With the rapid growth of Medicare Advantage (MA) plans in the last several years, many hospitals are struggling to effectively manage the financial and operational challenges of these plans, including:
- Increased denials of Medicare Advantage claims
- Confusion between Medicare, supplemental Medicare plans, and Medicare Advantage (Part C) plans, and what each cover
- Extra burden of “shadow billing” inpatient claims and leaving potential reimbursement off the table if not done correctly
- Compliance risk, including the risk for Medicare fraud
This year, over 30 million people—more than half of those eligible for Medicare—have an MA plan. Medicare Advantage plans are inherently more complex than traditional Medicare, and many hospitals simply don’t have the appropriate processes in place to manage their nuances. However, by implementing the best practices outlined below, hospitals can decrease their Medicare Advantage risks.
1. Optimize your Electronic Health Record (EHR) to decrease Medicare Advantage denials
As with any insurance, you should understand the patient’s covered benefits well before they walk in the door. Collecting correct information at the time of scheduling is essential. In addition, for non-scheduled encounters, it is also essential to gather the correct information so that you can get the "prior auth" after the fact but within the specified time frame. Educating your patient access staff is essential. This is true for all plans, but since Medicare Advantage is often confused with traditional Medicare (by patients and providers alike), it’s even more important.
Most hospitals and provider groups leverage an eligibility and benefits tool that verifies coverage. These tools are often fully integrated into the EHR system. Revenue cycle leaders must ensure these tools are configured correctly and staff understand how to interpret the results. For example, running eligibility on a patient with Medicare will return an active result regardless of whether they have a Medicare Advantage plan or not. Patients must be eligible for Medicare in order to have a Part C plan. Most of the query responses do contain the additional information that the patient has a Part C plan and many EHRs can alert the user regarding this information.
BerryDunn recommends:
2. Avoid authorization-related denials from Medicare Advantage
Authorization-related denials are a significant concern with Medicare Advantage. Two issues collide to form the perfect storm: Traditional Medicare does not require authorizations, and Medicare Advantage plans typically have stringent authorization requirements. The following is an example of a revenue cycle pain point that we see far too often:
The patient schedules an appointment and states that they are “on Medicare,” so they are registered with traditional Medicare. The patient needs an expensive procedure, and following Medicare rules, the staff believes no authorization is required. Approximately three weeks after the procedure, the hospital receives a denial stating the patient has a Medicare Replacement Plan. The accounts receivable staff member then bills the replacement plan, and now 60 days or so after the procedure, a second denial is received for no authorization. The claim will now get sent back to patient access and “ping-pong” around the revenue cycle. The ultimate result is most likely a write-off as most Medicare Advantage plans do not allow for retroactive authorizations after this much time has passed.
The revenue loss due to the volume of this type of scenario can be staggering, but with tools and training, it can be nearly 100% avoidable!
On a related note, there is a new bill being introduced in the US Senate, the Requiring Enhanced and Accurate Lists of (REAL) Health Providers Act, that is looking to ensure MA plans maintain accurate provider directories. This could be another tool that the frontline staff uses to identify traditional Medicare participants from MA plan participants. Asking “How did you find us today?” for new patients may solicit additional helpful information.
3. Don't neglect "shadow billing" of inpatient claims for MA beneficiaries
On top of the administrative burden of contending with prior authorizations and satisfying the billing requirements of the Medicare Advantage plan, hospitals, swing bed units, and skilled nursing facilities are also required to submit no-pay claims to the Medicare Administrative Contractor (MAC) for inpatient services provided to MA patients. This type of duplicate billing is often referred to as “shadow billing” since claims are submitted to both the MA plan for payment and MAC as information-only billing. It’s not uncommon for these shadow claims to be overlooked, or not billed to the MAC properly, which results in potential revenue loss or compliance risk related to:
- Reimbursement for Medicare’s share of indirect graduate medical education or nursing/allied health education costs. MA plans do not make payments for medical education costs, but the Medicare program will pay teaching hospitals directly for it based on the number of MA patients they serve as determined by shadow claim billing and reimbursed via the annual cost report settlement.
- Hospitals that are eligible for Disproportionate Share (DSH) payments receive additional operating and capital payments intended to offset the financial burden of treating a disproportionate share of certain low-income patients. It’s important that MA inpatient days are reported through shadow claims to properly capture days in the SSI percentage used to determine these payments and optimize reimbursement via the annual cost report settlement for DSH.
- Skilled nursing facilities and swing-bed units must submit shadow claims for beneficiaries enrolled in MA plans and receiving skilled care in order to take benefit days from the beneficiary and/or update the beneficiary’s spell of illness in Medicare’s common working file (CWF).
BerryDunn recommends that you periodically review your shadow billing processes to ensure that you’re capturing all Medicare Advantage inpatient claims and not leaving any potential reimbursement off the table.
4. Stay on top of best practices for Critical Access Hospitals receiving Medicare cost-based reimbursement
For Critical Access Hospitals (CAHs) that receive cost-based reimbursement from Medicare, there’s an additional layer of revenue risk related to the proliferation of MA plans. MA plans typically pay CAHs' based on a factor of their Medicare rates, which are based on the CAHs allowable costs. However, unlike traditional Medicare, MA plans do not retroactively settle payments based on actual allowable costs from its annual cost report filing. This means that a CAH is not actually paid its allowable cost to treat all Medicare beneficiaries, only those that are enrolled in traditional Medicare, which is a shrinking population. The Medicare Cost Coverage Ratio (the proportion of allowable costs that are reimbursed by Medicare) for CAHs throughout the United States shrunk by nearly 15% from 2018 to 2022 and is expected to continue to shrink as participation in MA plans grows. This puts a CAH’s cost-based reimbursement at risk.
A CAH may be underpaid or overpaid by an MA plan throughout the year if its interim Medicare rates are not close to its actual allowable costs. BerryDunn recommends that CAHs take the following steps to mitigate revenue loss and receive payments from MA plans that are reasonably close to their actual allowable costs.
- Regularly estimate Medicare cost report settlements (ideally every month, but at least quarterly). If necessary to incorporate operational changes, prepare an interim cost report to provide a more accurate estimate.
- Establish a threshold for your settlement estimate that would trigger you to request an interim rate adjustment.
- Send Medicare rate letters to all MA plans as soon as possible after you receive them so the MA plan can update their payment rates.
- If you’ve made significant investments or operational changes that would have an impact on your costs, don’t wait for your annual cost report filing to see the impact. Consider submitting an interim rate review to incorporate these changes into your Medicare and MA rates in a more timely fashion.
5. Understand your obligations at the time of contracting and enrollment
As mentioned above, many of the MA products are included as part of a commercial contract. While not inherently "bad," it is important that each provider organization is clear about the differences in plan administration (authorizations, formularies, panel closure notifications) that may cause workflow changes for the staff to ensure revenue integrity and the rates. Typically, a small percentage of MA plans are reimbursed on "Medicare Plus." However, this percentage varies greatly, as do the payer policies. Several MA plans are introducing value-based programs. It is very important for each organization to understand the obligations clearly before engaging in these programs.
While the MA plans may look like they are part of the commercial agreements, the enrollment process for these plans is reliant on the completion of the traditional Medicare enrollment. Far too many times, we have seen providers forget to go back to the commercial plan to ensure that the provider has been linked to all of the products, again resulting in denials.
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