In an effort to control Medicare costs, the government few years ago introduced Medicare Advantage plans which are administered by private insurance companies.
Medicare pays the insurance company a fixed amount per enrollee per year to manage the care provided to the beneficiary who enrolled with the insurance company.
These beneficiaries opt out of the traditional Medicare plan administered by the Government. However, they may re-enroll with traditional Medicare during open enrollment.
These plans are aggressively marketed by insurance companies to Medicare beneficiaries. They have proven to be “cash cows” for the insurance industry.
The insurance companies reimburse as per the Medicare rates, however to make them attractive to the average Medicare beneficiary they add extra benefits including health club memberships in some cases.
On the surface the reimbursement per enrollee seems reasonable. However, the government has complex formulas, where for patients with many illnesses the insurance is reimbursed several thousand dollars more to manage these situations.
The New York Times recently had an interesting article where a national insurance company was fined several million dollars by the government for manipulating the diagnosis on such claims to qualify for the extra dollars.
What is the impact for you the physician?
Unlike, traditional Medicare which does not require prior authorization, Medicare Advantage plans operate like any managed care plan. This puts an extra burden on the practice to ensure all the rules imposed by such insurance company are followed prior to rendering care.
The denial rate on claims for these Medicare Advantage plans is much higher than traditional Medicare. This increases the cost to collect from these plans.
As a practice you must be familiar to recognize this pool of patients and follow all the rules and regulations prior to rendering the service.
Cutting Benefits to Medicare Recipients – Boosting Insurance Company’s Profits:
From the initial introduction of these plans, the insurance industry has found how to make these plans very profitable. Since the government has given them flexibility in offering benefits and managing care insurance companies have benefited tremendously from offering these plans. The government has also benefited to some extent in controlling their costs and continue to encourage beneficiaries to opt for these Medicare Advantage plans.
It is evident from the movement in the stock prices of all the large healthcare companies that Obamacare had been a bonanza for the profitability of such companies. All the companies stock prices have increased by over 300% in the past five years. This is all despite many experts saying that the Obamacare laws would be “bad” for the healthcare companies and their stock values.
Who are the losers?
The patient and physician are both disadvantaged with these plans. The patient must make sure that they follow the guidelines for care to ensure the provider is paid for the service and they are not held responsible. The physician has the added cost for billing and getting all the prior authorizations before rendering care or less they will not get reimbursed for the services.
It is a sad commentary, the two most important entities in the healthcare equation: Patient and Physician continue to be victims in the US healthcare system.
If you are seeking advice on how to reduce your losses to Medicare Advantage plans or looking for insight on how to navigate healthcare plans please feel free to contact us.