters improved communication and collaboration with payers. Establishing clearer communication lines helps resolve issues promptly, reduce misunderstandings, and create a more collaborative relationship between healthcare providers and insurance companies.


What percentage of claims are denied?

The available government data indicates that, on a general scale, insurance providers reject approximately 10% to 20% of the claims they receive. However, these aggregate figures need to provide insight into the variations in denial rates among different plans or across various types of medical services. This information was reported in 2023 by ProPublica in collaboration with The Capitol Forum.

What is a health insurance denial?

A health insurance denial refers to rejecting a claim submitted by an individual or healthcare provider seeking coverage for medical services or treatments under a health insurance policy. 

Why do insurance companies deny claims?

This denial can occur for various reasons, including but not limited to insufficient documentation, coding errors, the treatment not meeting the insurer’s criteria for medical necessity, or the service being outside the coverage parameters outlined in the insurance policy.

When a health insurance claim is denied, the policyholder or healthcare provider typically receives a written explanation detailing the specific reasons for the denial. The insurance denial notice may also include information on the appeals process, allowing the policyholder or healthcare provider to challenge the decision and provide additional information or documentation to support the claim. The appeals process aims to review and reverse the initial denial, securing the coverage initially sought.

What is the list of Best Medicare Advantage Plans?

When selecting a Medicare Advantage plan, important considerations include the plan’s network, benefits, coverage, out-of-pocket costs, and the insurer’s reputation for customer service. Here are some notable Medicare Advantage plans:


  • UnitedHealthcare, a leading provider, offers a variety of AARP-branded Medicare Advantage plans, including HMO, PPO, and PFFS options.
  • Additional drug coverage is provided, addressing the Medicare donut hole.


  • As the second-largest provider, Humana offers diverse Medicare Advantage plans.
  • While featuring an over-the-counter drug benefit, Humana has fewer plans with additional coverage in the Medicare donut hole.

Aetna (CVS Health)

  • Under CVS Health, Aetna stands out for offering numerous Medicare Advantage plans with comprehensive drug coverage in the coverage gap.
  • Plans are competitively priced, often featuring $0 co-pays for primary care and specialist visits, though PFFS plans are unavailable.


  • Cigna distinguishes itself with the lowest overall cost plans among major providers.
  • The company provides Medicare Advantage plans, including options with prescription drug coverage and dental and vision benefits, available in 26 states. PFFS plans are not offered.

How Can Medical Billing Providers Help In Medicare Advantage and Commercial Insurance Denials Rise?

Medical billing service providers are instrumental in managing the complexities associated with the rise in Medicare Advantage and Commercial Insurance denials. 

These professionals employ advanced technologies, such as billing software with built-in validation checks, to ensure accurate coding and reduce errors that often lead to claim rejections. They stay ahead of evolving requirements by continuously monitoring regulatory changes and payer policies and adjusting billing processes accordingly. Medical billing services also utilize data analytics to identify denial trends, allowing for targeted interventions and process improvements. 

Expertise in the appeals process, including crafting comprehensive appeals with supporting documentation, enhances the likelihood of successfully overturning denials. 

Overall, the technical prowess of medical billing services is instrumental in addressing the intricate challenges of increasing denials in the Medicare Advantage and Commercial Insurance landscape.

Why Choose Billingfreedom As Your Next Billing Partner About Medicare Advantage And Commercial Insurance Denials Rise?

Choose BillingFreedom as your next billing partner who offers a strategic advantage in addressing the challenges associated with the rise in Medicare Advantage and Commercial Insurance denials. 

BillingFreedom specializes in advanced billing solutions to navigate the complexities of payer systems. Our team of experts ensures precision in coding and documentation, reducing errors that lead to claim rejections. We proactively stay abreast of changing regulations and payer policies, adapting our processes to minimize denials. 

By focusing on data analytics, we identify denial trends, enabling targeted interventions for continual process improvement. By choosing BillingFreedom, you gain a trusted partner dedicated to optimizing reimbursement outcomes and streamlining billing workflows in the face of rising denials in Medicare Advantage and Commercial Insurance scenarios.

For more details about our exceptional medical billing services, please don’t hesitate to contact us via email at or call us at +1 (855) 415-3472

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