News reports have been trickling in over the past couple of weeks — growing in number — about Medicare Advantage (MA) plans dropping doctors. First, we heard about UnitedHealthcare in CT dropping doctors — then news came out about the same carrier dropping patients in NY, FL, RI, NJ, and, just yesterday, OH.  Sam Unterricht, MD, the head of the State Medical Society of New York, said in a Fox Business interview a few days ago that other plans like Empire Blue Cross and Emblem were following UHC’s lead in his state — and that he expects this MA plan activity to spread nationwide.

What’s driving this (by all accounts, extremely sudden) behavior on the part of MA plans?  The Tampa Bay Times reports that UHC attributes it to quality ratings (“[providers that] demonstrate the highest quality at the greatest value will be rewarded for their efforts.”)   But, the effort to trim MA costs as part of the funding plan for the ACA probably plays a role. Unterricth said that one of the plan representatives he spoke with said that an anticipated 8% reduction in reimbursements to MA plans from Medicare as part of the ACA was at least partly behind all the physician cuts.  The timing — coming on the heels of news of thousands of patients dropped from individual health plans — does suggest a connection to ACA-mandated changes in 2014.

Certainly, UHC’s statement that quality ratings drove the decisions isn’t incompatible with Unterricht’s view that ACA cuts to MA reimbursement were behind them.  After all, if reimbursements to MA plans from the CMS are going to decline, then quality related bonuses are going to be that much more important to plans going forward.  It makes sense that they would try to goose their rankings to make up lost ground on reimbursements through bonuses.

What does this mean for practices that serve MA patients?  Some practices in some markets might have argued that MA is a pain: it’s like the restricted, non-negotiable reimbursement of Medicare combined with the hassles of dealing with a private payer.  But, we suspect that many practices are going to miss the revenue — and, of course, patients will bear the brunt of the hassle of finding a new doctor (and possibly even suffer consequences of poorer coordination and continuity of care, at least in the short term).

For those practices that want to continue to play on the MA field — and, increasingly, with all third-party payers — the time is now to get on board with the growing movement towards quality measurement.  This means that a greater sensitivity towards and emphasis on patient service within the practice is ever more important.  (If you need help dissecting your own practice’s patient service strengths and weaknesses, Judy’s new book is a great place to start.)

Going forward, pricing and quality pressure may lead some plans to focus on lower cost providers — e.g., practices that rely heavily on mid-levels, or even NP-only primary care practices.  This will be distressing for many practices in the short term, but may offer opportunities going forward: patients with resources will be motivated to pay for better care, e.g., through a cash model or concierge/direct pay for primary care or other recurring needs.  An additional market could expand for patients that are willing to pay personally for services.  The next few years could be very unpredictable as all of these regulatory and market changes shake out — but, they could also offer real opportunity for more entrepreneurial practices to serve their patients in new ways.

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