AEP Marketing and Sales Readiness — Do You Pass the Quiz?
The following are questions Gorman Health Group would ask when conducting an assessment on marketing and sales strategies and execution plans for our Medicare Advantage clients. Take the quiz today and see if you are on track for a successful Annual Election Period (AEP).
If you have answered "no" to any of these questions and you feel you are behind the eight ball — contact us, and we can get you on the right track. AEP is just around the corner!
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Understanding what's working and what's not within your sales and marketing plan is a must in the ever changing competitive Medicare market.Our seasoned veterans will work with your team to redefine sales and marketing strategies that will pay big dividends short and long-term at your plan. Visit our website to learn more >>
Gorman Health Group's Sales Sentinel™ is a flexible, module-based software solution with the ability to onboard agents, provide training, manage ongoing oversight activities and pay commissions. Created by GHG, Sales Sentinel™ was designed to address the specific needs of government managed care organizations. Contact us today to set up a demo >>
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The Formulary Season
It's the formulary season, and you should be in the home stretch for your Health Plan Management System (HPMS) submission. What's on the formulary and what changes were made to the formulary are among the top reasons why members either enroll in or disenroll from a health plan. Manufacturer price increases over the past two years and the number of high-cost specialty drugs released to market make formulary decisions and utilization increasingly difficult and significant to the health plan's bottom line. With an average generic medication utilization rate of 80-85%, there is limited movement to improve. Some thoughts to consider:
Custom vs. Template
Offering a custom formulary targeted to treat a subset of enrollees with a chronic condition seems to be the wave of the future through value-based insurance design. Counterarguments center around a probable increased cost for the Pharmacy Benefit Manager (PBM) administering a custom formulary as well as increased compliance risks for the maintenance and updating of a custom formulary.
Cost-Sharing
Monthly member out-of-pocket cost-sharing for commonly used formulary brand and generic drugs varies widely across Part D plans; for five of the ten top brands, monthly costs can vary as much as $100. Medications (including the specialty tier) with the highest cost share are generally non-formulary brand medications. Non-formulary specialty medications are sometimes ten times higher if they are non-formulary.
Utilization Management
The number of prior authorization (PA) edits approved through the coverage determination request process should be assessed by the plan. If over 90% of the requests are approved, is it really cost effective for the plan (especially if coverage determinations are delegated to the PBM) to continue to utilize the edit? That expense may be better utilized in performing retrospective reviews to ensure medications are being used for approved indications.
Coverage Gap
For 2017, members are responsible for 40% of the cost of brand name drugs and 51% of the cost of generic drugs in the coverage gap. Plans should determine the potential medical costs (emergency room, physician visits, hospitalizations) of members not taking their chronic medications or only taking a subset that they can afford in this coverage gap period. Providing additional gap coverage for medications makes sense in some benefit/risk scenarios.
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The rapid changes to Part D regulations make the tracking and implementation of these CMS requirements exceptionally difficult — to say nothing of actually managing to them. Gorman Health Group's broad array of services can assist you in post-audit remediation, implementation of best practices, PBM contracting and implementation, interim staffing, clinical process re-engineering, Star Ratings improvement, and claims and PDE assessment and adjustments. Visit our website to learn more >>
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How do health plans increase brand recognition and improve brand loyalty?
It is believed brands who engage on social media channels enjoy higher loyalty from their consumers. So why should health plans and health professionals engage in social media?
Social media provides a key opportunity for health plans and health professionals to build relationships with Medicare beneficiaries through social media, develop trust, and collaborate to design future programs to support the needs of the ever-changing Medicare population.
Social media creates an environment where consumers feel comfortable sharing honest feedback and feel a sense of community. Health plans can use this environment to communicate health and wellness tips, upcoming community events, and, as we enter into the Annual Election Period (AEP), these channels can help promote new products and services, help position products for growth, and provide a place to tell a story about your organization and the services you provide.
Are you still asking yourself if social media make sense for your particular audience, or is it a big waste of marketing dollars? Here are a few additional reasons why social media can help drive engagement, satisfaction, and promotion:
Health Plan
- Social media is not just a marketing tool — it is now a business and communication strategy
- Provides innovative ways to communicate with both prospects and members and deliver key messages about your products and services in real time
- Ability to use current members as advocates to share their positive experiences with your health plan
- Influence consumers not easily reached though traditional or direct communication channels
Consumer
- Consumers now play an active role in their healthcare, obtaining real-time data from their doctor and their health plan through their smartphone or tablet
- Allows consumers additional outlets to receive information in the way they feel most comfortable
- Capture the young adults helping their aging parents gain information and help navigate the complexity of our healthcare system
Is your 2017 social media plan in place? Don't miss out on the opportunity to engage consumers with a communication tool to proactively engage, educate, and identify negativity outcomes with current and future members.
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Gorman Health Group an unparalleled track record working with clients in government programs to develop cost-effective strategies and tactics to help plans achieve maximum potential for their products. Visit our website to learn more >>
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The Path to Value: The MACRA Quality Payment Program
To quote Yogi Berra, "If you come to a fork in the road, take it." Great, but exactly which fork do I take when faced with multiple options? That is the question many provider-led organizations are asking today.
On April 27, 2016, the Centers for Medicare & Medicaid Services (CMS) unveiled key provisions of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), a bipartisan legislation that replaced the Sustainable Growth Rate (SGR) formula with a new approach to paying clinicians for the value and quality of care they provide. The proposed rule would implement these changes through a unified framework called the Quality Payment Program (QPP), which includes two paths.
To the left, we have the Merit-Based Incentive Payment System (MIPS), and to the right, Advanced Alternative Payment Models (APMs). So what is a doctor or medical group to do at these crossroads?
The MIPS path leads to a world where a percentage of Fee-for-Service (FFS) Medicare payments are at risk based on performance in quality measures in four areas: Quality, Use of Information Technology, Clinical Practice Improvement, and Cost. Measurement would begin in 2017, and the rubber hits the road in 2019. By 2022, the portion of reimbursement at risk will be at 9% and could go beyond that. "MIPS is going to be the "new norm" for providers," said David Sayen, Senior Vice President of Client Relations at Gorman Health Group. "There will be no more hand wringing about draconian cuts to physician payments and, per Kerry Weems' clever quip, no regularly scheduled annual hostage taking."
However, it is important to keep in mind this is a zero sum game. To pay off the winners, there have to be losers, and nobody wants to be a loser. So we head to the other fork, which appears to have sunny skies and bluebirds just over the first hill. First, there is a hill. Moreover, for those providers who are starting to round the corner and take their initial steps into value-based risk sharing arrangements, it is never too early to start thinking about the right path for you and your organization.
For those providers who have taken a few steps or even large strides down the value-based fork and have a good understanding of their quality/cost compared metrics, have tightened their belts, and have a good understanding of contracting and negotiating risk sharing arrangements with payers, to get over the hill, you have to get onboard the APM train. Through future rulemaking, CMS will determine which APMs are acceptable as alternatives to MIPS and will be looking for models that have risk components as equally robust as MIPS.
We now know the Medicare Shared Savings Program (MSSP) Tracks 2 and 3 have been identified as APMs and would be exempt from MIPS payment adjustments. Additionally, they would qualify for a 5% Medicare Part B incentive payment. To qualify for incentives, clinicians would have to receive enough of their payments or see enough of their patients through Advanced APMs. Currently, only 5% of the 433 MSSP Accountable Care Organizations (ACOs) are participating in Tracks 2 and 3. However, the other 95% are gaining the experience they need to make actionable decisions on which fork their organization needs to move towards to prepare for the changes.
For organizations interested in taking the step towards forming a Medicare ACO, and potentially having the opportunity to participate in the QPP as an MSSP Track 2 or 3 via the Advanced APMs, the time for action is now. Your MSSP Notice of Intent to Apply is due May 31, 2016. Gorman Health Group (GHG) is available to help you understand the current MSSP requirements and your organization's readiness level. With the proposed changes to resetting the benchmark to incorporate factors based on regional FFS expenditures to establishing and updating the ACO's rebased historical benchmark, including an adjustment to the benchmark based on regional spending that is phased in over several agreement periods, GHG can assist in identifying health cost trends that vary in communities by using regional spending growth trends. As your organization makes the cultural shift towards a value-based model and establishment of essential ACO functions, we can assist in identifying priorities and goals for each functional area and developing a plan that is actionable, from the first step in applying to be an MSSP through implementation.
MSSP applications are due no later than July 29, 2016, at 5:00 p.m. EST. Please feel free to reach out to GHG for assistance in navigating the application. Alternatively, if you are a provider organization that would like to talk through key questions to ask prior to entering into a risk contract, we can help there, too.
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We've assisted scores of organizations through every step of the application process, from gathering the right data, completing the application, submitting, and responding to follow-up questions. Don't let the application process get in the way of your day-to-day operations. Contact us today to ensure a smooth, compliant process >>
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Tag, You're It…RADV Selection Has Begun
The data submissions have been completed, and the Risk Adjustment Data Validation (RADV) selection process has begun. Are you prepared for what the RADV has in store for you? In April 2016, the U.S. Government Accountability Office (GAO) released a report titled, "Fundamental Improvements Needed in CMS's Effort to Recover Substantial Amounts of Improper Payments." This report is quite telling about the improvements needed to strengthen payment recoveries during a RADV audit. John Gorman highlighted in a previous blog, "[the Centers for Medicare & Medicaid Services] CMS is on pace for its most aggressive enforcement year ever." So if you are one of the lucky plans that has an Affordable Care Act (ACA) plan and a Medicare Advantage (MA) plan selected for the RADV audit, my hat's off to you because you are about to experience not one but two risk adjustment audits this year.
For those plans selected for the RADV audit, now is the time to grab your RADV readiness plan off the shelf, dust it off, and put it into action. With a very short time frame allotted for health plans to request, review, and submit the appropriate documentation to support a Hierarchical Condition Category (HCC), there is no time to waste. There are five important pieces needed to survive a RADV audit:
- Accountability — It is important all employees involved in the RADV audit know who the person is within the company who is accountable for ensuring the RADV audit is conducted appropriately within the time frame allotted.
- Communication — All departments need to talk consistently during the audit process because of the short time frame to deliver the best supporting documentation available.
- Validation Review — Chart reviews should be conducted and documented in accordance with your health plan's Coding Guidelines and Compliance RADV Policy.
- Dispute and Appeal — Know when and how to dispute or appeal a finding from CMS.
- Lessons Learned — When it's all said and done, most importantly, learn from your mistakes and make strides to improve to prepare for the next audit.
If your health plan was fortunate enough not to be selected, congratulations to you for dodging the RADV selection process this year. Try not to get too comfortable with not having to participate in the RADV audit. CMS' goal is to have all MA plans subject to an annual RADV audit, comprehensive or condition-specific. It will take time to get to this point, but be aware a yearly RADV audit is right around the corner for MA plans.
There is no need to sweat over being selected for a RADV or the potential change to an annual all health plan participation audit. Reason being, everything you are being audited on is information that was submitted by the health plan to CMS. You can't necessarily plan for all of the unknowns or anomalies that occur during the audit, but you can certainly plan for the knowns. Health plans have the ability to ensure data quality and integrity with the risk adjustment operations that are in place prior to the data submissions to CMS. With all of the recent press and discussions about MA overpayments, health plans need to be assessing their risk adjustment internal controls. These are the primary categories for which health plans should be ensuring the right policies and processes are in place:
- Risk Adjustment Oversight — Various departments within a health plan should be providing oversight on the data submissions and operations of risk adjustment.
- Provider Engagement — Strong physician partnerships and collaboration are needed to build a long-term strategy around HCC validations.
- Risk Adjustment Interventions — Health plans need to have clear guidelines on acceptable supplemental diagnosis information obtained through interventions.
- Vendor Management — The vendors with whom health plans contract are an extension of the company. No matter how much you utilize a vendor to run your risk adjustment operations, they are not accountable to CMS during a RADV audit.
- RADV — Have a readiness plan in place and be ready to go upon being selected for the audit.
Health plans should be conducting operations as if an annual audit will occur, regardless of whether the plan is selected. There is no time like the present to ensure your health plan's risk adjustment operations are in order.
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GHG can help you streamline the execution of your risk adjustment approach, and build a roadmap to ensure you're keeping pace with CMS expectations in both compliance and health care outcomes. Visit our website to learn more >>
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The Effect of the New Part B Drug Payment Proposal on Medicare Advantage and Part D
It's no secret drug costs have skyrocketed in the past decade, and drug payment policymakers face an uphill battle in figuring out how to curb this exponential growth. The Centers for Medicare & Medicaid Services (CMS) has already taken a beating on its proposal to test a new alternative payment design to pay for drugs covered under Medicare Part B, calling into question whether this new methodology will go through looking anything like originally proposed. Part B spending is just a fraction of drug spending in Medicare, covering the drugs administered by a physician or hospital outpatient department. A major question for our industry is what effect this new proposal will have on Medicare Advantage (MA) and Part D plans if implemented.
Part B spending on drugs has increased annually by 7.7% since 2005. Currently, most Medicare Part B drugs are paid using the Average Sales Price (ASP) plus a statutorily mandated 6% add-on. This creates an incentive to prescribe more expensive drugs due to the higher payment amount. Under the new model, Medicare Part B would pay the ASP plus an add-on of 2.5% and a flat fee of $16 per drug per day. The lower add-on and inclusion of the flat fee would decrease the incentive to provide more expensive drugs as the revenue for the drugs would be more evenly distributed. CMS will then roll out the second part of the experiment in which they will test several other pricing methodologies currently utilized by commercial health plans and pharmacy benefit managers, such as discounting or eliminating cost-sharing, providing feedback on prescribing patterns and decision support tools, basing pricing on a drug's clinical effectiveness, and setting benchmarks for a group of therapeutically similar drug products.
The industry was quick to respond, arguing the proposal will lower incentives to give beneficiaries access to vital drugs due to the cost, leading to a reduction in patient outcome as well as patient satisfaction. Some physician groups threatened, if this new payment methodology doesn't adequately cover the cost of the drug, a physician would opt not to prescribe the more expensive, even if more appropriate, medication. The proposal is also facing much scrutiny from both sides of the aisle in Congress, although some Democrats did offer their support. The House and Energy Committee will hold a hearing on the demo on May 17, 2016, along with a bill aiming to quash the demo entirely.
We probably won't see a similar proposal under Part D, as CMS argued it is actually using some of the principles of Part D to inform their payment methodology in Part B. However, as America's Health Insurance Plans (AHIP) pointed out in their comments to CMS, this proposal would likely have some significant downstream effects on MA and Part D plans. AHIP noted the historical tendency of a reduction on pharmaceutical prices in one market segment to lead to cost-shifting practices by manufacturers, such as setting higher prices for new drugs and higher drug price increases for existing drugs. MA and Part D also lose out because they lack the flexibilities of the new value-based tools proposed under Phase II that could also benefit MA and Part D plans. The rollout of the new model could also the affect MA and Part D bid process for 2018, due to the cost-shifting effect of the proposal.
CMS has already noted it will seriously consider making changes to the proposal. For example, CMS announced it will re-examine whether certain types of practices would not be adequate enough to cover certain types of drugs — such as small rural oncology practices. We could also see CMS propose an alternative tiered approach instead of the ASP and add-on formula. CMS is also considering excluding the new oncology care model from this proposal. Despite these changes, questions as to the effect on the remaining Medicare drug programs remain.
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We can help your MAPD or PDP develop and implement efficient and compliant internal operations and prepare effectively for CMS audits with professional services and unmatched compliance tools. Our broad array of services can assist you in post-audit remediation, implementation of best practices, PBM contracting and implementation, interim staffing, clinical process re-engineering, Star Ratings improvement, and claims and PDE assessment and adjustments. Visit our website to learn more >>
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Are Your Members Giving Your Plan A Thumbs Up?
It's that time of year when health plans are designing their benefit packages for the upcoming selling season, setting goals for their sales team, and implementing strategies to achieve greater success than the year before. But have health plans lost sight of what really matters to membership growth? Are health plans thinking about their current members while planning for their future members? If not, you should know each retained member contributes an incremental amount annually. Do you know the impact of a single member?
Member retention is key to long-term success. Net growth does not happen with new sales alone but with a careful balance between new sales and the retention of members once they have enrolled. Plans can meet all sales goals and still end up significantly below membership and revenue targets if members disenrolll from the plan.
Members leave a health plan for a variety of reasons, including dissatisfaction with the health plan, the product, provider access, misinformation/marketing abuse, cost sharing too high, and service or quality of care, but the majority of disenrollments are within the plan's control.
Dissatisfied members may enroll into a competitor's Medicare Advantage or Part D plan, a Medicare Supplement, or return to Original Medicare coverage. Proactively addressing factors which lead to member disenrollment should be the focus of any member retention effort.
What is a member retention program? A member retention program encompasses member engagement, satisfaction, and performance measures. A successful program should be geared around the relationship between the member, the plan, and trusted advisors.
Careful design of retention initiatives and a commitment to communication will deliver a significant and positive impact on enrollment and revenue generation. The foundation of an effective member retention strategy is cross-functional alignment, placing the member at the center of the health plan's initiatives and core business functions.
Sales and Marketing typically are responsible for attracting new members and keeping them engaged during the onboarding process, but a true retention strategy contains efforts from all disciplines inside the health plan. No one department can be responsible for the full engagement of a member. Once a member is part of the health plan, they touch Customer Service, Communications, Risk Adjustment, Care Management, Compliance, and Operations. Their experience in all of these aspects of the health plan drives the retention of that member which in turn helps health plans increase Star Ratings and helps the health plan reinvest their performance bonuses in more and better member benefits.
Utilizing our cross-functional expertise, Gorman Health Group can work with your health plan to create a customized retention program focusing on strategies that address key factors driving your disenrollment and negatively impacting revenue.
For more information, please contact Carrie Barker-Settles at cbarkersettles@ghgadvisors.com.
Resources
Gorman Health Group's marketing experts have developed strategic plans for hundreds of Medicare Advantage Plans, Prescription Drug Plans, Special Needs Plans and Exchange participants. We will work with you to understand your market, mining demographic data for opportunity and finding the gaps in the competitive field into which your plan can fit.Visit our website to learn more about our services >>
Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>
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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What Is Driving Growth in Your Plan?
It's May, so if you have not formalized your sales and marketing strategy for this Annual Election Period (AEP), now is the time. At our recent Gorman Health Group 2016 Forum, Carrie Barker-Settles and I had a very insightful discussion with Forum participants about what is driving growth in plans today.
First, membership data analysis. It is critical to understand your data in order to understand the following about your members:
- What are the geographic, demographic, and plan selection of new members in the last year, and which plan, marketing tactic, and sales distribution did they come from?
- You need the same information about voluntarily termed members and any additional data gleaned from survey data.
Next, it is important to conduct a market analysis to review the following:
- Medicare population and penetration
- Product and plan trends
- Benefit design analysis — looking for product and benefit innovation
- Multicultural diversity
- Competitive analysis and trends
With this information, you should have a strong idea of what your growth looks like — now you need to understand how to attract it going forward.
Whether or not you are currently attracting the aging in audience, you want it! Having a young Medicare beneficiary helps drive down costs. But Medicare beneficiaries are beginning to delay retirement, so developing strategies to capture these folks is probably the most cost-effective program you will have, and having a benefit design that is attractive to this market is critical.
When trying to attract the younger Medicare beneficiary, the Affordable Care Act (ACA) enrollees aging into Medicare will be a strong market — if you are in the ACA market segment. Plus, you have the opportunity to target enrollees with "like" plans and just enroll them without having them test the outside waters, if you do it correctly. In addition, this audience is much more attuned to social and online media. We have found there are online media tactics now entrenched in most media plans, but testing should be continuous since more members will begin to enroll online who have purchased their ACA healthcare online and will expect the same experience with Medicare.
"For continued growth in your plan, make sure you're leveraging a multi-channel strategy to achieve your sales goals," said Carrie Barker-Settles, Gorman Health Group's Director of Sales & Marketing Services. "Placing too much emphasis on one channel may result in unsavory consequence. Utilizing the right channel for the opportunity will enable you to reach prospects that don't respond to the standard marketing outlets and help achieve the stretch goal that the sales team is always faced with year after year."
When looking at the sales channel, this segment continues to diversify.
First, there are the Transition Managers or "Navigators" − Distribution of direct-to-consumer Medicare products to support commercial companies transitioning their members from group plans to defined contribution individual plans. We have seen this segment grow substantially in the last few years.
In addition, we are beginning to see some transition among plans regarding their sales distribution of contracted agents, captive agents, and employed agents, and mixtures of all of the above with telesales and online sales. Another segment we see gaining popularity is storefronts. Have you reviewed your strategies among those discussed here today? If not, make sure you understand from where your opportunity for growth for 2017 will come. Believe it or not, 2016 is coming to a close quicker than we think.
If you need help in evaluating your marketing and sales strategies, let us know — we are here to help!
Resources
Gorman Health Group's marketing experts have developed strategic plans for hundreds of Medicare Advantage Plans, Prescription Drug Plans, Special Needs Plans and Exchange participants. We will work with you to understand your market, mining demographic data for opportunity and finding the gaps in the competitive field into which your plan can fit. Visit our website to learn more about our services >>
Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>
Medicaid Final Rule Aligns the Program with MA and Exchange Regulations
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. Although the final rule makes some tweaks based on the comments received from the industry, it largely adopts the proposals released last May. The new changes will be phased in over the course of three years, with some provisions going into effect starting July 1, 2017.
The new regulation, in essence, brings Medicaid managed care into the 21st century. Many of the new changes align the Medicaid program with Medicare Advantage (MA) and Exchange regulations currently in place. The rule encourages efficient, realistic use of limited resources, creating more incentives to improve clinical outcomes, reduce cost, and improve benefit coverage. Below is a synopsis of the major changes in the final regulation:
Medical Loss Ratio (MLR)
The final rule directs states to comply with a federal MLR standard of a minimum 85%, with a one-year reporting year. The new MLR requirement begins with contracts starting on or after July 1, 2017. This does not prevent states from setting loss ratios higher than 85%, however. Several states already impose MLR standard on plans, and many plans are already in compliance or close to an 85% MLR, so the impact of this new regulation is uncertain. Time will tell if the imposed 85% MLR will be effective as a way to standardize the varying state rules. CMS estimates the federal government would collect from $7 to $9 billion over a span of two year from plans failing to meet the ratio.
While the calculation details largely align with MA, CMS did make some slight variations in order to account for program differences between Medicaid/Children's Health Insurance Program (CHIP) and MA. The proposed rule also originally suggested fraud prevention activities would be included in the MLR calculation, however, decided since MA and the private insurance industry have yet to adopt this, the new regulation would read that Medicaid will adopt fraud prevention activities when the private market does.
In addition to the development of the MLR, CMS is requiring more transparency and fairness between health plans and States in the rate setting process — this will mean a closer look into how health plans and States are utilizing government funds.
Quality Rating System (QRS)
CMS plans to develop a Medicaid and CHIP QRS, similar to the one currently being implemented in the Exchanges. The new system will align with Exchange indicators but will retain flexibility to use different measures in order to reflect the differences in populations served by Medicaid/CHIP. CMS will expand on the methodology it plans to use in a forthcoming proposed regulation and expects to implement the QRS over the next five years. Overall, the major quality provisions of the rule all work to increase plan transparency of quality information, making it more available to the consumers and to facilitate identification of high risk members with special health care needs. States will also have the option of waiving out of the federal QRS and establishing their own, as long as it is substantially similar.
Quality Incentives
CMS also included several avenues in which states can now develop quality incentive systems in order to move forward with delivery reform and the movement toward value-based care, similar to the MA and Exchange spaces. States can now enter contractual agreements with plans in which plans agree to work on delivery system reform and performance improvement activities. This will be especially helpful in managing members in need of long term services and support and/or have special health care needs. States can also include value-based purchasing agreements that would tie provider reimbursement to performance on quality measures. Finally, states can develop other incentive and penalty arrangements to reward plans meeting quality or performance.
Marketing
CMS is updating the marketing standards in order to provide more beneficiary protections due to both the creation of Qualified Health Plans (QHPs) and the changes in managed care delivery systems in the past decade. For example, the new regulation updates rules on the use of mail, email, and websites. The final rule also requires plans to regularly update provider directories and drug formularies and make these readily available. The final rules also codify accessibility and anti-discrimination rules. The new rules greatly align with MA and the Exchange.
Appeals and Grievances
This is yet another area in which CMS streamlines the process with MA and the Exchange. The new regulation sets clear timelines, definitions, and guidelines for the appeals and grievances process and sets an expedited appeals process. Plans will need to ensure completion of the new required turnaround times for requests for external review; availability of case file medical records, and other documents used to conduct coverage determinations to the member; and documentation of notices and recordkeeping. Enrollees will now also be required to use the new internal process before utilizing state fair hearings.
Network Adequacy
Though CMS leaves network adequacy details up to the states, it does direct states to establish time and distance standards for primary and specialty care, behavioral health, OB/GYN, pediatric dental, hospital, pharmacy providers, and Managed Long Term Services and Supports (MLTSS). States will be required to certify the adequacy of the network at least annually or if there is a substantial change in the program design.
Actuarial Soundness and Rate Setting
CMS established and updated its rate setting procedures in order to bring clarity and ease to setting and reviewing Medicaid managed care payment rates. Currently, rates must simply be "actuarially sound." The new regulation defines actuarially sound rates as "rates that are projected to provide for all reasonable, appropriate and attainable costs under the terms of the contract and for the time period and population covered under the contract." CMS also set standards that capitation rates must meet and that CMS will apply in the review and approval of actuarially sound capitation rates.
Fraud Prevention
CMS also updates procedures to prevent, monitor, and identify fraud, including internal monitoring, audits, and mandatory reporting to CMS. The new rules include procedures for suspending providers when fraud has been alleged. The rule leaves some rulemaking to the states, however, states will need to submit a plan to CMS on how they intend to recover discovered fraud, waste, and abuse.
As previously noted, the final regulation makes changes to virtually every part of Medicaid Managed Care regulations and makes many more updates than we have gone into here. However, the big takeaway is many of these new regulations bring the Medicaid program up to date by borrowing from the successes and lessons learned from the MA and Exchange spaces. Plans would be well served to educate themselves on successful MA and Exchange plan compliance strategies and operations going forward in order to prepare themselves for the upcoming changes.
Resources
Let the team of experts at Gorman Health Group (GHG) help you prepare for the upcoming changes that could impact your organization. GHG's risk adjustment experts can help analyze the financial impact, develop feasibility models to help with meeting the new MLR requirements, and provide guidance on streamlining operations. GHG's Compliance Solutions can assist in the development and monitoring of these new contract requirements, and our clinical team can assist with reviewing and developing integrated care models to provide quality initiatives that are effective and efficiently managed to get optimal results.
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