Category Archives: Medicare Advantage Contract Terms

Medicaid and Medicare Claims Managed by Insurers Are Rising. Why Aren’t They Worried About Their Profits?

Posted on by • Posted in Health Insurance Industry, Medicare Advantage, Medicare Advantage Contract Terms, Medicare Advantage Denials, Medicare Advantage Supplemental Benefits, Out of Pocket Expenses, Prior Authorization, Underinsured, Wall Street • Leave a comment
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One of the things I’ve always found most fascinating about news coverage and policymaker attention to health insurers is how little focus is placed on what these companies say to their investors.

It’s no secret that each quarter, all public companies update their shareholders and provide guidance for the future. When I was at Cigna, preparing the CEO to speak with reporters and investor analysts was arguably considered the most important role I had every three months.

Mining insights from those earnings reports has been a focus of mine since I became an insurance industry whistleblower. Recently, for example, we’ve highlighted how CVS/Aetna, in particular, has taken a beating on its stock price for reporting increased spending on medical care by seniors in Medicare Advantage plans.

Now, though, CEOs have become even more public and open, beyond their quarterly earnings calls, about the challenges they are having extracting further profit from the Medicaid and Medicare programs. This should be noted, particularly by the bipartisan group of lawmakers in Washington increasingly eyeing regulatory reform on insurer practices like prior authorization, as evidence that insurers are going to become even more aggressive in limiting care to preserve their 2024 profits.

Centene’s CEO said a few days ago that medical claims are increasing in the company’s managed Medicaid business. UnitedHealth and Elevance, which owns several Blue Cross Blue Shield companies that have converted to for-profit status, also recently reported they’re seeing similar results. Combined with increased medical spending on Medicare Advantage claims, one might guess this would begin to worry investors that insurers would lower their profit forecasts.

But none of these companies have so far expressed concern about not meeting their 2024 profit expectations.

So, medical claims in Medicaid and Medicare Advantage plans – now the majority of the business for many of the largest insurers – are rising, but these companies aren’t expecting to disappoint Wall Street with a drop in profits. How is that possible?

Because insurers can deploy the tools to prevent patients from accessing care. And their playbook isn’t secret, or complicated.

By further increasing prior authorization in Medicaid and Medicare Advantage plans, insurers can limit how many seniors and low-income Americans follow through with legitimate care and procedures. (Here’s a recent congressional report on increased hurdles insurers have put in place to prevent children from receiving preventive care in Medicaid plans. And insurers’ increasing use of prior authorization in Medicare Advantage is something we’ve regularly covered.)

Unlike their marketplace and employer-based plans, insurers can’t negotiate reimbursement rates for Medicaid and Medicare Advantage plans that they manage.

But beyond prior authorization, they can put other layers of bureaucracy in place that increase how long it takes a provider to be reimbursed for providing care – and to make it more complicated for doctors to ensure they’re reimbursed fully for the care they provide.

In effect, these tactics can amount to decreasing the already industry-low rate of reimbursement for doctors from the Medicaid and Medicare Advantage programs. Physicians, you should expect to see more hurdles to reimbursement in these programs throughout the balance of 2024 as insurers look to hoard as much cash as they can.

In Medicare Advantage plans, insurers can pursue the industry jargon of a “benefit buydown” to further shift costs onto plan enrollees and off insurers themselves. Because the federal government pays insurers a flat amount per Medicare Advantage enrollee, regardless of how much health care spending each patient has, it is in the insurers’ financial interest to claim that seniors and disabled people enrolled in their plans are sicker than they really are.

Rising out-of-pocket costs that seniors and disabled people in Medicare Advantage plans are facing is a consequence of insurers wanting to squeeze further profits out of the program, and is a way to maintain direct government payments per enrollee within the insurers’ coffers.

Hospitals are dropping Medicare Advantage left and right

Posted on by • Posted in Accounts Receivable (AR), Administrative Burden, Cash-Flow Improvements, Health Insurance Industry, Health System, Hospital, Hospital Industry, Medicare Advantage, Medicare Advantage Contract Terms, Medicare Denials, Rev Cycle Management, Revenue Cycle • Leave a comment

https://www.beckershospitalreview.com/finance/hospitals-are-dropping-medicare-advantage-left-and-right.html

Medicare Advantage provides health coverage to more than half of the nation’s seniors, but a growing number of hospitals and health systems nationwide are pushing back and dropping the private plans altogether.

Among the most commonly cited reasons are excessive prior authorization denial rates and slow payments from insurers. Some systems have noted that most MA carriers have faced allegations of billing fraud from the federal government and are being probed by lawmakers over their high denial rates.

“It’s become a game of delay, deny and not pay,” Chris Van Gorder, president and CEO of San Diego-based Scripps Health, told Becker’s.

“Providers are going to have to get out of full-risk capitation because it just doesn’t work — we’re the bottom of the food chain, and the food chain is not being fed.” 

In late September, Scripps began notifying patients that it is terminating Medicare Advantage contracts for its integrated medical groups, a move that will affect more than 30,000 seniors in the region. The medical groups, Scripps Clinic and Scripps Coastal, employ more than 1,000 physicians, including advanced practitioners. 

Mr. Van Gorder said the health system is facing a loss of $75 million this year on the MA contracts, which will end Dec. 31 for patients covered by UnitedHealthcare, Anthem Blue Cross, Blue Shield of California, Centene’s Health Net and a few more smaller carriers. The system will remain in network for about 13,000 MA enrollees who receive care through Scripps’ individual physician associations.

“If other organizations are experiencing what we are, it’s going to be a short period of time before they start floundering or they get out of Medicare Advantage,” he said. “I think we will see this trend continue and accelerate unless something changes.”

Bend, Ore.-based St. Charles Health System has taken it a step further and is not only considering dropping all Medicare Advantage plans, but is also encouraging its older patients not to enroll in the private Medicare plans during the upcoming enrollment period in October.

The health system’s president and CEO, CFO and chief clinical officer cited high rates of denials, longer hospital stays and overall administrative burden for clinicians.

“We recognize changing insurance options may create a temporary burden for Central Oregonians who are currently on a Medicare Advantage plan, but we ultimately believe it is the right move for patients and for our health system to be sustainable into the future to encourage patients to move away from Medicare Advantage plans as they currently exist,” St. Charles Health CFO Matt Swafford said.

“I feel terrible for the patients in this situation; it’s the last thing we wanted to do, but it’s just not sustainable with these kinds of losses,” Mr. Van Gorder added. “Patients need to be aware of how this system works. Traditional Medicare is not an issue. With these other models, seniors need to be wary and savvy buyers.”

Here are six more recent examples of hospitals dropping Medicare Advantage contracts:

1. Adena Regional Medical Center is terminating its contract with Anthem BCBS’ Medicare Advantage and managed Medicaid plans in Ohio, effective Nov. 2. The flagship facility of Chillicothe, Ohio-based Adena Health System said rate negotiations between the organizations “have not been productive,” leading it to terminate its agreement with Anthem, whose parent company is Elevance Health.

2. Corvallis, Ore.-based Samaritan Health Services ended its commercial and Medicare Advantage contracts with UnitedHealthcare. The five-hospital, nonprofit health system cited slow “processing of requests and claims” that have made it difficult to provide appropriate care to UnitedHealth’s members, which will be out of network with Samaritan’s hospitals on Jan. 9. Samaritan’s physicians and provider services will be out of network on Nov. 1, 2024. 

3. Cameron (Mo.) Regional Medical Center stopped accepting Cigna’s MA plans in 2023 and plans to drop Aetna and Humana in 2024. It plans to continue Medicare Advantage contracts with UnitedHealthcare and BCBS, the St. Joseph News-Press reported in May. Cameron Regional CEO Joe Abrutz previously told the newspaper the decision stemmed from delayed reimbursements.

4. Stillwater (Okla.) Medical Center ended all in-network contracts with Medicare Advantage plans amid financial challenges at the 117-bed hospital. Humana and BCBS of Oklahoma were notified that their MA members would no longer receive in-network coverage after Jan. 1, 2023. The hospital said it made the decision after facing rising operating costs and a 22 percent prior authorization denial rate for Medicare Advantage plans, compared to a 1 percent denial rate for traditional Medicare.

5. Brookings (S.D.) Health System will no longer be in network with any Medicare Advantage plans in 2024, the Brookings Register reported. The 49-bed, municipally owned hospital said the decision was made to protect the financial sustainability of the organization. 

6. Louisville, Ky.-based Baptist Health Medical Group went out of network with Humana’s Medicare Advantage and commercial plans on Sept. 22, Fox affiliate WDRB reported.

Do Medicare Advantage Networks Vary by Plan within Contract?

Posted on by • Posted in Center for Medicare and Medicaid Services (CMS), Health Insurance Benefit Design, Health Insurance Industry, Health Maintenance Organization (HMO), Health Maintenance Organization Point-of-Service (HMO-POS), Medicare Advantage, Medicare Advantage Contract Terms, Out of Network, Out-of-Network, Preferred Provider Organization (PPO), Provider Specific Plan (PSPs), Service Area, Special Needs Plans (SNPs) • Leave a comment
Do Medicare Advantage Networks Vary by Plan within Contract?

Medicare Advantage (MA) is the private insurance alternative to traditional Medicare. MA organizations contract with Centers for Medicare and Medicaid Services (CMS) to offer eligible beneficiaries residing in a defined geographic service area (a collection of counties) a selection of private plans. Insurers may offer multiple plans across different plan types under one contract. The service area is defined at the contract-level, and for most MA plans, service areas can include a single county or a collection of multiple counties. (There are other types of plans for which there are constraints on the boundaries of the service area, but these don’t account for very much of MA enrollment.)

As MA-offering insurers contract with CMS, they establish networks that govern patient liability for seeing in- and out-of-network providers. Consequently, plans will vary in their cost-sharing structures and benefit designs as they assume different levels of liability for the cost of out-of-network providers. Overall, plans will cover the cost of care (less copays and deductibles) for patients seeing providers in-network, and certain plan types may require that patients pay more for out-of-network services or receive referrals/prior authorization from primary care providers (PCP) to see specialists.

The most common plan types offered by MA insurers include the following:

  • Preferred Provider Organizations (PPOs) are considered the most flexible type of plan in providing access to care and covering it out-of-network. PPO enrollees can use out-of-network providers for covered services without a referral from a PCP, albeit at greater cost to them than in-network providers.
  • Health Maintenance Organizations (HMOs), in comparison to PPOs, are more restrictive plans that provide less access to care and less coverage for out-of-network providers, with the exception of emergency, urgent, and dialysis care. HMO members are required to select a PCP and must get authorization for most specialty services. For any out-of-network services received, the patient bears the full cost, up to the traditional Medicare rate.
  • Health Maintenance Organization Point-of- Service (HMO-POS) are a hybrid plan between PPOs and HMOs. Like an HMO, members must select a PCP for care coordination, but they do not need a referral for specialty services. (However, some services may require prior authorization for coverage.) Like a PPO, this plan does provide some coverage for out-of-network providers.

The differences across plan types in access to and cost sharing for out-of-network providers leads to the important question, do MA networks vary by plan within contract? For example, in Figure 1 below, do the beneficiaries enrolled in Plan 1 or 2 under Contract A have the same set of in- and out-of-network providers (likewise for the beneficiaries in Plans 1-3 under contract B)? More specifically, what if Plan 1 is an HMO and Plan 2 is a HMO-POS plan, do they share the same network?

Figure 1: CMS Medicare Advantage and Part D Contract and Plan Enumeration (2010). Source: https://ncvhs.hhs.gov/wp-content/uploads/2014/05/100719p08.pdf

The simple answer seems to be: not necessarily, though more recent regulations attempt to push insurers toward having the same networks across plans within contracts.

For instance, prior to 2019, CMS only reviewed the adequacy of an MA organization’s contracted network under a “triggering event,” like if an organization were to operate a new plan, expand coverage to additional service areas, or in a response to inadequate network complaints. The scope of CMS’ review varied depending on the triggering event that occurred. In some cases, CMS could only conduct partial reviews of a contract’s network, looking at a select set of specialties or counties. A study by the US Government Accountability Office found that between 2013 and 2015, CMS had reviewed less than 1% of all networks. Without regular scrutiny by regulators, it seems likely that networks varied across plans within contracts.

Under the current MA Network Adequacy Criteria Guidance, CMS assesses network adequacy requirements both under triggering events (as explained above) and, separate from that, on a triennial-basis at the contract-level. CMS has previously commented in the 2021 Final Rule that this approach allows them to assess the adequacy of organizations’ networks across all of their plan types (HMOs, PPOs, SNPs) and consider the broadest availability of providers and facilities for an organization. Again, this suggests that insurers may vary networks across plans within contracts.

There are at least two scenarios for which we know certain plans can and likely do have different networks compared with other plans in the contract.

  • Special Needs Plans (SNPs) are plans designed for individuals with specific diseases or characteristics, such as those who are dual-eligible, have institutional care needs, or have a chronic condition. SNPs can be allowed by regulators to augment the contract’s network to integrate care management teams and specialty providers to accommodate beneficiaries’ complex care needs under the plan’s Model of Care. While SNPs may be granted additional flexibility to alter the contract-level networks established, CMS does not allow SNPs to narrow or shrink that network. They can only expand it.
  • Provider Specific Plan (PSPs) are plans often found under large, integrated medical groups or provider groups that are the primary bearers of risk. PSP enrollees have access to a smaller subset of in-network providers. Since this plan type has a network of fewer providers than the overall contracted network, organizations must request to offer a PSP from CMS and attest that these plans are in compliance with network adequacy requirements.

Future work with Vericred provider-network data could be one approach to exploring variations in networks among plans under the same contract and service area, beyond the cases listed above. If networks are varying across HMO, PPO, and HMO-POS plans within contracts, it would be interesting to explore just how different they are from one another. Moreover, as CMS reviews continues to review network adequacy requirements at the contract-level (and if networks do differ by plan), one should consider the breadth of the network that organizations are submitting for evaluation. To what extent all plans in a contract are in compliance with network adequacy rules warrants future investigation.

Medicare’s proposed payment rule benefits hospitals

Posted on by • Posted in American Hospital Association (AHA), Center for Medicare and Medicaid Services (CMS), Health Policy, Health System, Hospital, Hospital Industry, Legal Challenges, Medicare, Medicare Advantage, Medicare Advantage Contract Terms, Medicare Covid-19 Payments, Medicare Readmissions, Medicare Residency Funding, Price Regulation, Price Transparency, Quality Measures • Leave a comment

https://mailchi.mp/097beec6499c/the-weekly-gist-april-30-2021?e=d1e747d2d8

The Centers for Medicare & Medicaid Services (CMS) released its 2022 Inpatient Prospective Payment System (IPPS) proposed rule this week. Overall, the rule brings good news for hospitals: Medicare reimbursement rates are slated to increase by 2.8 percent, resulting in a $2.5B payment boost to the industry.

In another win, hospitals will no longer be required to disclose their contract terms with Medicare Advantage (MA) insurers. Hospitals had previously been mandated by the 2021 rule to report median, payer-specific, negotiated charges for MA insurers on their Medicare cost reports. Medicare’s goal was to use this data to create a new, market-based, inpatient reimbursement methodology—an effort which has also been tabled, at least for now.

Led by the American Hospital Association, hospitals have been embroiled in lengthy legal challenges over a variety of CMS price transparency requirements, maintaining they are neither beneficial for consumers, nor helpful in lowering healthcare costs. 

It’s too early to tell whether this step back from price transparency, which was a key goal of the Trump administration, signals anything about the Biden administration’s priorities; it’s possible CMS may just be slowing down the effort in the wake of the pandemic.

Other highlights of the proposed rule include funding 1,000 more residency slots over the next five years, and extending payments for COVID-19 treatments to the end of 2022, as CMS expects COVID patients will need care beyond the duration of public health emergency. The agency also proposed several changes to its readmissions and other value-based purchasing programs, to ensure hospitals aren’t penalized by COVID-related impacts on quality measures.

Comments on the proposed rule are due by June 28th.