McKnight’s: As Medicare Advantage drives rate lower, fed-up CEOs embrace strategies that limit carriers’ influence

Medicare Advantage aggressively penetrates the market, representing a major threat to skilled nursing providers, some of whom now find themselves clearing less per resident day through MA plans than they do in state Medicaid programs.

A panel of nursing home and senior living executives Friday called for more oversight in the face of the continuing shift. They spoke during the 2021 Legislative and Regulatory Conference hosted by the National Association for the Support of Long Term Care.

“This transfer of risk from the government to Part C Medicare Advantage plans, while it appears to be great for the federal government, if they do not establish some standards, it is in my top three threats to our profession, specifically skilled post-acute, in our coming future,” Phil Fogg, Jr., CEO and president of Marquis Companies said during an hour-long webinar. “The inability to have negotiating power with these plans puts us as one of the two, maybe three, providers that actually get paid less than the Medicaid rate for Medicare Advantage days. It threatens (our) financial stability.”

Clockwise from top left, moderator and NASL President Martha Schram, Marquis Companies’ Phil Fogg, Jr., National HealthCare Corporation’s Stephen Flatt and iCareHealth Network’s Chris S. Wright.

 

The increased preference for MA coverage among beneficiaries has been eating away at skilled nursing’s bottom line for years now. But as the volume of MA patients increases — and carriers hold more sway — providers are looking to change the game or even get out of it.

In 2020, about 39% of all Medicare beneficiaries enrolled in Medicare Advantage plans, a 9% increase over 2019. The Congressional Budget Office has estimated that the MA share will hit 51% by 2030, just as the first waves of the silver tsunami come crashing ashore.

But some spots are already seeing a far higher share go to Medicare Advantage.

Fogg noted MA shares hit 63% in the Western U.S, where Marquis is based. In the case of one unnamed payer, Fogg said reimbursement rates became so problematic that Marquis stopped contracting with them, despite the census hit he knew would come.

“We had to just say, ‘We’re not doing that.’” Fogg said. “We weren’t going to be able to make up the losses on this payer with volume.”

National HealthCare Corporation operates 75 skilled nursing facilities in nine states and has an MA penetration rate of about 36.5%.

 

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