Increasing Medicare Advantage spending could be a bright spot for hospitals' finances.
Spikes in Medicare Advantage utilization have put pressure on payers' margins, however. Humana, the second-largest Medicare Advantage insurer, posted a $541 million loss in the fourth quarter of 2023, driven by what executives called unprecedented increases in Medicare Advantage spending.
Nashville, Tenn.-based HCA Healthcare reported 10% growth in Medicare Advantage admissions in the fourth quarter. The rise is consistent with growth the system has seen through the year, CFO Bill Rutherford told investors on a Jan. 30 call transcribed by Seeking Alpha.
The growth in MA admissions is likely due to more beneficiaries switching from fee-for-service Medicare to MA, growth in HCA's volume and a possible bump in utilization, Mr. Rutherford said. It is difficult for the system to completely separate MA and traditional Medicare in revenue data, he said.
For the year ended Dec. 31, HCA posted revenues of $65 billion, up from $60.2 billion in 2022.
In addition to Humana, other insurers, including UnitedHealthcare and CVS Health, have warned of rising costs in the Medicare space. Insurers have pointed to several factors behind the increase, including increased COVID-19 admissions and pent-up demand for orthopedic and other procedures.
Mr. Rutherford said COVID-19 admissions for the fourth quarter were in line with expectations and not a material factor in the system's earnings.
HCA CEO Sam Hazen said it's difficult to parse the causes of increased Medicare revenue to the hospital. More baby boomers are aging into the program, and the system operates in areas with growing populations overall, Mr. Rutherford said.
"So it's hard for us to judge underneath that, whether or not there's some structural change in utilization," Mr. Hazen said. "That's almost impossible for us to discern with the data that we have."