Medicare Advantage is rapidly becoming the only government healthcare insurance game in town. As “traditional” Medicare mutates into a “non-pay for non-provable performance” model, it is clear to anyone watching that the draconian penalties and minimal bonuses are not worth the investment in either time or technology. On multiple levels, “traditional” Medicare is a certain loser for clinicians.
Fortunately, the clinical compensation possible through the Medicare Advantage program holds out the promise of being able to serve the patients who have no choice but to rely on government-sponsored healthcare while, at the same time, actually generating an equitable return on the clinician’s efforts.
Despite the opportunities for clinical and financial freedom, few clinicians take the time to actually learn how the program works and how it is applied through their own individual insurance contracts or compensation formulae. That is unfortunate, and an enormous missed opportunity. Just reading through the next few paragraphs will be worth HUNDREDS OF THOUSANDS OF DOLLARS TO YOU EACH YEAR.
So here goes.
The government allows private insurance companies to create insurance plans to cover Medicare Advantage patients. In exchange for taking full responsibility for the healthcare costs of that patient, the government provides the insurance company with a monthly payment. That way, the government limits its financial responsibility for the healthcare costs of that individual patient to that monthly payment . . . no more. The idea is that private health insurance companies will have better luck controlling healthcare costs than the government.
If the costs of the patient’s healthcare is less than these monthly payments, then the insurance company keeps the profit. If the cost of care is more, then the insurance company takes the loss. It’s that simple.
Since the insurance company is on the hook for the patient’s care costs, it can only do two things to decrease the chances that it will lose money: it can maximize the amount of the payment from the government and it can minimize the amount spent on care.
The amount of the government’s payment is based on demographic factors (sex/age/location etc…) and the patient’s own disease burden. The disease burden data can only come from the clinician and can only be submitted as part of a billable patient encounter (hence the emphasis on the “risk coding” discussed elsewhere). The whole amount is then adjusted based on the insurance plan’s “star rating,” an objective assessment by the government based on the quality of service the patient receives from the insurance company and how well basic care metrics, such as mammogram and colon cancer screening are met.
Cost control has always been challenging for insurers. For Medicare Advantage contracts, they design their insurance coverage so that each patient must be assigned a personal clinician. Patients are required to get all their care coordinated through that healthcare provider using a system of required referrals. Insurers also narrow their networks of specialty physicians to those who they consider to be the most cost effective. Patients are further encouraged to use their PCP as much as possible through significant copay differentials between specialist and prime. Standing alone, though, these efforts usually meet with indifferent success.
The most effective method of cost control lies is sharing the financial gain, or pain with the PCP herself. These arrangements can range from the PCP sharing a part of the financial gain or loss associated with their performance within the insurance contract (a so-called gain-share) all the way to being responsible for all of it (also termed total-risk).
If you are not sure the extent to which you are sharing in the revenues from your Medicare Advantage contracts, I suggest you check your contract or compensation formula . . because if you are participating in a Medicare Advantage program, you are almost certainly on the hook for some sort of revenue share. Once you understand how that share splits out, you can take the appropriate steps in your own workflows.
Important tip: If you are an employed clinician and you find you are not taking part in any share at all, or you get the runaround about how a gain-share is applied “indirectly” in some overall compensation calculation, consider evaluating other clinical opportunities in your area. Medicare Advantage contracts are going to be a key driver of revenue in the years to come and an organization which does not align incentives directly with its clinicians is going to underperform badly, especially on the cost side. Sooner or later, the burden to compensate for this underperformance is going to fall squarely on you.
But within that risk of loss lies the unique opportunity of Medicare Advantage for the primary care clinician. Having skin in the game allows you to be paid for providing care to your patients in the way that you believe is best. Your ideal panel size is only 300 to 500 patients. You will be “their doc” and you will have the time and resources to develop that long-term, bonded relationship with your patients that drew you to primary care in the first place. You will be your patients’ advocate and their healer.
Specialty care is an enormous driver of medical costs today. Simply by using all of your training to optimize your use of specialty care, you will generate all the relative cost savings you will need for equitable compensation. And since your patients will have to pay a share of those costs out of their pockets, they will appreciate the savings too.
Facing unsustainable growth in healthcare costs, the government is grasping at straws, creating an arcane labyrinth of financial penalties and regulatory restrictions that will divert the focus of clinicians away from the patient and decrease patient access to care. All so as to be able to lay the blame for payment reductions at the clinician’s own door. As a primary care clinician, you have far less of a cushion than your specialty colleagues to bear these reductions and still maintain a reasonable financial return on your sunk educational costs.
it’s really gonna suck.
If you want to care for your patients who have to rely on government-sponsored healthcare, your only other choice will be to practice under Medicare Advantage. The beauty about Medicare Advantage is that if you are going to have to be an agent of healthcare rationing, you might as well get paid for it. That way you can at least make sure that it is done right.