MCCH terminates Anthem Medicare Advantage contract

MURRAY – With Medicare open enrollment just around the corner, seniors who rely on Murray-Calloway County Hospital and its providers for medical care may want to steer clear of Anthem Blue Cross Blue Shield Medicare Advantage plans, at least for 2025. MCCH Chief Financial Officer John Bradford reported at Wednesday’s Board of Trustees meeting that negotiations with Anthem over Medicare Advantage (MA) plan contracts have stalled. Unless an agreement can be reached before the end of the year, the hospital will be out-of-network for Anthem MA plans effective Jan. 1.

In June, Bradford informed the board that the hospital terminated its contract for next year with Anthem MA with the intent of renegotiating the contract’s terms to get reimbursement rates more in line with traditional Medicare. He explained that, in terms of the percentage of charges paid, Medicare is the hospital’s lowest payor, and while MA plans are supposed to follow Medicare’s rules for reimbursement, for various reasons, the amount actually realized by the hospital is about 20% less than what traditional Medicare pays.

“The whole purpose of the contract negotiations is to close that gap if you will,” Bradford told trustees Wednesday. “We have not made any significant progress since June. We are still negotiating. There’s a chance that we could still have a contract on January 1, but right now, we don’t. In early October, we’ll start sending notices out to our current patients who have Anthem Medicare Advantage, letting them know that we’ll be out-of-network January 1 and informing them of their rights. They’ll have the right to switch to another Medicare Advantage plan during the open enrollment. If they choose to stay with Anthem, that’s their choice; but we’ll be out-of-network if we don’t get an agreement.”

Bradford made clear that the hospital is still open to signing a new agreement with Anthem between now and the end of the year if they can negotiate more favorable terms, “but so far, it’s been discouraging. So, we feel it’s best to let the public know that, in all likelihood, we won’t have an agreement.”

As a whole, Medicare patients comprise 54% of MCCH’s total charges for services provided, and that figure is roughly split 50/50 between MA plans and traditional Medicare, Bradford explained in an interview after the meeting. Medicare reimburses at the lowest rates than other payors. For inpatient admissions, Medicare reimburses around 25% of charges, whereas other payors reimburse at rates closer to 50%. For outpatient services, other payors reimburse around 38% of charges, but Medicare only reimburses around 14% of charges.

“What we have found is that, with Medicare Advantage plans, we realize about 20% less than traditional Medicare,” Bradford said. “So, they’re our lowest payor, generally, and then Medicare Advantage, specifically, is lower than traditional (Medicare), and the reason for that is they don’t follow Medicare rules. They say they reimburse like Medicare, but they don’t follow Medicare rules.”

It has been widely reported that providers have trouble with MA plans denying prior authorizations as well as claims for medically-necessary services provided. One tactic frequently employed by MA plans is not allowing a patient who has been admitted to the hospital to be classified as an “inpatient,” instead only allowing them to be classified as an “observation admission.” Observation patients are billed as outpatient services. Not only is the reimbursement rate lower for the hospital, but the copays and deductible patients have to pay for outpatient services are higher than for inpatient admissions.

Another issue is that, unlike traditional Medicare, which reimburses a portion of the charges for which a patient would be responsible, MA plans do not offer any reimbursement on bad debts.

MCCH is not the only hospital in the region to terminate MA contracts. At the beginning of this year, Baptist Health, which includes Baptist Health Paducah, dropped Wellcare and United Healthcare (UHC) MA plans from their roster, according to the Paducah Sun. That move came a few months after the healthcare system cut ties with Humana MA.

Currently, MCCH accepts MA plans from Humana, UHC, Wellcare and Anthem, but as Bradford explained, the hospital has trouble with all of them.

“We asked physicians, the utilization review staff, our admitting staff; we asked our business office staff, ‘If you had to choose one Medicare Advantage plan to terminate – to try to get better terms with – who would it be?’” he said. “And Anthem was the one that ‘won the boat,’ if you will. That’s how we chose Anthem. It wasn’t that we don’t need to make improvements with our other plans, and it wasn’t that they were necessarily the worst in all areas; but we’ve had specific issues with Anthem that are primarily related to prompt payment of claims. We have more older claims with Anthem than we do with the other plans.”

“If you all roll the clock back to January of 2023, we did (terminate) another Medicare Advantage plan for the same sorts of reasons,” CEO Jerry Penner told trustees Wednesday, referencing Aetna MA plans. “And there was some gnashing of teeth that went on with that because people, obviously, it’s personal to them. Fast forwarding to today, the numbers (of Aetna patients getting services at MCCH) are almost nonexistent. So, people were able to go to another plan, and what do you think’s happening with that group? They’re coming back to us and going, ‘You know, we’ve seen the light,’ and, basically, everything we asked for two years ago, they’re looking to give us now. Sometimes it’s power play. When you’re a small hospital like this, it’s tough for us to compete in that market, but it’s an opportunity for us to say, ‘Pay us correctly. Pay us right.’ … This is not our first rodeo.”

Editor’s note: This article was updated Sept. 26 at 5:20 p.m.

Related coverage: How Medicare Advantage plans differ from traditional Medicare