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2016 May Bring Changes to Medicare Advantage Payment Rules

2016 May Bring Changes to Medicare Advantage Payment Rules

Recent reports that Iowa's UnityPoint Health system is partnering with Minnesota's HealthPartners to create a new health insurance company called HealthPartners UnityPoint Health has brought attention to a growing trend in which smaller health systems are setting up separate insurance plans based on Medicare Advantage.

"The growth of provider-owned health plans likely will not subside, because systems want to raise revenue where they can," writes Bob Herman for Modern Healthcare. "They also see value in controlling premium dollars, which may help them better manage care for high-risk patients like Medicare beneficiaries, who typically represent half of a hospital's patient base."

Medicare Advantage allows private companies to offer Medicare health plans to patients, and this has become increasingly popular in the United States, with about one third of the 54 million U.S. Medicare beneficiaries having joined Medicare Advantage, according to Herman.

“Medicare Advantage is most definitely an area that has piqued most folks' interest,” Kevin Weinstein, chief growth officer at Chicago's Valence Health, told Herman. “These are the patients that require the most care coordination. There's the most to gain clinically, and if you're at risk for them, the most to gain financially.”

"The gates are wide open to capture that market share because competition from large, private insurers varies widely," Herman adds. "For instance, Iowa's largest insurer, Wellmark Blue Cross and Blue Shield, does not sell any Medicare Advantage products."

Next door to Iowa and Minnesota, Wisconsin has been trailblazing this method of hospital-owned health insurance service for decades. Though only about 13 percent of health systems nationwide offer a health plan, Wisconsin has nine, putting it in second place after Texas, explains Herman in a separate Modern Healthcare article.

"The Badger State ultimately could serve as a prototype for health systems that are trying to shift their focus away from filling hospital beds and toward more risk-based care coordination," writes Herman.

“A lot of communities didn’t have strong national or Blues penetration, and there had to be an answer to someone financing healthcare,” said Deloitte health care analyst Bill Copeland told Herman. “The dominant market leaders — provider systems — started those plans a long time ago.”

Potential Changes to Medicare Advantage Payment Rules

Speaking of Medicare Advantage, congressional advisors are pushing for changes to the program believed to make payments "more equitable," according to Bloomberg BNA's Mindy Yochelson.

"One draft recommendation to be formally considered in January by the Medicare Payment Advisory Commission would eliminate both caps on benchmarks, which determine how plans are paid, and the doubling of quality bonuses that are paid in some counties but are unrelated to a difference in performance," Yochelson writes, explaining that the removal of these provisions "would make MA plan payments fairer and simplify the system."

The same draft recommendation would also eliminate the “double quality bonus,” which are said to be the result of outdated geographic spending patterns. "At great expense to Medicare, double bonuses in the Medicare Advantage Quality Bonus Payment Demonstration were not associated with improved quality but were associated with more plan offerings," University of Michigan researchers concluded in a study published in Health Services Research.

“The cost of eliminating the caps is completely offset by elimination of the double bonuses,” said MedPAC principal policy analyst Scott Harrison, resulting in a redistribution of payments.

The Medicare Payment Advisory Commission unanimously backed the recommendations last week, reports Modern Healthcare.

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