Vertical Integration Raises Spending for Medicare Advantage Plans | TechTarget (2024)

FAQs

What are the benefits of vertical integration in healthcare? ›

Improved Care Coordination: Vertical integration can promote better coordination of care. By integrating different levels of care—such as primary care, specialty care, and hospital services—healthcare providers can reduce medical errors, improve patient outcomes, and enhance overall patient satisfaction.

In contrast, traditional Medicare does not have an out-of-pocket limit for covered services. In 2024, the out-of-pocket limit for Medicare Advantage plans may not exceed $8,850 for in-network services and $13,300 for in-network and out-of-network services combined.

Traditional Medicare, the alternative to Medicare Advantage, does not market the same way. Brokers have a financial incentive to encourage enrollment in Medicare Advantage plans because commissions are higher for Medicare Advantage than for Medigap and Part D plans that are purchased to complement traditional Medicare.

The government pays Medicare Advantage plans a set rate per person, per year (around $12,000 in 2019, not including Part D–related expenses) under what's known as a risk-based contract. That means that each plan agrees to assume the full risk of providing all care for that inclusive amount.

Advantages and Disadvantages of Vertical Integration

Vertical integration helps companies gain greater control over the supply chain and manufacturing process, leading to lower costs, economies of scale, and less reliance on external parties.

One of the primary drawbacks of vertical integration in healthcare is the potential for reduced competition. When large entities such as health insurance companies or hospitals acquire smaller players in the market, it often leads to a more concentrated industry.

Most individuals that dislike a Medicare Advantage plan usually have had a bad experience with in-network providers, plan authorizations for medical care, or having to wait a long time to have an appointment scheduled. Some of these concerns can be attributed to the healthcare provider.

Restrictive networks

In some cases, you'll have a higher share of costs when you see an out-of-network doctor. In other cases, you're not covered at all if you go out of network. This is particularly important if you travel a lot because Medicare Advantage plans generally don't provide out-of-state coverage.

UnitedHealthcare, alone, accounts for 29% of all Medicare Advantage enrollment in 2024, or 9.4 million enrollees. Together, UnitedHealthcare and Humana (18%) account for nearly half (47%) of all Medicare Advantage enrollees nationwide, the same as in 2023.

The biggest disadvantage of Medicare Advantage is you'll have a more limited choice of doctors and medical offices than you would with Original Medicare. Medicare Advantage plans can also cost more overall if you have complex medical needs. These plans are best if you don't need expensive treatments or tests.

Why do hospitals not like Medicare Advantage plans? ›

Why are hospitals dropping Medicare Advantage? Among other things, Medicare Advantage plans require patients to get prior authorization for more services than Original Medicare. Prior authorizations require time on the part of a medical provider, and the requests aren't always successful.

The Justice Department continued to pursue cases alleging false claims in the Medicare Advantage (or Medicare Part C) program, including allegations that organizations participating in the program knowingly submitted or caused the submission of inaccurate information or knowingly failed to correct inaccurate ...

There is no limit on the amount of cash you can have with Medicare Part A. You do have to have paid taxes for 40 quarters (10 years) during your working lifetime and you have to be age 65 unless otherwise qualified due to a social security eligible disability.

Nevada, Florida, Louisiana, Texas, Alabama, Nebraska and Arizona rank among the most affordable states for Medicare Advantage average premiums in 2024. In 2024, no Medicare Advantage plan may have a maximum out-of-pocket spending limit for in-network care that is greater than $8,850.

Medicare doesn't typically cover 100% of your medical costs. Like most health insurance, Medicare generally comes with out-of-pocket costs including copayments, coinsurance, and deductibles. As you'll learn in this article, Original Medicare (Part A and Part B) costs can really add up.

With system integration, you can easily share data, consult with specialists and coordinate care plans. This collaboration improves the efficiency of healthcare delivery and enhances the quality of patient outcomes.

Final answer: The three advantages of vertical integration include better control of competition, more buying power, and more control of distribution which all result from having increased control over a product's lifecycle.

Vertical integration has several advantages, including improved coordination of care, increased efficiency, improved patient access, and improved quality of care. Improved Care Coordination: The vertical integration of hospitals and physician practices allows for better care coordination.