CHICAGO—Private insurers have eyed Medicare Advantage as a major opportunity for revenue growth. Providers would be well-served to partner more with those health plans, according to two healthcare leaders.
“It's very strong and very robust, and it's not going away,” Eric Hammelman, a vice president at consulting firm Avalere Health, said of the Medicare Advantage program.
Hammelman and Dan Hoodin, vice president of managed care at Hospital Sisters Health System, spoke Wednesday at the American College of Healthcare Executives' Congress on Healthcare Leadership.
Since 2010, Medicare Advantage enrollment has grown about 8.3% per year, totaling more than 17 million people for 2015. The capitated, managed-care program has become popular among the growing ranks of baby boomers. Many plans offer reduced cost-sharing or added benefits like gym memberships to entice beneficiaries away from regular fee-for-service Medicare, but provider networks are often much more limited.
Hoodin said contract negotiations between his 14-hospital system, which operates in Illinois and Wisconsin, and Medicare insurers often can be laborious. One company told Hoodin they were the largest Medicare Advantage plan in a local market. But after Hoodin and others dug into publicly available Medicare data, they discovered the plan in question was not the largest and only used data from the most recent open-enrollment period.
“That tells you a little bit about the games they can play,” Hoodin said.
But increasingly, insurers are coming to providers with a more collaborative approach, Hammelman said. That's because providers can help insurers improve their star ratings, which are correlated to bonus payments from Medicare.
Under the Affordable Care Act, health plans need at least four or five stars from the CMS to have bonus payments added to their benchmark rates. Those stars are measured, in part, by how well insurers manage chronic conditions. For example, insurers are rated on how well they improve osteoporosis management for women and reduce the risk of patients falling.
Since those areas directly fall within patient care instead of benefits, high-quality hospitals and doctors have become targets for plans, Hammelman said. And providers can tilt contract negotiations in their favor if they demonstrate their care quality over long periods of time.
“Plans want providers in it for the long haul,” Hammelman said.
The CMS proposed cutting average Medicare Advantage benchmark rates by 0.95% for 2016. Insurers and the government are locked in a lobbying battle that will likely lead to a positive overall pay bump. Final rates will be announced April 6.
Follow Bob Herman on Twitter: @MHbherman