Hospitals Launch Their Own Medicare Plans to Help Patients

When Larry Wilkewitz heard his West Virginia hospital system was starting its own Medicare Advantage plan, he saw a chance to escape the insurance headaches he'd dealt with for two decades. The 79-year-old cancer patient switched to Peak Health two years ago and hasn't looked back.

He's not alone in making this move. More hospitals nationwide are entering the insurance business, creating Medicare Advantage plans that let patients stay with their trusted doctors without worrying about contract disputes or coverage changes.

Peak Health has tripled its enrollment to over 10,000 members in just three years. The plan expanded from 20 counties to 49 and recently moved into western Pennsylvania for the first time.

The trend reflects a growing problem in traditional Medicare Advantage. Last year alone, more than 3.7 million patients were forced to choose between keeping their insurance or keeping their doctors when hospitals and insurers couldn't agree on contract terms.

Fred Neary, 88, experienced this firsthand when his doctors at Baylor Scott & White Health in Texas left his Medicare Advantage plan. Rather than risk the same situation happening again with another commercial insurer, he enrolled in his hospital system's own plan.

"It was very important to me that I would never have to worry about switching over to another plan because they would not accept my Baylor Scott & White doctors," Neary said.

Hospital-owned plans remain a small slice of the Medicare Advantage market, but they're growing steadily. Of the 62.8 million Medicare beneficiaries eligible for Advantage plans, 54% signed up last year.

These plans offer something commercial insurers can't match: a familiar name that's already part of the community. Hospitals don't have to move into town because they're already there, serving patients year after year.

The Ripple Effect

The impact goes beyond individual patients finding better coverage. Hospital-owned plans are expanding into rural areas that commercial insurers have traditionally avoided because they're less profitable.

UCLA Health launched two Medicare Advantage plans in Los Angeles County last year. Mass General Brigham in Boston and other major systems are expanding their service areas and plan options.

Starting an insurance plan takes serious work. Hospitals need infrastructure to enroll patients, sign up providers, process claims, and maintain reserves to pay those claims. They need state insurance licenses and federal approval from the Centers for Medicare & Medicaid Services.

Kaiser Permanente, the nation's largest nonprofit health system by revenue, pioneered this approach. The organization started an experimental Medicare plan in 1981 and now has nearly 2 million people enrolled across eight states and Washington, D.C.

For patients tired of insurance battles disrupting their care, hospital-owned plans offer something priceless: stability and peace of mind.