Medicare Advantage (“MA”) enrollment represents 50% of eligible beneficiaries, while another milestone commands far less attention. Despite MA’s rapid growth, the absolute number of individuals within the Medicare Fee-for-Service (“FFS”) population had also expanded; we now see FFS declining in a growing number of metropolitan areas. The trend cannot be distilled down to a single dollar value. As we explore the severity of structural deficiencies in the Skilled Nursing Facility (“SNF”) revenue-cycle, remember that Medicare Advantage is simply one example of how provider-burden differs from market to market.
November 9, 2022
Medicare Advantage (“MA”) enrollment represents 50% of eligible beneficiaries, while another milestone commands far less attention. Despite MA’s rapid growth, the absolute number of individuals within the Medicare Fee-for-Service (“FFS”) population had also expanded; we now see FFS declining in a growing number of metropolitan areas. The trend cannot be distilled down to a single dollar value. As we explore the severity of structural deficiencies in the Skilled Nursing Facility (“SNF”) revenue-cycle, remember that Medicare Advantage is simply one example of how provider-burden differs from market to market.
Traditional Medicare subsidizes inadequate Medicaid payment; in fact, FFS is the only payer keeping many providers afloat. Medicare Advantage reimbursement for short-term care exceeds Medicaid rates, but MA pays SNFs far less than FFS for the same patients the “private option” replaces (what we call the “FFS Attrition Ratio”). MedPAC argues SNFs’ willingness to accept MA’s discounted rates justifies reducing FFS payment. The problem with their logic is that lowering FFS rates would further destabilize the SNF economic model that CMS created, even as MA plans increasingly deny SNF covered benefits.
Zimmet Healthcare and z-INTEL analyzed Medicare Advantage reimbursement for SNF services, relative to FFS benchmarks. The data in the table below is sourced from CORE Analytics (now part of Simple, a Netsmart solution) from markets with at least 1,500 admissions during 7/1/21 – 6/30/22.
Key Takeaways:
MA reimbursement is significantly below the FFS benchmark in all markets analyzed*.
The FFS Attrition Rate (MA payment shortfall, relative to FFS) in each market is explained by two factors: (a) the number of SNF beds and (b) MA enrollment penetration. In other words, greater bedsupply and MA market share increase the plans’ leverage to reduce SNF reimbursement.
Within markets, SNFs that centralize or outsource case management functions realized 9% - 12% greater MA reimbursement than providers case-managing with facility-based staff (most of whom were not fully dedicated to Medicare Advantage case management).
Zimmet Healthcare first quantified the “FFS-Attrition Ratio” (how much less MA pays relative to FFS) in 2001. Around that time, MA enrollment growth had slowed and even reversed in many markets before the Medicare Modernization Act of 2003 changed the program’s payment structure and trajectory.
Fast forward to 2014, ZHSG repeated the analysis and found most providers struggling with the Medicare Advantage revenue-cycle. The financial equation continued to deteriorate for SNFs; the OIG finally took notice this year and quantified the extent to which plans prevent beneficiaries from accessing care and burden Skilled Nursing Facilities with unfounded claim denials. Meanwhile, Medicare Advantage, per MedPAC, has never achieved a net savings for the Federal government.
CMS Indifference
Inexplicably, CMS does not collect MA-SNF utilization data, despite Medicare Advantage enrolment now exceeding the number of FFS beneficiaries nationally. This is outrageous. The data can easily be collected using the annual Medicare Cost Report, but CMS has neglected the CMS 2540-10 (Cost Reports have atrophied to little more than a mechanism to report reimbursable bad debt). Case in point, detailed below is SNF payer mix, as reported in the Cost Report’s Worksheets:
The Cost Report recognizes only four payer classifications. “Title XVIII” is Medicare, “Title XIX” is Medicaid, “Other” includes Private Pay, Medicare Advantage, VA, and, well, “Other.” The fourth option is “Title V” which, per the Social Security Administration, covers “Maternal and child health.” In 30 years of cost reporting, I’ve never seen a single day reported under this benefit. “Title V” is a vestige from a bygone era; it’s time to replace this field with “Medicare Advantage” utilization data.
Why it Matters
MedPAC cites provider willingness to accept lower Medicare Advantage rates as “evidence” FFS payments should be reduced, yet the Commission admits it has no data on which to support this argument. Instead, MedPAC references NIC’s quarterly “benchmark” report, which, as I’ve repeatedly warned, is absurd and dangerous. This defies logic
Medicare Advantage plans reimburse Skilled Nursing Facilities less than half the amount paid by Feefor-Service, with utilization and rate reductions highly variable across markets. CMS must consider provider protections and local area adjustments based on reliable data before subjecting providers to irrational reimbursement policy. MedPAC must recognize CMS’ role in fostering a dysfunctional SNF economic model and recommend Congress pass meaningful legislation to correct these imbalances.
Medicare Advantage Rates
Marc Zimmet
Medicare Advantage (“MA”) enrollment represents 50% of eligible beneficiaries, while another milestone commands far less attention. Despite MA’s rapid growth, the absolute number of individuals within the Medicare Fee-for-Service (“FFS”) population had also expanded; we now see FFS declining in a growing number of metropolitan areas. The trend cannot be distilled down to a single dollar value. As we explore the severity of structural deficiencies in the Skilled Nursing Facility (“SNF”) revenue-cycle, remember that Medicare Advantage is simply one example of how provider-burden differs from market to market.
November 9, 2022
Medicare Advantage (“MA”) enrollment represents 50% of eligible beneficiaries, while another milestone commands far less attention. Despite MA’s rapid growth, the absolute number of individuals within the Medicare Fee-for-Service (“FFS”) population had also expanded; we now see FFS declining in a growing number of metropolitan areas. The trend cannot be distilled down to a single dollar value. As we explore the severity of structural deficiencies in the Skilled Nursing Facility (“SNF”) revenue-cycle, remember that Medicare Advantage is simply one example of how provider-burden differs from market to market.
Traditional Medicare subsidizes inadequate Medicaid payment; in fact, FFS is the only payer keeping many providers afloat. Medicare Advantage reimbursement for short-term care exceeds Medicaid rates, but MA pays SNFs far less than FFS for the same patients the “private option” replaces (what we call the “FFS Attrition Ratio”). MedPAC argues SNFs’ willingness to accept MA’s discounted rates justifies reducing FFS payment. The problem with their logic is that lowering FFS rates would further destabilize the SNF economic model that CMS created, even as MA plans increasingly deny SNF covered benefits.
Zimmet Healthcare and z-INTEL analyzed Medicare Advantage reimbursement for SNF services, relative to FFS benchmarks. The data in the table below is sourced from CORE Analytics (now part of Simple, a Netsmart solution) from markets with at least 1,500 admissions during 7/1/21 – 6/30/22.
Key Takeaways:
Zimmet Healthcare first quantified the “FFS-Attrition Ratio” (how much less MA pays relative to FFS) in 2001. Around that time, MA enrollment growth had slowed and even reversed in many markets before the Medicare Modernization Act of 2003 changed the program’s payment structure and trajectory.
Fast forward to 2014, ZHSG repeated the analysis and found most providers struggling with the Medicare Advantage revenue-cycle. The financial equation continued to deteriorate for SNFs; the OIG finally took notice this year and quantified the extent to which plans prevent beneficiaries from accessing care and burden Skilled Nursing Facilities with unfounded claim denials. Meanwhile, Medicare Advantage, per MedPAC, has never achieved a net savings for the Federal government.
CMS Indifference
Inexplicably, CMS does not collect MA-SNF utilization data, despite Medicare Advantage enrolment now exceeding the number of FFS beneficiaries nationally. This is outrageous. The data can easily be collected using the annual Medicare Cost Report, but CMS has neglected the CMS 2540-10 (Cost Reports have atrophied to little more than a mechanism to report reimbursable bad debt). Case in point, detailed below is SNF payer mix, as reported in the Cost Report’s Worksheets:
The Cost Report recognizes only four payer classifications. “Title XVIII” is Medicare, “Title XIX” is Medicaid, “Other” includes Private Pay, Medicare Advantage, VA, and, well, “Other.” The fourth option is “Title V” which, per the Social Security Administration, covers “Maternal and child health.” In 30 years of cost reporting, I’ve never seen a single day reported under this benefit. “Title V” is a vestige from a bygone era; it’s time to replace this field with “Medicare Advantage” utilization data.
Why it Matters
MedPAC cites provider willingness to accept lower Medicare Advantage rates as “evidence” FFS payments should be reduced, yet the Commission admits it has no data on which to support this argument. Instead, MedPAC references NIC’s quarterly “benchmark” report, which, as I’ve repeatedly warned, is absurd and dangerous. This defies logic
Medicare Advantage plans reimburse Skilled Nursing Facilities less than half the amount paid by Feefor-Service, with utilization and rate reductions highly variable across markets. CMS must consider provider protections and local area adjustments based on reliable data before subjecting providers to irrational reimbursement policy. MedPAC must recognize CMS’ role in fostering a dysfunctional SNF economic model and recommend Congress pass meaningful legislation to correct these imbalances.