Pressure to accept low-ball contracts with Medicare Advantage plans that continue to reduce reimbursement is driving some skilled nursing providers into “a death spiral,” a major aging services association told federal regulators last week.

Payments to providers have diminished over the past 5-10 years, even as enrollment in MA has grown. The issues our members report with payment are not value-based contracting terms that drive quality care; they are merely mechanisms to pay providers less,” LeadingAge’s Nicole Fallon told McKnight’s Long-Term Care News Thursday. “Providers are now reaching a tipping point where they can no longer receive a lower payment for more beneficiaries while being expected to do more work. The numbers just don’t add up.”

LeadingAge submitted similar language in its formal comments to the Centers for Medicare & Medicaid Services, which earlier this summer asked for input on Medicare Advantage that could be used to inform future rulemaking or other policy development. 

Congress has been harshly critical of MA plans of late, with members of one House subcommittee questioning whether CMS is providing adequate oversight of the program. The Kaiser Family Foundation late last month reported that more than 28 million people — or 48% of the eligible Medicare population. — are enrolled in an MA plan.

The plans frequently offer lower upfront costs, but seniors are often denied or delayed access to care they need as they become sicker and near the end of life, a provider complaint backed up by an OIG investigation. Skilled nursing facilities have found themselves fighting routine denials with no real way to fight back as MA dominance grows.

Other provider groups, nursing home executives and industry analysts have also called out high-pressure practices, while an increasing number of skilled nursing providers are embracing Institutional-Special Needs Plans to try and counter some MA pressures.

In its formal comments, LeadingAge highlighted providers’ financial pain as the plans edge toward dominance. Fallon, vice president of health policy and integrated services for LeadingAge, led the organization’s effort to capture member concerns on a well-attended roundtable and in writing.

She said MA issues drew extensive input from the association’s 5,000 nonprofit members, with the number of comments received second only to those connected with a previously proposed 5% Patient Driven Patient Model rate cut.

Some examples she shared regarding practices of MA organizations included:

  • A SNF that reported receiving a flat rate by a plan regardless of the patient’s acuity, and that rate is 75% of what they are typically paid by Medicare FFS.
  • Another being paid $300 less per day by a major national plan than they would be paid under traditional Medicare for the same resident with a high level of need.
  • A high-quality Oklahoma SNF offered a contract with pay equal to a Medicaid per diem rate, even though it is a preferred referral partner for a large hospital system in the area because of its therapy and care capabilities. The plan refused to negotiate and instead pursued contracting with “smaller, less sophisticated SNF providers” who didn’t understand the rate they were being offered would not cover their costs.

Medicare Advantage leaves few options

“MedPAC assumes that providers accept contracts because payments from MA plans are adequate, but the reality is that providers in many markets have no choice but to contract with MA because the MA plan enrollment represents 50% or more of all beneficiaries,” LeadingAge said in its 21 pages of comments. “Choosing not to contract would result in insufficient service volume, making it difficult-to-impossible for the provider to keep their doors open. Providers sign the contracts, creating their own financial death spiral, as plans pay significantly less than Medicare fee-for-service.”

The result is a pattern of lower rates and increased administrative burden, LeadingAge said.

The association also reinforced the idea that MA plans, which are intended to drive quality and value, rarely include post-acute providers in value-based contracts. Fallon suggested the agency:

  • Develop guidance or post-acute specific templates that establish a roadmap with value-based arrangement parameters so providers can begin to earn pay-for-performance and take on more risk over time.
  • Establish goals for the percentage of value-based contracts by provider type.
  • Encourage VBAs between providers and MA plans serving specific or high-need populations.

LeadingAge also asked CMS to establish a stakeholder advisory forum to assist in the early identification of issues, development of solutions and sharing of innovations across plans, providers and the agency. 

CMS had received just under 4,000 comments in response to its request by the end of last week, though those reflect submissions from a wide array of provider groups, plans and other stakeholders.