From Dr. Tom's Desk

The lessons from Medicare Advantage in Puerto Rico keep on coming.

Even before the hurricane hit, I was writing about the opportunity Medicare Advantage provided in the Commonwealth.

One fifth of the Island's 600,000 residents are on a Medicare Advantage plan, though baseline capitation payments much lower than stateside limit the current profit potential.

But the low gross revenue and poor healthcare infrastructure mask the chance to break into the market while its still in disfavor.  Once the inevitable payment increases and regulatory relief come to fruition, there's sure to be a press of Medicare Advantage plans despite the physical barriers.

The same thing happened with the underserved populations on mainland, the dual-eligibles, those with both Medicare Advantage and Medicaid, those who qualified through disability rather than age, those with severe chronic illnesses.  

No one wanted to take care of those folks, and those Medicare Advantage Organizations (MAOs) who bit the bullet and did the right thing by recruiting and caring for them paid a high financial price.

But now those same organizations are doing very well.

CMS is shifting resources to increase the capitation payments associated with these patients, and with special needs plans now a permanent feature of Medicare Advantage, the organizations have the tools to keep costs down.

The same is going to happen to some MAO with resources and vision in Puerto Rico.

CMS recently accelerated payment increases for beneficiaries on the island, albeit modestly, and Congress is pushing them to do much more.

The lesson here is clear.

It worked for the underserved, it's working for Medicare Advantage patients in Puerto Rico, it'll work for you.

Do the right thing---and prosper.

You Should Know

Higher patient copays for skilled nursing service doesn't limit the duration of stays.

That's the conclusion of a well designed and high-power study comparing skilled nursing utilization against the amount of patient co-pays.

Patient co-pays for skilled nursing service was one of the weakest parts of the first Medicare Advantage contracts I worked two decades ago.

Believe it or not, in those early plans, the first twenty days of skilled nursing was without a daily patient co-pay.

That's right, they were free.

The $50-to-$100 a day the patient spent out-of-pocket only kicked in from day 21 to day 100.

Add in the fact that a patient could be directly admitted to a skilled nursing unit without an acute hospitalization and the over-utilization headaches were legion.

It took almost ten years before we could get the payment structure changed.  Once we did, the utilization drop was rapid and profound.

The Medicare Advantage Organizations, realizing that their clinicians might actually be onto something, proceeded to jack up the patient co-pays even higher in an attempt to further limit utilization of skilled nursing services.

They were so aggressive in doing so that, earlier this decade, CMS finally had to rein them in and limit how much out of pocket they could charge patients for each day of skilled nursing, as well as their overall skilled nursing stay.

Seems that CMS didn't need to do so.

As in most of medicine, some is good, more isn't better.

If a patient needs skilled nursing, they're going to get skilled nursing.  And punishing co-pays don't change that fact.  They merely deter the patient from signing up with Medicare Advantage in the first place.

The timing of when that co-pay kicked in, that made a difference.  But the amount of the co-pay, not so much.

The lesson here, as put forward in my first book Medicare Advantage Mastery, is that the way to limit your SNF costs is not by punishing patients with co-pays. 

Assure your SNF partners that good work will automatically result in further business, that they don't have to try to sabotage your patient management efforts in attempts to squeeze out a few more days from their existing admissions.

How do you do that?  How do you partner with your SNFs?

Read the book.  Step-by-step, it tells you how.