Changes in CMS Payment to Medicare Advantage Plans Could Alter Senior Healthcare Landscape Advises Clear Vision Information Systems

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As America grapples with how to remake the nation’s healthcare system, Medicare Advantage plans are confronting their own challenges as well, triggered by declining margins, shortened enrollment periods for new members, and issues surrounding how to most appropriately serve an aging society. Now these Medicare Advantage plans are facing their greatest challenge of all: changes in how and how much they get paid.

In a significant move that may alter the health insurance landscape, the Center for Medicare and Medicaid (CMS) is changing the methodology used in determining how – and how much – it pays Medicare Advantage plans. While all of the ramifications of this changeover are not yet clear, health plans and physician groups stand to collectively lose billions of dollars in revenue if they don’t learn how to adapt to the new environment.

Currently, a record 13 million seniors – representing 27 percent of all Medicare beneficiaries – are enrolled in Medicare Advantage plans. These plans are required to cover all of the services that covers (except care) and may also offer extra benefits such as vision, hearing and dental coverage. Most of these plans also include and have at their core specific programs and interventions that encourage preventive care and wellness.

CMS licenses these plans while paying them a fixed monthly amount to provide care to their members. The plans, in turn, pay their provider partners from that CMS revenue. The rate paid to Medicare Advantage plans has historically been established using data from fee-for-service providers and considers the age of members, geographic area, and likelihood of expenditures to serve these enrollees given their “risk factors.” Now this is all changing; and for the first time, plans will be paid based on actual care provided by Medicare Advantage plans, often referred to as “encounter data.”

“Going forward a health plan’s revenue will depend on how accurate a job it does – in collaboration with its provider network – in collecting and documenting precise data on services provided and how well they can put that into the correct payment format,” says Pam Klugman, co-founder and chief operating officer of Clear Vision Information Systems. “If health plans and physician groups don’t get this right, it will affect how much they get paid and potentially could be a big take-away from medical groups, health plans and the industry as a whole.”

Klugman says that CMS recalibrates its payments every few years, and 2013 payment to Medicare Advantage plans will be based on 2008/2009 fee-for-service claims data. However, the next recalibration may be based on the new methodology of encounter data from Medicare Advantage plans; and “that is why it is so important for health plans and physician groups to start doing this correctly now,” she says. “This also provides a wonderful opportunity for Medicare Advantage plans to clearly outline to the industry and to CMS all of the extra services it provides to members and all of the additional value plans like these bring.”

With that in mind Klugman says that there are five things Medicare Advantage plans can do right now to prepare for this change:

“This is one of the most significant changes ever for many in the Medicare Advantage industry,” warns Klugman. “Plans will need to build new billing competencies and better align with their provider partners, or they will be in for a big shock when these changes take place.”

Clear Vision Information Systems provides Medicare Advantage risk adjustment solutions and strategies to health plans and providers nationwide. Leveraging decades of experience at the forefront of Medicare policy, the Clear Vision team provides an integrated mix of risk adjustment analytics, continuity-of-care strategies and compliance consulting tailored to the individual needs of each client. The “20/20 clarity” and easy-to-implement, high-impact tools Clear Vision brings results in revenue optimization and improved quality of care. For further information, visit .