Some Medicare Advantage Plans Shift Risk to Providers

Instead of paying per patient, the plans get a monthly payment. The doctors keep the difference if they come under budget, but lose money if they don’t.

If that sounds familiar, it’s because it had been tried in the 1990s and didn’t go so well. This time things will be different, say proponents of physician groups taking on global risk, whereby they get a lump sum each month to pay for care. Physician-management groups that went bankrupt a generation ago, such as FPA Medical Management and PhyMatrix, had not proven to insurers that they could handle the financial risk, Kaiser Health News reports.

In this iteration, Medicare Advantage plans will partner with provider organizations that have a track record of handling financial risk. Also, they’re not completely surrendering administrative control to the doctors. Health plans still write the benefits packages, determine which doctors to allow in their networks, and field beneficiary complaints.

About one third of the 57 million Medicare beneficiaries are enrolled in Medicare Advantage plans offered by insurers such as UnitedHealthcare and Humana, and that’s expected to rise to 41% over the next decade.

Not everybody likes the idea of provider groups taking on full risk.

Judith Stein, executive director of the Center for Medicare Advocacy, tells KHN that “at the end of the day, this is a way to keep costs down and provide less care.”

Rushika Fernandopulle, the CEO of one of the physician groups taking on risk, Iora Health, disagrees. “We can be much more creative in how we meet patient needs. By taking risk, we never have to ask … ‘Do we get paid for this or not?’”