Medicare Advantage trends, payments and challenges are a critical aspect of the modern healthcare landscape, requiring specific activities on behalf of their patients and changing payment patterns where risk is shifted from the Payor to the participating physicians and organizations. The Medicare Advantage future is shaped by key trends, payment models, and challenges, including the role of Accountable Care Organizations (ACO) and Management Service Organizations (MSO). This blog delves into these aspects, focusing on how they influence the managed care system’s evolution.

Key Terms in Managed Care

Understanding the future of managed care requires familiarity with several essential terms:

Risk Reimbursement

Risk reimbursement is a fundamental concept in managed care, where insurers assume financial risk by receiving a fixed payment per enrollee. This payment model incentivizes cost control, as insurers must cover costs exceeding the capitation amount. For example, a Medicaid-managed care plan might allocate $500 per member per month, with insurers becoming responsible for any expenditures above the allocated amount.

Medicare Risk Adjustment (MRA)

Medicare Risk Adjustment is based on adjusting payments based on enrollee health status and demographics. This system aims to account on the patient’s health status and adjust payment based on their healthcare needs. An enrollee with multiple chronic conditions, for instance, will generate a higher risk score, leading to increased payment for their care.

Healthcare Effectiveness Data and Information Set (HEDIS)

HEDIS measures are critical for evaluating healthcare quality, encompassing preventive care, chronic disease management, and patient satisfaction. High HEDIS scores can improve a plan’s star rating, attract more enrollees, and increase financial bonuses from Medicare. A Medicare Advantage plan, for example, might achieve a 5-star rating by excelling in cancer screening and diabetes management.

Accountable Care Organizations (ACO)

ACOs are groups of healthcare providers that collaborate to deliver coordinated care to Medicare patients. Ideally, this cooperation is expected to avoid unnecessary services and prevent errors, ACOs aim to improve patient outcomes and share in cost savings. An ACO managing chronic conditions may implement comprehensive care plans, reducing hospital readmissions and enhancing overall health.

Management Service Organizations (MSO)

MSOs provide administrative services to medical practices, allowing healthcare providers to focus on clinical care. They manage tasks such as billing, coding, and compliance, which can be particularly beneficial for smaller practices. For example, a small physician group might partner with an MSO to streamline administrative tasks, ensuring efficient operation and regulatory compliance.

Payment Models in Managed Care

Fee-for-Service (FFS) and Risk Reimbursement

The Fee-for-Service model reimburses providers for each service rendered. In contrast, risk reimbursement models assign a set payment amount per patient. Fee-for-service models are supposed to pay providers within 30 days of receiving a clean claim while risk models may take up to 15 months to start paying for the services provide to a patient.

Value-Based Care (VBC) and MRA

Value-based care is designed to shift the focus from volume to value, rewarding providers for achieving designated goals. Medicare Risk Adjustment plays a critical role in VBC by adjusting compensation based on documented conditions that support patients’ MRA codes. For example, a practice under a VBC model may receive a lower payment than another practice with a similar patient due to the failure of the second practice to support the patient’s MRA codes.

Challenges and Trends Shaping Managed Care

The future of managed care is influenced by several challenges and trends:

Payment Disputes and reduced payments

A Department of Health and Human Services Office of Inspector General (OIG) report showed that Medicare Advantage plans delayed and denied patients access to medically necessary treatment. The OIG also found that 13% of the prior authorization requests that were denied by Medicare Advantage plans met the clinical coverage rules of traditional Medicare. Of the claim-payment denials in the study sample, 18% met Medicare coverage rules and Medicare Advantage plan billing rules.

Based on that study alone it should not be a surprise that Hospitals and Providers nationwide are dropping Medicare Advantage plans.

Phantom Networks

Medical experts have urged Congress to take action against insurance companies for inaccurate medical directories that can hinder patients’ access to mental health treatments. This issue, commonly referred to as a “ghost network,” occurs when health insurance providers claim to offer coverage but direct customers to doctors and providers who either do not exist or are unavailable.

Senate Finance Committee Chair Ron Wyden (D-Ore.) expressed his view that insurance companies selling plans for thousands of dollars each month, while their product is unusable due to a ghost network, is a breach of contract. This situation creates significant challenges for patients care, as they are unable to find suitable providers within their insurance network.

Commercial Market Focus

Medicare Advantage plans are encountering obstacles to growth as the market shifts from fully insured arrangements to self-funded models. This transition presents challenges in terms of revenue streams and sustainability.

Increase Administrative Burdens

Unlike the fully insured commercial market, government programs require Payors and participating providers to navigate a complex regulatory landscape that is subject to frequent changes and updates. This means that they must stay informed about evolving rules and guidelines to ensure compliance and avoid penalties. The regulatory landscape for government programs is resource-intensive, requiring Payors and participating providers to invest in expertise and infrastructure to keep up with the changing requirements.

The Future of Managed Care

Increased Scrutiny of Managed Care Operations and Payment Practices

Managed care operations and payment practices will face increased scrutiny as the healthcare industry evolves. This scrutiny stems from regulators, policymakers, and consumer advocacy groups placing a greater emphasis on monitoring and regulating managed care organizations to protect the interests of patients and ensure quality care.

Shift Towards Value-Based Care Payment Models

One of the key trends in the future of healthcare is the shift towards value-based care payment models. Value-based care focuses on payment based on metrics rather than services. Value-based models also shift the risks to the healthcare providers and organizations.

Integration of Technology and Data Analytics

The integration of technology and data analytics is another key trend shaping the future of managed care. Healthcare organizations must leverage technology solutions and advanced analytics to track and report the designated values that will result in payment for their services. Data analytics, including predictive modeling and machine learning, help identify patterns, trends, and insights from large volumes of healthcare data. These insights can inform clinical decision-making, identify high-risk patients, and optimize resource allocation..

Cash Models and Integrative Medicine

In addition to the aforementioned trends, a portion of the healthcare market is expected to move towards cash models and integrative medicine. Cash models involve patients paying directly for healthcare services, bypassing insurance reimbursement. This approach offers greater flexibility and control for patients, allowing them to choose providers and services based on their individual needs and preferences.

Integrative medicine, which combines conventional medical treatments with complementary and alternative therapies, is also gaining popularity. This approach recognizes the importance of addressing the physical, emotional, and spiritual aspects of health and wellness.

Conclusion

The future of managed care is complex and dynamic, influenced by key trends, payment models, and emerging challenges like phantom networks. By understanding these factors and adapting to changes, stakeholders can survive and potentially thrive in this evolving market.