On Aug. 14 St. Charles announced it may stop accepting Medicare Advantage Plans as early as this fall after the hospital system conducts a review. In Deschutes, Jefferson and Crook counties, about 26,000 people are on Medicare Advantage plans, which is over 40% of total Medicare enrollees.
St. Charles said it's considering the change due to patient care, access and affordability, and encouraged Central Oregonians to consider switching to traditional Medicare coverage during open enrollment this fall. Medicare Advantage plans are funded by the government but are managed by private insurers. They're also much more flexible with benefits and fee structures.
Few non-pediatric doctors opted out of Medicare in 2020, but Medicare Advantage insurers negotiate payment rates and form networks with health care providers like most private health insurance plans. Insurers have "preauthorization" to approve or deny care for patients. St. Charles officials said the additional administrative hurdle is wasteful and can impact patient care.
"One part of the equation is getting care at the time care has to be administered. Another aspect is on the opposite side of when a patient needs to be discharged," said Matt Swafford, chief financial officer at St. Charles. "Oftentimes, you'll have a situation where a patient won't be able to be discharged to a post-acute setting because the Medicare Advantage plan has not had a solid contractor relationship with a post-acute care provider."
Chief Clinical Officer Dr. Mark Hallett said this problem occurred recently at St. Charles Cancer Center when three specialists had to call a Medicare Advantage insurer to approve a scan that would confirm if a patient's cancer had metastasized. With a standard Medicare plan, it would've been ordered and completed without incident.
"Denials and preauthorization problems pretty much come with the territory of Medicare Advantage," Hallett said.
The program can also be costly for hospital systems. The Center for Health Care Quality and Payment Reform noted that 600 rural hospitals are at risk of closure due to poor reimbursement of Medicare Advantage Plans.
In St. Charles' announcement, it mentioned that some of the nation's biggest insurers that offer Medicare Advantage Plans have been accused of fraud by the U.S. Justice Department, or they engage in practices of over-diagnosing patients to get more money from the federal government. The Medicare Payment Advisory Commission estimated overdiagnosis led to $12 billion in taxpayer dollars to insurers. A former government health official guessed overbillings were more than double of that in a 2021 study.
St. Charles officials chose not to comment when asked if local providers engaged in similar tactics as the larger insurers that are under investigation.
Other local health care providers have a totally different view of Medicare Advantage.
"I have worked around the country, in different agencies and partners with different health care companies. And I was really surprised when I got here with how collaborative Medicare Advantage plans are in the state of Oregon," said Justin Sivill, the executive director of Summit Health.
Sivill said during the post-pandemic staffing crisis there was a significant concern with insurer authorizations at Summit, but that it was quickly addressed after meeting with insurers.
"We sat down with the payers and were able to figure out a way to work out with their staff, a very significant improvement in our workflows," Sivill said. "Nobody likes authorizations. And I would say that there are plenty of them that are completely unnecessary. But when it comes to the most expensive part of health care, it is the hospital. And plans are always going to focus in that area, on unneeded utilization."
Insurance is typically cheaper for younger people, and Sivill fears that if people move away from plans they've been on for several years, they'll face higher costs to receive similar benefits — either through monthly premiums or when accessing care through standard Medicare.
PacificSource accounts for 15,000 of the region's 26,000 Medicare Advantage beneficiaries. Its Oregon Market President Jeremy Vandehey said St. Charles raised concerns about Medicare Advantage plans this summer, but only as high-level concerns.
"We haven't seen details behind it and get to the level to see what we actually need to change in the contract. We need a bit more detail and we haven't been able to get them to sit down and share that with us," Vandehey said.
St. Charles isn't the first hospital system to raise concerns about Medicare Advantage plans. The Mayo Clinic withdrew most Medicare Advantage plans from its network last year, and a hospital in St. Joseph, Missouri, signaled that it may stop accepting them. But in those communities, there's more than one hospital nearby that may remain in-network. The decision could kill the entire Medicare Advantage market if St. Charles follows through.
"We basically have to submit a proposal to the federal government each year for how we will run the plan and how much it will cost and who's on our network. We've done all that for 2024. One of the things we have to do in that process is show them that we've got an adequate network that usually requires you have to show them you've got a hospital in-network," Vandehey said. "So, when they're saying, we're not going to contract with Medicare Advantage plans anymore. Really, no Medicare Advantage plans can be offered."
The hospital system has made no immediate decisions on Medicare Advantage Plans, and people can still access care under them. St. Charles only listed four providers that it's evaluating continuing care: PacificSource, Humana, HealthNet and WellCare.
"We don't want to mislead people into going into another plan and then have the same situation occur. So right now, we're calling attention to the issues that need to be addressed. And working with the plans that are currently listed in the press release," Swafford, St. Charles CFO, said.
