Medicare Advantage and Disadvantage: TRUE/FALSE Scenarios
Below are 10 true/false questions and their answers on the federal Medicare Advantage program. Medicare Advantage is “sponsored” and “supervised” by HHS/CMS, but operationally, it is primarily run by private, for-profit carriers.
1. Medicare Advantage covers 55% of eligible beneficiaries or more than 35 million people. TRUE
It’s a very big deal, population-wise. Therefore, when you think of all of Medicare, don’t think of it as “your father’s Medicare”. It’s not. If Medicare availability/accessibility in any format is lessened for whatever reasons, life expectancy for seniors decreases.
2. Medicare Advantage (MA) for profit insurance companies (carriers) often increase their profit margins by inaccurately upcoding their Medicare Advantage patients’ clinical severity. TRUE
MA carriers are paid by HHS/CMS on a per capita enrolled basis. The carrier’s pay is adjusted upwardly by the “documented” clinical severity of the covered patient. The higher the clinical severity, the higher the per capita payment to the carriers, irrespective of what the carrier actually spends on providers. However, independent searches for the asserted higher clinical severity show that the clinical documentation for this upward severity adjustment is often not actually present to the degree to which the carrier(s) claims.
3. The greater the profitability of MA carriers, the greater the margins achieved by hospitals serving these MA patients. FALSE
The margins of MA carriers, high or low, real or “created”, have no direct cause and effect on the hospitals’ margins, or lack thereof.
4. Medicare Advantage for-profit companies (and they almost all are for-profit) often or routinely increase their margins by cutting payments to hospitals and physicians by applying inappropriate and/or excessive out-of-network penalties and other dollar takeaways. TRUE
For example, emergency visits are often out-of-network but usually should be considered in-network and covered in full, i.e., paid for by the MA carrier. The MA carrier will attempt to cover this on an out-of-network basis so that the carrier makes more money in this scenario by keeping a greater percentage of their per capita government fees. Certain sub-specialties that are not readily available in-network, must be seen out-of-network for timely, effective treatment. They should not be reimbursed at out-of-network rates as some/many MA carriers often do.
5. Currently and in general MA pays providers more than generic Medicare. FALSE
In many cases, MA will pay less on a net basis, compared to generic Medicare, when one takes into account out-of-network and prior authorization mechanisms and other dollar subtractive mechanisms applied by MA carriers. Additionally, MA carriers will further cut hospital dollars by denying more claims, negotiating lower payment rates and reclassifying treatment locales from inpatient to observation, etc., etc.
6. Medicare Advantage has for many hospitals in certain locations filled more beds than generic Medicare. However, the significantly increased hospital dollar losses from MA per patient have made MA a losing, non-sustainable carrier for the majority of hospitals that significantly admit large numbers of MA patients, particularly rural/small/independent hospitals. TRUE
Filling beds with negative margin MA patients has increasingly limited financial or operational hospital viability or appeal.
7. Medicare Advantage plans are (1) 70% more likely than generic Medicare to deny claims due to “incomplete medical records” and/or (2) to request “additional documentation” 4-8 times more frequently than generic Medicare. TRUE
Both (1) and (2). While some of these denials are appealable, the cost of the appeals and fixes can be substantial, especially for rural/small/independent hospitals which often lack the experience, expertise and staff numbers and budget to do this economically, timely and effectively.
8. MA plans are 50% more likely than generic Medicare to deny claims based on medical necessity. FALSE
MA Plans are 100% more likely than generic Medicare to deny claims as based on medical necessity. Again, as above, these are often successfully appealable, but at a significant dollar, time and staff cost.
9. Most MA denials that are fully appealed are eventually overturned. TRUE
This is true, however, large numbers of denials and underpayments are NOT appealed or fully appealed. As mentioned above, MA appeals of any kind are costly, time consuming and require expertise and experience, which most rural/small/independent hospitals don’t have immediately available. Nor are these appeals and contestations affordable for these economically stressed and pressed hospitals.
10. Despite all these handicaps and barriers referenced above, MA enrollment continues to grow. TRUE
This is true, however, as bad news grows about MA, MA’s rate of growth has substantially slowed.
So, what’s to be done, especially for rural/small/independent hospitals?
- Contract and work with an outstanding comprehensive, AI-based revenue cycle management company, e.g., Microscope.
- Work to immediately recover the maximum recoverable dollars from both your Medicare Advantage patient coverage and your generic Medicare patient coverage, ASAP, i.e., NOW!
- Maximize the work that can be done on a purely zero-risk, purely contingent basis from your management consultants.
- More forcefully and frequently negotiate with and contest your major carriers, particularly on denials, documentation requirements, expedited appeals, medical necessity, prior authorization, out-of-network penalties, etc., for both Medicare and Medicare Advantage, as well as for Commercial coverage.
- Push local employers to transition back to generic Medicare.
Understanding the problem is step one. Recovering the dollars is step two. Let’s talk about how much your organization could be missing—and how to get it back.
For more information, please contact:
Richard Kunnes, MD | Managning Principal, Margin Solutions
