Why Medicare ACOs Were Always a Bad Deal, and Why They Need an Exit Strategy
Last week, the tenth of 32 Medicare Pioneer ACOs dropped out of the program. Others are expressing reservations about entering or continuing given the experience of Pioneers and the hundreds participating in the Medicare Shared Savings Program (MSSP). To be clear, it's not all bad news...but most ACOs will need an exit strategy, fast.
Medicare ACOs were never a fair deal. As I pointed out last week, the problem with the Pioneers, and in fact with all Medicare ACOs, is that the rules tilt the playing field toward CMS, often to the detriment of the ACO. Most significantly, the downside risk, as required by CMS, is irrational. Any ACO incurs substantial downside risk in the form of its investments to participate and its operating costs.
A rational deal would be: the ACO incurs operating costs, and it gets a share of any savings it generates. The risk is that savings are not enough to cover costs. Your reward is that you keep any excess over operating costs, although CMS couldn't resist putting a ceiling on that, too. Adding a financial penalty if costs exceed the benchmark doubles down on the downside, giving the ACO two ways to lose money, and only one way to make money — by generating savings in excess of costs. Losses incur a penalty, in addition to operating costs. Small gains still leave a loss if operating costs are not covered -- so only large savings offer a profit. This is not a fair deal, especially for ACOs in already-efficient markets like Sharp in San Diego.
In the CMS math, the "losses" that incur downside risk, and require refunds to CMS, result from per capita costs for Part A and B services for assigned beneficiaries exceeding a benchmark. The benchmark is supposed to represent the per capita cost for these bennies if the ACO did nothing. Costs below the benchmark represent the degree to which the ACO has succeeded in doing something effective.
I can think of only two scenarios in which costs would exceed this benchmark cost of doing nothing. One is collusion by the ACO providers to increase Medicare billings. That is illegal, and already carries stiff penalties, and nobody would try it in a public demonstration. That leaves only one other explanation: the benchmark is supposed to represent the per capita costs if the ACO does nothing. If the ACO does something and still incurs a loss, that means that the benchmark is defective. CMS does a poor job of incorporating risk adjustment into the benchmark, and, as in the case of Sharp, the benchmark is not necessarily adjusted year to year at a rate that reflects local market changes. That means the downside risk imposed by CMS is really a penalty for its inability to get the benchmark right. That is not a fair deal.
In addition to the problems with the downside risk requirement, even if you do generate large savings, your share of those savings will be reduced unless you achieve near perfection on 33 quality metrics selected by CMS. The ink is barely dry on the first set of metrics, and CMS is already proposing to change half of them. When one party to a deal keeps shifting the goal posts, it is not a fair deal.
So as we see it, as many as three-quarters of Medicare ACOs need an exit strategy, and fast. Many Medicare ACOs' 3-year demos will wrap up in 2015-2016, so as early as next year dozens will look at the significant investments in time and treasure and nonexistent ROI and say, "what's next?" They have three major choices:
- Go back to traditional fee-for-service Medicare with a hole in their budget and scars on their asses. Pursue commercial ACO arrangements that are attractive, and effectively flush the investment in Medicare management down the toilet.
- Enter, or go deeper into, contracts with one or more Medicare Advantage plans in the market, leveraging infrastructure and experience into a channel where money can be made and quality rewarded. Most MA plans recognize that a Medicare ACO with a record of savings and quality is primed to be a good risk partner.
- Build your own Medicare Advantage plan and move up the food chain. A successful Medicare ACO has already mastered the hardest parts of eldercare: care management and an engaged network of high-performing providers. What's missing is insurance functions, which can be built or bought.
Those Medicare ACOs that choose the latter path have good reason to do so: Medicare Advantage remains a sound investment opportunity in most markets for 5 big reasons:
- Beginning in 2017, the MA benchmark is guaranteed to grow at the same rate as FFS Medicare, whereas the Medicare ACO benchmark resets every 3 years, confiscating most hope of shared savings.
- Medicare ACOs have to be good diagnostic coders to avoid losing revenue, whereas in MA that's an enormous financial advantage under risk adjustment.
- ACOs share their savings with CMS; MA plans keep theirs. Boom.
- Medicare ACOs with demonstrated quality watch CMS keep less of what they've already earned, while quality gets MA plans a bonus -- and new entrants automatically start with a 3.5 Star Rating and a 3.5% bonus.
- Medicare ACO beneficiaries are "free range". There is no lock-in and the same level of benefits for any Medicare provider. The MA benefit design is a lock-in that favors in-network utilization. Free range is only tastier when referring to carnivorous treats, not capitalist ones.
Those Medicare ACOs that choose the latter option need to move fast. To evolve into a Medicare Advantage plan, a Medicare ACO needs to have confirmed its market's financial viability, and then build or arrange for:
- state licensure and financial reserves, and must hold 100% of risk net of reinsurance;
- a highly developed function to manage Federal and state regulatory requirements;
- a sophisticated and accountable sales and marketing structure;
- transaction processing like eligibility, enrollment and claims;
- a member-centric member service operation.
These capabilities can be homegrown, obtained from the health plan down the street or from third-party vendors like TMG Health, or some combination thereof. But either path takes time, and sound health plans aren't built during a fire drill. A Notice of Intent must be submitted to CMS in November and application made in February for the following contract year -- so at this point you're talking 2016 entry at the earliest, 2017 most likely.
If you're a health system watching this all unfold, let me suggest this: instead of investing in a Medicare ACO, take your money to Vegas or to Medicare Advantage -- in either place you know the rules and the odds.
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The Medicare ACO Demos Are a Mess. Here's What it Means for Health Plans.
This week, another Medicare Pioneer Accountable Care Organization Demonstration site, longtime GHG client Sharp Healthcare in San Diego announced it was dropping out. It was the tenth Pioneer to quit the trail, and not for lack of trying. Many of the Pioneers did great on improving quality and reducing costs -- the issue is not the performance of Pioneers. It's CMS' methodology, with its requirement for Pioneers to bear risk in the third year, and benchmarks calculated to make any gainsharing impossible.
The deck was stacked against them from the beginning, including inability to control beneficiary out-migration, inability to generate meaningful savings if the network was already highly efficient, and the beneficiary at-will opt-out. It's left dozens of Medicare ACOs in both Pioneer and the more than 330 in the Medicare Shared Savings Program (MSSP) scratching their heads and wondering how to monetize the millions they've invested in population health and complex case management -- the "hard part" of Medicare managed care.
I think many will conclude it's time to move up the food chain and become Medicare Advantage plans, and we'll start seeing them next year, with a mini-surge to follow in 2016 and 2017. Look at it this way: Even if only 10% of all Medicare ACOs decide to jump into the elder insurance game, we could be talking as many as 40 new Medicare Advantage plans entering the program over the next three years. All of them local and/or regional powerhouses with loyal followings to command those thousands of "assigned" beneficiaries. At a minimum, a Medicare Advantage contract of their own would command big leverage in negotiations with competing plans they may already be in business with.
To participate in Pioneer or MSSP, health systems needed to develop sophisticated reporting structures to meet CMS demands, as well as the significant investments needed to better manage their elderly frequent flyers. They assembled more integrated, coordinated providers and held them to tough quality standards, and for the most part, they delivered. But for all the hard work of evolving their delivery systems, most -- we estimate as many as three-quarters -- won't see a penny from either demonstration.
Many of these ACOs will look at the health plans they contract with in Medicare Advantage, flip the model on its head, engage the plan or a vendor like TMG Health to operate "back office" insurance functions like enrollment, and enter the market in 2016 or 2017 as private-label senior plans.
They'll have a great story to tell, loyal followings, brand recognition, and -- hugely -- will enter Medicare Advantage with the newbie default 3.5 Star Rating, including the 3.5% bonus. And let's not forget 2016 and 2017 are when the worst is over in the Medicare Advantage rate cuts from the Affordable Care Act, with MA benchmarks being pegged at the traditional Medicare growth rate. These two factors, not to mention a health system's inherent advantage in collecting risk adjustment diagnostic codes, should provide a substantial tailwind to these new entrants. Disappointed Medicare ACOs will reinvent themselves as MA plans making an entrance in 2016-2017 like Beyoncé at the Video Music Awards.
This mini-surge of provider-sponsored MA plans should be considered by many sectors of our industry, from provider relations execs and health plan strategists, to pharmacy benefit managers and other vendors hunting new prospects. Disruptive events like the Affordable Care Act have ripple effects, and one will be the evolution of ACOs into full-risk insurers seeking to control their own destiny. And we need to look no further than members of the Health Plan Alliance, systems like Geisinger Health Plan, or UPMC, or Security Health Plan to see the impact they can make.
If you're a Medicare Advantage Plan with a Medicare ACO in your neighborhood, or worse in your network, start sleeping with one eye open. It's now time to keep your friends close and your enemies closer.
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Further Evidence That PBMs are Failing on Government Programs
At CMS' oversight and enforcement conference last week Jonathan Blanar, the agency's Deputy Director of Compliance Enforcement, presented the following slide. In this slide, you will see actions CMS has imposed against Medicare health plans in the last two years, and for what reasons. It's further evidence that pharmacy benefit managers (PBMs) are failing Medicare beneficiaries and the plans enrolling them.
PBMs have a big hand in the first category, coverage determinations, though they're not entirely culpable. What's maddening about that tally is the fact that appeals and grievances rules in Medicare haven't changed much in the 17 years since they were first issued, and PBMs and plans are still screwing it up. To CMS, appeals are the most important consumer protection at the point of service, so they dish those findings out regularly.
It's the second category, formulary administration, that's most disturbing. The numbers speak for themselves. But Blanar added this color, the most frequent findings, which included the following and are a damning indictment of PBMs as the Keystone Kops of government programs:
- Unapproved quantity limits
- Unapproved utilization management practices
- Failure to properly administer the CMS transition policy
- Improperly effectuating a prior authorization or exception request
- Failure to provide a transition supply of a non-formulary medication
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 >>
4 Points to Ponder from CMS' Oversight and Enforcement Conference
On June 26, CMS hosted their MA-PD Oversight and Enforcement conference. Not one of the topics was less relevant to the audience than another — they prepared ahead of time to present current, critical information related to their data-driven approach to oversight, best practices and common findings, preparing for an audit and enforcement actions. I was glad to see CMS invite plan sponsor staff to share their experiences. They included Todd Meek of SilverScript Insurance Company; Margaret Drakeley of Kelsey Care Advantage; Shannon Trembley of Martin's Point Health Care; Marcella Jordan of Kaiser Permanente, and Jenny O'Brien of UnitedHealthCare. Their first-hand accounts are worth your full attention.
The webinars and materials are all available to the public and I encourage you to watch them and encourage your staff to watch. Of all of the things said, the following should be enough to kick your compliance efforts into high gear:
- Jerry Mulcahy shared that the improvement is not what CMS had hoped, and that organizations are still not testing effectively. That should warrant a hard look in the mirror to ensure your "trust but verify" methods are working. Put another set of eyes on your validation. Leverage staff with auditor experience. If the improvement is not what CMS has expected, especially after having shared their protocol and numerous best practice/common findings memos over the past few years, then consider this a red flag.
- Statutes and regulations expect nothing but 100% timeliness. Too often we are asked for the acceptable threshold for compliance of a measure. Unless otherwise published, the expectation is 100%. Kady Flannery stressed this while explaining the 2014 method for checking CDAG and ODAG universe timeliness.
- LCDR Lorelei Piantedosi communicated an additional best practice that didn't make the slides, and that's a 100% rejected Part D claims look-back. Seeing as how all five of the Formulary Administration common findings have been common findings published in the past, it is a wonder when an organization does not dedicate resources to this activity. (She also communicated a best practice near and dear to our hearts, but I'll leave that for another blogger.)
- "Be transparent!" Todd Meeks says he would often times get asked about how transparent to be. Based on the fact that he shared how collaborative CMS was in aiding his organization, at times providing easier, cleaner ways to correct something, then the answer should be simple.
Think about it this way: if you draw the short straw this year for a CMS Program Audit (and I use ‘short straw' in the most lovingly way possible, CMS), then everything you add to your Self-Assessment Questionnaire should already be known by your Account Manager. We can be broken-record about this, but a Medicare Compliance Officer should know what's going on well before CMS does — it's arguably just as important to your organization that your Account Manager knows about it before Central Office.
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Taking the time needed to regularly assess the risk exposure of operations can be both disruptive and costly — if not impossible. Let us augment your efforts by conducting your required annual risk assessment. Visit our website to learn more >>
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 >>
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.
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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 >>
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 >>
Follow the Leader: United Health Group's Outlook on Government Health Programs
Ralph Giacobbe at Credit Suisse is a leading health industry analyst and is doing the best work of his career. Today he produced a fantastic recap of his discussion with United Health Group CEO Steve Hemsley and several of his top executives. It included some fascinating insights into the market leader's strategy for government health programs:
â– 2015 Earnings Growth: Management reiterated its focus on growing operating earnings in 2015. While Medicare rate pressures remain (-3 to -3.5%), the company is optimistic of better MA enrollment in 2015 as it does not expect the same level of market disruptions with more limited network reconfigurations...Medicaid is expected to remain a positive contributor. Additionally, UNH has $90B in medical costs and $20B in administrative costs from which to drive savings, which was stressed by management during the meetings...cost creep has backfilled previous administrative cost savings. Management is now "acutely focused" on applying more rigorous standards to general reinvestments in the organization.
â– Medicare Star Ratings and Renewed Focus on Performance: While the management team noted that performance as a whole has been "good", there was clearly a sentiment that performance needs to improve. Hemsley noted that too many of UnitedHealthcare's recent issues have been "self-inflicted," especially Medicare Stars. As a result, UNH is in the process of narrowing its networks to steer patients to high performing providers in an effort to improve quality. Additionally, a greater focus will be placed on leveraging data to stratify members in order to quickly identify and place high acuity members in appropriate care management programs. As the largest player in the market, UNH has several metrics under its control and is expected to perform at high levels. According to management, it took UHC too long to figure out that STAR ratings place significant emphasis on serving both the healthcare and social needs of members. While corrective steps are encouraging the improvement in STAR rating won't be evident until 2017 at the earliest given the lag time in measuring criteria.
â– Network Reconfigurations Continue: As a result of MA rate pressures, UNH significantly adjusted its networks during the 2014 annual enrollment period for which it received scrutiny. Management reiterated that network reconfigurations will continue, but will be guided by insights gained during 2014. Last year UNH narrowed its Medicare networks by 10-15% and management expects some continuation into 2015, although changes will be made more on a continuous basis vs. occurring all at once and therefore should be less disruptive. Overall, network configuration remains a significant component of managing trend and should not be underestimated as narrowing networks to higher performing facilities/providers can save on medical costs. MA rate pressures for 2015 were evident when management reiterated that the final rate came in below their expectation of flat. UNH sizes the impact in the range of -3% to -3.5%. We would expect network reconfigurations to be an ongoing process, as management believes it is only in the 2nd or 3rd inning, but again, don't expect big disruption like 2014.
â– Reform Update: While UNH's exchange participation in 2014 was limited, it is inclined to increase its involvement in 2015. UNH is currently in the process of evaluating markets, products, regulations, and first year pricing. While it continues to appear that the company is likely to increase its exchange exposure in 2015, it has until September to finalize its decisions.
â– Medicaid: Expansion also appears to be tracking well, as management now expects Medicaid growth to exceed the high end of guidance (+350-450K lives). While the dust has yet to settle, expectations were to see 65% of expansion enrollment 1Q, followed by more moderate enrollment in the middle of the year and a reacceleration around year end. It is still early, but at this point UNH has not seen anything alarming in terms of utilization and feels comfortable about its ability to effectively manage new Medicaid members. Additionally, UNH is getting paid appropriately higher rates for Medicaid expansion members.
â– Optum: Management's new goals are "8 by '16" (8% operating margins, 10 new large relationships, double digit top and bottom line growth, and doubling 2013 op earnings of $2.3B). With a backlog of $7.2B, Optum has an abundance of opportunities at its fingertips...Optum's role as a system integrator for HealthCare.gov was an important building block in establishing its reputation. Management also conveyed a new level of confidence that scrutiny around Optum's association with UNH has subsided, as payors and healthcare systems appear to have gained comfort that the appropriate firewalls are in place for Optum to maintain its independence from UNH.
Resources
On May 7, Gorman Health Group Executive Vice President and former regulator Steve Balcerzak joined Vice President of Provider Network Management Craig Lyon for a deep dive into CMS expectations. Attendees got their their take on what to expect and how to prepare. Access the webinar recording here >>
From ACO-type incentives to bundled payments and contract capitation, to full professional and global capitation — where the potential is promising, we can help design and implement these arrangements. Contact us for more information >>
Spring Cleaning: Have you thoroughly examined your MSP records yet?
Spring cleaning normally consists of taking a look around our homes and conducting a deep clean. It's a time when we can no longer ignore those often neglected, out of sight jobs that we know we must do in order to maintain a clutter-free, and healthy home.
In the government health care space, there is also room for a fresh start. Spring is the time CMS sends each Part D plan a full replacement COB file that includes records that would normally be included in the daily COB notification files and the full replacement COB data for all enrollees with other coverage. CMS released a recent HPMS memo on March 25th, which stated the COB file would be sent to plan sponsors during the week of April 7Th.
What does this mean for Plans? It creates an opportunity to thoroughly go through your MSP records, clean them up, and get them up to date. It means NOW is the BEST time to take a long look at your MSP data and perform an MSP spring cleaning! Yes, it's a big job, but well worth the effort as GHG MSP Analysts just recovered over $20M dollars for one of our clients (their expected A/R, plus millions more).
GHG has experienced MSP analysts and consultants that can do the work for you. Think of us as the "Merry Maids of MSP."
Find our Spring cleaning checklist below. (You can choose to perform one or all of the following.)
- Perform validation and clean-up of prior or current MSP and COB data with GHI and within internal systems.
- Analytics on current state process effectiveness, creating Business Process Redesign plans, and Project Management of a Robust MSP process.
- Training of Finance, Operations and Claim teams on processing and applying MSP and COB data.
- Working with GHI and CMS Central Office on rejections or appeals for payment beyond 36 months.
- Validation of P&L between validated CMS data and internal claim systems.
- Analysis and business process redesign of commercial Section 111 reporting process that may be negatively impacting MSP.
Think how good it feels when your home is sparkling clean.That's how good it will feel when you know your MSP data is clean and accurate, but better yet when you recover unexpected A/R!
A small investment can realize a huge recovery. Contact us today.
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Join Gorman Health Group May 1 — 2 at the Red Rock Casino and Resort in Las Vegas for the 2014 GHG Forum where GHG experts will dive into the MSP validation process. This two-day event builds on the success of past GHG Forums and is designed to provide best practices for the decision makers of organizations serving Medicare members, Exchange beneficiaries, and the Dual eligible population. Register now >>
The Final Rate Announcement webinar hosted by Gorman Health Group Founder and Executive Chairman John Gorman, financial expert and former health plan CFO, Bill MacBain, and former regulator and industry-renowned policy expert Jean LeMasurier is now on the GHG website. View the webinar now>>
Member Engagement and Experience are the New Risk Adjustment
In this new era of Star Ratings in Medicare Advantage and Part D, where a 4+ score is now do-or-die, health plan survival comes down to two things: member engagement and the member experience. They're the new risk adjustment when rates in 2014-2015 will be at their lowest levels in more than a decade, and a low-quality rating is a kiss of death in government programs. Plans that can't evolve into kinder, gentler, more coordinated and Member-Centric service providers are already beginning to disappear.
Here's why: the vast majority of the Star Ratings performance measures, especially those that are triple-weighted, are utterly dependent on an engaged member. Example: breast cancer screening. All women hate mammograms, and this measure doesn't move unless the member shows up. Another: Diabetes Care -- Blood Sugar Controlled. "Controlled" is a clinical outcome. And you can't get there with daily testing and insulin treatment without a member who's paying attention every day. Less than 20% of seniors engage in all screenings and tests required in Stars.
Similarly, the patient's experience measures and surveys now comprise fully a third of the Star Rating and are all 1.5 weighted, which means they count 500 basis points more than simple process measures. Getting appointments and care quickly, handling of complaints and coverage disputes, interpreter availability -- just a couple examples, all 1.5 weighted and instrumental to getting or keeping those all-important 4 Stars. The Consumer Assessment of Health Plan Survey (CAHPS) and the Health of Seniors Survey (HOS) are enormous determinants of ratings, both conducted by government surveyors, and both strike fear in the hearts of health plans. "Has your health improved in the last two years you've been enrolled, and who do you attribute it to?" are two of the most critical questions facing our industry. You have no hope of a positive answer to these questions from your members if they don't know who you are and what you're doing for them.
Most of the tasks involved in the Stars measures are actually pretty simple, like getting a flu shot. And behavioral economics show us that simple tasks are susceptible to contingent, or "if-then" rewards. So plans need to have the ability to track member progress on health-related tasks and administer appropriate incentives when they are completed. And all of the patient's experience measures necessitate a responsive, proactive service model that could be lifted from some of the leaders of e-commerce.
So the more we thought about it, the more we realized we needed to offer our clients a platform that can help them execute better on Stars tasks, while ensuring dramatically better member engagement and a much more positive consumer experience. And that's where our new partnership with Novu comes in. Novu is a unique platform which creates a deep ongoing relationship between your plan and your members, and gives you the "stickiness" that keeps them around. Members engage in a fun, easy to use, and rewarding health engagement tool that has a proven record of getting people to actively participate in their health: 76% of members return to the site 2 or more times per week, and stay on the site almost 10 minutes per visit.
We're thrilled to offer this first-of-its-kind engagement platform specifically tailored to the needs of Medicare, Medicaid and ObamaCare exchange members with Novu. Check out the product on the GHG website: https://www.ghgadvisors.com/who-we-are/our-partners/novu
Resources
New Webinar with John Gorman: Join him on April 2 for this complimentary presentation. "Member-centricity is more than a catch-phrase. How enhancing member engagement impacts the top AND bottom lines." Register now.
Learn more about the GHG-Novu partnership by reading our press release.
Join John Gorman, Novu's Tom Wicka, and dozens more industry thought leaders at the 2014 GHG Forum. Full agenda just released.