California-based Medicare Advantage insurer to depart Napa, Sonoma counties

Thousands of North Bay area members with a Medicare Advantage plan through Senior Care Action Network, known as SCAN, will see their coverage end Dec. 31.

"After much consideration, SCAN made a strategic business decision to exit Napa and Sonoma counties in 2024,” Karen Schulte, president, SCAN Health Plan, said in an Oct. 20 email.

Schulte stated SCAN’s departure in Napa and Sonoma counties will impact 3,012 members. She declined to say what led to the decision but did confirm it will begin offering Medicare Advantage plans in both Fresno and Madera counties Jan. 1. The Long Beach-based company offers Medicare Advantage plans in more than a dozen counties in California, and parts of Nevada, Arizona and Texas.

Health care industry consultant Nate Kaufman said he believes SCAN’s reason for departing Napa and Sonoma counties is that it’s become a losing proposition.

“My speculation is that doctors and hospitals (in those two counties) may be at capacity and are unwilling to incur the extra cost associated with Medicare Advantage,” Kaufman said, “and (SCAN) is unwilling to pay a premium to get the attention of those doctors and hospitals.”

Straight Medicare pays health care providers a fixed amount of 85 cents on the dollar; Medicare Advantage plans vary but pay less, said Kaufman, a 47-year health care industry expert and managing director of San Diego-based Kaufman Strategic Advisors.

“If you have a choice of getting paid 85 cents on the dollar of care, or now getting paid less than 85 cents per dollar of care because of Medicare Advantage, … that’s where the negotiations come in,” he said. Hospitals and health care systems in regions like Napa and Sonoma counties tend to be full and don’t want to lose more money on patients, so operators like SCAN leave the market, he said.

It’s likely SCAN will have an easier time negotiating Medicare Advantage plan rates in Fresno and Madera counties, Kaufman said.

“If you look at Fresno (County), it's really covering the Madera and Fresno area,” Kaufman said, noting Madera Community Hospital, the county’s only hospital, closed in December. “(Fresno) has two or three hospitals, so because of that, there may be more capacity and a willingness to accept those patients.”

It has been widely reported that hospitals and health care providers are increasingly dropping Medicare Advantage plans altogether, citing excessive pre-authorization denial rates and long wait times for payment from insurers. Those issues also can result in delays in needed patient care.

As such, SCAN’s contract with San Diego-based Scripps Health will shrink, effective Jan. 1.

Scripps Clinic and Scripps Coastal medical groups will no longer be part of the SCAN Health Plan provider network, according to Scripps Health and SCAN. Scripps Health will continue its relationship with SCAN on Medicare Advantage plans with six of its other facilities, according to both entities.

Scripps Health President and CEO Chris Van Gorder told Becker’s Hospital Review in an Oct. 9 article that because of its increasing challenges with Medicare Advantage plan providers, it is looking at a $75 million loss this year.

Because of that, Scripps is ending its contracts with UnitedHealthcare, Anthem Blue Cross Blue Shield of California and a few others, effective Jan. 1, he told the outlet.

“It's become a game of delay, deny and not pay,” Van Gorder told Becker’s. “If other organizations are experiencing what we are, it's going to be a short period of time before they start floundering or they get out of Medicare Advantage.”

Within California, in addition to adding Fresno and Madera counties, SCAN will continue to offer Medicare Advantage plans in San Francisco, Alameda, Stanislaus, Santa Clara and San Mateo counties, as well as Los Angeles, Riverside, Orange, San Bernardino, San Diego and Ventura counties.

It will no longer have any presence in the North Bay after it exits Napa and Sonoma counties.

Cheryl Sarfaty covers tourism, hospitality, health care and employment. Reach her at cheryl.sarfaty@busjrnl.com or 707-521-4259.