After years of explosive growth, Medicare Advantage crossed a major tipping point in January: More than 50% of all Medicare beneficiaries are now covered by an MA plan.
That’s according to an analysis of federal data released this month by KFF, which found 30.2 million of the 59.8 million people with both Medicare Part A and Part B were enrolled in a private plan.
While consumers continue to flock to such plans for their zero-dollar premiums and appealing supplemental benefits, skilled nursing providers may feel like their long-running complaints about the plans’ affect on care quality are finally being heard.
That’s because the Centers for Medicare & Medicaid Services in late April finalized a Medicare payment rule that aims to greatly restrict plan practices that have kept many seniors from accessing post-acute care, or at least accessing it in a timely way. Those same delay and deny tactics also have cost providers a fair chunk of their revenues as MA penetration has grown, often reducing referrals, lengths of stay and per-day payments.
As the 2024 Medicare payment rule kicks in on June 5, providers and those who study the business of healthcare are pondering what might happen as federal regulators’ new appetite for MA rule-making intersects with record beneficiary enrollment.
“Does the regulatory environment become harder and scrutiny intensify and those in effect put brakes on growth?” asked Fred Bentley, managing director of ATI Advisory. “I wouldn’t pretend to know. But … let’s say it gets to 55 to 60%, all the sudden, policymakers and regulators are thinking, ‘Wow, this is Medicare and they are managing the majority of Medicare beneficiaries, and we’re going to scrutinize them in a way that we haven’t.’”
That’s the hope of researchers behind a paper published Thursday in the New England Journal of Medicine. Data related to Medicare Advantage care provision and payments is largely missing, especially when compared with the rich datasets available for Medicare fee-for-service patients.
The lack of MA transparency makes it hard for providers to know what kinds of rates they might be able to negotiate. It also has been challenging for those who study healthcare quality to see if the switch to privatized Medicare plans — in which plans are incentivized to reduce costs — has harmed patient care.
The authors, among them Claire K. Ankuda, MD, MPH of the Icahn School of Medicine at Mount Sinai and Harvard’s David Grabowski, pointed out that the program has gone from one largely covering healthier beneficiaries than did traditional Medicare to on increasingly insuring people with serious illness. Many of them are in special-needs plans that cater to beneficiaries who are dually eligible for Medicare and Medicaid, those residing in institutions, and those with certain chronic illnesses.
“For enrollees with serious illness, who often require extensive care provided in multiple settings, the program’s cost-control mechanisms — such as coverage denials, narrow provider networks, and prior-authorization requirements — may undermine the ability to receive necessary or high-quality care,” wrote researchers from eight prominent universities and hospitals. “We believe a comprehensive approach that prioritizes improving data transparency and quality measurement is necessary to ensure that the Medicare Advantage program facilitates the delivery of high-quality and equitable care.”
‘Have to fight for it’
Traditionally, the two services most often denied by MA plans have been MRIs and nursing home stays.
That’s one reason Maureen McCarthy, president and CEO of Celtic Consulting, has said skilled nursing providers must educate themselves on the new MA rule and stand up to insurers who may try to keep using underhanded tactics.
The rule, at the urging of the two major US nursing home advocacy groups, explicitly requires insurers to cover all services available under traditional Medicare. As of June 5, practices around coverage and length of stay were also required to comply
with national coverage determinations, local coverage determinations, and the coverage and benefit conditions of traditional Medicare.
That means Insurers should no longer be able to reject payment based on their own medical determinations. Now, medical necessity and other clinical decisions are to be dictated by the patient’s provider — a nursing home’s rounding physician or medical director — rather than a plan’s case management team. Also, pre-authorizations will be allowed only when a diagnosis is unclear, which should make for easier transfers of hospital patients.
Still, the rule’s impact on both admissions and length of stay was unclear at press time.
“I don’t think the rule will open the floodgates, but you could see incremental cases where in the past a plan would have said, ‘We’re sending them to home health,’ to ‘OK, this looks like the kind of patient for which skilled care was recommended. They meet the criteria. We’ll send them to a SNF,’” predicts Bentley. “Now, how long will they stay? The plans are still going to tightly manage length of stay.”
MA negotiations remain key
MA insurers find themselves under greater pressures on several fronts these days.
In March, while awarding plans an average 3.3% raise for 2024, CMS also announced it will start recovering improper payments. The potential clawbacks, combined with rules that also limit plan marketing, could potentially slow MA growth after years of explosive expansion.
Still, the New England Journal of Medicine authors predicted the program’s projected enrollment would climb to 60% of beneficiaries by 2030. And that means skilled nursing providers need to continue getting better at negotiating, and potentially, using the current regulatory view of plans to their benefit.
“There are a couple things that SNFs need to do to get the best rates that they can,” Bentley said. “There’s the basic blocking and tackling of negotiating with plans that honestly maybe a lot of senior care companies haven’t done or have a lot of experience with.”
But insurers also have been underselling and “seeing what they can get away with,” Bentley said.
“Networks that can put aside competition and negotiate as a pack through clinically integrated networks will find themselves in a stronger position,” he added.