Providers, Are Your Medicare Advantage Plans Taking Advantage?

When Congress enacted its budget sequestration reductions in 2013, it reduced premium payments to Medicare Advantage Plans (“MA Plans”) by 2%, but many MA Plans found a creative way to soften the blow. Even though the law did not require a corresponding reduction in the negotiated rates paid to participating providers by MA Plans, and did not alter the Medicare fee schedules, or the formulas for the calculation of  payment rates under the inpatient prospective payment system (IPPS), outpatient prospective payment system (OPPS), or other Medicare methodologies, which commonly serve as the basis for the rates negotiated by the parties, many MA plans have passed the 2% payment reduction along to participating providers under questionable interpretations of their existing contract language.

Recently, a Pennsylvania state court judge ruled, on a summary judgment motion, that a Pennsylvania insurer was not justified in passing along the 2% reduction to its participating providers, because it was unable to show any provision in the participation agreement that supported the reduction to providers.  The court’s decision may be viewed here.  This is a welcome decision for health care providers.

Providers should carefully review their managed care participation agreements with counsel to determine whether or not the MA Plans can properly pass along the 2% reduction under their current contract, and strategize on how to avoid or mitigate the impact of the sequester reductions in future negotiations.

~Submitted by C Hoeffling

Categories: Managed Care