Becker's Hospital Review

21 THOUGHT LEADERSHIP those employed providers, that figure is growing. As that figure grows, that generates losses overall to the system as a whole. Within systems as well, corporate offices or unallocated corporate shared service expense, etc., that can also drive those margins down a little bit. e cost of IT services, cyber security events, legal, all of these types of necessary but required services that aren't being fully shared to the hospitals. at's also driving those system margins down to some degree. Lastly, there are other areas in which systems are working to deliver care. is could be home health, skilled nursing facilities, post acute sites of care, etc. Just like with hospitals, there's a fair amount of uneven performance in those spaces. When you pull these all together, generally what you find is that the margins on systems are about 150 to 200 basis points lower than that of the hospitals at the moment. So if we see we're at 3.8% as an example, that means that the system might be around 1.8 or thereabouts at the median. n 5 CFOs, 5 takes on Medicare Advantage By Alan Condon M edicare Advantage has grown rapidly in recent years, and now provides coverage to 55% of the nation's seniors, almost 34 million people. On one hand, the value-based program offers the potential for shared savings and alignment with quality care goals. On the other, it presents growing concerns around administrative complexities, increasing payer denials and misaligned incentives, and many systems are dropping their contracts with MA plans. As MA expands into new regions, health systems are carefully weighing the benefits of participation while navigating the financial risks and operational hurdles it presents. Here are five health system CFOs' thoughts on the program: Editor's note: Responses were lightly edited for length and clarity. Kyle Fisher, CFO, Community Health Network (Indianapolis): Medicare Advantage is a hot topic these days. The market in general took off on the East Coast and the West Coast and it's finally hitting the Midwest.Not only are we participating in it as a provider, but we're also engaged in it directly. We're getting shared savings out of the plans we're operating, but it is complex and the rules seem to be changing. We're trying to take as little downside risk as we can but we understand that value-based care is here. We're successful in value-based care and it will continue to grow, certainly within the state of Indiana. You've got to have a team with great discipline and good processes in place. In terms of the metric you're trying to achieve, it really boils down to having a solid team focused on care delivery, particularly around the MA population. Dan Morissette, CFO, CommonSpirit (Chicago): Rarely, if ever, [have I] seen the kind of payer behavior that we've seen recently. Denials that are absolutely not in accordance with the contracts that we have, delayed payments where we need to go to arbitration and/or litigation to try to get paid for work that we're clearly entitled to. The behavior overall has been egregious. We have some markets in which the payers themselves have a near- monopoly on the commercial insurance market and therefore we do not receive enough reimbursement to offset the costs of Medicaid, self-pay and even some of the Medicare outpatient things. Cheryl Matejka, CFO, Mercy (St. Louis): Medicare Advantage helps keep incentives aligned if commercial contract terms are appropriate. Patients like the model in our markets and, I would argue, across the country. We want to adapt to serve our communities, and our patients that like those models. That being said, the model needs some tweaks. Mercy has been building its MA structure since the late 1990s related to the physician demonstration projects with one of the early models in our Springfield market. We believe it's a model that can help us as the nation reduces the overall cost of care, but only if it's structured appropriately and when there's a win-win for everyone involved. As many of our communities age, we need a financially sustainable model to care for them. Medicare Advantage has a lot of promise there. Fortunately, we've already built that infrastructure to manage risk but some of those other issues around denials need to be addressed. Gail Kosyla, CFO, Yale New Haven (Conn.) Health: The biggest challenges we are seeing are the administrative burdens of commercial MA contracts. Additionally, we see instances of required utilization and quality metrics that do not align with our overall population health strategies. Both are burdensome and costly for our organization, and result in lower overall reimbursement than traditional Medicare. Health systems need to better partner with MA plans to ensure alignment, and potentially limit the number of plans with which they contract for better collaboration and contract performance. Scott Hawig, chief financial and administrative officer, Froedtert ThedaCare Health (Milwaukee): Nationally, the predominant reason cited for health systems terminating Medicare Advantage contracts is the significant increase in payer denials that began during the pandemic. While we've seen payers increase denials on Medicare Advantage contracts, we continue to perform at or above the quality and efficiency requirements of this program. As a result of our ability to meet these requirements, we have not terminated Medicare Advantage agreements and we continue to work with our payers on appropriate medical policy adherence/coordination. n

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