From Tom's Desk
Managed Care Medicaid Provides A Glimpse Into Your Future
More insights on trends from publishing six months of value-packed observations.
The financial challenges being faced by privately-contracted Medicaid organizations are a glimpse int the future of Medicare Advantage—a vision of what’s going to happen to poorly run plans as Federal payments into the program become increasingly restricted.
Exactly what payment reductions are on the horizon?
CMS already adjusts payments downward to account for increased coding intensity and those adjustments have stayed the same or worsened every year they’ve been in existence. There are already discussions of far greater adjustments as an additional offset in response to the reports of enormous coding fraud within the system. The most recent downward adjustment in payments is in the range of five percent. What will happen to your projections when it jumps to ten?
Other factors: resource shifting within the program to underserved populations, the likely increases in costs from telemedicine and other technologies that increase access, the overall Medicare funding shortfall, adjustments due to migration of sicker patients off the Medicare Advantage program, re-institution of the health insurance tax, decreased medical-gap premiums from the regulatory loss of first dollar coverage starting in 2019.
Despite the heedless rush to acquire beneficiaries, Medicare Advantage funding is facing significant headwinds.
In 2008, the large banks failed the real world “stress test” of the financial crisis and had to be bailed out by the Federal Government. When the real world “stress test” of reduced funding strikes your organization, how will you respond? Who will bail you out?
Boom times are great. They make you feel like every decision you've made is right, like you're firing on all cylinders. I've been there. But in this case, the pushback that's coming is obvious---and the prudent will do their best to avoid getting caught up in the hype, leveraging their current strong performance in anticipation of certain change.
Investments in care system development and provider education while avoiding capital commitments that result in long term expenses are the way to prepare for the lean times ahead.
I've been through this before. Don't get carried away by momentum. Steady scaling of your high-performing system will pay great dividends as resources swing.
The survivors of change will thrive.