Once every 10 years or so I am moved to write a letter to the editor. Recently morning I read the article about the St Charles’ proposal to drop Medicare Advantage Plan contracts. So, today is such a day.

I am particularly concerned that not only is the hospital system proposing to drop Medicare Advantage they are also encouraging seniors to switch en masse to original Medicare. I thought it strange behavior for a hospital to encourage an effective consumer boycott of private enterprise.

So, I sent the article to a trusted CFO colleague in another state for his thoughts. His reply was that threatening to terminate a contract with an individual plan can often be a negotiating tactic, but you do that one at a time rather than all at once. And why the apparent move to involve the community in the situation?

While it may sound simple: If everyone changes insurance providers, then problem solved.

Win-win. But of course the situation is more complex. If the Medicare rules have not recently changed, seniors on an Advantage plan for more than a year may find that Medigap (the extra 20% payers) policies are not available to them. Insurers can and will deny seniors who have had a significant medical diagnoses: heart disease, lung disease, cancer, orthopedic surgeries, etc. leaving them with only 80% coverage. How many seniors have not had significant surgeries, procedures or diagnoses. It goes with the territory. The only alternative St Charles would offer is to stay with Advantage and pay out of network rates: often 30? to 50% copay depending on outpatient or inpatient services. Voila, their revenue problem is solved and the burden is passed to the patient.

As you can imagine the response from the community has been swift and negative. It may come as a surprise to St. Charles that almost 50% of seniors are on Advantage plans and are generally happy with their coverage. If St. Charles was hoping that community sentiment would be helpful pressure with the insurers they may be very disappointed to hear that many seniors generally understand this for what it is: a lose-lose proposition. And it is not the insurance companies who are shaping up to be the focus of their ire. I might offer that in my estimation openly advocating for a boycott of Advantage plans has an appearance of unethical if not morally wrong behavior. They have a large dog in this fight after all.

In a further conversation with my colleague he said his hospital is happy with their Advantage plan revenues. Like St Charles they are also a single hospital system in a similar size city with a large rural service area. Interestingly, he told me that shortly after our conversation his vice president of managed care sent him a breaking news article titled Hospitals Take Aim At Medicare Advantage: in which Bend Oregon is highlighted along with comments from CFO Matt Swafford, tinyurl.com/StCaim.

Although playing out for us locally, it is clearly being orchestrated on the larger national stage. The timing of the announcement and appearance of an article on the subject in Becker Healthcare Review can not be a coincidence. I would think it a better option for hospital leadership to sharpen their pencils and their negotiating skills to optimize their revenue. And perhaps to leverage their peers and professional organizations to advocate directly to Medicare to demand a review and improvement of Advantage plan management. It is far wiser than a strategy that leaves the seniors of our community to bear the burden of their poor performing contracts.

For further information about the hospital’s revenue performance compared with their Oregon peers visit the OHA website, tinyurl.com/ORHospitalpayments. Then click on Hospital Payment Report.

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