With Medicare Advantage growing rapidly, providers are asking, "Is it really possible to balance high-quality care with profitability?" In short, YES—but it requires a shift in thinking and some serious investments in data and tech.

Medicare Advantage (MA) plans have gained popularity as a way for healthcare providers to deliver high-quality, proactive medicine while also maintaining profitability. With more seniors enrolling in Medicare Advantage, it has become an attractive option for providers to streamline operations, improve quality outcomes, and increase revenue. In a perfect Medicare Advantage world, patients are kept healthy by seeing providers routinely to prevent sickness while providers can still be profitable without “relying” on patients getting sick before being seen. But can we thread that needle in a historically fee-for-service (FFS) healthcare society?

Medicare Advantage vs. Traditional Medicare

Medicare Advantage, also known as Medicare Part C, is an alternative to traditional Medicare. It is offered by private insurers and covers the same services as original Medicare (Parts A and B) but often includes extra benefits like dental, vision, and prescription drug coverage. Healthcare providers contract with these insurance companies to deliver care to patients enrolled in MA plans.

Medicare Advantage works on a fixed-payment model (sometimes interchangeably called capitated payments). This means that insurers receive a set amount per patient from Medicare, regardless of how much care the patient requires. Providers share in this payment, creating an incentive to manage costs efficiently while delivering high-quality care.

How Value-Based Care Fits In

Value-Based Care (VBC) is a model that focuses on improving patient outcomes while reducing healthcare costs—a perfect strategy! But does it work…for all parties?

Under this model, providers are rewarded for keeping patients healthy and reducing the need for expensive interventions. This differs from the traditional FFS model, where providers are paid based on the quantity of services rather than quality. In Medicare Advantage plans, Value-Based Care is critical. Providers can increase profitability by delivering care that prevents hospitalizations and other high-cost services. For example, investing in preventive care, patient education, and chronic disease management helps keep patients healthier and reduces the overall cost of care. Providers excelling in these areas can share in the savings through incentive payments offered by insurers. This incentive taps into our healthcare system's potential, but it's often easier said than done.

Leveraging Risk Adjustment to Increase Revenue

In addition to preventive care, accurate patient documentation plays a pivotal role in MA profitability. This is where Risk Adjustment comes into play.

Risk adjustment is the process by which Medicare adjusts payments to insurers and providers based on the health status of their patient population. Sicker patients generally require more care, so insurers are paid more for managing these higher-risk patients. In turn, providers who accurately report their patients’ health conditions are reimbursed accordingly.

For healthcare providers, optimizing risk adjustment is crucial. By ensuring that all patient diagnoses are correctly documented and coded, providers can secure higher reimbursement rates. This involves thorough patient assessments, accurate coding, and up-to-date medical records. Regular reviews of coding practices and investing in staff training can help avoid underreporting or misreporting conditions that could lead to lower payments. One could argue that educating your staff on what MA/VBC/RA means and how it works differently than FFS is the single greatest strategy for ensuring the success of an MA population and profitability.

The Path to Profitability

Healthcare providers can become profitable with Medicare Advantage plans by focusing on three key areas:

• Efficient Care Management: Implementing care coordination and population health strategies helps providers manage chronic conditions and prevent costly interventions, resulting in better patient outcomes and reduced healthcare costs.
• Quality Performance Incentives: Providers who meet quality benchmarks set by Medicare Advantage plans can earn additional bonuses. This makes investing in patient satisfaction, preventive care, and health outcomes a profitable strategy.
• Optimizing Risk Adjustment: By accurately documenting patient conditions, providers ensure they receive appropriate payments that reflect the true cost of care. This requires strong clinical documentation and coding accuracy.

So - Is it Possible to Be Profitable in a Medicare Advantage World?

YES. Risk-based payments are not going away. They are becoming a higher percentage of patient populations across the country. Proactively implementing new strategies early, instead of being caught off-guard later, is key to setting providers up for success. Medicare Advantage plans offer a unique win-win-win scenario for providers to be profitable WHILE patients remain healthy WHILE the burden of increasing healthcare costs is reduced.