Medicare and Medicare Advantage

The Everett Clinic has the privilege to care for 41,000 Medicare patients. The Clinic's first core value is to do what is right for patients. Yet the organization faces an ethical and financial dilemma regarding how best to improve care and reduce costs for its growing Medicare population.

Many seniors find it difficult to access care right now because providers are losing money on every Medicare patient they serve. In this region, payments are less than the actual cost of care. The Everett Clinic loses $10 million year caring for Medicare patients.

Given the rapidly aging Baby Boomer population, policymakers simply must focus on Medicare.

To get Medicare on solid financial footing and ensure that seniors can continue to receive care, Medicare’s payment formula must be changed. Currently, providers receive payment for each procedure they perform. This is called fee-for-service. The fee-for-service approach encourages high-volume, high-intensity care, which drives up healthcare costs. As a result, the per capita cost of care for Medicare patients can range from approximately $6,000 to $16,000 depending on the region, with no discernable difference in the quality of care.

Under the current system, there is no financial incentive to keep patients healthy. No one is accountable for ensuring that care is patient-focused, and also cost-effective. Prevention, education and even chronic disease management, which can help avoid costs and sustain or improve patients' health, may not be reimbursed adequately or at all.

To compensate for Medicare losses, providers are forced to increase the fees charged to other patients. This amounts to what is often called a “hidden healthcare tax.” Given the current healthcare market, it is increasingly difficult to shift costs to compensate for the shortcomings of the Medicare program.

If Medicare is not revamped, it will remain a serious drain on the economy for the foreseeable future, taking resources away from other needs. Healthcare costs will rise as providers struggle to compensate for losses. State dollars will be required to plug gaps in federal funding. Seniors will be forced to seek expensive emergency room care if they cannot find a physician who will accept Medicare.

Medicare Advantage
Managed Medicare Advantage plans have allowed providers to reduce losses resulting from caring for Medicare patients.

Why does The Everett Clinic lose $10 million a year caring for Medicare patients? Years ago, Congress initiated a physician reimbursement formula for Medicare based on a national comparison of total physician services. Since this region has a long history of providing very efficient care, providers here receive significantly less reimbursement for the exact same procedures as providers in other parts of the country. In fact, providers here are paid less than the cost to provide care for Medicare patients.

However, Medicare Advantage plans are reimbursed differently. They allow the Clinic to nearly break even for providing care to Medicare patients. This will help the Clinic keep doors open to Medicare patients and assures patients can continue to receive care from all of their Everett Clinic doctors. Care coordination is especially important for seniors who often suffer from chronic, complicated conditions, and these plans reimburse providers for coordinating care with an emphasis on prevention and disease management. 

For these reasons, the Clinic requires all patients "aging into" Medicare to join a Medicare Advantage plan accepted by The Everett Clinic in order to continue care at the Clinic. In January 2012 the Board of Directors also implemented a new policy requiring all Medicare patients to move to Medicare Advantage HMO/PPO plans in order to continue to receive services at the Clinic. Exceptions were made for Medicare patients seeing only Everett Clinic specialists, and patients covered by employer-funded retirement medical plans that did not include one of the Medicare Advantage plans accepted by the Clinic. 

The Clinic's leaders firmly believe that Medicare Advantage plans are a very good choice for patients, since they support wellness, prevention and access to effective disease management programs. The Clinic's goal is to keep patients healthy, not just provide care after they are already sick.