Medicare Advantage an Insurance Proving Ground for Providers

Christopher Cheney, for HealthLeaders Media , August 27, 2014

The Medicare Advantage program is emerging as an entry point for healthcare providers seeking to establish their own health plans, such as UNC Health Care and Catholic Healthcare Initiatives.

As healthcare providers across the country consider opening subsidiary health insurance plans, some of the early adopters view the Medicare Advantage program as an advantageous place to get started.

In combination with a population health management effort, UNC Health Care has launched a Medicare Advantage plan targeted at the residents of Wake County, NC. This week, Allen Daugird, MD, MBA, president of UNC Physicians Network and UNC Health Care's chief value officer, told HealthLeaders that developing an MA health plan is a high-gain, low-risk opportunity for providers.

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"Medicare was attractive because the annual cost of care is so high, and even a small percentage decrease in costs results in a large sum. However, we also realized the shortcomings of traditional Medicare as a vehicle for care and value, even with various shared savings programs, where any shared savings is very uncertain and very long in the future," Daugird said.

"On the other hand, with Medicare Advantage, [the Centers for Medicare & Medicaid Services] provides a monthly payment up front, and it is severity-adjusted so that there is an incentive to take care of the sickest patients. Medicare Advantage HMOs can require assignment to a primary care home and a more narrow network of like-minded value providers," he continued.

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