More than Leaves Are Dropping in the Fall—Are You Affected?

In New England, October is prime leaf season. I was looking forward to that when I recently relocated to Connecticut from Florida, jumping back into consulting full bore. The first headline from the Hartford Business Journal that greeted me on my return was “United Healthcare drops thousands of CT Medicare Advantage docs.”1 The actual count was 2250; United claims that these physicians amounted to approximately 19% of their total physician network in Connecticut. The letters that were received by the physicians being let go noted that the cuts were being done “without cause,” and that United was “building a network of healthcare providers that we can collaborate with more closely to have the most positive impact on the quality of care for our members. This will encourage better health outcomes and ultimately lower costs.”

This was matched with a recent headline out of Tennessee, reported on local NBC affiliate WCYB, “Wellmont [Health System] drops some United Healthcare Medicare Plans.”2 The hospital system was dropping 4 United Medicare Advantage Plans. In the summer of 2012, the Texas Medical Association reported that Humana dropped about 200 physicians in Texas from their Medicare Advantage plans as of January 2013.3 Headlines about dropped plans and dropped providers are likely to only increase as we move into 2014.

What’s at Stake for Medicare Advantage?

The stakes are rising in the Medicare Advantage world. The Centers for Medicare & Medicaid Services (CMS) rates Medicare Advantage contractors using a complex system of measures that results in a ranking of up to 5 stars. There is big money attached to each star and half star. How much money varies each year, and in 2014 payments will drop to Medicare Advantage plans that do not achieve high enough ratings. The implementation process of these star ratings is an important driver of some of these market changes:

  • Beginning in 2012, a bonus payment was introduced for plans with 4 or more stars. The bonus payments have increased each year, and in 2014 Medicare Advantage plans with more than 4 stars in the rating system can achieve a 5% bonus payment.
  • Rebates are also critical. Each year, Medicare Advantage plans bid to CMS for their costs to provide care in a given county. If the bid is below the county benchmark set by CMS, the plan also receives a rebate, which is a percentage of the savings off the benchmark. Depending on the star ratings, Medicare Advantage plans can receive rebates of 50% to 70% in 2014 in addition to the bonus payments achieved for higher star ratings.

Costs of care delivered affect the ability of a Medicare Advantage plan to successfully bid under the county benchmarks, which is why these plans will be focusing more and more on cost containment, and even risk-based programs. However, there is a catch-22 for these plans. CMS has assigned the highest weight in the ratings process to outcomes, intermediate outcomes measures, patient experience/complaints, and then access measures. Patients who do not like the benefits packages presented by Medicare Advantage plans, experience restrictions in access, or encounter difficulties in working with their plan have 2 very powerful tools at their disposal—they can walk or they can talk. Neither is good for the Medicare Advantage plan.

Each year, every patient enrolled in a Medicare Advantage plan has the ability to change plans; in 2013, that time period is from October 15 through December 7. When plans announce significant cuts in their physician panels just before the Medicare open enrollment period, they are taking a huge risk that patients will choose to remain with the plan rather than switch to another plan in which their doctor participates. Or, this could be part of a master plan to achieve a different patient mix, if physician panel cuts by Medicare Advantage plans lead to an exodus of members with costly or chronic disease who wish to stick with their physician. Ultimately, the plan could achieve a patient mix with more new enrollees who may have a less costly medical profile. Massive cuts in physician panels by plans, whether for public or private insurance, can also be part of a cost-cutting maneuver to encourage provider groups to offer cost savings and rate reductions to get back on the participating provider list.

What does this mean for you?

First, consider your strengths and vulnerabilities. Are you the only provider of your services in the area, or one of many? What does your “cost profile” look like to the plans with which you are contracted?

Consider the Medicare Advantage plan strengths and vulnerabilities. What is happening with Medicare Advantage plans in your area? Are they encouraging primary care physicians or even specialists to accept risk contracts? What are their star ratings? Do you know the measures upon which these plans are being evaluated and how each of them stacks up against the others in your market?

Understand clearly what you can and cannot do regarding Medicare open enrollment. Providers cannot recommend one plan versus another, but you can provide information to your patients and in your community about patient choices and resources. Patient complaints to CMS regarding access and choice of physician, as well as the volume of patients choosing to leave any one plan are very powerful and directly affect a Medicare Advantage plan’s star ratings.

As we move into 2014, the number of Medicare Advantage plans is projected to decrease as plans with low star ratings find it more challenging to stay open. It is important for healthcare providers to know that these plans are driven by cost against benchmarks, and that even small percentage variations in dollars spent and patient satisfaction, in addition to performance on quality and outcomes measures, can lead to significant revenue impact for Medicare Advantage plans. We never used to worry much about the revenue profiles of insurance plans, but now those variations can directly affect our patient base, contract participation, and our own revenue streams.

So, whether you get dropped or you are the dropper in this new game of health insurance, the more you understand the environment and goals of the Medicare Advantage insurers in your own area the better equipped you will be to react. Remember also that patient voices are increasingly important. Sometimes patients may need some help in understanding how to make their voices heard. Too often in the past, patient concerns had less sway when sweeping insurance changes were made. One advantage of the new CMS star ratings is that patients can indeed hit plans right in the pocketbook when the plans make sweeping changes that adversely affect patients—merely by making their voices heard and voting with their feet by exercising their option to leave the plans.

1. United Healthcare drops thousands of CT Medicare Advantage docs. October 9, 2013. Accessed October 14, 2013.
2. Wellmont drops some United Healthcare Medicare Plans. September 6, 2013. Accessed October 13, 2013.
3. Texas Medical Association. Humana Drops Medicare Advantage Physicians. June 15, 2012.

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