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Providers are short on cash. What are health plans doing about it?

By: Jasmine DeSilva

U.S. providers are struggling to remain financially stable amidst Covid-19. The Primary Care Collaborative found that nearly 80% of surveyed clinicians report their practice is under “severe” strain, and two-thirds of PCPs don’t think their practice has enough cash to remain open a month from now.

As of April 7, CMS has dispersed $34 billion in advanced and accelerated payments. Both AHIP and the AMA have publicly urged private health plans to emulate CMS by prioritizing payments to providers. The question is: will private plans do the same?

How CMS is subsidizing provider finances

In late March, CMS ramped up its Accelerated and Advanced Payment Program in Medicare, offering a cash infusion to all U.S. providers and suppliers nationwide. Payment amounts are based on historical payments. Advanced payments can be requested for either up to three or six months depending on the type of provider and supplier. The agency also announced it will reduce processing time for these payments to seven days from the usual three to four weeks. Most hospitals will have up to one year from the payment date to repay the balance of these payments, while recoupment for all other providers and suppliers begins 120 days after the payment date. As of April 7, CMS received over 25,000 requests from providers for cash payments and have approved over 17,000 of those. Prior to Covid-19, CMS had only approved about 100 of such requests in the past five years.

Use the interactive menu below to see how private plans will mitigate financial risk when offering advanced or accelerated payments

Use funds dedicated to previously budgeted value-based programs

What plans are doing:

Recognizing that it’s hard to find net-new funds, some plans are dipping into their value-based program budgets to support providers during Covid-19. Since these programs typically have a dedicated amount of money that was budgeted for in the previous year, plans are using these funds to offer emergency advanced payments to providers. Plans will need to consider how to recoup payments that would have otherwise been tied to providers’ performances in the respective value-based programs.

How plans are doing it:

On April 8, UnitedHealth Group said they will immediately accelerate and advance payments to medical and behavioral care providers in the U.S. Additionally, UHG is providing $125 million in small business loans to clinical operators with whom OptumHealth is partnered. UHG is also partnering with HHS to deliver the initial $30 billion of relief funding to providers from the CARES Act, and will donate all fees for administering the payments to the CARES Act Provider Relief Fund partnership.

On April 8, Highmark released plans to help local primary care physicians through advanced payments based on achievement in the True Performance Reimbursement program. Over 1,700 PCP practices will receive over $30 million in advanced payments across Pennsylvania, West Virginia and Delaware.

On April 8, Blue Cross and Blue Shield of Michigan is accelerating payments to more than 40 physician organizations that are a part of Blue Cross’ Physician Group Incentive Program (PGIP), including more than 20,000 primary care and specialist physicians throughout Michigan. Since the PGIP offers funding each year that providers can earn based on performance, Michigan is simply advancing funds that would’ve been spent later in 2020.

On April 10, CareFirst BCBS said they will offer a new accelerated payment program offering over $170 million to providers that would have otherwise been paid later in 2020 and 2021. Qualifying patient-centered medical homes will receive a combination of advance lump-sum payments, increased fee schedules, and monthly cash advances. Pediatricians, rural primary care providers, independent practices, and dentists will receive monthly cash advances.

Pay providers based on historical performance

What plans are doing:

Plans are calculating the amount of their advanced or accelerated payments according to providers’ claims this time of year in 2019—effectively subsidizing any immediate revenue loss. With this approach, the payment should be relatively non-controversial and easy to calculate. The hope is that recoupment would ultimately level-out over time once in-person care (e.g., elective surgeries, preventative care) can safely begin again. However, given how expensive treatment is for Covid-19 patients, payment based on historical performance alone likely won’t prove to be enough for providers.

How plans are doing it:

On April 8, Premera Blue Cross stated it will provide $100 million in advance claim payments to contracted medical, dental, and behavioral health providers in Washington state and Alaska. Providers could receive a 3-month advance based on historical averages of office visits, behavioral health codes, and dental codes incurred between October 1, 2018 and September 30, 2019 and paid through December 31, 2019 for fully-insured members. All eligible providers must have at least $1500 as a cash advance. Recoupment will begin January 1, 2021 over a 9-month period as a percentage of claims.

On April 8, Blue Cross and Blue Shield of Minnesota unveiled a plan to accelerate about $80 million in payments for providers that achieved certain cost and quality goals. Providers will receive these funds in the fall of 2020.

Segment payment to prioritized providers over a few months

What plans are doing:

While the majority of physicians, hospitals, and health systems need immediate financial support due to Covid-19, it will be difficult for most health plans to provide enough funds to meaningfully support all of these providers. Therefore, plans are determining which providers have the most amount of revenue loss and are serving in the areas hit hardest by Covid-19 to prioritize financial support. To offset some of the financial risk, plans are segmenting these payments to providers across a few months, rather than paying it out all at once.

How plans are doing it:

On March 30, Blue Cross of Idaho announced plans to offer a cash advanced payment system to independent physicians, prioritizing primary care, behavioral health, and a few other non-surgical specialty providers. The payment is calculated according to their patient volume this time last year. To qualify for the monthly cash advancement over a 3-month time period, physicians must have seen a reduction in revenue by at least one-third. Physicians can apply for the opt-in program and receive an interest-free loan, which the plan will recover during the fourth quarter of 2020.

Help providers secure favorable loans

What plans are doing:

To help providers secure the most favorable loan, plans are helping providers work with financial institutions on options that best suit their organization’s needs. This approach is also viable for plans who may not have the funds immediately available to directly offer providers advanced or accelerated payments.

How plans are doing it:

On April 6, Blue Shield of California said they will provide up to $200 million in direct financial support to providers including financial guarantees, advance payments, and contract restructures with favorable repayment terms. The insurer is working with two financial institutions to assist providers with guaranteed loans and payment advances on expected costs.

On April 8, Centene launched an initiative to open an online portal for providers to research and secure grants and small business loans to help them cope with the financial impact of the Covid-19 pandemic. Those providers will then be connected with experts who will help them navigate applications and hopefully secure financial support.

How health plans can protect their own finances

To mitigate risk and losses, plans will need to be creative and strategic in how they recoup advanced payments post-Covid-19 given that providers’ finances won’t immediately rebound. A few options plans have proposed include: recouping the advanced payments at the end of 2020 interest-free, reconciling payments to future value-based arrangements, and tying payments to achievement of certain cost and quality metrics.

The decisions health plans make now will have long-term implications on providers’ viability and the plan’s own financials, including premiums and network composition. These are difficult times but ultimately plans are best served by supporting high-quality providers during a financially challenging time. As such, we expect private plans will continue to look to CMS as they navigate decisions around advanced payment.

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