So, what does “Unreasonable Delay" really mean in Federally Facilitated Marketplaces?
As expected, CMS has been sending correction notices to health plans about their networks. Also, as expected, some plans have received a second rejection of their response to the first rejection. Now, time is limited since final corrections are due by September 4. Health plans are asking CMS to give them some idea about how to meet CMS expectations.
Plans are asking—
- What standards does CMS use that makes for a rejection?
- What do we need to do?
- What exactly is deficient?
Given the short timeline, most of these plans are asking "how can we know when we jumped high enough?"
Currently, there are no reasonable standards that CMS or plans can look to. CMS responses to these questions remain vague and unspecific as plans complain that the rejection notices give no direction on what is really wrong. Instead, CMS wants plans to respond with another narrative that explains the pattern of care, any extenuating circumstances, or even a confession of network complaints. Health plans aren't feeling too comfortable with CMS' responses. They are still not sure they will get a "pass" with the next and final submission. Given that multiple CMS reviewers can result in varying opinions on what is sufficient, health plans are worried about the final CMS judgments.
At the same time, CMS assumed responsibility for assuring network adequacy when they initiated these reviews for 2015. So, the focus on narrow networks has placed CMS in the cross-hairs again if network complaints re-surface.
While CMS acknowledged that there might be another window after September 4th, at this point, plans should use metrics using technology support to make their case to support the narrative. Numbers and metrics plus persistence may count.
Resources
Gorman Health Group's network evaluation service deploys an automated software solution that uses metrics based on population, provider ratios and time/distance standard. Learn more >>
Join John Gorman, GHG's Founder and Executive Chairman together with colleague, John Nimsky, Senior Vice President of Healthcare Innovations, as they discuss the vehicles for achieving what could be characterized as a reengineering of the health care delivery process and its effectiveness. Register now >>
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Navigators, In-Person Assisters and Brokers
The Alliance for Health Reform held a briefing on August 5, 2014 on "Navigating the Health Insurance Landscape: What's Next for Navigators, In-Person Assisters and Brokers?"
Consumer enrollment in Qualified Health Plans (QHPs) offered in the Exchange Marketplaces for 2014 was greatly assisted by Navigators, In-Person Assisters (including Certified Application Counselors) and Brokers. 28,000 navigators and assisters helped 10.6 million consumers during the first ACA open enrollment period. The Kaiser Family Foundation just completed a survey and issued a report entitled "Survey of Health Insurance Marketplace Assister Programs: A First Look under the Affordable Care Act". The survey did not include agents and brokers. The survey reported that there were 4,400 assister programs nationwide. Certified Application Counsellor Programs account for 45 percent of the assister programs, in-person assistance programs were 26 percent, the FQHC share was 26 percent, Navigator programs represented only 2 percent and the Federal Enrollment Assistance program provided only 1 percent.
According to the Kaiser study, the federal government spent over $400 million on these assistance programs during the first year. $100 million came from Exchange establishment grants, $208 million from grants to FQHCs, and $105 million from CMS ACA implementation funds. In addition, there was substantial additional funding from private sources including non-profit community programs, hospitals and health care providers, state and local governments. Funding for assister programs in the state-based marketplaces and federal-state partnership markets was substantially higher than funding in the federal marketplaces. The uneven funding distribution meant that the number of assister staff per 10,000 uninsured was about half in the federal marketplaces.
Assistance was time intensive involving on average one to two hours for each client. The top three reasons consumers sought assistance included their limited understanding of the ACA and the need to understand plan choices and their lack of confidence in applying on their own. Information from QHP websites was inadequate and plans did not have dedicated phone lines for assisters. Assisters faced a number of challenges including lack of health insurance literacy, transportation issues in rural areas and lack of trust in certain hard to reach communities. States had only 10-12 weeks to hire and train most assisters. 92 percent of assisters wanted additional training especially in the areas of subsidies, tax penalties, and immigration issues. Successful techniques in reaching the target uninsured populations included partnership with community agencies, building on Medicaid and CHIP networks, use of mobile navigators and media outreach efforts. Back-end access to Exchange portals in some states, e.g. Maryland and New York greatly helped the assisters with their jobs. States with larger funding were able to conduct more outreach and education events and schedule one on one appointments.
There is no data on the number of agents and brokers that participated in the 2014 open enrollment period. The National Association of Health Underwriters (NAHU) reported high broker interest and their 2013 survey found that almost 75 percent were obtaining marketplace certification. HHS reported that 70,000 agents were certified by the federal marketplaces. State exchange data shows 30,000 additional agents and brokers were certified. The NAHU reported that agent and broker services had an 89 percent customer satisfaction rate. In general, state based exchanges were designed with better broker participation mechanisms than the federal marketplace, although all exchanges experienced technological issues. The level of collaboration between brokers and assisters varied across states. Some assisters were wary of brokers, largely because they received commissions from the plans. Others valued the expertise of the brokers.
90 percent of assister programs reported post-enrollment problems after the ACA open enrollment ended in April. The top problems identified included not receiving an insurance card, Medicaid eligibility determination problems, and failure to receive a premium invoice. Three fourths of the consumers lacked understanding of the basic insurance concepts. About one-third of the enrollees picked the wrong plan, for example because they didn't understand high deductible plans or innovative benefit designs that covered some benefits but not others.
76 percent of the assister programs plan to continue during the second open enrollment. This open enrollment is 50 percent shorter than the first enrollment period and overlaps with tax season. The assisters will also be facing the QHP renewal process as well as uncertainly on the functionality of the online portals. New QHPs will be entering the marketplace. Federal Navigator funding will be $8 million less. States can continue to use their grants for the 2015 enrollment period, but they must be self-supporting in 2016. Additional education will be needed on tax penalties which will be three times larger if consumers don't sign up in 2015.
NAHU expects broker participation in the 2015 open enrollment period to be high, although slightly lower than 2014. A June survey found that 69 percent of brokers plan to sell on the individual exchange in 2015. Brokers see opportunities with new plans entering the marketplace and the availability of the SHOP exchanges. Brokers and agents experienced a number of challenges in 2014 including payment and liability issues resulting from the failure of applications to record multiple assisters. NAHU recommends broker portals, additional fields to record multiple assister numbers on applications, ability to edit enrollment records to add NPNs and addition of a complete list of brokers on HHS.gov.
Resources
Gorman Health Group's Sales Sentinel has been providing training and certification services to the healthcare industry for 8 years. Every value is reportable, and Sales Sentinel currently reports on over 120 data points. Learn how Sales Sentinel can help you certify your agents and brokers today >>
GHG currently offers guidance and support in every strategic and operational area in Government sponsored health programs. Visit our website to learn more >>
Join John Gorman, GHG's Founder and Executive Chairman for an exploration of why assessing your current position and developing new strategies to drive profitable market share growth is crucial for continued success. Register now >>
Regulatory Oversight of Narrow Network Plans
The Alliance for Health Reform held a meeting that focused on "Network Adequacy: Balancing Cost, Access and Quality" on July 21. The meeting was very well attended for mid-summer, indicating substantial interest in the trend towards smaller networks particularly in qualified health plans offered through the ACA Exchange marketplaces. Several of the panelists mentioned a recent McKinsey study that found that 92 percent of consumers using ACA plans have access to narrow network plans while 90 percent of ACA plans offer broader networks.
The panel participants emphasized the value that smaller networks bring to consumers in offering substantially lower premiums. For example, a recent Milliman report for AHIP found that high value networks can reduce premiums by 5 — 20 percent. However, it is important that plans select the providers based on quality and performance and not just on price. Paul Ginsberg pointed out that smaller networks also can support integration of care and that these plans are moving in the same direction as payment reform e.g. making payment based on episodes of care or bundled payment. Katherine Arbuckle from Ascension Health noted that providers in smaller network plans can benefit from being connected to the same electronic health record system which further benefits clinically integrated care.
All of the panelists agreed that there needs to be adequate regulatory oversight of network access. Currently the NAIC is in the process of updating their Model Network Adequacy Act which has not been modified since 1996. The goal is to have an updated model by the end of the year. NAIC is focusing on new provisions on essential community providers, tiered networks, formularies, provider directories and updates, continuity of care and consumer protection from unanticipated bills and broadening the act to all types of managed care plans. NAIC wants to retain state flexibility to deal with local conditions, for example, provider access standards should be very different in Wyoming than Los Angeles. Paul Ginsburg noted that passing any willing provider laws is an overreach and will offset the advantages that smaller networks, carefully chosen, can bring to the marketplace.
NAIC does not have regulatory jurisdiction over Medicare Advantage plans. CMS is considering making changes to MA access standards to deal with mid-year network changes beginning in 2015, for example by allowing enrollees to switch plans if their doctor leaves the network mid-year without cause. Senator Sherrod Brown and Rep. Rosa DeLauro have introduced legislation to prohibit MA plans from dropping physicians mid-year without cause.
Resources
Find out what provisions in the final marketing guidelines will have the greatest impact on your organization and how plan sponsors can prepare for the upcoming changes in a webinar next Wednesday, July 23.
High Performance Health Plan Networks
A Milliman report commissioned by AHIP finds that narrower, high value provider networks can help reduce premiums from 5 to 20 percent when compared to broad network plans. A high value network is one selected on the basis of not only fee schedules, but also overall efficiency and quality metrics. Health plans can make these judgments in ways individual consumers cannot.
It is ironic that ObamaCare has created the structure and incentives for a truly competitive health care market, something long sought by Republicans as an alternative to government regulation of prices and medical practice.
The Exchanges offer consumers an opportunity to compare plans on cost and (when the data are accurate and up to date) on networks. Now that insurance companies cannot manage costs by waiting periods and exclusions, they have more incentive to high performance networks as their main competitive advantage. This leaves excluded providers with the option to improve, and qualify for high performance networks, or lose business. Maybe, just maybe, we'll see some improvement in the mismatch between what we pay for health care and what we get.
Resources
On Wednesday, July 23, join GHG to discuss the 2015 Medicare Advantage Marketing guidelines and how to plan for the upcoming changes. Register now >>
If you've just submitted your HEDIS data, now is the time to analyze that data for gaps and identify interventions for your health plans, providers and members. On July 17 join John Gorman, Executive Chairman at GHG, Jane Scott, Senior Vice President of Clinical Services and Anita McCreavy, Senior Consultant, for a webinar on HEDIS reporting, the new measures and what's next. Register now >>
PBMs are the Health Plan Industry's Achilles Heel
In this Golden Age of government programs, the health plan industry has never had more exposure to the generally poor performance of pharmacy benefit managers (PBMs). Performance metrics in Medicare, Medicaid and ObamaCare are directly tied to PBM execution, and the recent track record of these companies means they are the Achille's Heel of insurers.
PBMs historically made most of their money on commercial insurance and have lagged on government programs, a trend exacerbated by a brain-drain of talent following a wave of PBM consolidation. The danger has never been greater for health plans, and their choice of vendor has never been more important.
First, Medicare's Star Ratings system has several critical performance measures directly tied to PBM performance, notably those related to drug plan service, formulary administration, patient adherence to drug therapies for chronic diseases like hypertension, and readmission prevention (many hospital readmits are due to drug over/underdose post-discharge). The numbers don't lie: Medicare Part D Star ratings and formulary administration were the two leading reasons for CMS-mandated corrective action plans dropped on insurers in the last year. Of plans scoring less than 2 Stars by performance domain, Drug Plan Customer Service came up worst in CMS's last review cycle -- followed by Member Experience with the Drug Plan, and Member Complaints, Problems Getting Care, and Improvement in the Drug Plan's Performance. It's a dismal record and getting worse.
Then consider that the two critically-important health plan quality improvement measures -- C33 and D07 -- are now weighted 5, a first for CMS and a huge development. The concern here is that PBMs are often terrible at data management, and under these measures a plan can be reduced to 1 Star where mishandled data resulted in bias or error, or where appeals and grievances handling is in question. With that 5-weighting, this has come as a rating killer for several plans and a major vulnerability for the rest, as most don't keep good logs of non-compliance issues or audit results.
PBMs are generally good at managing the drug benefits of commercial members, but the complexity of seniors and the low-income and the previously uninsured continues to confound these companies. Gorman Health Group ran 15 solicitations for government program PBM services for its clients in the last 12 months, and we wouldn't wrap fish in one of the responses we received. All varying degrees of suck.
In this last round of contract and service area expansions for 2015 Medicare Advantage and Part D, in our 18 years we have never seen more rejections due to PBM failings like pharmacy and home infusion network adequacy -- literally dozens this cycle, due both to PBM sloppiness and a new resolve at CMS to directly address it.
As PBMs continue to consolidate, plans need to protect themselves from weak execution by bringing renewed focus on PBM-directed Star ratings measures and most importantly, inspecting what they expect. The delegation oversight plan for this vendor is the most important document in compliance right now. Payers are now literally at the whim of the government programs sophistication of their PBM account manager, and that is not a comfortable place to be with literally billions of dollars and millions of seniors and the vulnerable hanging in the balance.
PBMs need to awaken to the new reality of the primacy of government programs today, and make a serious commitment to catching up.
Resources
If you've just submitted your HEDIS data, now is the time to analyze that data for gaps and identify interventions for your health plans, providers and members. On July 17 join John Gorman, Executive Chairman at GHG, Jane Scott , Senior Vice President of Clinical Services and Anita McCreavy, Senior Consultant, for a webinar on HEDIS reporting, the new measures and what's next. Register now >>
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. Contact us today to learn how we can help >>
The state of enrollment: Lessons learned in connecting Americans to coverage
Enroll America issued a 92 page report on the lessons learned and best practices from the initial open enrollment on the new Affordable Care Act (ACA) Exchanges. According to the report, 8 million people enrolled in the new qualified health plans (QHPs) and an additional 4.8 million people enrolled in Medicaid and CHIP. The report was followed by a conference featuring analysis by health policy leaders and reports from Navigators and Assisters who were on the front lines during the open enrollment. The report highlighted many findings including:
- Repeated contact is needed for hard to reach populations. African Americans, Latinos and young people were twice as likely to enroll after the third contact.
- People were twice as likely to enroll when helped by in-person assisters. 87 percent of partners surveyed by Enroll America reported that help from an assister was the top factor that led to a successful enrollment.
- Affordability has been the biggest barrier to insurance coverage. Informing people that financial assistance was available was the biggest motivator to enroll. Combined digital messages and email messages emphasizing affordability and access to personalized tools, such as calculators greatly increased uptake.
What will this November look like? See expected changes below.
- Enrollees need to be educated on payment of premiums and the need to re-enroll.
- 2015 outreach will target Latinos who have a low level of literacy and low enrollment levels.
- Messaging on financial assistance and examples with data are critical.
- Mobile matters since 85 percent of the target population have cell phones and one-half are smart phones.
- Personalizing the message is critical and testimonials where real individuals share real experiences are effective outreach efforts.
- Messaging about penalties is more effective when combined with the benefits of insurance.
- While data driven outreach helped drive successful campaigns in 2013-14, the effort in 2014-15 will be expanded to include predictive modeling and updating models and data to adjust for the newly insured.
The lack of insurance and health coverage literacy in the target population is very high, e.g. 50 percent did not know what an exchange was; 40 percent did not understand a deductible; and there was a poor understanding of the Medicaid expansion or availability of subsidies. HHS through the "Coverage to Care" Campaign, Exchanges and partners will continue outreach and education leading up to and during the second open enrollment.
The new campaign "From Coverage to Care" (C2C) is a national initiative to help new QHP enrollees and Medicaid and CHIP enrollees use their new health care coverage. The program includes an 8-step roadmap which describes coverage basics such as steps to accessing care, benefits of coverage, and define terms, e.g. in and out of network coverage. Topics covered in the roadmap include: Understanding Your Coverage, Using Prevention to Stay Healthy, Understanding Primary vs. Emergency Care, How to Select a Provider, Preparing for and Follow-Up After Appointments. A diagram of the roadmap and videos are available here. A marketplace 800 number is available 24/7 (800-318-2596) or consumers can contact their insurer or Medicaid or state CHIP agency. The C2C program is an ongoing program. Separate resources are available for partners and providers to help their patients' access covered care.
Healthcare.gov will be better for next open enrollment period given the short time frame between April and November and will include improved back-end functions, a small business portal and a simplified application that can be used by applicants with uncomplicated financial situations.
Resources
The launch of the Health Insurance Exchanges is the most challenging implementation in our industry's history with a patchwork of eligibility, new systems and numerous regulations. GHG can help, find out how >>
The Impact of Tax Subsidies in the Federally Facilitated Marketplaces (FFM)
A recent report released by the Department of Health and Human Services (HHS) found that four out of five persons who qualified for tax credits in the Federally-facilitated Marketplaces paid an average of $82 a month in premiums after tax subsidies for their health coverage.
69 percent of individuals selecting plans with tax credits in the FFM have premiums of $100 or less while nearly half had premiums of $50 or less. The tax subsidies averaged $264 per month and reduced enrollee premiums an average of 76 percent.However, the analysis shows wide variations among states in the premiums that people are paying for their new insurance, the amount the government is picking up and the proportion who qualify for the subsidies. For example, enrollees in Mississippi paid an average of $23 in monthly premiums after subsidies while enrollees in New Jersey had the highest post-subsidy premiums averaging $148. Cost sharing expenses, such as deductibles and coinsurance, are additional beneficiary costs and were not included in the report. In addition, the report did not analyze premiums in State-based Exchanges, such as California, which had by far the most people sign up.
On average, the federal exchanges provided a choice of 47 health plans offered by an average of five insurers. New York had the highest number of issuers with 16. Florida and Wisconsin had the largest choice as measured by number of plans. However one in five enrollees had a choice of two or fewer insurers, for example there was only one issuer in New Hampshire and West Virginia. New issuers, including CO-OPs, represented almost 26 percent of all state issuers. The majority of new issuers had Medicaid experience. On average, an increase of one issuer in a rating area reduced the second lowest cost silver plan premium by four percent.
Nearly half of enrollees chose the lowest cost silver plan and two-thirds chose one of the two lowest cost silver plans. The HHS report provides analysis of enrollee selection of plans at all metal levels and analyzes premiums by age group in FFMs as compared to State-based marketplaces and Medicaid expansion states.
What does this mean for you if you are participating in the FFM?
- According to the analysis above, the Americans who qualify for tax credits through the new federal insurance exchange are paying an average of $82 a month in premiums for their coverage — about one-fourth the bill they would have faced without the government's help.
- The government has previously reported that 87 percent of the 5.4 million Americans who chose a health plan through the federal health exchange qualified for some financial help.
- Be careful: As of June 1, the government will need to verify eligibility of subsidies by additional documents to verify their income, citizenship, immigration status and Social Security numbers, as well as any health coverage that they may have from employers. People who do not provide the information risk losing their subsidized coverage and may have to repay subsidies next April.
Resources
The launch of the Health Insurance Exchanges is the most challenging implementation in our industry's history with a patchwork of eligibility, new systems and numerous regulations. GHG can help, find out how >>
Most, if Not All, States Will Be on the Federal Exchange by 2020
Correction: June 20, 2014
An earlier version of this article misidentified the state of Washington as preparing to enter into the Federal Exchange. Though the state of Washington is having trouble with its enrollment website, Washington Health Benefit officials have clarified that Washington state has no intention of becoming part of the federal marketplace.
As ObamaCare launched last fall you'll recall 16 states started their own exchanges, 7 were State/Federal partnerships (effectively operated by the Federal exchange for most functions), and 27 states were supported purely by the Federal Exchange.
Ironically, most of these were in red states where Congressional delegations and governors and state legislatures wailed about a "Federal takeover of healthcare," and that's exactly what they got by their inaction. We knew at least 3 would have no choice but to drop out after the first year and go Federal. As preparations continue for ObamaCare's second enrollment period in October, it's now clear at least half of the state-based exchanges are going Federal in 2015.
I'll say it: I think most states, if not all, will be on the Federal exchange by the end of the decade. The only holdouts will be states where the politics necessitate it, like Kentucky's KYNect, home of Senate Minority Leader Mitch McConnell (R-KY). KYNect has been wildly successful, signing up over 420,000 Kentuckians, many gaining health insurance for the first time in their lives, and it's giving McConnell fits in his midterm reelection bid.
The technology to run an exchange at state and Federal is duplicative, basically the same black box web-commerce architecture from over a decade ago, made wildly complex by the many state and Federal agencies involved in eligibility and enrollment. In the last several months we've seen multiple states crash and burn trying to stand it up, just as healthcare.gov did last fall. Oregon is preparing to sue Oracle for its botched system. Maryland's goat rodeo of an exchange launch has become a wedge issue in the governor's race. Now, Politico reports that Washington state is dealing with "back end" problems on its enrollment website, and the ObamaCare launch actually went relatively well there.
Then there's the issue of cost. The Affordable Care Act requires state-based exchanges to be self-sufficient in 2015. Those that went their own way had the buildout — or meltdown — largely paid for with Federal funds in 2011-2012. It was a vendor's Full Employment Act, with extremely mixed results. Next year's a whole different matter. State-based exchanges costs hundreds of millions of dollars annually to operate, and that won't last long in cash-strapped legislatures. The only ones left standing at the end of the decade may be Kentucky — and only as a middle finger to McConnell, as long as he may be in office — and California. Because it's California.
So for those health plans operating in states already under the Federal exchange: steady as she goes and stay current as pregame festivities begin for the second open enrollment period. If you're operating in a state doing it's own thing that's not KY or CA, you may want to consider re-speccing your systems for Federal functionality. It's only a matter of time in my opinion.
Resources
The launch of the Health Insurance Exchanges is the most challenging implementation in our industry's history with a patchwork of eligibility, new systems and numerous regulations. GHG can help, find out how >>
Tuesday Night's Primary Elections Were Huge. Here's What They Mean for Our Industry.
House Majority Leader, Eric Cantor (R-VA) is toast. Trounced in his Richmond district by a nobody Tea Bagger Tuesday night. Cantor gave up his leadership position yesterday. Depending on where you sit politically, either the unthinkable or the inevitable happened. In fact, a Majority Leader hasn't lost incumbency since the office was created in 1899. "The defeat of the second-ranking Republican in the House by an ill-funded, little-known tea party-backed candidate ranks as the biggest congressional upset in modern memory and will immediately generate a series of political and policy-related shock waves in Washington," wrote Chris Cilizza of WaPo.
What it means for our industry is that legislatively speaking, President Obama's second term is already over. The House will seize up like a bag of concrete in a toilet. The most unproductive Congress in history is about to continue and worsen that record as an epic Republican leadership battle ensues.
That means Obama is left chasing his agenda through administrative action, Executive Orders, regulations and enforcement. With brand-new and surprisingly popular HHS Secretary Sylvia Mathews Burwell on the job, expect her department to flex its muscles in ways we haven't seen, especially given the number of oversight hearings she's about to be subjected to:
- There will be tough new rules for all government-sponsored health programs: Medicare, Medicaid and implementation of the Affordable Care Act. The contentious new Part D rules are just the beginning.
- There will be increasing activism in network adequacy and rate reviews of insurers in Medicare Advantage, Part D and the exchanges;
- CMS will take a hard line on Medicare plans lagging in Star ratings and/or compliance records. The second term of a Democratic administration is always when scores are settled; the renewed Congressional scrutiny on our favorite agency will make the paper tiger grow some claws;
- CMS and the HHS Inspector General (IG) will finally put the pedal down on dreaded RADV audits with the promise of hundreds of millions in recoveries.
- With wingnuts like House Oversight Chairman Darryl Issa (R-CA) salivating for domestic Benghazis, the HHS IG will likely deliver a few surprises of its own.
Every time there's a major electoral event in Washington like this, elected and appointed officials alike will usually settle back on the motherhood and apple pie of health care politics: kicking the crap out of the insurance industry and other monied interests like pharmaceutical manufacturers and PBMs. If you're not wearing them already, it's time to pull on the kevlar boxers and the asbestos Spanx.
Aetna Offers a Playbook for Evolution in the Golden Age of Government Programs
Ralph Giacobbe of Credit Suisse got another terrific "get" hosting Aetna's management team for an insightful discussion last week. I found the takeaways offer a playbook for how to adapt and evolve in the new Golden Age of government-sponsored health programs:
Watch Your Wallet: Aetna assumed an accelerating cost trend in 2014 of 6-7%. The company noted that underlying cost trends remain generally muted and that overall drug spend is within expected ranges. The company's informatics and medical economics function tracks a wide range of data indicators for early warning of cost acceleration, and had nothing unusual to report.
Put the Pedal Down on the Government Platform: Aetna acquired Coventry for the purpose of having a seasoned platform for government business, so integrating the company remains a top priority for Aetna in 2014. You may recall Aetna called Fran Soistman, a legendary founder of Coventry and a battle-hardened veteran of Medicare Advantage and Part D, out of retirement to run its government business unit. He's been making huge progress in leveraging the company he built within Aetna. For instance, Aetna ranked #1 in price in 6 of 7 ObamaCare exchange regions in Florida, largely because of Coventry's footprint there. Aetna continues to expect $200M in synergies and $0.50 of accumulated accretion in 2014, and $400M in synergies and $0.90 of total accretion in 2015 from the Coventry acquisition.
Invest in Medicare Advantage Stars: Aetna invested heavily in Star ratings improvement the last two years, and now averages 4+ Stars. As a result, the bonus payment and favorable rebates it gets allowed the company to maintain competitive premiums and benefit designs for 2015 in the face of a 3-3.5% revenue headwind. The company remains positive on its competitive position, and expects to grow membership next year.
ObamaCare Exchanges in 2014-2015: This year Aetna is participating in 17 states and has 570,000 paid public exchange members, with management expecting to have 450,000 exchange lives by year end due to churn. The company booked some reinsurance in 1Q and now believes it may get the data to begin to factor in risk adjustment. Risk corridor remains more difficult to estimate and will evolve as experience matures. Aetna's exposure in the exchange market is limited to 5% of projected 2014 revenues and its guidance incorporates a modest drag on earnings. The company doesn't expect to expand its footprint in the ObamaCare exchanges in 2015 until it has a clearer picture on costs and the competitive landscape. Management suggested it would seek average high-single digit pricing increases for 2015 on the exchange -- and there's some comfort there as an early indicator that trends so far in the exchanges are not as crazy as the rate hikes of 15%-20% seen from other plans.
Aetna's perspectives, when considered against the backdrop of United's outlook for the next couple years, paints a picture of a rapidly-expanding government book of business that is gaining on its longtime commercial market dominance. It's a portrait of evolution in the Golden Age of publicly-sponsored health care.
Resources
Listen as John Gorman, Executive Chairman at Gorman Health Group and Josh Raskin, Managing Director at Barclays, discuss the recently released Stars data, and the seismic impact of the 8.5 billion quality demonstration. Access the podcast here >>
In this recorded webinar, John Gorman explores what "member centricity" means in today's government health care industry, at a time when consumerism is defining our relationships with members more than ever, and with CMS elevating quality improvement to game-changing levels. Download the webinar >>