Why Hospital and Health System Leaders Must Understand Medicare Advantage

The popularity of Medicare Advantage has grown exponentially over the last 10 years. Over half of Medicare beneficiaries are now on a Medicare Advantage (MA) plan. Even if the thought makes your eyes glaze over, you can see why it’s so important to keep an eye on MA.?

When some of your biggest elective revenue involves Medicare Advantage patients, it is important to take notice of MA trends. In my case, we at Curvo work in the medical device arena, which includes hips, knees, heart & vascular, and other procedures growing right along with the Medicare-eligible population.?

Friction with patients, providers and payers has put MA plans back in the news. Hospitals and enrollees have grown frustrated with MA and some private payers have come under fire for excessive denials and for overbilling. Under original Medicare, denial hovers around 1%, but MA denies 22% of claims, and pre-authorizations are very slow.?

Medicare Advantage AKA Medicare Part C

For the basics of Medicare Advantage, you can browse some of the many, many online resources out there, but in a nutshell, MA is the commercially available version of Medicare.?

Traditional Medicare Part A provides inpatient care that's funded by taxpayers. Medicare Part B covers everything outpatient-related, like office visits and lab tests, and Part B comes with a premium.

Medicare Advantage, known as Medicare Part C, is a combination of Parts A and B. MA also carries a premium, but it’s lower than Medicare Part B alone. If you’re a healthy, Medicare-eligible person who doesn’t anticipate much outpatient care, Part C might be for you.?

Medicare Advantage Plans – Attractive But Risk-Based

The Centers for Medicaid and Medicare Services (CMS) fund Medicare Advantage, but outsource MA plan management to private payers. If you enroll in Medicare Advantage through United Healthcare, for example, CMS sends United a capitated payment for you for the year. It's up to United to manage that money. They keep every dollar they don't spend, but if you get very sick, the MA plan loses money on you.

MA offers price “advantages” among other things, but the promise of lower costs and lower out-of-pocket hasn't always been met. Although MA coverage sounds attractive, it's risk-based, and it's up to the insurer and the enrollee to aggressively manage care and wellness. This has spawned higher-than-usual denial rates.?

Hospitals Lead through Patient Advocacy

Most healthcare professionals have at least a passing knowledge of MA, but at the leadership level, that might not be enough. Today MA impacts healthcare systems in significant and not always positive ways. Has your leadership had discussions about the situation? It’s an important topic, given Medicare, specifically Medicare Advantage, has become such a behemoth.?

As MA denials, prior approvals and other obstacles cause problems, hospitals are pushing back. Some frustrated systems are dropping the popular coverage altogether. Others are adopting greater patient advocacy or using messaging campaigns to influence Medicare beneficiaries during open enrollment.?

As more systems abandon Medicare Advantage, where does that leave patients? Sometimes consumers must return to traditional Medicare to get specific care from certain providers. The friction is real.?

If enrollees are frustrated because of high denial rates, what can healthcare leaders do to help and advocate for the patient? Having leadership conversations is critical.

Grow Medicare Advantage through Reform

Hospitals have a meaningful stake and voice in Medicare in all its forms. Over half of the Medicare market is Medicare Advantage, and Medicare remains a major revenue source for healthcare systems. Hospital growth is tied to the continued health of the plan, so preserving Medicare means preserving growth for health systems.

How can hospitals help grow Medicare into its next phase with equitable bonus payment distribution and reduced denials? Without question, the Medicare Advantage bonus plan has grown large and controversial, and needs reform. Federal spending on MA bonus payments has increased steadily every year, reaching over $12 billion in 2023. Hospitals can advocate for change in payment flow and for bringing denial rates in line.

It takes Congress, insurers and providers coming together for the good of patients. It takes a capitated, risk-based plan that can work. Curvo touches many elective procedures, and as Medicare is a big payer for these, we also want to work towards a solution.?

Medicare Advantage has had unintended consequences, but by not participating in reform, hospitals miss opportunities to grow the program in positive directions. The goal of rewarding quality care and health remains valid. For example, Supply Chain can help drive clinical quality via reduced product variation.

The future of Medicare and Medicare Advantage is worth a discussion with payers, executive leadership and your healthcare supply chain. What are your thoughts?