The leaders of physician groups most active in value-based contracting and especially in risk-based contracting with payers, are feeling a range of financial and operational pressures these days. Utilization of healthcare services is up, raising costs per member per month; at the same time, they are emphasizing that reimbursement is not always keeping up with the costs they face, whether the direct costs of providing care, or the indirect costs associated with various aspects of care management and care coordination.

One area of high focus for many physician group leaders is around their participation in the Medicare Advantage program. As of last year, a report from the Kaiser Family Foundation found, fully 51 percent of Medicare beneficiaries are now enrolled in Medicare Advantage health plans, meaning that the private health plans that manage care for more than half of Medicare beneficiaries, have tremendous power in their contract negotiations with providers.

And so on April 3, the leaders at the Alexandria, Va.-based American Medical Group Association (AMGA), one of the most prominent nationwide associations representing the interests of large medical groups,  expressed their frustration with how the Centers for Medicare & Medicaid Services finalized its 2025 benchmark rate for Medicare Advantage plans. AMGA published a press release to its website, which began thus: “AMGA today objected to the Centers for Medicare & Medicaid Services (CMS) cut in the finalized 2025 benchmark rate for Medicare Advantage (MA) plans. AMGA is concerned the cut in the benchmark payments by 0.16 percent does not account for the increased cost of providing care and the increase in utilization.” And it quoted president and CEO Jerry Penso, M.D., as stating that “AMGA providers will have to absorb yet another round of payment reductions, first on the fee-for-service side with a cut in the conversion factor and now in Medicare Advantage. While the MA benchmark rate is directed at the payer community, these cuts will affect how AMGA members are reimbursed for caring for MA beneficiaries. I’m concerned plans will reduce their benefit packages to account for this cut, which will be detrimental to patients and providers,” Dr. Penso said.

Further, the press release stated, “AMGA also remains concerned about the continued phase-in of changes to the MA risk adjustment model, which ultimately will result in lower payments to MA and providers. AMGA strongly supports CMS’ continued work on its Universal Foundations measure set, which will create a core set of measures that are aligned across programs. CMS is working to include all of the Universal Foundation measures into the Part C and Part D Ratings, pending future rulemaking. This effort largely matches AMGA’s work from 2018, when our Board of Directors endorsed a streamlined set of quality measures. This measure set,” the press release emphasized, “was designed to simplify the reporting process and limit the burden on providers and group practices, while still reporting clinically relevant and actionable data. AMGA would be pleased to continue to work with CMS on this effort.”

The AMGA leaders’ concern is not new. Back on Feb. 1, AMGA published a press release to its website noting that “AMGA is concerned the proposed rate cut in the 2025 Medicare Advantage rate notice will adversely affect medical groups and health systems, who already are absorbing payment cuts in traditional Medicare at the same time they are facing increased costs. Under the proposed 2025 Advance Notice of Methodological Changes for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies, the Centers for Medicare & Medicaid Services (CMS) is proposing a reduction in the benchmark rate, while continuing the phase-in of a modification to the risk adjustment model. These proposals would result in a 0.16-percent decrease benchmark rate. In isolation, the cut may not seem significant; however, providers are facing increased costs, in part due to increased labor costs and higher demands for medical services.” And that press release quoted Penso as stating that, “On paper, it may appear that Medicare Advantage plans can afford a little belt tightening. But the providers they contract with already are facing cuts of more than 3 percent on the fee-for-service side. In addition, there are potential impacts to patient care, such as decreased access, a reduction in available services, and decreased programs that address social drivers of health. I think CMS is underestimating the ramifications of further payment reductions for providers and their patients.”  

Shortly after AMGA published that press release, Healthcare Innovation Editor-in-Chief Mark Hagland sat down with Darryl Drevna, AMGA’s senior director of regulatory affairs, to discuss the reimbursement and operational challenges that the association’s member groups face in the current policy and payment environment. As Drevna noted at that time, “We’ve got an aging population with multiple chronic diseases, and it’s very labor-intensive to care-manage those patients. In Medicare Advantage, you can make sure that providers have the resources to care-manage.” And, he added at that time, “There are issues that have to be addressed” in terms of Medicare Advantage, on a broad level. “And we’re trying to align as much as possible with the payer community. But prior authorization is really an issue for our members. And we really have to make sure that payment rates are adequate. And ultimately, if CMS and Congress want to hit their goal of getting all patients into value-based care, MA will have to be a part of that.”



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