Providers Eying Medicare Advantage

The March 28 edition of Medicare Advantage News cites a possible trend for provider organizations to sponsor their own Medicare Advantage plans. In the waning days of the old Medicare+Choice program, many provider-sponsored plans came on hard times, so this may seem like an unusual reversal. However, Medicare Advantage lives up to its name, and offers advantages to sponsors as well as members. This includes risk adjusted capitation payments, the option to offer drug coverage that is subsidized by Medicare, and bonus payments for achieving quality targets. Even with the payment reforms imposed by the Affordable Care Act, Gorman Health Group is hearing from a number of provider organizations that the predictable capitation revenue under MA is looking preferable to the fee-for-service treadmill. Medicare fee-for-service reimbursement is becoming increasingly complex, and fee-for-service margins are eroding. The prospect of moving up the food chain is especially appealing to organizations whose costs are largely fixed. MA matches predictable fixed revenue to fixed costs, while FFS requires a constant scramble after variable revenues to achieve necessary margins.


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