Of all the buzzwords in the Medicare conversation at the beginning of the new year, none is getting more press time than the Medicare Advantage (MA) topic. The advantages/disadvantages to the consumers and the advantages/disadvantages to the industry are constant sources of debate and prediction. But with all the talk, one thing is nearly for certain: MAs are here to stay.
MA plans are a type of health insurance plan that provides coverage within Medicare Part C. These plans pay for managed health care based on a monthly fee per enrollee (capitation), rather than on the basis of billing a fee for each medical service provided (fee-for-service, FFS), which is the way original Medicare Parts A and B work. Most such plans are health maintenance organizations (HMOs) or preferred provider organizations (PPOs). MA plans finance at a minimum the same medical services as “Original” Parts A and B Medicare. Part C plans, including Medicare Advantage plans, also typically finance additional services, including additional health services, and most importantly include an annual out of pocket (OOP) spending limit not included in Parts A and B. For the consumers, this can (but not always does) mean better coverage at reduced prices.
In 2004, there were an estimated 5.3 million seniors enrolled in Medicare Advantage plans. In 2018 that number was 20.2 million and enrollment is expected to increase another 12% in 2019! According to Anne Tumlinson, CEO of Anne Tumlinson Innovations (ATI), “Medicare Advantage plans offer [the consumer] a better deal over traditional fee-for-service in terms of the out-of-pocket exposure, cost exposure, and the opportunity to get supplemental benefits that are not otherwise covered by Medicare.” But what about for the providers? How do MAs affect their bottom line?
Data collected on MA participants has shown that for complex care needs, there are very little difference between MA covered patients and those who are covered by traditional Medicare – meaning that if SNFs can prove to insurance partners that they are able to provide high-quality care to patients with complex conditions, they can position themselves for success. Yet while having solid outcomes data to back up their claim of excellence is a great first step, SNFs will need to go further to ensure ongoing success.
National Investment Center for Seniors Housing and Care (NIC) strategic advisor Robert Kramer, pointed out “The reality is that even though [acute care hospitals and insurance companies] may be saving dollars in terms of total health system dollars, and in terms of saving dollars for the MA plan, they’re not voluntarily willing to gain-share,” [referring to bonuses offered to SNFs for hitting certain savings benchmarks.] That’s why you see many providers now, post-acute care providers, long-term care providers … banding together in consortiums or coalitions, basically to have more leverage.” ATI Vice President Mary Coppage voiced the same concern in a Skilled Nursing News story. “There aren’t really incentives for them to share with SNFs, and there’s nothing telling them they have to,” she said. “I think they also know SNFs are in a relatively vulnerable position and need those strong relationships with the [MA/ACO Plans] to maintain their [census].
Clearly, MAs are changing the landscape of Medicare and, subsequently, the long-term care industry. Acknowledging these changes and identifying strategies to embrace the future are key to the success of SNF communities, and all long-term care providers. In the venerable words of Tony Robbins, “Change is inevitable, Progress is optional!” Choose progress.