What a Clinton Administration Could Mean for Government Health Programs
So the people spoke and we are heading for an epic cagematch smackdown general election between reality TV star Donald Trump and former Senator and Secretary of State Hillary Clinton. And you're asking, what's going to happen to Medicare, Medicaid and ObamaCare? The answer is plenty -- below the waterline and out in the states. Stakeholders will need to pay attention or get left behind.
First, the likely scenario is that Hillary is going to win this thing big. While other Republicans may have had a chance to capitalize on her high negatives with likely voters, nobody's negatives trump Trump's. He's the most unpopular major-party candidate since polling began. Most polls have him losing by double digits in November.
At this moment, Trump's likely to lose so bad that many down-ticket Republican Senate and House seats are now in play. So: Hillary in the White House, Democrats likely running the Senate again, and poor Speaker Paul Ryan trying to corral an even more radical, noisy and smaller Tea Party caucus in the House. The only people those guys hate more than President Obama are the Clintons. So betting on more gridlock is safe money. Little or nothing gets done in Congress except the bare minimum to keep government running.
That means most of what happens in Medicare, Medicaid and ObamaCare will occur "below the waterline" in Administrative policy, regulation, and guidance, or is driven by the states. Here's what that could look like:
- Medicare: the forced march to value-based payment across the program will continue. The recent MACRA rule makes it clear that a fundamental change to traditional Medicare is coming and that fee-for-service is dead. By the end of Hillary's term, a majority of Medicare dollars will be tied to provider performance. Medicare Advantage will continue its steady 5-7% annual growth and exceeding 25 million enrollees in 2020. But CMS raises the bar through a rapidly-maturing Star Ratings program and an aggressive compliance and auditing initiative carried over from Obama's last year in office. Regulations and guidance are pumped out in regular order, drafted by newly-emboldened career CMS staff and making the program a laboratory of continuing performance improvement with claws and teeth.
- Medicaid: on the heels of the biggest regulation in 12 years, Medicaid converges more than ever with Medicare Advantage and ObamaCare, but also goes down some very strange alleys. With Obama out of office, several more red states like OK and TN finally take the Medicaid expansion deal from the Affordable Care Act. But with it they insist on "conservative principles" like work requirements and drug testing that dampen coverage and introduce new complexities to the program. At the same time, blue and red states alike flood CMS with new home and community-based services waivers to force dual eligibles into health plans and implement managed long-term care programs.
- ObamaCare and health insurance exchanges: health plans in the public exchanges continue a market correction and shakeout for another two years. During that time, CMS issues even more regulations dove-tailing exchange operations with Medicare Advantage rules, and several states currently running their own marketplaces like CO revert to healthcare.gov.
Health plans and other stakeholders in these programs will need to pay more attention than ever to stay ahead as government solidifies its role as their biggest customer. These are changes that won't necessarily be splashed across major media, but rather in trade rags and expert blogs. The only thing that's certain: it won't be dull.
Resources:
The Centers for Medicare & Medicaid Services (CMS) issued the final Medicaid "mega-rule," a huge regulation that makes changes to every part of the current managed care rules. Read more >>
Under the provisions of the 2015 Medicare Access and CHIP Reauthorization Act (MACRA), physicians and other practitioners will face a Hobson's choice: live with a more aggressive risk-based adjustment to payments or join forces with an alternative delivery model, like an Accountable Care Organization (ACO), that is taking risk. Read the full article >>
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Takeaways from the Gorman Health Group 2016 Client Forum
The Gorman Health Group 2016 Forum concluded last week with over 200 of our closest clients and partners. There was great news and rough news, so here are a few takeaways:
- The playing field of government programs continues to expand rapidly, with improving revenue outlook across the board:
- We're sticking by our projections of over 29 million Medicare Advantage (MA) enrollees by 2023, driven by more positive rate trends and a plan-friendly baby boomer tsunami underway.
- Six to eight more states expand Medicaid — once President Obama leaves office.
- Significant enrollment gains for dual eligibles as home and community-based services (HCBS) waivers and managed long-term services and supports (MLTSS) initiatives become the new normal. We expect dual eligible special needs plan (D-SNP) enrollment to double and exceed 4 million by 2019.
- Rising ObamaCare enrollment, albeit slowing and below projections, as more difficult-to-reach populations remain outside coverage.
- During the Forum, United announced its departures from most ObamaCare Marketplaces. We characterized the news as a nothingburger in terms of enrollment or market impact but huge symbolically and politically. We expect another two to three messy years sorting out the pricing and finances of the Marketplace business, with membership reconciliation and cleanup of membership discrepancies front of mind for issuers.
- Risk Adjustment Data Validation (RADV) audits will begin to be conducted in MA — 2016-2018 will be the first time we see plans prosecuted under the False Claims Act and hundreds of millions clawed back by the Centers for Medicare & Medicaid Services (CMS) for unsubstantiated codes submitted for higher payments.
- Clinical and pharmacy data integration and strong provider partnerships around person-centered care were clear priorities in medical management, Star Ratings improvement, and Pharmacy Benefit Manager (PBM) oversight.
- The Star Ratings system of performance-based payment drives the payer and provider markets. This year will be the first year where plans below 3 stars are terminated. It's also when another 180+ MA plans will be scored for the first time, diluting ratings for existing plans, especially those at 4+ stars and denying many their bonuses and rebates in what promises to be an ugly "October Surprise."
- The turbulent Presidential elections will likely be won by Hillary Clinton, promising continued gridlock with a likely weakened and more polarized Congress. This means CMS will increasingly fight out policy changes "below the waterline" in subregulatory guidance and enforcement, where politicians are less likely to intervene. That means more surprises for plans not paying attention.
- Appeals and grievances and pharmacy benefit management vendor performance remain the #1, 2, and 3 regulatory infractions in MA and integration of long-term care and supports and services the leading challenge facing Medicaid health plans.
- CMS is on pace for its most aggressive enforcement year ever, with over a dozen actions taken against plans this year already.
As we've said since the passage of the Affordable Care Act, we are now in the Golden Age of government-sponsored health programs, and the opportunities and challenges that come with this shift have never been greater. Our clients went home with a clear grasp of both, and we are thrilled so many joined us this year.
Resources
Our distinguished team of experts collaborated to provide our interpretation of this announcement and the key features that will have the greatest impact on the industry, emphasizing core business functions in Risk Adjustment, Provider Network, Quality, Compliance, Pharmacy, and Data Integrity. Download our full Summary & Analysis of the Final Rate Announcement & Final Call Letter >>
Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>
19 Lessons from 19 Years
Nineteen years ago this week, I left the Health Care Financing Administration (HCFA), now the Centers for Medicare & Medicaid Services (CMS) and the Office of Managed Care, to launch what would become Gorman Health Group. Time has flown, the company has grown, and my backside sewn with hard lessons about our industry and government health programs. Here are 19 lessons I've learned in those 19 years.
- What Medicare Advantage and Part D do, Medicaid and the commercial market, including the ObamaCare Exchanges, follow 3-5 years later.
- Every CMS staffer I've ever known is well-intentioned, many are downright brilliant, and all want to be good business partners to health plans. Their shortcoming is lack of business experience and how stuff works in the real world. There is a huge difference between policy/guidance and operations. That's where we come in.
- If government health programs were an easy business, we'd be out of business.
- Inspect what you expect. Or, as Reagan said, "Trust but verify."
- Star Ratings, like risk adjustment before it, is the biggest and most consistent experiment in performance-based payment on the planet, a total game-changer and the new fulcrum of competition. You don't excel at Stars by working on them off the side of your desk.
- Fish where the fishes is.
- Pick your vendors and partners like you pick your fruit.
- Capitation with performance-based payment is the only real hope for long-term viability of entitlement programs.
- Being a doctor is the worst job ever. Right after community hospital CEO and President of the United States.
- High-performing health plans are good at everything, especially those functions that are member- and/or provider-facing. It's about culture and execution.
- Health plans' days are numbered if they can't consistently provide value to CMS, their customer, and to providers, their partners. That value is about two things: making data actionable and moving money to contributors when quality and results improve.
- It's easier to increase revenue than it is to cut costs.
- Pharmacy benefit managers are a health plan's most important partner. They are also the ultimate B2B companies and most are struggling in the transition to B2C and true government accountability for results.
- Big data and high-tech is all the rage -- and all noise, unless it's actionable. What works is low-tech: clogs on the street; a house call; a medication consult.
- Doctors of the future are in multispecialty practice and leaders of a team of nurses, aides, social workers, and pharmacists. They are quarterbacks, not gods. They diagnose, and everybody else treats.
- So much of the future is about retail pharmacy. In short time, they will make more providing services than filling bottles.
- Ninety percent of the evil and waste in the system occurs at the tip of a doctor's pen.
- We are all going to retire thanks to government programs. Demographics is destiny.
- Five percent of members account for 60 percent of your spend. Put the love and focus on them, and you can pretty much leave everyone else alone.
It's been an incredible ride these last two decades, and especially the last five as health reform blossoms. We look forward to continuing the journey, older, wiser, and bigger. Stay tuned.
Resources
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12 Years in the Making - Rules Guiding Medicaid Managed Care are Getting a Makeover
At the Medicaid Health Plans of America (MHPA) meeting last week in Washington, DC, there was a lot of buzz surrounding the upcoming release of an updated Medicaid Managed Care regulation. Per CMS officials speaking at the conference, the last update was 12 years ago!
Discussions surrounding the update were focused on three main themes:
- Aligning Medicaid Managed Care with other public programs
- Payment and accountability
- Network adequacy
Aligning with other programs — This could take many different shapes and sizes. Certainly the well-established program guidelines of Medicare Advantage could become very prominent. In contrast, the newly evolving rules of the Exchange Marketplace could be drawn more into the spotlight. Being that Medicaid beneficiaries sometimes align with Medicare Advantage and sometimes with Exchanges, this is likely to draw a lot of comments from the industry when released in the coming months.
Regardless of how you think it should be done, the rationale to better align all of these programs makes good sense for both beneficiaries and the managed care plans that serve them. Beneficiaries can have common experiences; families with multiple program enrollments have an easier time navigating the system; and plans reduce unnecessary administrative burden to administer multiple programs.
Payment and accountability — Several hot button items are involved in this theme. All of these involve modernizing the regulation to the current day environment.
- Using data to think about issues related to rate setting and rate review
- Using program dollars wisely, as more is at stake as the program continues to evolve and grow
- Integration of long-term services and supports into the regulation
Network adequacy — The OIG recently released a report identifying significant variation between states as it relates to access to care, and how those standards are being checked on a regular basis. With the recent significant growth in Medicaid Managed Care enrollment, this becomes even more concerning. We can expect CMS to take a strong stance on access to care issues including network composition, availability of primary care and specialists, and provider directory issues. As a major beneficiary protection issue, we also expect this area to draw a lot of comments from the beneficiary community.
We are very anxious to see the draft regulation and the "give and take" it is going to provide to the industry. With 12 years worth of ideas baked into it, it should be a fun ride!
Resouces
Gorman Health Group, LLC (GHG), the leading consulting firm and solutions provider in government health care programs, announced its further expansion into Medicaid, and the promotion of one of the nation's leading Medicaid experts, Heidi Arndt, to lead the division. Read more >>
Gorman Health Group is dedicated to assisting managed care organizations, as well as states with developing models of care, maximize member engagement. Visit our website to learn more about how we can help you with your Medicaid initiatives.
Save the Date for the Gorman Health Group 2015 Forum. Join us April 7-9, 2015 at the Gaylord National Resort and Convention Center in National Harbor, MD. Learn more about the event >>
Sea Change at CMS
Administrator Marilyn Tavenner officially named Paul Spitalnic as the CMS chief actuary. I worked with Paul when he first came to CMS to implement the Part D program. He then served as the Director of the Part C and D actuarial group. Paul is very smart and will ably fill the shoes of other distinguished CMS chief actuaries that I have worked with including Guy King and Rick Foster. Both Guy and Rick were outstanding public officials who came to CMS from the Social Security Administration and from a tradition of government run social insurance programs. I guess experience with the managed care side of Medicare is no longer considered a handicap. To me this shows how much has changed at CMS. Part C is almost 30 percent of the Medicare program and Part D is administered through contracts with private plans. These programs are no longer step children. Congratulations Paul.
We Can All Agree On This, I Think
Resources
John Gorman and Nathan Goldstein discuss what is next for Government Healthcare in this podcast. Download the recording here.
Well, thank God THAT'S over
Our long national stimulus for political consultants and media companies has finally ended. What do we have to show for it? An electoral map that is still nearly identical to the national schism during the Civil War, a lot of BuzzFeed slide shows, a "theater of the absurd" moment as Karl Rove blew up Fox's coverage and Megyn Kelly's legs literally ran away… and for some, a hangover of epic proportions.
In my view, while a little morning-after gloating can be expected, any talk of a mandate for the Dems' philosophy of government is overstated. Tell your friends as much. The President barely won the popular vote. The composition of Congress didn't change much. As noted by the New York Times this morning, most counties actually shifted right in 2012. Moreover, thirty statehouses are occupied by GOP governors. That's not the result you get when you win decisively on the issues.
More interesting to me than the talk of mandate is the coalition that the President has put together. Lindsey Graham, the GOP Senator from South Carolina, famously remarked this summer, "We're not generating enough angry white guys to stay in business for the long term." Or as Matt Lewis reported GOP strategist Chuck Warren said to him "To be frank, we're a Mad Men party in a Modern Family world." That proved true last night. The coalition that elected Obama in 2008 re-elected him in 2012. The GOP's erosion among non-elderly, non-white constituencies concerns them deeply, as it should. The way out is not clear. But that's not the news, in my view. The news to me is that our quadrennial national debate continues to substitute identity politics for an actual discussion at great cost to the system. That's what a coalition is, of course. And coalitions are much more important to the "ground game" at get-out-the-vote time. We're not unique as a country in this regard. What is unique (and ironic) for a nation such as ours, is that this appears to be so because we will seem to do anything to not talk about class, even by reducing our elections to generalizations about race and gender. Our elections become about mobilizing the Hispanic vote, or about "soccer moms---" as if the issue of providing day care to the Gomez family so that mom can work doesn't impact dad too.
Even more concerning to me is that once again the election was still one giant pander to the actively voting middle class. The only mention of the 45 million Americans who live under the poverty line was to blame them for crimes of dependence perpetrated against the rich. Too much Medicaid. Not enough bootstraps. It begs the question: what would a campaign that was genuinely about "the least among us" even sound like these days? We used to have them. But that language would be stale and borrowed now. For an ex-political wordsmith, it's a serious question even if it is also a rhetorical one. Our politics are only ugly because we have forgotten how to be beautiful. It is beautiful to have cares for others beyond yourself because empathy is part of what makes us human, as is weeping at a piece of music or leaping to cheer a touchdown. These are things that belong in politics.
As a result, this election was the triumph of tactics over inspiration. Given the very lack of mandate, what can be said is that the Republicans got out-smarted and out-worked in the battle ground states. (Let's also not forget outspent, despite the idiot's tax levied on Sheldon Adelson and others thanks to Citizens United.) I don't think laypeople understand just how sophisticated the Obama operation was. (A primer here). What they experimented with in 2008 leapt forward in 2012. Once again, the man made history. Only this time, he didn't do so with the color of his skin but with the content in his databases. The only comparison one can make from recent years is what Google did to the advertising industry--- destroying 100 years of clichés and assumptions while creating a new, superior reality for matching people with their material desires. There was advertising before AdSense and after AdSense. The Obama operation took trillions of pieces of consumer data, a la Google, and then married it to behavioral economics to create engagement strategies that left the GOP looking positively… 2004. One couldn't help note it when listening to Romney Ohio Chair Ted Strickland proudly talk about the "many thousands of doors" the GOP's Ohio teams had knocked on. The Obama crew did too, but when you opened the door, they already knew what magazines you read and whether you liked to Supersize your value meals. If that spooks you out, turn off your computer. Because it's the way the world works now.
A final first note: speaking of 2004, my friends with whom I served on John Kerry's campaign have noted just how similar this campaign was to that one. An embattled incumbent (is there any other kind?) A challenger emerges from a fractious field because he "looks good on paper." He is charismatically challenged. By spring, he emerges cash poor from a hard-fought primary. The money starts to come in, but not before the incumbent's surrogates label him with a devastating critique that neutralizes his natural advantage: "Swift-boating" in the case of Kerry, "Bain" in the case of Romney. The 47% comment would come later, but it stuck in part because of how effective the early critique had been.
So, while I am glad to get back to the work of reforming health care, today is not a day of celebration for me. I want to finish what we have started with the ACA, flawed as it may be. But the far bigger project is to finish reforming our politics. I sense we'll be done with Health Reform first.
Supreme Court upholds Romneycare
As you have likely heard, Romneycare no, Obamacare, no, the ACA has been upheld by the Supreme Court, with Chief Justice Roberts casting the deciding vote with the liberal block. Health policy implications aside, there are some truly delicious politics here:
Obama did not support the mandate in the ‘08 primary. In fact, he was the one Democrat to oppose single-payer or mandated health insurance (for which he took much heat from the left). He got behind the model, famously developed by the conservative Heritage Foundation, when it became clear that it was the model with the best chance of passing Congress. But, remember how absent he was from that legislative action (for which he took much heat from the left). But one thing he made it clear in the run up to the fight: don't call the mandate a tax! Then, the last two years happened….
Today, we learned that Chief Justice John Roberts (appointed by noted left wing activist George W. Bush) disagrees with that. He called the mandate penalty a tax, and on that basis voted with the liberal block to uphold. No one questions the Government's power to tax. Well, except this guy.
The significance of his vote is that it expands the Government's power, in functional terms, to tax. That's pretty darn important. However, my friend who clerked for the Chief a few years back noted in a call this morning that Roberts tends to give with one hand and take with the other in big decisions--- perhaps reflective of the instinct towards balance and conservatism. In this case, it should be noted that five justices ruled that the Government did NOT have this power under the commerce clause--- which is a big victory for conservatism.
Mitt Romney, on whose Massachusetts model the law is clearly based, has some extraordinary days of spin ahead, particularly given that it was the staunchly conservative Roberts (and not the fence-riding Kennedy) who cast the deciding vote. Romney's job is made harder by stuff like this. So here's a tip from a "Washington Insider:" look at how much money Mitt raises online in next 48 hours. If it's more than $10MM, then we'll have a great race this fall. If less, it means serious problems for the campaign.
But the GOP should not be too dejected. If the mandate penalties are indeed a tax, then it only takes 51 votes to overturn. If you thought the mid-term elections were distressingly nasty… get ready to lose your innocence for good this fall when the GOP aims its sights at the Senate. Truly.
Remember, Mom: Digital is Forever.
Humana has launched a social network for its Medicare Advantage and Part D members called "Humanaville." No word yet if members have started posting embarrassing pictures of shenanigans in the skilled nursing facility...
Actually, it's not exactly a social network like Facebook. Rather, the design and functionality more closely resembles Second Life, in which users build an avatar and move within a multi-dimensional space, meet others, barter/trade, etc. This is not the first medical network of its kind. The Starlight Children's Foundation maintains a space for chronically ill teens called Starbright World, which more closely adheres to the Facebook model.
No doubt the plan should be given credit for pushing the boundaries of member engagement. However the model--and more specifcally the decisions made by Humana for the members within the model--seems to adhere to an older model of communication. At a cursory glance it appears Humana is attempting to carefully script and guide users' experiences, rather than create an environment, a social utility, full of user-defined content.
Like society at large there must be rules of engagement in these environments. But the brilliance of the social media model as an economic force (that's why Facebook is in the news... it's not because of Farmville) is that by allowing participants to wander around at will "liking" stuff and joining groups they track people's actual interests. This means that by the time Facebook puts a particular Old Spice ad in front of you the algorithm already knows: you're a man, you have a slightly juvenile sense of humor, and you care how you smell.
There is much talk in clinical circles about the tyranny of the internet on two fronts: in making every patient an expert via WebMD et al., and in the public rating of physicians. An entire industry called "Reputation Management" has sprung up in the last two years to protect physicians (and lawyers, and others) from the ignominy of having patients share their experiences with each other. This is a losing battle. It remains to be seen if payers or providers will rise to the challenge of the digital age--which has heretofore been defined by the inability of choice-makers to control it--or if they will revert to type and attempt to narrow choice and access to information along prescribed paths that lead inevitably to the next sale.
What Happened to the Crack-berry?
This amazing letter was written to RIM leadership by a ranking exec about the woes of their flagship product line, which you know and love as BlackBerry.
It's not often that a company* can appropriate a 1000-year-old word and completely change its meaning in the culture. It's a testament to the way RIM changed--one could say created--the smartphone category with its product. You always remember your first: mine was in 2003: the 6200, the last greenscreen model, which I promptly traded for the 7200 (color!) a year later. RIM's woes since then have been well documented and are fascinating. They go something like this: guessed wrong, got lazy, became out of touch with the market it created.
It's the last point I find most interesting. RIM defined the smartphone market by convincing businesspeople that responding to emails while on the toilet at 11pm was completely acceptable behavior. But they swiftly lost touch with this category by missing the implication of what they had created: that email and phone use were precursors to the real game, which was putting a computer in everyone's pocket. That was where the category was always headed--- it's easy to see now. But at the time, just the addition of a phone was so radical that when Blackberry first added it to its handheld--which was an overgrown two-way pager, they didn't even include a numbered keyboard.
Medicare Advantage is in a similar moment. While CMS gets credit for creating the category, seniors are now comfortable with managed Medicare. This coming generation even more so. But will the product be left behind by ACOs or other forms of integrated care? By MSAs? By something really cool that we don't even know about? Will MA learn how to integrate a phone? And will we forget to put the numbers on it?
*A CANADIAN company, at that!