Kevin is chief managed care and revenue strategy officer at Unlock Health.
This post is the first in a series on the state of managed care by Kevin Thilborger.
Medicare Advantage (MA) plans have emerged as a pivotal component of the U.S. healthcare system, with enrollment more than doubling since 2010. These plans offer seniors an alternative to traditional Medicare. For the first time last year, more than half (51 percent) of the 65 million eligible Medicare members opted for MA plans over traditional Medicare. By 2030, more than 60 percent of eligible members are projected to enroll in an MA plan.
This is a trillion-dollar market for the health plans, and growing ever larger.
The question we should be asking is, does Medicare Advantage work for taxpayers?
In his Hospitalogy newsletter Blake Madden writes of the recent MEDPac Report, “Since 2007, we estimate that Medicare has paid $507 billion and will pay $83 billion more for MA enrollees in 2024 than if those beneficiaries had instead been in [fee-for-service (FFS)] — a total of $591 billion. Over half (an estimated $338 billion) of the MA payments above FFS spending will have occurred in the last five years — from 2020 through 2024. These higher payments are increasingly driven by coding intensity, which we estimate accounted for the largest share of payments above FFS spending from 2022 through 2024.”
There’s a lot to unpack here. First, providers are suffering under the yoke of bad behavior by the MA plans, poor yield on MA contracts, and payments for care that are well below the traditional fee for service adjuster (FFSA) payments that would have been realized from traditional FFS Medicare. Second, taxpayers are paying more for MA than they would for traditional FFSA Medicare. And third, payors are realizing massive gains as a result of “coding intensity.” When we hear “coding intensity,” hold onto your wallet.
All these factors combine and point to two realities.
- Every hospital and health system must evaluate its MA partners and which networks to participate in. Now is the time to be very strategic.
- The federal government owes it to taxpayers to carefully analyze whether MA has fulfilled its goals and its original promise — a tall order for a federal government mired in gridlock, but the Medicare trust fund is projected to be insolvent in 2036, just 12 years from now.
Ready to Make Your MA Agreements Work for You?
Unlock Health is here to help negotiate these issues and many others in the complex world of payor/provider contracting. Our full-service managed care consulting group helps providers set their managed care strategy, negotiate contracts, and handle all the contract modeling, analytics, and contract performance. And when negotiations are difficult or contentious, we pioneered the use of strategic marketing communication campaigns to protect the provider’s brand and create pressure on the payor for a fair and reasonable settlement of contract negotiations. Contact us to speak with a managed care expert and learn more about how our unique approach to managed care is winning our clients better agreements and higher returns.
Like what you’re reading? Read the second post in this series here.