If Medicare Advantage Becomes the Default, Nursing Homes Could Be the Ones Who Pay

Washington, D.C. — The federal agency that runs Medicare is weighing one of the most sweeping changes to the program in a generation: automatically enrolling all new Medicare beneficiaries into Medicare Advantage plans instead of traditional fee-for-service coverage. For nursing home operators, the implications are difficult to overstate.

Chris Klomp, President Trump’s Medicare director at the Centers for Medicare & Medicaid Services, said Thursday that his team is actively exploring what it would take to make Medicare Advantage — the privately administered version of Medicare — the default enrollment path for new beneficiaries. Under the current system, anyone who doesn’t make an active coverage choice is placed into traditional Medicare. Klomp wants to flip that.

“Would either of those, in my view, be superior to a default enrollment into a fee-for-service arrangement, where there’s not this long-term, secular relationship between the beneficiary, the patient, and their provider? Yes,” Klomp said, referring to both MA plans and accountable care organizations as alternatives to traditional Medicare. Beneficiaries would still be able to opt out.

A Shift From Project 2025’s Playbook

The idea didn’t come from nowhere. It was outlined in the Project 2025 policy blueprint, the conservative governing document that has quietly shaped several Trump administration health care moves. Implementing it would require an act of Congress — there’s no regulatory path for CMS to make this change on its own.

Still, the fact that it’s being openly discussed at the highest levels of Medicare policy sends a clear signal about where the administration wants the program to go. More than half of all Medicare beneficiaries — roughly 54% — are already enrolled in MA plans. A default enrollment policy would accelerate that shift dramatically.

What It Means for Skilled Nursing

Skilled nursing facilities have spent years documenting the ways Medicare Advantage creates friction in their operations. Prior authorization requirements, shorter approved stays, and lower reimbursement rates than traditional Medicare have become defining features of MA’s relationship with the post-acute sector. Operators have watched algorithms from companies like naviHealth — the UnitedHealth subsidiary whose AI model is now the subject of a federal lawsuit — override physicians and cut patients off from SNF care mid-stay.

A world where nearly all Medicare beneficiaries arrive at a nursing home through a managed care plan would mean less traditional Medicare revenue, more authorization battles, and tighter margins on an already thin operating model. Nursing homes have been tracking CMS’s recent moves on Medicare Advantage rates closely, aware that changes at the federal level often land hardest on the post-acute care end of the care continuum.

It’s also worth noting the financial dynamic that underlies the proposal. MedPAC’s March 2026 report to Congress found that MA plans are paid roughly 14% more per beneficiary than traditional Medicare would cost — an estimated $76 billion overpayment in 2026 alone. Critics argue that shifting more beneficiaries into a system that’s already costing more doesn’t solve Medicare’s financial sustainability problem. It compounds it.

No Timeline, But a Clear Direction

CMS hasn’t put a timeline on the proposal, and Klomp acknowledged the change would need legislative action. But the policy conversation is moving. Nursing home operators who’ve been focused on the immediate pressures of staffing costs, Medicaid cuts, and state reimbursement reform now have another federal-level shift to monitor — one that could reshape the payer mix of every facility in the country.