Medicare Advantage (MA) has proven to provide better patient outcomes and can be an opportunity for independent physicians interested in participating in value-based programs. But let’s be honest, the program can be confusing. What is MA, really? How are RAF scores determined? What is the benefit of a risk-sharing program?
Medicare Advantage in Simple Terms
In simple terms, MA is a program in which Medicare partners with private companies to provide care. MA has increasingly gained traction since its inception twenty years ago, with over one-third of Medicare beneficiaries enrolled in an MA plan this year, and enrollment expected to reach an all-time high in 2018 with 20.4 million beneficiaries, according to the Centers for Medicare and Medicaid Services (CMS).
MA enables primary care physicians to provide better care and receive compensation for treating chronically ill seniors with high-value services, while lowering out-of-pocket costs. Essentially, CMS provides a monthly payment to the insurance provider to fund all the care for that Medicare recipient. Unlike fee-for-service, where Medicare has to pay all bills on a recipient’s behalf, CMS is no longer at risk for costs beyond the monthly capitation and the insurance company now bears that risk.
CMS uses risk adjustment to evaluate patients’ health and modify the monthly base compensation for a specific MA program to insurers. Accounting for patients’ Risk Adjustment Factors (RAF scores) can be murky, but is absolutely critical if providers want to be successful in Medicare Advantage.
Patients’ RAF scores determine how much insurers are paid for providing care, and each county has a payment amount set by CMS. These RAF scores are based on two categories of patient information:
- Demographics. Based on the age and gender of the patient, as well as the county they live in. This accounts for 0.3 points that make up a RAF score, on average.
- Medical Conditions. CMS provides a list of medical conditions that risk adjust, based on the actuarial cost of care for these illnesses (for example, diabetes, cancer and vascular disease). Not all medical illnesses risk adjust, for example hypertension and Alzheimer’s Disease do not. It all depends on the frequency of the disease and the impact on cost of care.
Each county has different costs in Medicare, so the payment on a RAF score can vary depending on the patient’s location. These RAF scores determine how much insurers compensate providers for the care they provide. For example, a healthy patient with no medical conditions may have a score of 0.3, versus a sick patient with a higher score of 2.0. You can see from the variance in scores that document the illnesses in the provider’s notes is critical to accurately capturing the RAF score and generating adequate revenue to provide care for those patients.
What are the Benefits of Participating in Medicare Advantage?
There are tremendous upsides to participating in Medicare Advantage, however, the program is not all roses. You, as a provider, have to be committed to capturing the Risk Adjustment codes and working on the quality measures, which can be quite daunting. What I’ve done over the years is learn to flip my thinking about MA: capturing all these illnesses with your patients can be overwhelming, but it allows you to keep these conditions on the front burner when treating complex patients.
The focus on quality measures and disease management has been proven to provide better patient outcomes. A recent study published in the American Journal of Managed Care evaluated a patient population in Portland, Oregon and proved the benefit of risk programs. The patients were divided between two programs: the first was a capitated risk adjustment program with additional upside risk for the doctors, and the second was a traditional fee-for-service contract. While studying this population, the researchers found a 6% increase in survival benefit and a 32.8% lower hazard of death in the group actively managed through a risk adjustment program. These findings illustrate very clearly the benefit of a risk-bearing program; patients in the program live longer and live better.
MA has continued to gain momentum, growing into new states every year, and rising in popularity among seniors looking for high-quality care and access. In November, CMS announced that it will expand a program allowing insurers to apply for a demonstration project that lowers patient copayment for more expensive treatments such as inhalers and insulins, according to Modern Healthcare. Participating in an MA program with a contract that aligns reimbursement with performance in Risk Adjustment and Quality ultimately allows providers to spend more time with patients. It’s a better visit for the patient, it’s a more satisfying experience for the doctor, and it offers providers a way off of the fee-for-service hamster wheel.