From Tom's Desk

Not everyone has access to a Medicare Advantage plan.  CMS requires that regions have a certain level of local medical service in order to be eligible for contracting, including parameters for clinician density, inpatient facilities, home health and hospice. But developing these resources takes time and money, so naturally insurers migrate toward offering plans in metropolitan areas where they already exist.

But the low hanging fruit in the cities and suburbs has now been picked, and competition for new lives is fierce. In an effort to encourage insurers to move into underserved areas, CMS is beginning the process of shifting resources to account for the increased associated costs of setting up the supporting services needed to contract in these areas.

That’s good news. I can personally attest to the value that can be generated for insurers, clinicians and patients when a Medicare Advantage plan opens into an underserved area.

After over a decade of success with our Medicare Advantage program, we convinced one of our insurer/partners to bid on a contract for a neighboring county. Even 10 years ago the response in the area far outstripped anything either of us expected—to the point that our little office outpost was by far the greatest revenue generator per square foot in our organization.

The most valuable result, however, was not the increased revenue, the improved specialty referral streams, or even the experience gained.  It was the word of mouth that we were willing to expand our services into a previously ignored area.  The patients, clinicians and the insurer were all big winners.

And now CMS is using changes to it’s capitation model to shift additional resources in an effort to replicate this experience across the country.  As the competition for urban lives heats up, I wonder who is going to recognize the immense opportunity of these underserved areas in this new Medicare Advantage environment.

You Should Know...

First quarter earning reports for all the major insurers are in and the growth of government business pushed all of them to better-than-expected earnings. Even Aetna reported a smaller than expected loss. With the end of Cigna’s compliance-related moratorium on signing up new lives, all the major players anticipate accelerating growth in the Medicare Advantage space.

They should be very careful what they wish for.

Riding the demographic wave is a fine business strategy, but rarely is there any acknowledgment by insurers that the government revenues they are booking are based on the assumption of the healthcare costs of their new enrollees.

Everyone is fat and happy now. Capitation rates are high, cost control efforts cheap and modest, and even with the recent spate of multi-billion dollar qui tam actions, compliance enforcement seems more an annoyance than a challenge.

Yet any combination of cost control failure, gross revenue cuts and accelerating regulatory burden will quickly bring the party to an end.

If you’re looking to invest your time and treasure in working with one or more Medicare Advantage insurers, then find the organizations who aren’t simply riding a market acquisition strategy, but are investing in their care delivery systems, such as through shared-risk partnerships with their providers. They’ll not only be survivors, but thrivers.

High-Value Insight

Candidal Esophagitis (ICD-10 B37.81) is a fungal infection of the esophagus. It’s a not uncommon finding noted when the esophagus is directly visualized by a digital camera or “endoscopy,” usually ordered for pain in patients whose immune systems are suppressed by drugs or illness.  Because of it’s cost implications, it’s also associated with a significant boost in a patient’s risk score and subsequent capitation.

The challenge? The diagnosis must be confirmed by culture or stained biopsy to be valid. To shorten their own revenue cycle, most workflows at endoscopy centers simply immediately submit the endoscopy encounter for payment on the day of the procedure, usually with a nonspecific code of inflammation.

The result?  Thousands and thousands of dollars of lost gross revenue and the full assumption of the costs associated with the diagnosis.

The fix? Set up a workflow within your endoscopy suite to hold submission of encounters until all pathology results from biopsy are back, making sure the diagnostic codes are the most specific supported.  Or, if you don’t want to stretch your revenue cycle, make sure every patient who has undergone endoscopy sees the ordering clinician in follow up to address the results.


It’s not enough however, just to send them back to their PCPs, you must explain to your primes both the clinical and the business case about why this workflow is required in order to get the results you desire.


But if you’re not sharing risk and gains with your primes, don’t expect too much.

Q&A with Dr. Tom

Are visits to residential facilities covered under the same rules as house calls?




Care can be delivered by clinicians to patients in residential care facilities (RCF) without having to meet the “cannot leave residence without significant discomfort” standard.  They are billed as domiciliary visits rather than as house calls.

In fact, several clinicians I have worked with have developed ultra-low overhead Independent Medicare Advantage practices simply by traveling from RCF to RCF on a routine basis.  By doing “room calls”, these clinicians can care for their patients, submit the data required for capitation and keep their costs way down.

It’s a great model well worth exploring.

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