Learn why Managed Medicare can cost therapists more, including the challenges and key factors affecting reimbursement, and how to navigate these complexities.
Managed Medicare, commonly referred to as Medicare Advantage (MA), has gained popularity among seniors as a comprehensive alternative to Traditional Medicare. These plans, offered by private insurers, bundle standard Medicare benefits (Part A and Part B) and often add extras like vision, dental, and wellness perks. But while Managed Medicare provides a broader range of services, studies have shown that it can be more costly for Medicare compared to the traditional program. This higher cost has implications not only for the Medicare system but also for physical therapists (PTs) who work with patients under these plans.
Why Managed Medicare Costs Medicare More
Though Managed Medicare aims to control costs through managed care and prevention, it often ends up costing Medicare more per patient than the Traditional Medicare program. Here’s why:
- Risk Adjustment Overpayments: Managed Medicare plans are reimbursed by Medicare based on the health status of their enrollees, using a system called risk adjustment. This system is meant to ensure that insurers receive more funding for patients with complex needs. However, some insurers might engage in “upcoding,” a practice where patient conditions are documented as more severe than they are. This results in Medicare paying more to the plans than necessary. For example, a patient with mild diabetes might be coded in a way that suggests more intensive management, leading to higher payments to the MA plan.
- Higher Administrative Costs: Unlike Traditional Medicare, which is a government-administered program, Managed Medicare involves private insurers, who carry their own administrative expenses. These costs are passed back to Medicare through higher payments per enrollee. Administrative fees, marketing expenses, and the need for profits mean that operating these plans is inherently more expensive, which contributes to the increased cost burden on Medicare.
- Enhanced Benefits Come at a Price: Managed Medicare plans often lure enrollees with additional benefits like fitness programs, telehealth, and dental services—things not typically covered by Traditional Medicare. While these benefits are valuable for patients, they also come with higher premiums and more substantial reimbursements, which end up raising the overall cost to Medicare.
Impact on Physical Therapy Practices
For physical therapists, the increased costs of Managed Medicare have several practical implications that can affect the way they run their practices:
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- Reimbursement Rates and Complexity: While Managed Medicare plans might cost Medicare more overall, they don’t necessarily translate into higher payments for therapy services. In fact, therapists often face lower reimbursement rates and more complex billing requirements compared to Traditional Medicare. Each MA plan may have its own unique rules for authorizations, coding, and claims processing, which can lead to a heavier administrative burden. For example, gaining prior approval for physical therapy sessions might take longer with a Managed Medicare plan than with Traditional Medicare.
- Navigating Prior Authorizations: Managed Medicare plans often require prior authorizations for physical therapy services, which can delay care and add to the administrative workload for practices. These additional steps can lead to a slower revenue cycle and require more staff time to manage. In comparison, Traditional Medicare has more streamlined processes, which can simplify patient access to care and ensure quicker reimbursement.
- Fluctuating Referrals: One potential benefit of Managed Medicare is its emphasis on preventative care, which can increase referrals for physical therapy services. MA plans often promote wellness and preventive services, leading to more patients being referred for PT services like fall prevention, mobility improvement, or pain management. However, the increased patient volume must be balanced against the time-consuming administrative requirements. Practices need to have efficient systems in place to handle this balance effectively.
How HelloNote EMR Can Help
Managing the complexities of working with Managed Medicare requires robust tools. HelloNote EMR provides features that can simplify the administrative challenges and help practices focus more on patient care. Here’s how:
- Integrated Billing: Manage billing for multiple payers, including Managed Medicare plans, to streamline claims submission and improve cash flow.
- Automated Reminders: Stay on top of plan-specific requirements, like prior authorizations and progress reports, to ensure compliance and minimize delays in care.
- Documentation Efficiency: HelloNote’s customizable templates help meet the varied documentation standards across different insurance plans, reducing the risk of denied claims.
Weighing the Pros and Cons of Managed Medicare
While Managed Medicare offers benefits like additional services and a focus on prevention, it comes at a higher cost to the Medicare system. For physical therapists, this reality means navigating a more complex landscape of reimbursement and compliance, but it also presents opportunities for growth through increased patient referrals. By leveraging tools like HelloNote EMR, therapy practices can better manage these complexities, improve administrative efficiency, and focus on providing high-quality care.
Understanding the financial implications of Managed Medicare helps PTs stay informed and make strategic decisions for their practice. With the right knowledge and technology, therapy practices can thrive even as the healthcare landscape evolves.
If you’re struggling to manage Medicare costs, HelloNote has the perfect solution. Our EMR system is designed to help therapists organize billing, manage claims, and ensure compliance with ease. Book a demo now to see how HelloNote can simplify your Medicare management!