January 18, 2019

Medicare Advantage Part 2: How Providers Can More Closely Engage with Medicare Advantage Plans

In our prior article, How Medicare Advantage Works and What to Watch, we provided an introduction to Medicare Advantage (MA) from the perspective of provider organizations.  Having addressed the “what” and “why” of MA, we’ll now consider the “how,” highlighting several ways in which provider organizations can work collaboratively with local health plans and identify new ways to serve MA beneficiaries.  These partnerships present an excellent opportunity to deliver value for a growing population of MA beneficiaries.

How to Engage with Your MA Population

Although opportunities vary from market-to-market, there are several ways for provider organizations to actively engage with MA beneficiaries.  We encourage thoughtful evaluation of the possibilities to avoid committing too many resources too quickly.

Collaboration and Partnerships

For most organizations, the logical starting point is to expand existing health plan relationships.  Collaborations can help providers develop a stronger relationship with local MA plans, minimize risk of capital investments, create opportunities to demonstrate high-value care, and gain more experience with value- and risk-based contracts.

  • Work directly with existing MA plans for creative payment models and revenue streams.  Most providers presently have contracts with several MA plans, both large and small.  However, most of these contracts are no different from typical commercial contracts or fee-for-service (FFS) arrangements.  According to a recent national survey, 50% of all MA plan payments to providers are still under a traditional FFS model.

In other words, there is plenty of opportunity for more value-based arrangements between providers and MA plans, including:

  • Pay-for-Performance.  As a starting point, an MA plan may offer performance incentives for providers to furnish care management, annual wellness visits, and other preventive services.  It is in the plan’s best interest to deliver these services to their beneficiaries, and many will want to incentivize providers for their investment.

When it comes to pay-for-performance arrangements with MA plans, negotiating around specific CMS quality measures on which plans are evaluated is another common opportunity for providers.  This type of pay-for-performance arrangement is not new, but serves as a good foundation for additional value-based contracting opportunities.

  • Shared Savings and Risk Sharing.  Similar to the Medicare Shared Savings Program (MSSP) or other commercial payer shared savings arrangements, providers can contract with MA plans to share in any savings between the expected and actual total cost of care (or an agreed-upon portion of the beneficiary’s costs of care) for the MA plan population.

Providers and MA plans typically agree to share some or all of the difference between a specified Medical Loss Ratio (MLR),which is an expression of expected claims costs/actual revenues, and a population’s actual MLR, without the trouble of setting a separate benchmark for expenditures (benchmarks have generally plagued the MSSP as a pain point for providers).

Providers and MA plans may initially agree to an upside-only shared-savings option with no downside risk, shifting more risk toward the provider as they are ready (and willing).  For providers who are more experienced with value-based contracting, they may be more willing to quickly accept downside financial risk on their assigned MA populations.

No matter which agreed-upon arrangement is executed, there are several ways the provider can be successful with its MA partner.

  • Marketing Opportunities. In addition to collaborating with MA plans for contract terms that better align incentives, there may be opportunities for shared marketing and improving beneficiary education about MA plans.
    • Beneficiary Education. There are specific CMS guidelines for providers to use in educating their Medicare beneficiaries about Medicare Advantage.  More information about those guidelines can be found here.
    • Co-brand with existing payers or health plans. A provider who has developed a strong relationship with a particular payer or health plan, may find it advantageous for both parties to co-brand a Medicare Advantage plan and market each other’s services. 

Provider-Sponsored Health Plans

For provider organizations with more experience—likely developed internally or through cooperation and partnerships with other MA plans—there may be an opportunity to establish an independent, provider-sponsored health plan (PSHP). However, there are many considerations before deciding to launch a PSHP (e.g., local competition, available resources, network adequacy, willingness to accept risk).

In many cases, provider organizations have two primary options for developing their own PSHP: work with a third-party population health or payer organization with experience as an insurer, or create a health plan of their own from the ground up.  Both require significant planning and development.

Some providers may opt to jointly enter the health plan space with an existing payer.  Joint-venturing with an existing plan (or one new to the market) allows providers to share some of plan startup costs and still have a financial stake in the insurance of an MA population.

PSHPs represent a tremendous opportunity to benefit from delivering high-value care, but also require significant investments and an ability to assume financial risk.  For more information on PSHPs, see PYA’s white paper, Pursuing a Provider-Sponsored Health Plan:  Key Considerations.

The Medicare Advantage Opportunity

Medicare Advantage represents a unique opportunity for providers to sharpen their competencies for value-based (and risk-based) reimbursement models.  Contract terms between MA plans and providers are not mandated like traditional Medicare, leaving plenty of room for creativity and cooperation between payer and provider.


For additional information on Medicare Advantage and how to develop a strategy around your MA population, contact a PYA executive below at (800) 270-9629.

Read the first article in this series here.

© 2019 PYA
No portion of this article may be used or duplicated by any person or entity for any purpose without the express written permission of PYA.

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