Medicare Advantage Creates Benefits For Providers Amid COVID-19 And Beyond
Value-based payment arrangements offered stability and continuity for providers and patients during the uncertainties of the pandemic
Picture this: a global pandemic when doctors and health care personnel are most critical – yet doctors’ offices were shuttered and access to care was limited and uncertain. We don’t have to imagine this scenario. It was the reality for many health care providers and their patients during the first months of COVID-19.
The health system had to focus on triaging those seriously ill with the rapidly spreading coronavirus and doctors caring for everyone else were left to find other ways to connect with their patients outside the office setting.
A July 2020 article in JAMA reported that “Physicians in small private practices around the country have reported steep declines in revenues, drops so significant that some of them and their supporters have turned to GoFundMe … to raise funds to help pay their overhead.”
Another study found that 97% of physician offices experienced a negative financial impact directly or indirectly related to COVID-19, with practices reporting an average 55% decrease in revenue.
Congress responded with multiple relief measures containing millions of dollars for hospitals and loans for doctors’ offices, while the administration eased rules and granted waivers to provide more flexibility. In these months before aid would arrive, Traditional Fee-for-Serve Medicare floundered, while Medicare Advantage offered financial support and needed stability to physician practices and likely saved patients’ lives.
Medicare Advantage is built on a value-based framework in which health plans receive a capitated, prospective payment for each beneficiary and assume full risk for the individual’s care. Increasingly, Medicare Advantage plans are adopting similar payment arrangements with health providers – and not a moment too soon.
As Modern Healthcare reported, “Anecdotes from physicians, medical group administrators, health insurers and other industry experts suggest that providers paid for value have had an easier time weathering the [COVID-19] storm.”
UnitedHealthcare – the nation’s largest Medicare Advantage organization – reported in 2019 that more than three million of its Medicare Advantage beneficiaries are treated by providers in such contracts.
Similarly, Humana reports that 67%, or 2.41 million, of its Medicare Advantage enrollees seek care from primary care physicians in value-based agreements.
Before and during the COVID-19 pandemic, physician practices praised the impact of value-based models for them and the patients they serve.
ChenMed, a primary-care provider for Medicare Advantage beneficiaries with over 70 centers nationwide, calls value-based payment “the secret formula behind the handful of provider groups that were thriving before and also now during COVID-19.”
Dr. Rushika Fernandopulle, the CEO and co-founder of Iora Health, described his organization’s value-based payment models this way: “Medicare Advantage is the fuel that lets us work. In the typical Medicare system … we submit a bill for each thing we do and get paid. It just simply encourages transactional medicine. In Medicare Advantage, we have the flexibility … that allows us to get paid a different way. It’s called value-based payment. We get paid not to do more things to people, but actually make them healthier.”
Another provider, the Chicago-based Oak Street Health, cares for over 85,000 Medicare patients, and as MedCity News reports “Its main source of revenue is through its capitation contracts with Medicare Advantage plans,” saying “that model has helped Oak Street where many primary care clinics have struggled as in-person visits have dropped during the COVID-19 pandemic.”
Importantly, these payment models – now flourishing in Medicare Advantage – are not only helpful to physician practices’ financial stability during times of crisis but deliver meaningful benefits to patients as well.
Research from ChenMed and University of Miami researchers showed lower mortality rates among high-risk COVID-19 patients under value-based care. Oak Street Health reports that its value-based contracts with Medicare Advantage plans “drive a 51% reduction in hospital admissions and a 42% reduction in readmission rates.”
These findings mirror broader research across Medicare Advantage, which has shown a 43% lower rate of avoidable hospitalizations than Traditional Medicare and a 5% lower rate of all-cause readmissions.
The capacity in Medicare Advantage – fueled by a framework of capitated payments – to meet both clinical and social beneficiary needs while bringing stability to doctors’ offices is key to better care at better costs, even in times of emergency.
Medicare Advantage and its embrace of innovative provider payment models is driving care delivery in the right direction: more primary care and outpatient services, more preventive services, and additional benefits that improve health outcomes and beneficiary wellbeing.
Continuing this trend toward value-based care requires not only new payment arrangements but trust between providers and payers, robust data exchange that drives improvements in care, fair and consistent regulations, accountability measures that ensure quality, and a commitment across industry lines to work together in order to align incentives that move towards shared goals.
The pandemic showed how health care has innovated in the last few years and how those changes made it possible to adapt in the face of the extraordinary challenges posed by COVID-19. The growing recognition of the ways value-based payments benefit both providers and beneficiaries brings confidence that the health care system is poised to not only weather this pandemic but emerge ready to build a better health care future for all Americans.
Allyson Y. Schwartz is President and CEO of the Better Medicare Alliance.
This blog post was originally published with Health Affairs. See here.