Inside 1 payer's strategy as hospitals become 'more discerning' about Medicare Advantage

Some hospitals and health systems are paring the number of Medicare Advantage plans with which they contract, seeking payer partners that align on clinical and financial outcomes. 

Becker's sat down with Shannon Drotning, market president for Providence Health Plan's consumer and specialty division, to discuss how the health system-owned insurer is working to act as a partner to providers, and consistently achieve better health outcomes for its more than 60,000 Medicare Advantage members. 

Question: Becker's reported on at least 15 hospitals and health systems that dropped some or all Medicare Advantage plans in 2023. What should we make of these tensions?

Shannon Drotning: Hospitals are definitely becoming more discerning about which Medicare Advantage plans they contract with, though it's not happening in every single market. At a high level and as time goes on, I think we're going to see higher-quality plans on the market, though maybe fewer of them. What's happening is that the reimbursement rates toward the hospitals are not keeping up with the market when you look at costs in general. We're also seeing some of the hospitals talk about more burdensome processes and procedures, so they're looking to MA plans to help with that. 

What's great about Medicare Advantage through Providence Health Plan is that we really do put members first. We've been in the MA market for a very long time now, and our care philosophies tend to align with those of the hospitals. I think that's because we're in an integrated system. I talk to providers a lot, and they really like working with Providence Health Plan because we're very much aligned on our care processes, care management and putting the members first. 

Q: Bend, Ore.-based St. Charles Health System encouraged its older patients not to enroll in Medicare Advantage plans last fall. The system decided to remain in network with four MA plans in 2024, including Providence Health Plan, and it dropped Humana and Centene MA plans. Why do you think St. Charles contracted with PHP?

SD: I should first mention that I was not personally involved in contract negotiations with St. Charles. 

More broadly, with some health systems, especially those in more rural areas, labor and supply costs can be more exacerbated. These systems are looking at which MA plans won't exacerbate those problems and who will be partners. Providence and St. Charles are great partners, and we ended up growing enrollment in Bend because we work closely with the providers and brokers in that community. True alignment around how you take care of the members and being very detailed with care management is key. Our care managers at the health plan work with the care managers at the hospital, so our philosophies are aligned.

Q: What advice would you offer an MA plan or a hospital to ensure these partnerships stay intact?

SD: Constant communication. I'm not involved in all the conversations our provider team is on, but from my perspective, we're meeting with providers all the time to talk about how we can work together to bring members into Medicare Advantage and make sure patients are engaged in the plan, getting their wellness visits and needed care, and that we're constantly aligned on their experience.

Q: Medicare Advantage is politically popular, has high member satisfaction ratings, and studies show the plans can achieve better health outcomes than traditional Medicare. But contract negotiation disputes between payers and providers are on the rise, including with MA plans. Do we need more nuanced conversations about the MA program?

SD: Yes, I think all these things can be true. When you look at Medicare Advantage, there's 70% fewer hospital readmissions compared to original Medicare. There's also fewer preventable hospital visits and use of high-risk medications is lower. At Providence Health Plan, we're focused on wellness. For example, in California, we enrolled over 2,000 new members in Orange County for 2024, so we're reaching out to those members now and getting their wellness exams and other care coordinated for the rest of the year, including referrals and medications. When you're doing these things, along with achieving the outcomes I mentioned, that's what makes these plans so successful.

Q: What is the media getting wrong about Medicare Advantage today?

SD: There aren't enough examples of day-to-day Medicare Advantage members compared to someone that's just on a supplement plan. You could compare provider visits, medications or dental and food benefits and really see how drastically different it is. 

A coordinated care approach drives better health outcomes. It drives lower costs in the long run because we're focused on everything about that person and preventing hospital stays. With original Medicare, there is no dental flex card, food card or medication management — you don't have that quarterback managing the person as a whole. That's the real difference.

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