It seems that most of the Medicare Advantage plans are not familiar with the HPSA bonuses. Or at least they act as if there is no such thing. One recent conversation with a large national carrier resulted in the response of “no we will not put that in our contract”. It seems that there is no incentive for rural primary care physicians in shortage areas to contract with Medicare Advantage Plans.

Patients love these plans because they generally offer lower costs and sometime added benefits of health clubs, silver sneaker clubs, rewards for compliance etc. But most often, none of these benefits are passed on to the providers tasked with keeping costs low. According to the Kaiser Foundation annual enrollment in these plans has nearly doubled in the past 10 years so it is imperative that the smaller rural practices negotiate for fair compensation.

For a rural provider participating in several of the Medicare pilot programs, the loss in revenue from a patient switching from a Part B Fee for Service plan to a Medicare Advantage plan can be substantial.

For example, if a practice participates in CPC+, that practice receives 110% of the Medicare fee schedule, they receive a monthly care coordination fee, and they receive a portion of the savings benefits if they demonstrate that they provided cost effective care. If that practice is also in a study like the Million Hearts study, they are getting monthly fees for managing complex cardiac patients as well as incentives for reducing risks. These incentives could add another 10+% compensation to the practice.

Hospitals complain that they also lose, but the most dramatic effects are on the primary care practices. If a practice has $100K in Medicare Allowable receipts, the loss of the HPSA bonus is a loss of $10K. This is a significant portion of a primary care physician’s income. For example if that physician has annual collections of $500K per year, the additional amount is only 10/500 or 2% of total revenue, but in terms of compensation, it amounts to twice that or 10/250 or a 4% increase in take home pay for the same work that they are already doing on only 20% of their services. As responsible small business owners, that additional $10K in revenue is sometimes donated to local schools or charities or used to make up for uncompensated care that is offered to friends and neighbors.

What can practices do? They should bring this information to their Medicare Advantage carriers to demonstrate the low costs of their practice and demonstrate the quality cost containment that they are creating for the advantage plan and request that those efforts be recognized.

Another area that can sometimes be negotiated is the quality incentives that some MA plans are now starting to provide. Unfortunately for the small practice, achieving statistical significance is very difficult when diagnosis numbers are small in rural areas.

Send us your ideas of how you approach financial viability in the country setting.

What are your thoughts? #ruralhealth

Photo courtesy of Randy Fath