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What MedPAC reported
The Medicare Payment Advisory Commission released its June 2026 report on June 15. One chapter examines how Medicare Advantage enrollment relates to the finances of hospitals and post-acute providers. Several findings speak directly to hospital economics:
- Longer stays. MA patients stayed in the hospital 11.2% longer on average than traditional Medicare patients in fiscal 2024.
- Revenue pressure for independents. For hospitals outside a health system, a 10-percentage-point rise in market MA penetration was associated with a 3.1% drop in all-payer operating revenue and a 3% drop in costs.
- Size matters. Hospitals with up to 100 beds saw lower costs and revenue as MA grew, but better margins. Hospitals with more than 250 beds saw stronger revenue with higher MA penetration, with no clear link to margins.
- Post-acute shift. The number of skilled nursing facilities fell 5%, from 12,720 to 12,050, while median market MA penetration for nursing homes reached 54% over the 2013 to 2024 period.
The broader context
MedPAC also put Medicare spending at $1.1 trillion in 2024, or 3.8% of GDP, and projects it will pass 5% of GDP by 2032. It cited an HHS estimate of $56.7 billion in improper Medicare payments in fiscal 2025, of which $23.7 billion was tied to MA. Audits suggest medical record problems, such as missing documentation, drove 85% of improper MA payments. Those numbers keep MA payment accuracy on the congressional agenda.
Why longer stays matter to hospital finance
When an MA contract pays per case, extra inpatient days are largely unpaid cost. Longer stays can reflect delays in authorizing post-acute care and a shrinking supply of skilled nursing beds. The result is lost capacity: a bed held by a patient waiting for a nursing home transfer cannot take an admission from the emergency department.
The independent hospital finding also deserves attention. Revenue at unaffiliated hospitals fell as MA enrollment grew, with costs falling almost as fast, which leaves less room for error as plans gain share.
Questions for the finance team
- What is our length of stay gap between MA and traditional Medicare, by plan?
- How many avoidable days are tied to post-acute authorization delays?
- Do our MA contracts include outlier or per diem protections for long stays?
- How does our MA revenue per case compare with traditional Medicare for the same diagnoses?
Archive entry for Jun 16, 2026, added Nov. 11, 2026.