Thursday, July 13, 2017

Unwrapping Medicare Advantage Provider Payment Levels: New Study

This week, JAMA Internal Medicine publishes a new study by Trish et al. which researches Medicare Advantage payments to providers and compares them to payments made on various fee schedules under Traditional Medicare.

The article is online here; an editorial on the article, by Berkeley's James Robinson, is here; and coverage the Healthcare Dive is here.

The take-home lesson is that physician payments are about the same under Medicare Advantage and under Traditional Medicare.  However, Medicare Advantage plans are able to negotiate payments circa 70% of Medicare fee schedule rates for some lab tests and some DME.

Tidbits follow the break.    Pm a separate note, for an interesting current overview of ways to make Medicare Advantage more innovative, by Broome & Mostashari of Aledade, see their July 2017  Health Affairs blog here.

Only 11 Services Reported in Trish's Paper
The authors state they reviewed data for a broad set of procedures, but publish data (including in supplemental tables) only for 11 services, of which the represented lab service is 85025 (CBC) while DME is represented by 3 DME codes.  They remark that when the broader range of (unseen) services was studied, conclusions were the same as those presented for 11 services in the article.

POC Tests: Higher Payments to Physician Offices Really Occur
One data tidbit for physician office point-of-care test stakeholders:  The authors find that a CBC pays 75% of Medicare for commercial payers paying labs, but a CBC pays 110% of Medicare rates when commercial payers pay physician offices (see Figure 2.)  This also suggests that docs get Medicare rates for office visits but 110% of CLFS rates for lab tests.

Editorialist on Market Power and Benchmarks; Also Consider Regulations
Robinson, the editorialist, asks why doctors would use their market power to negotiate higher-than-Medicare rates for private insurers in general, but accept Medicare-level rates in a commercial Medicare Advantage plan.   One answer is that the payer doesn't have more money; the payer is capitated by its Medicare Advantage payments.

Regulatory factors occur, too.   Another partial answer is that out-of-network providers must accept Medicare-level payments as payment in full for Medicare Advantage patients (see Medicare Advantage Manual, Chapter 6, Section 100). This doesn't prevent MA plans from trying to negotiate lower-than-Medicare rates for in-network MA providers, or prevent MA providers from trying to negotiate higher-than-Medicare rates when faced with commercial MA plans.  The provider may be able to see the patient as an "out of network provider" for Traditional Medicare rates, limiting the ability of the MA plan to coax him in-network while offering lowball contracted payments.   There are also Medicare Advantage "fee for service" plans that are rare but are required by law to pay providers "not less than Traditional Medicare rates" (42 CFR 422.144(a)(2)).

For a recent article on the resurgence of narrow network plans with no out of network benefits, here.