United Healthcare Potential Exit
Last month, United Healthcare (UHC) made an announcement that shocked the industry — it may leave the Health Insurance Marketplace if it can't become profitable by 2017. The company stated it expects to lose $490 million next year due to its participation in the Affordable Care Act (ACA) market. Standing by its comments, UHC pointed to "structural" problems with the ACA as the factor behind its unprofitability. Adding to the deterrent of the Marketplace business, the company stated it will stop paying broker commissions for Marketplace policies as well as individual plans not sold on the Marketplace. UHC's announcement is troubling, especially with recent news of the failing co-ops — 12 of the 23 co-ops have already closed their doors, and even the most profitable, such as Maine's Community Health Options who announced profits in 2014, have lost money this year.
So what are the structural problems, and should plans and consumers on the Marketplace be worried?
One major issue is, of course, the risk adjustment and risk corridor programs under the ACA. With Congress unwilling to increase funds for the program, health plans faced a huge hit in 2015, recouping only 13% of requested funds through the risk corridor program. Congress remains firm on its decision not to further fund this part of the ACA, which means the Centers for Medicare & Medicaid Services (CMS) will have to find alternate means if it wishes to assist plans with their losses next year.
Another big change the ACA brought is the inability to initially properly price for the incoming consumers. Insurers set rates without any risk factors or data on the incoming policyholders and did not anticipate the sicker populations who would flood the market. This issue will likely linger — with 12 of the co-ops folding, the big question in 2016 is, where will these consumers who made the companies unprofitable sign up? At the same time, there is still a large population of healthy, young individuals unwilling to sign up for the health plans despite the mandate. It remains to be seen whether the tax penalty of 2016 will be enough to steer individuals during the next open enrollment period.
The lack of flexibility in benefit design is also a consideration of health plans. Many see the current rules as a pill too large to swallow all at once — the sudden requirement for plans to accept all consumers with pre-existing conditions, remove lifetime maximums, and pay no less than 60% of medical costs may have been more than plans could handle in altering their benefit designs. Another issue is the grandfathering of plans not compliant with the ACA due to the famous line, "If you like your plan, you can keep it." California chose not to comply with this grandfathering requirement, leading to a higher number of healthy and risk-averse people already covered on catastrophic plans to sign up under the ACA. Other states, on the other hand, gained only the people who could now sign up because there was a prohibition of pre-existing conditions, leaving people with catastrophic plans and their squeaky-clean claims history to the individual market.
At the same time, the flexible open enrollment periods also created a disincentive for healthy people to sign up, while allowing individuals who are suddenly faced with medical claims to quickly jump onto a plan through loopholes in the rules. CMS is dialing back on one of these enrollment period loopholes this year by announcing there will not be an open enrollment period extension during tax season for those who learn of the steep penalty when filing.
Do these problems and UHC's warning mean the demise of ACA?
It is important to remember the Marketplace, as well as the individual market, is simply not the primary business of UHC. While several months ago UHC announced it may expand its Marketplace presence in more states, this announcement they may do the opposite and pull out of the Marketplace could mean the exit of co-ops and the imminent mergers have made UHC re-focus on its main bread and butter business instead — the group market. Most of UHC's profits come from group sales of employer-sponsored health plans. UHC started out its participation in the ACA in only a handful of states, with conservative premium offerings, and only cautiously increased their market last year. This approach means UHC has a small risk pool, and dipping their toes in the Marketplace water could have hurt them in the long run. At the same time, despite the cautious entrance into the Marketplace, start-up costs to create these new plan offerings were no doubt substantial, and the small population who did choose UHC likely did so for the brand recognition — in other words, consumers who knew they would incur more claims and needed better plans. At the same time, with the mergers going through next year, the Marketplace is not going to be UHC's game―their focus will be group plans, while Humana and Aetna will likely dominate the Medicare Advantage space; Cigna and Anthem and the blues, the individual market.
At the same time, CIGNA and Aetna, while acknowledging they also did not profit from the Marketplace, stated it's way too early to call for an exit from the Marketplace. And the program was not without its winners in 2014. Looking at companies who had to share their profits in the risk corridor program in 2014, for example, plans in California were big winners — namely Blue Shield of CA, Kaiser, and Anthem Blue Cross. This could be due in part to the number of young individuals in urban areas who did sign up for coverage in California, marking the success of the Covered California campaign, as well as not setting premiums as aggressively as possible in the past year.
What we do know is, this open enrollment period is crucial for CMS. While CMS already announced they anticipate low enrollment numbers, it is vital to the success of the ACA that these numbers include the healthier and younger individuals who have yet to sign up for a plan and are not deterred by the tax penalty.
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As CMS expectations regarding risk adjustment continue to evolve, health plan, ACOs, and capitated health systems must design and flawlessly implement a strategic, mixed model that incorporates a meaningful percentage of retrospective, concurrent, and prospective initiatives, plus drives data integration with care management. Visit our website to learn more >>
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Are You Paying Twice?
Each month, health plans receive files and premium reductions for members deemed to have secondary coverage, which the Centers for Medicare & Medicaid Services (CMS) calls Medicare Secondary Payer (MSP). MSP shifts the burden from Medicare to commercial insurance companies. CMS receives information from a multitude of sources identifying beneficiaries who have other coverage appearing to be primary to Medicare. When a member is identified as MSP, CMS reduces the payment for those members to 17.3% of the full premium.
When the MSP record is valid, that premium payment is sufficient for the health plan to pay services on a secondary basis. If the MSP record is obsolete, and the plan is paying on a primary basis, the plan is paying twice: paying primary for the service and paying through reduced premiums from CMS. This can be a huge premium loss for a health plan of typically around $700 per member per month for every beneficiary incorrectly classified as MSP.
As with all things involving CMS, accuracy is critical.
Reviewing each MSP-identified individual and validating the information is the only way to ensure the member is set up correctly and the premium and claims payments are accurate. MSP validation is not a one-and-done process―information can change, be inaccurate, or be out of date. Outreach validation requires diligence and persistence. Electronic Correspondence Referral System (ECRS) submissions need to be monitored for non-responses and records under development. Other coverage information and system flags need to be updated for claims reprocessing and recoveries from other insurers for claims paid as primary in error.
Do you know the status of each of your MSP members? Are you revalidating information on a regular basis? Are you sure you are not paying twice? If you aren't sure, Gorman Health Group (GHG) has delivered exceptional outcomes for our clients by recouping millions of dollars in MSP recoveries. We can help you evaluate your process and your existing MSP records to ensure you are only paying once.
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When it comes to financial reconciliation and overall membership data management, you must protect against leakage. Need help staying ahead of the reconciliation curve? GHG can work with your team to set up strong revenue reconciliation processes. Visit our website to learn more >>
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Because They Can
The United States Senate conducted the first day of hearings Wednesday, December 9, on the high price of pharmaceuticals. The Special Committee on Aging is investigating the soaring prices of old drugs, including the overnight price hike of Turing's Daraprim from $18 to $750. Every day there is another press release about the egregious increase in pricing of a generic drug or a newly-released-to-market medication. U.S. drug prices are the highest of any in the industrialized world.
Drug prices and the strategies used to determine them are shrouded in secrecy. A recent Wall Street Journal article compared U.S. prices to Norway and several other countries. Pharma and biotech companies in the S&P 1500 average a net profit margin of 16% compared with an average of about 7% for all the other companies. Their rationale is usually they need that profit margin to support Research & Development (R&D) costs. That argument obviously doesn't apply for generic drugs. Pricing has nothing to do with recouping costs—it is a decision based on market research, competitor products, and shareholder value.
What's the answer? Doctors, insurance companies, hospitals, and Pharmacy Benefit Managers (PBMs) are all struggling to figure it out. Many healthcare policy experts are advocating for Congress to pass legislation which would allow the government to negotiate pricing especially for Medicare. Since there are more pharmaceutical company lobbyists in Washington, DC, than there are members of Congress, this could be an epic struggle.
These breakthrough treatments are invaluable to patients, but the costs for the patient and insurers can be exorbitant. What programs have you put in place to help your members adhere to treatments, minimize side effects, and empower them to understand their disease, and the drugs to help treat it?
Doctors are publishing and participating in dialogues about what the true value of a cancer drug is based on effectiveness and increased patient longevity. What is the true cost of a medication? If patients actually knew, could they make informed decisions about their options?
The Turing CEO may have just opened the can of worms that Pharma did not want to ever be seen. Greed and arrogance may be the catalyst Congress needs to implement meaningful changes. One thing we all know now―pharmaceutical and biotech manufacturers charge what they do…because they can.
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Gorman Health Group can help your organization transform the delivery, payment, and care coordination efforts necessary to provide positive outcomes for your challenging patient population. If you are interested in more information, contact us here.
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Government Shutdown Deadline Nears
Less than a week remains for Congress to agree on a $1.1 trillion funding bill in order to avert the threat of yet another government shutdown. The deadline to pass this bill is December 11, 2015, although Congress could technically use a stopgap measure to buy an extra week, pushing the deadline to December 18. As previously reported, a shutdown would have significant consequences for all government agencies, including the Department of Health & Human Services (HHS). Although most Medicare and Medicaid services are considered necessary to the public welfare and would thus escape much of the repercussions of a shutdown, operations at the Centers for Medicare & Medicaid Services (CMS) would nonetheless be affected.
So what is the likelihood of a shutdown occurring?
The House Democrats rejected the Republican's offered funding bill on Monday and are planning an alternative package in response. The Democrats cite more than 30 policy riders making the package unacceptable to their side. The aggressive response from the left wing suggests they won't easily back down this go-round, however, the possibility of a shutdown is less likely than estimated during the stand-off a few months ago.
For one, unlike a few months ago, Planned Parenthood funding has not been as much of a battle this month. This time, the Syrian refugee crisis, terrorist attacks, and immigration policies bear the brunt of the debate. Congressman McCarthy also hinted on Monday he did not predict the Planned Parenthood tension to hinder the passage of a funding bill this year. The new Speaker, Paul Ryan, also has a lot riding on averting a government shutdown, as such an event six weeks into the job would be disconcerting to the party. And, unlike earlier in the year, with key members of both parties unwilling to use the threat of a shutdown to further their agendas, the likelihood a funding bill will pass is very good.
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AEP Is Winding Down, But Your Work Is Not Over!
As the Annual Election Period (AEP) begins to wind down, you have a pretty good idea of where you will end up this AEP. Whether you knocked the socks off your competition or missed your goals, now is the best time to assess your marketing and sales strategies in preparation for 2017!
Typically, we all have to perform an analysis for senior management showing where the leads and sales came from and what the costs per lead and sale were. Based on that information, we want to understand what changes need to be made or tested for next AEP to increase lead generation and decrease the cost per lead or sale.
But that shouldn't be the end of the analysis — now is the time to do the following:
- Conduct an AEP Process Analysis — From an operational perspective, what went right and what didn't go as well as expected? Were there reprints? What were the call center stats — were they better or worse than last year? From an operational perspective, what would we like to change from this year to the next? What do we have to do internally/externally to accomplish that?
- Vendor Assessment — What vendors over-performed or performed as expected? Do vendors need to be replaced? If so, the Request for Proposal (RFP) process should probably be completed by the end of the first quarter.
- Review Competitive Creative — There is nothing wrong with understanding what competitors are doing and seeing where you might need to strengthen your own creative in the next year.
- Review the sales distribution strategy to understand where the sales opportunities may have been missed and where they were most successful.
- Deep-dive Evaluation of Lead Generation to Member Onboarding — Since now is the time when we really remember all of the pain points and accomplishments, we want to document them to ensure we make changes where needed and expand the successes.
- Look back at the work plan/tactical execution plan to understand where more time is needed next year for a better execution come AEP.
Based on our experience, now is the time to conduct the assessment — before everyone has forgotten what needs to change and before the frustration of a missed date or opportunity becomes a distant memory. Gorman Health Group (GHG) has helped several organizations with this type of assessment — to provide that outside-in perspective which is honest and non-partisan.
Have questions? Contact GHG at ghg@ghgadvisors.com.
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Gorman Health Group's marketing experts have developed strategic plans for hundreds of Medicare Advantage Plans. We will position you for the challenges — and opportunities — posed by health reform, designing a strategy that takes into account your service area, market environment, core competencies, and vision of the future. Visit our website to learn more >>
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Evolution of Validation: Selecting an Independent Auditor
The Centers for Medicare & Medicaid Services (CMS) audit validation process has evolved over the past few years. Here is what you should know about the changes and how to best prepare to contract with an Independent Auditor, or IA.
Let's go back to 2012. CMS was conducting the validation of audited Sponsors' corrective action plans (CAPs) by retesting areas found to be problematic. While the terminology has changed, the charge was led at that time by the Regional Office. In 2013, validation became an activity conducted by the Medicare Parts C & D Oversight and Enforcement Group (MOEG) at Central Office and Regional Office staff. Any items that resulted in a Corrective Action Required (CAR) or an Immediate Corrective Action Required (ICAR) were subject to validation.
As part of the 2013 validation timeline, the Sponsor had seven days from the issuance of the final audit report to submit a CAP for each condition. If we reference the 2014 Part C and Part D Program Audit and Enforcement Report, CMS outlined the average number of days which elapsed after an audit notice was issued.
If we take a look at the average days elapsed from the Exit Conference to the Final Report Issued date, the number of days elapsed has decreased, from 241 days in 2011 to 99 days in 2014. Based on the last year of reported data, plans still had a healthy three months from the verbal acknowledgement of CARs and ICARs (that is, the Exit Conference) to the issuance of the final report in order to implement corrections. In theory, by the time the final report was issued, some issues could have been corrected and, therefore, could have been ready for validation. However, time had to elapse for CMS to approve the CAPs, and after that point, CMS allowed Sponsors another 90 calendar days from that approval to implement and test the results of those CAPs. That's a lot of time when you look at it from the beneficiary perspective.
Fast forward to today — CMS is exercising their authority to require a Sponsor to hire an IA in order to validate if deficiencies found during a CMS program audit have been corrected. In a memo released on November 12, 2015, CMS confirms they will not provide recommendations on IA firms. Instead, they require the Sponsor to attest to both the independence of the IA as well as an absence of conflicts of interest. They point to the 2010 guidance for the selection of a Data Validation auditor for examples of relationships not meeting the standard for organization independence.
We are united with CMS' recommendation that Sponsors solicit proposals to select an IA early in the post-audit phase. Speaking from the auditor standpoint, it is much better for all parties involved to plan early, so exceed CMS' expectations and seek proposals as soon as possible. It's better to have that agreement in place ahead of time, rather than waiting until CMS sends you their instruction to hire an IA. This will give you the time to evaluate your options, so you can best determine their experience and subject matter expertise. When you are accountable to CMS to validate corrections, it is particularly important to partner with someone you can trust to apply a skilled eye to the validation activities. Otherwise, you may be subject to further scrutiny by CMS, which is the last thing any Sponsor needs when coming to the close of their audit process.
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Determining conflict of interest is the responsibility of the Plan Sponsor and can be subject to interpretation. Not every auditor that a Plan Sponsor has used in the past is necessarily a conflict of interest. Contact us for further questions >>
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2016 Readiness Review Smaller Size, Bigger Punch.
The Centers for Medicare & Medicaid Services (CMS) released the 2016 Readiness Checklist on Monday, November 9, 2015. The 20-page checklist is full of items CMS is expecting plan sponsors to review and validate it will be compliant for the 2016 calendar year. While CMS won't have an official website for plan sponsors to attest to the readiness this year, they will use other methods to validate compliance. No matter the validation method, CMS' expectations are clear: Part C and Part D plan sponsors should review and validate compliance for each item.
In reviewing the 2016 Readiness Checklist, there are some new and modified requirements as well as other areas of CMS concern. Regardless of whether or not the items are new to the readiness checklist party, they should all be known to you. If they aren't familiar, you may want to check your Health Plan Management System (HPMS) and regulatory guidance distribution process. CMS indicates at the end of almost every requirement where the guidance for that item came from―what Medicare manual or HPMS memo provides the supporting information for that item. CMS makes it convenient to validate what you are asked to validate and attest.
If you have waited until now to implement or validate new guidance from 2015, it will be a stressful few weeks in what is already a very busy time of year. Several items are heavy-hitters and get into the nitty gritty of processes. As in past years, any items which won't be in compliance are to be reported to your CMS Account Manager. No one likes to be on that list.
Many sections of the Readiness Checklist are smaller but have more potential process changes. "By no means should plans see an abbreviated Compliance and Fraud, Waste, and Abuse (FWA) section and start resting on laurels," said Regan Pennypacker, Senior Vice President of Compliance Solutions at Gorman Health Group (GHG). Regan went on to say, "In this year's checklist, CMS issues another reminder about the May 24, 2014, regulation change which requires mandates on Medicare Advantage (MA) organizations to require all of their first tier, downstream, and related entities (FDRs) to take the CMS training and accept the certificate of completion of the CMS training as satisfaction of this requirement."
Another change highlighted in the readiness assessment is plan sponsor's appropriate use of extensions for organization and coverage determinations and appeals. In audits, we often see plan sponsors who have failed samples due to extensions granted for contracted providers or when extensions are used early in the process and on a routine basis rather than as an exception. CMS is expecting plan sponsors to review their process for exceptions and ensure they are in compliance.
One change Regan called out is CMS included a recommendation that plan sponsors making pharmacy network changes provide both those pharmacies whose network status is changing and enrollees using those pharmacies with notices of changes specific to their situation. "This is almost certainly a result of CMS' close work with one plan sponsor on effective notification strategies as part of pharmacy network changes. While the plan sponsor had indeed sent letters to supplement the Annual Notice of Changes' (ANOC's) notification of changes, the recommendation is to move to a more personalized notification approach," indicated Regan. "This will allow beneficiaries to make a more informed decision and will also aid pharmacies in understanding their network status."
A senior consultant of Pharmacy & Clinical Solutions at GHG, stated, "The Readiness Checklist is always an excellent method of making sure you have the bases covered for new guidance which takes effect in the new plan year (2016)." Deb went on to indicate there are three items plan sponsors must pay particular attention to in the 2016 Readiness Checklist for Part D. They are as follows:
- The long-delayed requirement "physicians and other eligible professionals who write prescriptions for Part D drugs are required to be enrolled in Medicare in an approved status or to have a valid opt-out affidavit on file for their prescriptions to be coverable under Part D, unless the prescriber is an ‘Other Authorized Prescriber'." This takes effect on June 1, 2016, and, therefore, plans must confirm their contracted providers, including dentists, are eligible to furnish Part D prescriptions.
- Also, providers must have a valid prescriber National Provider Identifier (NPI) number for Part D claims to be valid. Specifically, "for plan year 2016 and thereafter, claims for covered Part D drugs must include a valid prescriber NPI. Part D sponsors must submit to CMS only prescription drug event (PDE) records containing an active and valid individual prescriber NPI."
- Starting on January 1, 2016, it is CMS' expectation Medicare Advantage Prescription Drug (MA-PD) plan members will not leave a network pharmacy without their prescription for a medication(s) where coverage may available under either Part D, Part A, or Part B. Plan sponsors and/or their PBMs must have processes in place so the network pharmacist can exchange information with the plan sponsor or PBM about the member to make the determination about which arm of Medicare will pay.
Parting words from Regan, "CMS makes it clear these are key requirements, and the checklist is not an exhaustive list. Consider these items to be hot topics CMS will hang their hat on in the coming year." The key to successful MA and Part D programs is to know your business better than anyone, including CMS. The Readiness Checklist is one additional tool to do just that.
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If you need assistance in assessing your organization against the Readiness Checklist or in strengthening your MA or Part D program, GHG's knowledgeable team is here to help you. We've been in your shoes and know the pain points and how to move through them. We can help you prevent that punch from being a knock out. Contact me directly at jbillman@ghgadvisors.com.
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Is This Payment Real? CMS Launches Policy-based FFM payments Through the HIX 820 in 2016
If you think your organization has been working from a fire hose these past few years since the launch of the Health Insurance Marketplace, wait until the Centers for Medicare & Medicaid Services (CMS) rolls out policy-based payments to Federally-facilitated Marketplace (FFM) Issuers beginning in 2016. It's not as if the accuracy of member data wasn't significant before, but now with a direct payment from CMS to the Issuer, your enrollment discrepancy rate will be transparent in real dollars.
For the first time, Issuers will be able to quantify the financial impact of enrollment discrepancies simply because CMS will be making payments directly to Plans through Advanced Premium Tax Credits (APTCs), Cost Sharing Reductions (CSRs), and User Fee (UF) charges based on effectuated subscribers within the federal system, not the Issuer system. This ups the ante for synchronization of data between the Issuer and the Marketplace.
In January 2016, CMS will begin paying Issuers at a policy-based level through a transaction called the HIX 820 complimented by the Preliminary Payment Report, or PPR. Aside from the typical challenges and workarounds Issuers are confronted with during open enrollment season, the timing of policy-based payments creates somewhat of a twist or a renewed focus on the financial impact of enrollment data being out of synch with the government.
Issuers are anticipating more work ahead in 2016 with a long list of inherited issues and newfound challenges such as 2016 renewals, ongoing Health Insurance Case System (HICS) activity, continued FFM lags with system updates, and continued interim processes. Yet, one can view the implementation of the HIX 820 as a new opportunity to review and build upon your operations and reconciliation practices simply based on your Chief Financial Officer's (CFO's) perspective.
If your CFO hasn't asked you before, he/she will.
- If we have an expected payment of $100 million based on effectuated members on our books, why is our payment $120 million this month?
- Is this a real payment or an overpayment based on lags with the FFM applying member updates such as cancels and terminations?
- Aside from timing and adjustment activity, what should the prospective payment for next month be? Let's review and find out why your estimate differs once the HIX 820 arrives.
- What does this high volume of adjustment activity in May 2016 applied to January and February 2016 coverage months represent? How do we build an expected adjustment each payment cycle so there are no surprises?
- How many monthly cycles will it take to be paid accurately for January 2016?
With the goal of measuring the overall financial impact of your enrollment and payment discrepancies, you will be able to build a strategy around successful reconciliation. Some key drivers are fundamental and important to highlight. Your organization can simply calculate your expected payment to your actual payment by comparing your PPR/820 monthly payment files to your plan data (RCNI) as a first step. At the end of the day, your CFO will not be interested in a partial picture — he/she will want to understand if the payment is real and whether it will change retroactively. Understanding the complete financial impact of all discrepancies should be your first step. The operations surrounding the resolution of discrepancies should be secondary, albeit a huge undertaking. So, how do you get there?
Recommendations for Issuer's HIX 820 Strategy:
- Be audit ready.
- Understanding CMS will pay you based on the FFM system signifies your daily enrollment processing oversight and the audit of those processes in the form of reconciliation practices go hand in hand. In an audit, you never want CMS to identify you are being paid for non-members or not paid for members consuming the benefit and everything in between.
- See the big picture.
- On a weekly or monthly basis, your organization needs to understand its discrepancy rate and the formula the rate represents. Is it 2%, 8%, 12%? Measure it, and work that rate downward.
- If you have a 5% FFM orphan discrepancy rate in January 2016, what is your January discrepancy rate in April 2016? Monitoring by coverage month each report month is critical to being paid accurately and other downstream issues impacting revenue.
- Put your CFO hat on.
- Institute a monthly review of your organization's discrepancy rate with your CFO.
- Be able to tell a story on the difference between expected and actual payment along with your retroactivity predictions. Now that the 820 will be paying prospectively and retroactively back to 1/2016, Issuers will be able to measure the swings in payment activity.
- Track discrepancy drivers within your organization and look for process improvement opportunities you can operationalize along with aligning resources more effectively.
- Track CMS-defined payment issues and submit timely through the Payment Dispute template. Remember, these are discrepancies sourced to an FFM system issue since your Issuer data matches the FFM data (Pre-Audit File).
- Summarize, work, and measure success of the FFM Recon Outbound File (RCNO).
- Update your enrollment system or dispute Issuer action flags.
- Track and monitor the FFM action flags as well as ensure CMS is applying corrections to the FFM database in conjunction with Issuer corrections. This is a two-pronged approach.
- Track orphan discrepancies (both Issuer and FFM) by coverage month through the FFM Pre-Audit file and resolve each subscriber case.
- Categorize the causal such as FFM BAR error, missing 834, Issuer processing error.
- When you know your data, you are able to answer every audit question that arises.
- At a maximum, when monthly orphan identification is working well, move to weekly discrepancy tracking by comparing the authoritative Pre-Audit file to your Issuer data. This allows you to detect internal issues more timely before interfacing with the government.
While none of this is new for government programs as history always repeats itself, it is clear you can apply the same guiding principles. Positioning your organization to succeed in this new environment is directly tied to an optimal reconciliation approach so you can answer the question, "Is this payment real?"
To learn more about Gorman Health Group's reconciliation solution, Valencia™, and how it supports enrollment and payment reconciliation for Issuers, please contact ghg@ghgadvisors.com or Diane Fischer at dfischer@ghgadvisors.com.
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Gorman Health Grouop's Valencia™ creates the workflows organizations like yours need for critical operational functions. With Valencia™, you'll always know where your membership and premium-related data is out of sync, thus eliminating missed revenue and inappropriate claims payments. Contact us today to set up a demo >>
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Mergers Pave Way for Good Opportunity to Enter Medicare Advantage Market
While the largest insurance companies await their fate at the hands of federal regulators, other plans and investors should pay close attention to the opportunity to acquire divested plans from the two deals.
With the shareholders overwhelmingly approving the merger between Aetna and Humana, all eyes are on what the Department of Justice (DOJ) and the Federal Trade Commission (FTC) will make of the proposal for the two largest health insurers to consolidate. Anthem and CIGNA also await federal scrutiny. The mild grilling of the healthcare executives on the hill has led many to believe these deals will receive federal approval. And while hospital associations warn of lack of competition in programs such as Medicare Advantage (MA), it is widely recognized these companies will face significant divestitures in markets which will become highly concentrated due to the mergers. Aetna already announced it took a conservative look at the amount of business it would need to divest in order to make this deal go through.
Humana and Aetna would need to divest their plans anywhere the two plans have too much of the market combined — financial analysts estimate this to be any county where the market share is over 40% to 50%. One example of such state is Kansas, where Humana and Aetna combined hold 90% of the MA business. Other major states include West Virginia, Iowa and Missouri, and Ohio, where the two insurers would control an overwhelming amount of MA business. While, according to the Kaiser Family Foundation, Aetna currently only controls 7% of the MA business nationwide, Humana has the largest enrollment in 11 states.
These divestures present a great opportunity for investors and existing plans to enter or increase their presence in the MA market. MA enrollment currently sees no end to the growth spurt it is experiencing. In fact, the National Committee for Quality Assurance (NCQA) recently praised MA plans for their success in increasing quality for seniors, for the first time ever outpacing commercial plans on some quality measures. These existing MA plans are also attractive because of their existing infrastructure already in place, as the investment in creating a new MA plan is very burdensome and can take a long time to reap the benefits.
With both deals expected to close mid to late 2016, investors should really consider looking at states and counties where divestitures will be particularly significant and entering the ever-growing MA market.
Interested in entering or increasing your presence in the MA market?
Gorman Health Group's integrated team of experts can provide strategic analysis in evaluating market conditions across the country to identify MA opportunities and high potential target areas for expansion. Contact us today >>
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Registration for the GHG 2016 Forum is now open! This year we are offering a tiered pricing schedule. Register between now and November 30 to receive the biggest savings at $795. Come December 1, the price increases to $1,095. Register today >>
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Star Ratings: Preparing for 2016
With the Centers for Medicare & Medicaid Services (CMS) release last week of its annual Request for Comments on Enhancements to the Star Ratings program, we now have our first official glimpse into the potential changes which could be introduced in the 2018 Star Ratings.
Consistent with CMS' recent about-face on the impact of socio-economic characteristics on a plan's Star Ratings, CMS laid out two potential interim analytical methodologies which may be used to help account for the Star Ratings differences of low income subsidy (LIS)/dual eligible (DE)/disabled members. CMS indicated these interim analytical adjustments will be interim solutions only and could be used while CMS completes its broader work on a more effective quality structure and payment model which more effectively supports the unique needs of LIS/DE/disabled members. CMS has requested health plan feedback regarding both potential options as well as recommendations for any additional permutations and/or hybrid approaches based on the two options presented.
CMS is not planning to add any new 2017 measures, which is welcome news to health plans, to be certain. However, CMS announced a number of potential new 2018 measures, some of which will bring transparency to clinical areas new to the Medicare Advantage Star Ratings program. Some of the new areas which could be Star rated include asthma medication management (including dispensation of, and adherence to, asthma medications), statin therapy prescribing patterns, and hospitalizations for preventable conditions (which will assess the quality and coordination of ambulatory care). In sharp contrast to recent history, in which we have seen very few new clinical measures added as Star Ratings, the nature and scope of these new measures will put plans squarely back in the driver's seat to initiate new types of clinical quality improvement work with their providers.
The proposed retirement of the High Risk Medication (HRM) measure (which had an average national 2016 rating of 4.1) to the Display page and the continued retention of the Improving Bladder Control measure on the Display page should be considered temporary by plans. These measures continue to receive attention from CMS and measure developers and could easily be returned as Star Ratings Measures in the future — the Improving Bladder Control measure potentially as early as the 2018 Star Ratings and the HRM measure potentially as early as the 2020 Star Ratings.
As is always the case with CMS' announcements regarding potential changes to the Star Ratings program, we know final decisions will not be made until after the measurement periods are complete. To successfully cope with this reality, health plans must continue monitoring CMS' updates and announcements in the upcoming Advance Notice and Final Call Letters while simultaneously enhancing current workflows to incorporate strategic elements of the proposed changes. As we learned last spring, CMS gives strong consideration to health plan feedback regarding any proposed changes to the Star Ratings program.
With the potential Star Ratings changes on the horizon, this is a great opportunity to revisit your 2016 Star Ratings work plan to ensure you are ready for success. It's a great time to evaluate reports, analytics, member/provider workflows and targeting, and budgets to make sure you're prepared to earn your 4-Star Rating next year.
Resources
Gorman Health Group's team of experts can help your organization adapt to the new clinical areas emphasized in the Request for Comments, develop or enhance care coordination within your programs, or evaluate the effectiveness of your current Star Ratings program. We can also help you educate your staff and providers on the nuances and clinical implications of these new measures. Visit our website to learn more >>
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