Slide 1: Medicare Advantage Plans and Rural Providers

Presentation to the National Advisory Committee
on Rural Health and Human Services

Presentation by Keith Mueller
RUPRI Center for Rural Health Policy Analysis
University of Nebraska Medical Center
January 30, 2006

Slide 2: Enrollment is MA plans is Increasing

• The 1999 peak non-metro: 260,653
• The 2002 low point: 171,874
• The 2005 enrollment: 230,481

Slide 3: Enrollment is in 3 Types of MA Plans

• Coordinated care plans (PPOs, HMOs): 140,697
• Cost plans (carried from TEFRA days): 54,671
• Private Fee-For-Service (PFFS): 25,644
• Most rapid growth is in PFFS
• 47% of the 2004-2005 increase
• CCPs were 41% of the increase

Slide 4: Expectations are for continued increases in enrollment

• Impact of regional plans minimal so far
• And concentrated in urban markets

Slide 5: General Comments about Impacts

• The magnitude of change in Medicare is huge; full implementation will take time
• Purpose of program is gaining affordability for beneficiaries
• Access to services an issue, but the implication is that it is a secondary concern
• But of course access is a primary concern for the NACRHHS

Slide 6: Implications for rural providers

• Pharmacists
• Physicians
• Hospitals

Slide 7: General choices for all providers

• Refuse to sign or negotiate contracts
• Refuse beneficiaries enrolled in undesirable plans
• Negotiate, then sign
• Sign without negotiation
• Take the patients and accept payment
• May mean billing the patient

Slide 8: For physicians

• Payment: less than Medicare, more than Medicare, same?
• Network: are preferred referral physicians and hospitals included?
• Patient copayments: any change, and who collects?

Slide 9: For pharmacists

• All the horror stories in the first 2 weeks
• More critical questions remain, especially basis of payment
• Some terms are difficult to accept
• Guiding patients through formularies and copayments

Slide 10: For hospitals

• More complex because Medicare traditional ffs more complicated
• Considerations may differ between PPS and non-PPS
• Need to understand the type of MA plan

Slide 11: Two major types of MA plans

• PFFS
• CCP (HMO and PPO, regional and local)

Slide 12: PFFS plans and provider payment

• Mistake to assume they will be paying Medicare rates
• They can, and do enter into contracts with providers
• Or they can "deem" providers to be network participants

Slide 13: Becoming "deemed"

A provider is a deemed-contracting provider if:

• The provider is aware in advance of furnishing services, that the person receiving the services is enrolled in a PFFS plan;
• The provider has reasonable access to the plan's terms and conditions of participation; and
• The service provided is covered by the plan

Slide 14: HMO Plans

• Not as relevant in most of rural America
• But there are notable exceptions, local rural plans in Wisconsin, Pennsylvania, Oregon

Slide 15: PPO Plans and rural hospitals

• Access standards should lead to contracting: ensuring that services are geographically accessible and consistent with local community patterns of care."
• But plans can count providers when paying Medicare rates: "Additionally, an MA regional plan, upon CMS preapproval, can use methods other than written agreements to establish that access requirements are met."
• Regional plan making "good faith effort to contract with" an essential hospital can designate the hospital for in-network inpatient services with normal in-network cost sharing levels applying to all plan members

Slide 16: PPO Plans and CAHs: Key Findings from a National Survey

• At the time of the interview, 43% of administrators surveyed had not been approached by MA plans; another 12% had been approached with initial proposals but had limited or no follow-up from the MA plan.
• Most final contracts (after negotiations) specified that payments from the MA plan were to be cost-based, but there were some notable exceptions across lines of service (inpatient, outpatient, lab, swing beds).
• About two-thirds of signed cost-based contracts included provisions for annual cost settlement, but in some cases administrators had to negotiate to get settlement terms in the final contract.
• Administrators strongly advised examining all details of contracts.
• Administrators voiced concern about the ability to retain local patients if contracts were not accepted.

Slide 17: Key Components in CAH Contracts with MA Plans

• Basis for payment
• Definition of cost
• Interim payment calculations
• Year-end settlement

Slide 18: Other considerations

• Time for payment of clean claims
• Addressing bad debt
• Length of the contract terms
• Cost of contracting

Slide 19: Medicare Advantage Plans and Rural Providers

For more information, visit
www.rupri.org/healthpolicy