Optimizing Hospital Management with Medicare Advantage Plans

Since its inception with the Balanced Budget Act of 1997, Medicare Advantage (originally known as Medicare + Choice under Medicare Part C) has evolved into a pivotal element of American healthcare. This transformation was further solidified by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which not only renamed it to Medicare Advantage but also introduced Medicare Part D. These legislative changes mandated that plans annually submit cost estimates for delivering Medicare benefits in the forthcoming year, setting the stage for today’s challenges and opportunities.

Medicare Advantage plans, offered by providers such as United Healthcare and Humana, have surged in popularity due to their comprehensive coverage which extends beyond the traditional Medicare Parts A and B. These plans often include additional benefits such as dental, vision, hearing, and prescription drug coverage. They also typically feature lower monthly premiums and capped out-of-pocket expenses, unlike their traditional counterparts. However, these advantages come with their own set of challenges, including restrictive network participation and stringent prior authorization requirements.

Currently, the soaring popularity and the expansive benefit options of Medicare Advantage plans have led to escalated costs and tightening profit margins for the plans themselves. This financial strain is prompting plans to scale back on benefits, shrink networks, reduce reimbursements to healthcare providers, and increase denials of prior authorizations and claims. These changes have created a challenging environment for hospitals, forcing them to reconsider their participation in these plans due to increased denials and diminished reimbursements.

For hospital organizations, navigating this landscape requires a strategic approach. The decision to maintain or terminate Medicare Advantage contracts is complex. Effective management of these contracts is crucial, taking into account factors such as service utilization by subscribers and the impact of claim denials. Hospitals must also prepare for the implications on patient care and financial health when deciding to exit contracts, ensuring continuity of care for affected patients and maintaining steady revenue streams.

At Microscope we understand the complexities involved in managing Medicare Advantage contracts and the broader implications for hospital operations and patient care. Our team of experts specializes in providing tailored solutions that help hospitals optimize their contract portfolios, enhance operational efficiencies, and improve financial performance. Whether you are looking to refine contract management processes, navigate the challenges of reimbursement, or strategize for sustainable growth, Microscope is here to guide you every step of the way. Let us help you turn these challenges into opportunities to better serve your patients and strengthen your bottom line. 

For more information, please contact:

Richard T. (Terry) Lang, CPA, FHMFA - Principal