As physicians face a 10 percent cut in Medicare reimbursement next month, skeptical eyes are turning toward Medicare Advantage, the private health plans that cover almost 8.3 million of the 43 million Americans with Medicare.
The government pays these plans between 12 percent and 19 percent more than it would pay to have the same beneficiaries in plain-vanilla Medicare, according to the Medicare Payment Advisory Commission. The Congressional Budget Office estimates those extra payments at $65 million over the next five years. Medicare Advantage plans got a 3.5 percent raise in 2008, even as physicians faced last-minute cuts.
If Medicare needs to save money, Advantage plans are a place to start.
Physicians probably would want to start by killing private fee-for-service plans, which are the most-common type of Medicare Advantage plan. Unlike traditional managed-care networks, Medicare’s private fee-for-service plans don’t have to establish traditional networks by contracting with physicians the old-fashioned way. In what Congress says is an effort to provide more coverage in rural areas, they can simply dragoon any Medicare physician into their networks.
Here’s how it works: A patient arrives at your practice and presents a traditional Medicare card. You treat the patient and bill Medicare. Medicare flips the claim to the fee-for-service plan, which sends you a check. You cash the check.
Bingo.
You are now deemed a part of the plan’s network. And that’s not good.
Of 2,022 doctors surveyed online by the AMA, half said Advantage plans deny services typically allowed by Medicare, and that payments for approved services are lower.
“It’s a tiger trap for the practice,” says Robert Bennett, who works on the issue as a government affairs representative for the Medical Group Management Association.
Making matters worse, physicians have to do administrative work for the plans. Payers justify their costs to the government by calculating risk adjustment for their beneficiaries; they try to show they have very sick people on board. How do they prove that? They ask you for copies of charts. Many charts. “So the practice that got tricked into getting on the plan now needs to do all this extra work,” says Bennett. He has seen practices get a request for charts attached to a 10-page Excel spreadsheet of names.
CMS recently confirmed that providers must comply with such requests. But realizing that it needs willing physicians to make the system work, it also stipulated that the requests should only be for patients covered by private fee-for-service plans, only for services rendered when the patients were covered by the plan, and should be “reasonable.”
So, bottom line for you: Train your front-desk staff to work with often-confused patients about just what kind of Medicare they have before you cash any checks.
Keep the work you do for private fee-for-service plans to the required minimum.
And most importantly and profoundly — especially in this election year — consider the philosophical underpinnings of Medicare Advantage. The Bush administration advocates for Advantage plans because it, like many physicians, believes private enterprise and the free market can manage healthcare more efficiently than federal projects. Yet Advantage plans’ administrative costs are around 10 percent to 15 percent of revenue, compared to 3 percent for traditional Medicare, according to the Medicare Rights Center. Those costs include paying people to sort through your patients’ charts in order to justify higher payments from the government.
While Medicare Advantage plans don’t operate in a truly free market, propped up as they are by larger-than-average government payments, they still present a troubling example of how privatization won’t necessarily be better for physicians than much-hated government programs.
Pamela L. Moore is senior editor, practice management, for Physicians Practice. She can be reached at pmoore@physicianspractice.com.
This article originally appeared in the June 2008 issue of Physicians Practice.
