Hospitals vs Medicare Advantage Inflection Point

somarco

GA Medicare Expert
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As Medicare Advantage enrollment climbs to nearly 34 million people and the federal government implements new insurance policies, the scene has been set for tensions between hospitals and payers to intensify.

"The relationship between hospitals and managed care is strained at best right now," Chip Kahn, president and CEO of the Federation of American Hospitals, told Becker's. "[Insurers] are finding every way to not pay for the care that Medicare beneficiaries should receive. I don't know how the issue gets worse — we're at a critical stage, and I think CMS is sending those signals."

"Payers know that they're going to have to cut supplemental benefits, and premiums may even have to go up, but I wouldn't want to be the first one to do it," Scott Ellsworth, founder and president at Ellsworth Consulting, told Becker's.

Mr. Ellsworth is a former senior insurance executive, overseeing large divisions at Centene, Optum and a BCBS plan throughout his career.
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It was explained to me once, by a hospital provider, that the rural hospitals (or maybe it was specifically FQHC) get reimbursed at a rate 20% higher than a city hospital, by OM.

So, with that in consideration, while MA plans reimburse a city hospital nearly the same $$ as OM, the MA plans don't pay the additional 20% at the rural hospital, and as such these hospitals prefer OM.

I dont have any published data to support this, I am just reciting what I was told.
 
So, with that in consideration, while MA plans reimburse a city hospital nearly the same $$ as OM, the MA plans don't pay the additional 20% at the rural hospital, and as such these hospitals prefer OM.

Could be true, can't say, but there seems to be quite a bit of controversy and animus between some hospitals and MA plans.
 
Yea Hospitals absolutely love OG Medicare.

"It is broadly acknowledged that Medicare reimburses hospitals less than the cost of providing care and their reimbursement rates are non-negotiable. The Medicare Payment Advisory Commission found that hospitals experienced a -8.5% margin on Medicare services in 2020, and it projects that margin will fall to -9% in 2022. Combined underpayments from Medicare and Medicaid to hospitals were $100 billion in 2020, up from $76 billion in 2019. Exacerbating this pressure is the fact that Medicare and Medicaid account for most hospital utilization. In fact, 94% of hospitals have 50% of their inpatient days paid by Medicare and Medicaid and more than three quarters of hospitals have 67% Medicare and Medicaid inpatient days. Because of the fixed nature of these payments, hospitals are unable to fully absorb the tremendous inflationary forces they are currently facing."

 

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