Rethinking Medicare Advantage: One Health System's Decision

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Daniel Marino:

Welcome to Value-Based Care Insights. I am your host, Daniel Marino. In today's episode, we're going to dive into Medicare Advantage, and in particular, some of the challenges that hospitals and healthcare systems are having with Medicare Advantage commercial organizations, just the structure overall. As many of us know, a lot of the systems, or a few of the systems around the country, have chosen not to participate in Medicare Advantage, and there's a number of reasons for that, but for the most part, it seems like the predominant reasons are related to the administrative cost, for hospitals and health systems as they are work through pre-authorizations as they work through these denied claims, and just the negative impact that has been placed on patients related to, you know, the pre-authorization process, not to mention the erosion of cash flow. Interestingly enough, the OIG came out with a study recently where they evaluated, 2024 Medicare Advantage activities and the denied claims and ID rates related to that, and what they found was over 20%, I think it was close to about 23%, of pre-authorized services were denied. But the interesting thing about that is, after a period of time, when the healthcare providers went back through and appealed those, 95% were approved. And the only thing that tells me is that we've added all of this extra cost to the system, because somebody's got to work these denied claims. It's been a major impact on patients, and again, it just… it creates inefficiencies and impacts the cash flow all the way around for healthcare providers and for our patients and our consumers.

Well, I'm really excited today to have a long-standing colleague of mine. Ivan Mitchell. He is the Chief Executive Officer of Great Plains Health. He's been the CEO for a number of years, a fellow in the American College of Healthcare Executives, and interestingly enough, Great Plains Health, about a year and a half ago or so, were one of those organizations who made the decision to terminate their Medicare Advantage contracts. Really excited to have you part of the discussion today. Ivan, welcome to the program.

 

Ivan Mitchell:

Dan, great. Happy to be here.

 

Daniel Marino:

So, Ivan, maybe we can dive into this. What were some of the factors that, I guess, led you and your colleagues and Great Plains Health to terminate your Medicare Advantage contracts?

 

Ivan Mitchell:

Yeah, it's… it was kind of an evolution, and we started… we had jumped into quite a few value-based agreements with some payers, and part of the…You know, part of the reason we went into these contracts was to try to manage costs, and one of the stipulations they had in place was to join, and to go and network with some of their Medicare Advantage products. And so, we had two, plans that we went and networked with, with Medicare Advantage. And it was… they were pretty small numbers at first, and, you know, it was, it was going okay. We were… we were seeing some issues. And during that time, we started to see some of the national plans and providers that decided to stop accepting Medicare Advantage. And some of the ones that stood out to us, you saw Mayo Clinic, you saw Scripps Healthcare System, a large provider in San Diego. And so we started kind of sharing this with our board, with our medical staff, as we got complaints about delayed care and a lot of work with prior authorization. But the big issue that came to us is the largest employer in our community ended up moving all of their retirees from traditional Medicare with a supplement to a national Medicare Advantage plan and It was really interesting, they never talked to us about this. We had one of our nurses bring this in and say, hey, my dad got this in the mail, is this an issue? And we were looking at it, and we were not in network with that Medicare Advantage carrier, so we were really concerned, and so, we kind of started going through this process of evaluating it, looking at this, letting them know we're not in-network. It was really interesting that National Plan got on a bunch of phone calls with us, and they said, we shared our concerns with Medicare Advantage, showing them all of these people are not accepting it anymore, showing the OIG report that came out years ago that talked about delays and denials of care. And we said, we're just really worried about this. And they said, well, this is not a typical Medicare Advantage plan, it's a super-duper national plan. If you're out of network, there's no prior authorizations, there are no issues that you're going to run into, and so we said, well, we're a little concerned, but we're going to go ahead and trust you. And so we did not go in network with this plan, but we started accepting it in 2024. And in February, I remember this in particular, we had a patient who was in pretty good health prior, ended up getting really sick, ended up being intubated, you know, went through septic issues, and went through a full recovery, was, but due to the time she was intubated and whatnot, really qualified, and under traditional Medicare guidelines, would have qualified to go to a rehabilitation hospital. And we have a really… we have a great one in Nebraska, a Madonna Rehab Hospital, and we called them up, they said we got space, they accepted the patient, we got ready to transfer them, and they said, well, this is a Medicare Advantage patient, we have to get a prior authorization. And we said, well this is a super-duper national plan, and we don't need prior authorization. They said that it'll go through, and they said, well, sorry for us, we're not going to take them without a prior authorization. So that was interesting to us, so we went through the prior authorization process, and what was more interesting is we kept getting denials.

 

Daniel Marino:

Wow.

 

Ivan Mitchell:

Denial, denial. Had to take… had to take it to a peer-to-peer. And our physician, who had a full day of clinic, you know, busy physician, had a full day of clinic, had to do a prior authorization. They would only do it between 8 and 5, Monday through Friday, when his clinic was going. Made him sit on the phone on hold for a half an hour, and and got denied, with that peer-to-peer after wasting all that time. We went again, and still got denied, and it was really frustrating. Because they wouldn't give us a reason. They would say, well, the patient's still in acute status. And we said, yes, they need acute rehab status, they are done with acute care hospitalization status.

 

Daniel Marino:

Even what Medicare would say, you know, I mean, the natural progression, natural transition is to put them into acute rehab.

 

Ivan Mitchell:

Yeah, exactly, and so that was our, so we ended up… we ended up holding on to this patient for… unnecessarily for an additional 6 weeks. The reason for that…we're required to provide a safe discharge. Taking this patient anywhere other than acute rehab was not a safe discharge, so this patient was stuck for 6 weeks. And we have an average length of stay of about 4 days. So… a few things here. Number one, most hospitals and health systems don't have an abundance of nurses, and we are the only hospital our size in about a 100-mile region, and so that patient staying an extra 6 weeks denied care at our average length of stay for 10 additional patients. So you had 10 patients who had to travel over 100 miles… 100 miles per care, and we were… we were turning away other transfers during this time, you know, we… we were having census issues, so you think about the impact to the patient there, it's just substantial.

 

Daniel Marino:

I mean, the financial impact to your organization, when you think about…You know, the individual that's supporting trying to get this pre-authorized, not to mention, then, the physician who you brought in, in a peer-to-peer situation, you know, and… and…I can only imagine what the financial impact was.

 

Ivan Mitchell:

Yeah, and of course, you know, I was the administrator on call one time during this time, met with that family, and, you know, they were pretty angry, as you can imagine. And then… but, you know, we took good care of them at our hospital, but on the financial side, 6 weeks of care unnecessarily, we've allowed the commercial insurances to, to abuse the Medicare payment policy, and so we got paid a DRG, diagnosis-related group, for that stay. Whether that patient stayed 3 days or 30 days, we got paid the same, and so they left in our hospital for 6 weeks. 24-hour nursing care. We did the best we could, you know, we are not a rehab hospital, we're not that, you know, we're not at that level, we don't have that status, but we did the best we could with rehab, which is expensive. Physician coverage every day, you know, meals, medications, all that stuff, none of that was reimbursed, and so…So basically, this, this, this got us angry, and we called up the…a company the next day and said, alright, we're going to give you a long runway, but we are not accepting this in 2025, and we will be out of network, and not only will we be out of network, we will not allow patients on Medicare Advantage to schedule with our specialists, and so we took a really hard approach.

 

Daniel Marino:

Well, it sounds like that was really… that was really the straw that broke the camel's back. I mean, I would assume that there were a number of things that kind of led up to this, you know. You know, in talking with you prior, there were some… certainly some areas of frustration with Medicare Advantage that you had, but this was definitely the tipping point.

 

Ivan Mitchell:

Yeah, we had some general frustration, you know, maybe some smaller things here or there, but, you know, we looked at this, and we just said, this is just so bad for…the patients, for the healthcare system in general. You know, we, so that was the story in particular, and you know, it's really interesting, so we told them that, you know, I said, I want a, I want a meeting with all of those leaders who came and told me about the super-duper national plan where we wouldn't have these issues, and of course. None of them will get a phone… on a phone call with me after, you know, they're all of a sudden gone away, and, you know, not available, or not working there, or anything like that anymore, which is…Garbage, you know? And it's so frustrating, because these people that are coming and telling me, they're not the ones meeting with the family, explaining to them why they can't get care. It's us. We're the ones stuck dealing with the situation, paying for all this care that we're not getting reimbursed for. You know, they're shuffling papers. They're providing no good or service. It really is a, it really is, honestly, it's kind of parasitic to the healthcare system, and so that was, so for us, that was the process, and we said at that point out, we're not taking it anymore.

 

Daniel Marino:

They really place you in the middle, you know, really being able to have it to serve the patient, because, I mean, you're gonna… you're gonna deliver good care, you know, you're a small community hospital, your mission is to serve the patient, so really kind of puts you in a very difficult, difficult position. If you're just tuning in, this is Daniel Mourinho, you're listening to Valley Based Care Insights. I am here with Ivan Mitchell, Chief Executive Officer at Great Plains Health, having a fascinating conversation on his, path towards leaving Medicare Advantage, and sort of the things that led up to the decision. So, Ivan, let me ask a couple other questions. Now you made this decision to, transition out of Medicare Advantage. Obviously, there's, you know, you probably have experienced it in your community, the same as nationally. Medicare Advantage has started to grow. The payers have done a nice job of marketing to Medicare beneficiaries. What was the communication like with patients? Were they upset? Did they understand? I mean, I assume you had to do some level of education to the patients to kind of get them to either re-enroll in traditional Medicare. Or help them find another provider. What did that look like?

 

Ivan Mitchell:

Yeah, so we had a long runway, which was nice. We made the decision early on, I think we notified the payers in March or April, and we ended up doing quite a bit. We did a lot on social media. We did letters directly to anyone on a Medicare Advantage plan. I held multiple symposiums and open community forums and meetings at our local community college, and tried to get as many people as we could to attend, so…We did a lot, and as much as we possibly could. It was challenging, and I would say it was mixed. There were some people, when we kind of walked through the process that understood it. There was so much out there with the healthcare systems that stopped taking Medicare Advantage with the OIG report, with the report on people being denied post-acute care, so we had a lot of stuff that was, that was from other entities, so it wasn't just us. I think the challenge is that sometimes when you hear that a health system's no longer going to accept something, it's, well, look at that greedy healthcare system, or look at that.

 

Daniel Marino:

Right, right, right.

 

Ivan Mitchell:

And so trying to, even from that story, you know, if we continue to accept Medicare Advantage, we… we called, two health systems, one in Brookings, South Dakota, and one in Stillwater, Oklahoma, that were more our size that stopped accepting Medicare Advantage. And it was interesting, we asked them, we sat down with their CFO, and they said, well, when we calculated everything out, delays, denials, down coding, all of these things, one said we estimated we were getting 16% less than traditional Medicare, and the other said we were getting 17%.

 

Daniel Marino:

Wow.

 

Ivan Mitchell:

We didn't go to that level, but we didn't go to that level, but we, came to the conclusion that it was over double digits. It was over 10%. We didn't get. So I think probably that 16% to 17% is probably about accurate, and then if you think about it, so you're getting… you don't make money on Medicare anyway, and then taking another 16% or 17% cut. And then we were thinking of all of the patients. There would be a half dozen to a dozen patients just stuck in our hospital that really didn't need care, you know, that really didn't need to be there. And a lot of them, it's only a one or two-day delay, and that might not sound like a very big deal, but if you go from a 4-day length of stay to a 5-day length of stay, you just increase my cost 25%. And I have a 3% operating margin. So, I mean, it's just… it was just non-sustainable. And so those were… those were the things that we looked at and explained. We had a lot of public meetings, a lot of public discussion. And I can even give you the results of that. So we had, just in… of course, we had it in, Lincoln County. So, we ended up, We ended up having… it was over a couple of thousand, enrollees in Medicare Advantage. We had 2,212 enrollees in 2024. And, our Medicare… that time, our traditional Medicare and Medicare Advantage payer mix was 44.67%, so in 2025, That 2,212 members, Went down to about 400 that we no longer would accept their plan. We did end up staying in network with the dual DSNP plans, so we did end up continuing to see those. We thought that dealing with Medicaid's such a pain anyway, you know, so we did stay in the DSNP enrollees, but basically there were about 400 people who decided to stay on their Medicare Advantage plan that we only treat now through the ER. We don't treat them through outpatient care, through our specialists.

 

Daniel Marino:

So about those…1,800 transitioned then over traditional Medicare, and I'm assuming, you know, you probably kept them within your physician panel within your healthcare community.

 

Ivan Mitchell:

Yeah, yeah, that was… that was… and it looks like that's what happened. So, I was concerned. I kind of felt like we would probably lose some volume when this happened, but just to give you an idea, in 2025, our payer mix between traditional Medicare and Medicare Advantage actually increased, to 45.53%, 1%. And then, to give you an idea, our admissions from year to year, went up 3.7%. And then our patient days only increased 1.6%, so that kind of goes to show you how… so admissions went up quite a bit, patient days basically went up less than our admissions went up. Surgery's increased about 1%, cath lab procedures went up 7.2%, imaging went up 1.9%, lab and path went up 6.4%, and adjusted discharges, which takes your inpatient and outpatient, went up 1.6%. So I was thinking we were going to see…You know, a decrease of a few percent. But we did not. We actually grew, and because we weren't caring for patients that didn't need to be there anymore.

 

Daniel Marino:

That's clearly a good business decision, and like you said, you just did a great job on being able to redirect it and educated the patients, you know, which really helped solidify the value, I think, that Great Plains Health was providing.

 

Ivan Mitchell:

Yeah, I mean, that was kind of what we were hoping for. I kind of felt like it would… I kind of felt like our volumes would go down a few percent, but not only… you know, you feel bad saying no to anyone that you're denying care, but… but as we were looking at the data, we were actually able to care for more people because we stopped taking Medicare Advantage, so…

 

Daniel Marino:

I just wanted to kind of ask your opinion. Given, obviously your experiences there then, and what you saw, and obviously you did a great job of talking to your colleagues, I'm sure it wasn't an easy decision. But going forward, how do things need to change? Like, if, if a Medicare Advantage, payer came to you and said, you know, look, we want to try it again, we'd love to have you join our network. You know, what would be some of the requirements that you would need to see in order to ensure that the care is being delivered at the right level, and all of these costs and inefficiencies, you know, frankly, either are reduced or they go away.

 

Ivan Mitchell:

Yeah, I think that's the key. From my perspective, the problem we have is that incentives are not aligned, and so…There are a couple of Medicare Advantage plans, and they're typically provider-run plans. You know, you'll talk to Kaiser, to Intermountain, Sanford, and a few others that, you know, if you think about it, they are not going to leave a patient in the highest cost of care setting so that they can save money from paying for a skilled day, you know what I mean? But when you're an insurer, and you don't have both sides of the coin, you're saving money by…trapping people in a hospital that you're not paying for, you know? So, I think that somehow, someway, those incentives have to be aligned. They're probably going to be most aligned in a provider-administered Medicare Advantage plan. So, we're…I really do feel bad. I would like to have one option for our region, and so those people that did stick in Medicare Advantage, if we had an option that they were able to switch to a Medicare Advantage plan and have that work for them. So we are evaluating. There is a small regional provider plan that, that is out there. We're kind of analyzing that at this point. There are a couple of things that are interesting in rural areas called cost plans, where it's kind of Medicare Advantage light. You know, Part A is traditional Medicare, and Part B is provided by the private insurer, so…Those are the two plans we're looking at right now. I think I really would like to, you know, have one option, and then just really manage that, and that way people can kind of, you know, jump into that if they prefer a Medicare Advantage option.

 

Daniel Marino:

So, within Great Plains Health, you have a pretty successful, clinically integrated network. You've done a nice job of kind of aligning incentives with your physicians, with the hospital, and have created, you know, some pretty good relationships on the commercial side with the payers. Do you see, you know, getting kind of building off of that aligned incentive theme that you had mentioned, do you see using the CIN as a mechanism to maybe align with a local, I don't know, provider-sponsored MA plan, or a way to be able to leverage a lot of the work that you've done in your CIN to create that aligned incentive?

 

Ivan Mitchell:

I think so, and that, yeah, kind of really is the purpose of the CIN, is to coordinate with your independent providers and your employed providers to, you know, to eliminate duplication, to get rid of administrative waste. To provide the appropriate care at the appropriate time versus care that might be more expensive or inappropriate at that time. So I think that is going to be the model, where you have a payer and the provider group with aligned incentives to care for the patient in the most appropriate way possible, and so I think that is where you're going to see a path forward.

 

Daniel Marino:

Yeah, I would agree with you. You know, and CINs who are really high performing have created a tremendous amount of efficiencies within the care that's being delivered, and not just clinical efficiencies, but administrative and business efficiencies, efficiencies as well. And I think to build that into the model where you do have those aligned incentives, but you're doing it at the right cost point, delivering at the highest level of care, that's what's really going to… going to drive it. So, where are you going from here? Are you kind of looking at, entering back into the MA market? Are you sort of just feeling it out, just to say what's out there? Is there a particular direction? I mean, clearly you don't have to do anything right now. It sounds like the model that you have in place and the approach that you've taken clearly has worked.

 

Ivan Mitchell:

Yeah, so I think right now we're just doing some analysis. You know, I kind of shared with you 24 to 25 volumes. So far in 2026, we're actually even seeing higher volumes and an even higher growth rate than we did the prior year. So we've had kind of that discussion as to why go back into it and have the potential to be abused, I guess you could say. So as of right now, I think we're kind of holding steady, but again, I think we would really like to have one option out there that's available for our community and region. We're going to be very careful about selecting that option. We're gonna make sure that, it's locked in to where patients are treated appropriately, and their care is not delayed or denied inappropriately. So, so we're kind of holding steady at this point.

 

Daniel Marino:

Yeah, well, hindsight is always 20-20, and you had some great lessons learned that clearly, you know, you leveraged and you sort of built on as you thought about what direction you wanted to go, and I'm sure as you start to consider getting involved in an MA plan down the road, those things will be certainly taken into consideration. Well, Ivan, thanks for coming on the program and sharing your story. Fascinating, and I give you a lot of credit you on your business approach, certainly, you know, a leader in the… across the country, certainly in the rural health space, in the community health space, on driving a lot of the change that needs to happen in Medicare Advantage. But thanks again for coming on the program.

 

Ivan Mitchell:

Thanks a lot, appreciate it.

 

Daniel Marino:

And for all of our listeners, thank you for tuning in. If you're interested in learning a little more about this topic, or any of the topics that we talk about here on Value-Based Care Insights, please visit luminaHP.com/insights, or ECGMC.com as well. Till our next insight, I am Daniel Marino, providing 30 minutes of value to your day. Take care.

About Value-Based Care Insights Podcast

Value-Based Care Insights is a podcast that explores how to optimize the performance of programs to meet the demands of an increasingly value-based care payment environment. Hosted by Daniel J. Marino, the VBCI podcast highlights recognized experts in the field and within Lumina Health Partners