Medicare Advantage Plans’ Woes Trickling Down to Physicians

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Traditional Medicare was shielded from the 2% across-the-board cuts of sequestration, but not so for Medicare Advantage Plans. Add to this mandatory Affordable Care Act reductions to Medicare Advantage to bring its costs more in line with traditional Medicare, and it is no surprise that insurers who offer these plans are looking for ways to pass along the cuts to providers.

Several state medical societies and the lawyers who represent them told Modern Healthcare that they are negotiating disputes and may sue insurers who are attempting to pass along the 2% sequestration cuts to providers.

“The mere fact that premium payments have been reduced to health plans does not mean that payments to hospitals should be reduced by [Medicare Advantage] plans, unless contracts allow it,” said Jeffrey Gold, vice president of managed care and special counsel to the Healthcare Association of New York State in an interview with Modern Healthcare.

Another tactic of insurers is to reduce the number of providers in their networks, effectively switching their Medicare Advantage plan from a PPO to an HMO. UnitedHealth, which has 2.9 million Medicare Advantage members, issued termination letters to physicians in Connecticut, Florida, Indiana, New Jersey and Rhode Island less than two weeks before the Medicare Advantage Open Enrollment Period began on October 15.

In an earnings conference call, UnitedHealth Chief Executive Stephen Hemsley said that the next two years "represent periods we have long described as challenging in the near term," and signaled to investors to not expect high earning next year.

The release of UnitedHealth’s third quarter earning report on Thursday sent health insurance stocks down across the board, although most were climbing back up on Monday.

Providers who have been cut from insurers’ networks are countering that instead of being concerned about investors, the insurers should be concerned about their Medicare Advantage plan members.

In Florida, where Medicare Advantage plans have a high market penetration, the Florida Medical Association’s spokeswoman Erin VanSickle told Modern Healthcare that it is counseling its physician members to, “tell patients that there is nothing requiring them to stay with United.”

The Connecticut State Medical Society also issued a tersely worded statement saying, “By focusing on profits rather than patient care, United’s decision jeopardizes the health of seniors by disrupting continuity of care and access to care – especially for those seniors with chronic health conditions and limited mobility.”