Up to the last month, I’ve been predicting that it will be a “compliance backlash” against all the fraudulent risk-coding and other data submissions that will greatly reduce the revenue of Medicare Advantage organizations (MAOs)—reducing the profitability of high-margin plans and sinking all others.
Experience teaches that I’m right about the system pushing back against the excessive revenue harvesting, I may, however, have been mistaken about the catalyst.
There has been a spate of articles (here, here, here, and here) about the competitive bidding of Medicare Advantage plans. Instead of benchmarking capitation payment to Traditional Medicare Fee-For-Service rates, MAOs would be required to bid for the opportunity to offer a plan in a given area, with access to that market granted to the most effective bid.
It’s worked with durable medical equipment and some meds.
If introduced into Medicare Advantage, competitive bidding would be transformative.
It would also be a win-win—for everyone but the insurers and the health systems with whom they contract..
Every county in the country would have access to a Medicare Advantage plan. And the plan offered would be the most cost-effective for the government.
Whenever I’ve seen a flurry of such healthcare financing articles in the past, it’s a sign that a decision has already been made and CMS is performing battlespace preparation to ready the healthcare community for a change.
The last time I saw this was about 2 years ago, with research published that established the basis for the government to go “all-in” on Medicare Advantage.
Look for more articles over the next six months, a pilot program for 2021 and phased-in implementation after that.
If I’m right, and competitive bidding is an idea whose time has come, then there is going to be one heck of a reckoning.
Medicare Advantage is the last bastion of profitability in the world of health insurance. With the loss of the ACA’s mandated purchase of insurance, Medicare Advantage is the final safety valve that keeps the industry above water. With payments set politically rather than by the market, the program is literally a river of cash, flowing from the Federal government to insurers and their providers with little compliance enforcement. Every organization and provider is in a rush to tap it and, with few exceptions, all are bears feasting on garbage.
If the program is redesigned such that it has to respond to market forces, if the garbage gets picked up, the bears will starve.
What is your organizations doing to prepare?