From One CFO to Another: Breaking the Medicare Advantage Bottleneck

See what the CFO of a health plan and the CFO of a health system think is the solution to the payer-provider battles of Medicare Advantage.

Medicare Advantage (MA) enrollment has surged past traditional Medicare, and small and mid-sized health systems are increasingly caught in a messy, complex web of administrative burdens, underpayments, and unbalanced negotiating power.

For Tim Ajayi, CFO of Bristol Community Hospital in Connecticut, navigating payer dynamics has become one of his biggest challenges, one he believes calls for strategic, data-driven, and possibly regulatory solutions.

On the other hand, MA health plans also want effective, transparent partnerships with providers. According to Michael Plumb, CFO of SCAN Health Plan, the key to effective negotiation isn't just about economics, but also about empathy, alignment, and transparency.

Alignment from the Start

Too often, parties enter negotiations solely focused on their internal goals without considering what success looks like for the other side. This lack of perspective, Plumb argues, leads to misalignment and missed opportunities for compromise.

"Both plan and provider CFOs need to better understand the economics of who they're negotiating with," Plumb says.

Rather than treating negotiations as a zero-sum game, Plumb urges CFOs to approach the table as partners.

"If one side is focused on growth and the other on margin, and you don't know that from the start, you're going to be spinning your wheels," he says.

According to Ajayi, at first glance, Bristol's major payers appear to have a genuine desire for collaboration, but down the road payer administration tactics arise that strain the relationship.

The administrative mechanisms under them like the claims processing, the audits, the recovery agencies, it creates a level of bureaucracy that makes it almost impossible to resolve daily issues efficiently," he says.

Ajayi cites examples like the Advantage Plus Network, a third-party network used by payers like United and Anthem.

"You call one and they send you to the other," he says. This pattern ultimately turns into a constant finger-pointing game that wears down providers teams and delays their reimbursement.

Large gaps in expectations early in a negotiation are a warning sign, according to Plumb. When that happens, he says, it's the CFO's job to step in and uncover the root cause.

"Don't just go back and forth trading dollars. Understand the ‘why' behind the numbers," he says.

Medicare Advantage Headaches

The biggest pain point? Medicare Advantage itself.

"MA plans often reimburse below traditional Medicare, which is already below cost for us," Ajayi says. "Then they layer on administrative burdens that reduce real revenue by another 10% or more."

Unlike larger systems that can walk away from unprofitable contracts, small hospitals like Ajayi's don't have that kind of leverage.

"We can't just drop a payer without potentially impacting access to care in our community," he says "But that leaves us absorbing costs we can't recoup."

Plumb's message to providers is clear: Consolidate your health plan relationships.

"Work with plans that perform well on stars and that are transparent and collaborative," he says.

High-performing plans receive higher CMS payments, meaning the overall pie is bigger. Providers can solve financial concerns not by negotiating higher rates, but by shifting volume to plans with better economics, Plumb says.

Tools for Alignment

While Ajayi explains that the Price Transparency Act has been helpful for providers, he says "I think where the data sharing becomes more helpful between the payer and the providers is in denials."

Ajayi sees some hope in the growing emphasis on data sharing and transparency. Before entering negotiations, his team compiles detailed cost and denial data.

"We sit down with payers and show them the real cost trends, the administrative inefficiencies, and the impact of high-deductible plans on patient collections," he says.

Resources like pricing transparency data allow Ajayi's team to benchmark against competitors and question why some systems are paid significantly more for the same services.

"We have great quality metrics, low infection rates—there's no reason we should be reimbursed less than larger systems other than size," he says.

Still, access to payer-side data, especially around denials, is often lacking.

Value-Based Care

Plumb sees shared-risk and value-based arrangements as a key lever for stronger partnerships, particularly in the MA space. These models naturally align incentives around population health management, risk coding accuracy, and improving access to care, all of which are crucial for managing cost and revenue in MA.

"Value-based arrangements do a better job aligning around the elements necessary for success in Medicare Advantage," he explains. "They move the conversation beyond rates to shared outcomes."

Ajayi says more providers are shifting towards value-based care agreement, to find better alignment with payers, but they still don't have a comparable level of dictation alongside their payer counterparts. 

Plumb acknowledges the pitfalls of these agreements: fee-for-service often brings rigid payment rules and denials, while value-based models can feel risky for providers.

Ajai also highlighted the benefits of payer provider collaboration on preventive care, a vital component to value-based care models. With health plans and providers tightly aligned on preventive care strategies, there would theoretically be less emergency room visits and high-cost care to begin with.

A collaborative mindset and an empathic payer strategy are essential.

Technology

Bristol uses tools for contract modeling, helping hospital executives to forecast the financial impact of different contract scenarios. On the operations side, they're exploring automation to streamline repetitive tasks like responding to redundant medical record requests, a tactic Ajayi believes is used deliberately by payers to delay payment.

Ajayi says components such as financial modeling and scenario planning are "absolutely indispensable when it comes into negotiation."

Accountability and Evolved Mindset

Ajayi emphasized that providers will face the malpractice burden for a patient who is denied care by a payer.  If payers had to bear some of that responsibility, he says, it would help to level the playing field.

"An ideal collaborative relationship is one where maybe the insurance companies would agree to accept that responsibility and one where we understand each other's roles and responsibilities and we negotiate fairly and in good faith," he says.

Ultimately, Ajayi argues that the imbalance in payer-provider relationships can't be solved solely through better negotiations or technology.

"The payer dictates the rules, has more capital, better tech, and all the leverage," he says. "If we want a sustainable system, we need regulatory oversight to ensure payers are playing fair."

Until then, smaller providers like his will continue walking a financial tightrope, balancing patient care with business survival.

Ultimately, Plumb believes the CFO mindset must evolve. Rather than asking "How do I get what I need?" it's time to ask, "How do we succeed together in Medicare Advantage?"

That shift, paired with greater transparency, including discussions about broker commissions and benefit designs, could unlock stronger, more sustainable relationships.

"At SCAN, as a nonprofit, we're able to be fully transparent with our provider partners," Plumb says. "That builds trust, and trust is the foundation for everything else."