AMGA pushes back on Medicare Advantage payment adjustment and outlines needed reforms
The American Medical Group Association (AMGA) is raising concerns over what it describes as an inadequate payment update for Medicare Advantage (MA) plans, warning that current policies may strain providers and limit patient access to care.
In a recent statement, AMGA objected to the finalized 2.48% payment increase from the Centers for Medicare and Medicaid Services (CMS), arguing it falls short of keeping pace with rising healthcare costs and growing demand among Medicare beneficiaries. While the group acknowledged that CMS did not adopt an earlier proposed 0.09% increase—effectively a freeze—it maintains that even the higher finalized rate does not adequately reflect the financial realities facing medical practices.
Health Exec spoke with Darryl Drevna, AMGA’s senior director of regulatory affairs, in the above video interview. He said the issue extends beyond a single year’s update and reflects broader, long-term pressures on the healthcare system.
“Providers are being asked to do more with fewer resources,” Drevna said, pointing to years of declining reimbursement rates in traditional fee-for-service Medicare, while operational costs have risen. “That can only go on for so long.”
Concerns over patient access
Drevna warned that insufficient payment updates could have downstream effects on patient access. He noted that some insurers have already begun reevaluating where they offer MA plans, with an estimated 1.5 to 2 million beneficiaries affected by plan withdrawals between 2024 and 2025.
“If rates don’t reflect the true cost of care, organizations may scale back offerings,” he said, adding that such shifts could disrupt coverage for seniors.
With Medicare Advantage now covering more than half of all Medicare beneficiaries, AMGA also questioned whether current payment and risk adjustment methodologies—largely tied to fee-for-service benchmarks—remain appropriate as the program continues to expand.
Risk adjustment and policy uncertainty with Medicare Advantage
Another major concern for AMGA is ongoing changes to risk adjustment models, including the transition from older coding frameworks to newer systems. Drevna said these shifts can obscure the true health status of patients and complicate long-term planning for providers.
“Patients don’t suddenly become healthier because of coding changes,” he said. “But if they’re no longer reflected as high-risk on paper, the resources needed to care for them may not be there.”
Frequent policy changes also create uncertainty for healthcare organizations trying to plan staffing, care management programs and resource allocation years in advance.
Prior authorization remains a problem in Medicare Advantage
Beyond payment rates, AMGA highlighted persistent frustrations with prior authorization requirements in Medicare Advantage. Drevna described the process as resource-intensive and often redundant, noting that many services requiring authorization are already well-established and routinely approved on appeal.
According to AMGA, some provider organizations employ teams of 10 to 20 staff members dedicated solely to managing prior authorization requests. He said this diverts time and health system resources away from patient care.
The group is advocating for faster turnaround times, suggesting 24 hours for urgent requests and 72 hours for non-urgent cases, compared to current standards that can extend up to a week.
Drevna also pointed to potential reforms such as “gold carding” for high-performing providers and reducing the number of services subject to prior authorization altogether. He added that emerging technologies like artificial intelligence could either streamline approvals or exacerbate delays, depending on how they are implemented.
He said further frustration over policy issues comes from the apparent disconnect between CMS Administrator Mehmet Oz over his understanding of federal policy and reality on the ground concerning Medicare Advantage. At a recent value healthcare summit Oz said payers are telling him providers are not supplying the right data to get prior authorizations.
"That was really jarring to hear, frankly, because one of the things we've been pushing on is getting payers to share data with the providers so they can know exactly what patients have had done and what needs to be done. So to hear him say that the plans and payers are saying they have insufficient information, we need to follow up and ask what data is missing? Because I am 100% positive our member's provider community be more than willing to share whatever it is they need to expedite this process," Drevna explained.
Calls for policy alignment
AMGA is urging CMS and policymakers to stabilize risk adjustment policies and ensure payment levels better align with the cost of delivering care. The group also emphasized the need for improved collaboration between payers and providers, particularly around data sharing to support more efficient care delivery.
“Medicare Advantage works best when it’s stable and predictable,” Drevna said. “That requires payment systems and policies that reflect the real-world cost of caring for patients.”
As debate over Medicare Advantage policy continues on Capitol Hill and within the administration, AMGA’s objections underscore growing tensions between providers and payers over how to sustain the rapidly expanding program.
Dave Fornell has covered healthcare for more than 17 years, with a focus in cardiology and radiology. Fornell is a 5-time winner of a Jesse H. Neal Award, the most prestigious editorial honors in the field of specialized journalism. The wins included best technical content, best use of social media and best COVID-19 coverage. Fornell was also a three-time Neal finalist for best range of work by a single author. He produces more than 100 editorial videos each year, most of them interviews with key opinion leaders in medicine. He also writes technical articles, covers key trends, conducts video hospital site visits, and is very involved with social media. E-mail: [email protected]