Lighting the Path in the Golden Age of Government-Sponsored Health Programs: Join Us for the GHG Client Forum
More than 300 guests will convene on May 1-2 at the Red Rock Casino in Las Vegas for the 2014 Gorman Health Group Forum, our annual strategic retreat for leaders in government-sponsored health programs. This year's gathering promises to be the most actionable, content-packed conference you could attend on how to succeed in this new Golden Age of government business. And when the learning and planning is done for the day, we will celebrate this unique moment in health care history as only GHG can in Vegas. Here's what's happening this year and why you've got to join us:
- The event features 27 content-charged sessions, including multiple presentations on Star Ratings tactics, quality improvement, risk adjustment, and compliance challenges unique to Medicare Advantage and Part D, Medicaid, and the ObamaCare exchanges
- A keynote presentation from CMS leadership
- An expert roster of presenters from Gorman Health Group and leading health plans in government-sponsored programs. No fluff, no sales pitches, no history lessons -- it's all about what to do NOW
- Approved for up to 12 continuing education credits from the Compliance Certification Board
- The perfect off-the-strip venue to minimize distractions during the day, but close enough to the action to make plenty of bad decisions in the evenings. ;)
Based on feedback from last year's Forum, I'm speaking in three separate sessions on overall strategy and implementation planning for government programs. If you've heard my "state of the industry" presentation before, you may think you know what to expect from me on stage. Think again. This is my favorite gathering of the year, and I'm building three brand-spankin' new presentations that are focused on specific steps and mileposts your organization needs to reach this year in care management innovation, risk adjustment, Star Ratings, and operational performance improvement. In each session I'll drill down to specific steps, and we'll leave you with a self-assessment tool in our closing session to help track your progress.
Many of our clients use the Forum as an offsite retreat for their government programs executive teams, and so we offer huge group discounts to encourage it. It's a unique opportunity for team-building and action-oriented planning and budgeting.
If government-sponsored health programs are central to your company's future, do yourself a favor and join us in Vegas. You'll come back tired, happy, and ready to win in this crazy new environment of health reform.
Don't believe me? Hear what last year's attendees thought about the event, and why they keep coming back for more.
Resources
Register today for The Annual GHG Forum held May 1-2 at the Red Rock Casino and Resort in Las Vegas. This two day event is designed to provide best practices for the decision makers of organizations serving Medicare members, Exchange beneficiaries, and the Dual eligible population.
On April 11, Bill MacBain and Jean LeMasurier will be back, and this time joined by John Gorman, Executive Chairman of GHG, to offer insight on the Final Rate Announcement from CMS. You will walk away from this session with critical to-do items and issues to tackle in order to ensure your success in 2015 and beyond. Register now >>
ObamaCare's Winners and Losers -- Consumer Edition
I got my start in DC some 23 years ago as a reporter, and the profession's credo is always to "afflict the comfortable and comfort the afflicted." ObamaCare is the story of a lifetime for enterprising journalists, and the really poignant anecdotes that can shape and move public opinion -- and therefore politics -- are just beginning. Small stories will go viral in the echo chamber of 24-hour news cycles and social media in the coming weeks as enrollment and coverage begins in earnest. Here's how these very personal stories of what ObamaCare means to consumers will break down.
University of Michigan professor and senior Brookings fellow Justin Wolfers created a chart depicting the "winners and losers" under the Affordable Care Act, sourced to a Ryan Lizza article that used estimates from M.I.T. economist Jon Gruber, a former adviser to Mitt Romney.
The chart shows how the GOP and ObamaCare dead-enders have pumped up media coverage of the relatively small number of Americans whose substandard individual market plans were cancelled. It also shows how many Americans are unaffected by health reform. But it's not without its problems and does manage to oversimplify things, but as a visual processor, I appreciate this stuff.
You could say the biggest losers under ObamaCare are patients with expensive medical conditions who don't qualify for the just-extended state high risk pools and whose current plans have been canceled, and who are having trouble getting through HealthCare.Gov to purchase coverage by Dec. 23 -- the deadline for buying insurance that begins January 1. WaPo had a good piece with some gut-punching anecdotes here: ObamaCare losers who have given up hope. The best you can hope for in first quarter of 2014 is that vulnerable patients don't die because of an administrative screw-up or lapse in coverage. Those are the kinds of anecdotes that could become serious liabilities for the President, and it'd only take a few to shatter what little public or political confidence in ObamaCare still exists.
Other losers include those with lower incomes who live in states that decided not to expand their Medicaid programs. The Advisory Board looked at which states will have the most uninsured in 2016. Being uninsured but too poor for exchange subsidies in a state that refuses to expand Medicaid, or being an undocumented immigrant and ineligible for ObamaCare benefits, means you lose out.
ObamaCare's consumer winners thus far include the "bro's" and young invincibles who can now remain on their parents' health plans until age 26; consumers with serious pre-existing conditions who have been denied health insurance; and residents of states that opted to expand their Medicaid programs up to 138% of the federal poverty level. Anecdotes abound here too, from across the country, like these from Nebraska:
Obamacare will benefit retired Windstream Manager John Gapp, who now pays $1,375 a month for a plan available through his former employer that covers him and his wife. The premium is high because he pays both company and employee shares. Gapp, who isn't yet 65 and eligible for Medicare, wasn't able to get less expensive private health insurance last year because of a pre-existing condition -- a mild heart attack in 2012. He hasn't signed up for an ACA policy yet, but he has done some online window shopping. Because Gapp's income is less than 400 percent above the federal poverty level, he will qualify for some subsidy and likely will pay $580 to $800 less per month, depending on the plan he chooses. Without the subsidy, his insurance premiums under ACA plans would be similar to what he's now paying, $100 less for one plan and $125 more for a so-called Cadillac plan that has better benefits than the one he has now.
Lori Schwartz will pay $200 less a month for a better insurance plan under Obamacare, because insurers no longer can charge people more or deny coverage because of pre-existing conditions. Schwartz, who has diabetes, has been buying insurance under a state program for people who couldn't get health insurance on the private market. She was paying more than $750 for a policy with a $5,000 deductible. Her husband, Mark, recently signed her up online for an ACA-approved plan that will cost $526 a month, even with no tax subsidy. And it is a much better plan, with a $1,500 deductible, she says.
There will be plenty of ammunition in the coming weeks for both sides of ObamaCare. The trick for issuers is to ensure you're not the one plastered across your hometown paper or Twitter by a wipeout in your enrollment department this month.
Resources
Every health care organization is looking for improved outcomes, better compliance and enhanced process efficiency when it comes to managing membership and premium payments. GHG's Valencia was designed specifically to meet those needs.
Aaron Eaton, Chief Development Officer at Gorman Health Group, discusses the latest announcement from CMS related to payment process changes for the Health Insurance Marketplace. Access the podcast >>
In this recorded presentation Gorman Health Group strategy and data analysis experts discuss actual case studies that show how plans can mine data for precious insight that can help improve performance.
CMS announcement regarding 820 payment files and the interim process poses a new challenge for Issuers in the Health Insurance Marketplace
It's a rough road ahead for Issuers trying to get paid in the Health Insurance Marketplaces.
The latest announcement from CMS on Monday, December 2, 2013 related to payment process changes for the Health Insurance Marketplace present yet one more challenge for Issuers. As GHG predicted several weeks ago, each new phase of the rollout is going to have bumps in the road or road closures in some cases.
The announcement that 820 Payment Files will not be issued in January to track detailed subscriber payments for Advance Premium Tax Credit (APTC) and Cost Sharing Reduction (CSR) subsidies is a total road closure. Please follow the Detour signs if you want to get paid.
The detour, in this case, is an interim process designed to allow the Issuers to get paid the subsidies they need in order to operate this line of business. But it will not come easily. The burden has been shifted from the government back to the Issuers to produce a monthly file requesting payment for the subsidies.
While this seems simple on the surface, the last minute changes present several challenges that must be solved:
- Ability to develop new systems and processes to accurately calculate data fields needed for payment
- Transition from interim process to 820 files once they become operational
- Effective 820 and total premium reconciliation following interim process
For GHG's take on each of these critical areas, listen to our podcast where I dive into particular details regarding each one. Access the podcast now >>
Resources
Every health care organization is looking for improved outcomes, better compliance and enhanced process efficiency when it comes to managing membership and premium payments. GHG's Valencia was designed specifically to meet those needs.
GHG announced its partnership with TriZetto to offer an end-to-end reconciliation solution that will enable health care payers to successfully participate in the Health Insurance Marketplaces. Together, Valencia™ and TriZetto will provide health plans the necessary reconciliation capabilities needed to analyze data quickly and efficiently. Learn more about the service >>
Join us December 11 from 2:00 — 3:30 pm ET for a lively session with Gorman Health Group strategy and data analysis experts who will discuss actual case studies that show how plans can mine data for precious insight that can help improve performance. Register now >>
Much Progress on Healthcare.gov, But "Back End" Fixes Will Determine Success
Of the many, many things I gave thanks for last week, there was Jeffrey Zients, the White House management guru brought in to sort out the mess that is the launch of ObamaCare, and for his geek squad working feverishly on the fixes. His long-awaited progress report was released on Sunday, and it's amazingly sanguine for a government document. Knowing big IT projects as we do, it's impressive how far the fix team has gotten in a matter of weeks, much of it in consumer-facing functionality on the "front end" of the website and the enrollment process. What remains to be seen is what can be done this month on the crucial "back end" functions that connect to insurance companies participating in the exchanges -- the functions for which ObamaCare will ultimately be judged when coverage kicks off on January 1, and the true test for Mr. Zients and his geeks.
"HealthCare.Gov on December 1 is night and day from where it was on October 1," Zients told reporters in his victory lap Sunday morning. "While we still have work to do, we've made significant progress with HealthCare.gov working for the vast majority of consumers." The administration released some geek speak to make its case. Response times, capacity, and system stability are markedly improved, and conventional wisdom is that the consumer-facing functionality -- the "B to C" part -- is in much better shape.
It's the "B to B" piece that's still a problem. The metrics Zients released Sunday focused almost exclusively on the front end of healthcare.gov -- there were precious few details on the back end, specifically on the all-important "834" transmissions to insurers that tell them who's signed up, and which have been problem-plagued since the launch. You'll recall that last month Henry Chao, who oversaw healthcare.gov's technical development, said 30-40% of the back end functions remained to be completed, including a system to send payments to insurers. Without timely and accurate 834s from the Federal data hub, coverage can't be effectuated, members can't get their insurance cards, insurers can't get paid, and claims can't start flowing through the system for the uninsured.
The omission was glaring, and the Administration jumped in to address it. White House spokesman Jay Carney said that 834 fixes were ongoing but that the problems were "vastly improved." "We believe that the majority of fixes to the 834 forms have been made, including significant ones over the weekend," Carney said. "We're going to continue to work with issuers to make sure that the remaining problems for issuers will be fixed."
"A number of the fixes that went into place this weekend in particular will significantly address some of the highest priority things that we know were a particular concern with those transaction forms," said Julie Bataille, spokeswoman for CMS.
But there's still clearly a very long way to go. Administration officials and a new "Payer Exchange Performance Team," made up of insurance industry leaders, in a meeting on Monday acknowledged that about one-third of completed applications since Oct. 1 contain errors generated by healthcare.gov. The errors included failure to notify insurers about new customers; duplicate enrollments or cancellation notices for the same person; incorrect information about family members; and miscalculated federal subsidies. It's still bad enough that yesterday CMS recommended that consumers who choose a health plan through HealthCare.gov contact the insurer afterward to make certain they are actually enrolled. "Consumers should absolutely call their selected plan and confirm that they have paid their first month's premium, and coverage will be available Jan. 1," Bataille said.
There is no margin for error this month. Deadlines for enrollment are coming up in less than 2 weeks for people to get insured by Jan. 1. If the 834s can't be fixed by then, and it appears likely they won't, the next big barrier to enrollment is the ACA's requirement that eligible exchange customers pay their first month premium before they receive coverage. Without clean 834s, susbidy verification and calculations given to the plans, no one knows what the first month's premium will be. That may be the next "audible" to be called on the field: the Administration will seek a way around the premium payment requirement, and then ask insurers to take a leap of faith, issue coverage, and hope that premiums and subsidies catch up later. And that's a real problem that strikes at cash flow for many of the smaller, regional players in the exchanges, and especially for start-ups, like the ACA's co-ops. Nobody set aside contingency funds for this kind of headache.
So Mr. Zients and his geeks can't let any grass grow under their feet, and we all ought to spill some Starbuck's or Red Bull for what lies ahead for them. But to also give some perspective, a hat tip to Dr. J. Mario Molina, CEO of Molina Healthcare: "A few people are going to have data that's not correct; but compared to the tens of millions of people who don't have coverage right now, that's a minor problem." He's thrilled with the progress made, and points out "We process a couple million patients through our system the last week of the month as it is."
Whether you're a glass half-empty or full type of person, I think we can all agree we are looking at one wild and hairy enrollment reconciliation process in Q1 and 2 of 2014, so grab your shovels. There's a pony in here somewhere.
Resources
Join us December 11 from 2:00 — 3:30 pm ET for a lively session with Gorman Health Group strategy and data analysis experts who will discuss actual case studies that show how plans can mine data for precious insight that can help improve performance. Register >>
Gorman Health Group's Valencia, was designed to create workflows organizations need for critical operational functions, and give you insight into where your membership and premium-related data is out of sync. See how Valencia can revolutionize your capitation management >>
Consultant Assessment in the Headlines
Consultants were in the news this week; that doesn't happen often. In this scenario which I will not deeply dive into, a private consulting team was brought on to independently assess the status of a certain federal health insurance enrollment system. Their assessment, after reviewing hundreds of documents and conducting scores of interviews, includes a number of risks with some detailed root cause drivers.
A risk assessment conducted well in advance of any initiative helps leadership and stakeholders understand what potential failures or gaps exist within a system or process. Most readers who have compliance responsibilities are aware of the requirement to conduct a formal baseline assessment, and then to periodically re-evaluate the accuracy of that baseline assessment. The reality is that with all the day-to-day responsibilities that compliance needs to handle, the baseline assessment or the re-evaluation often takes a back-burner.
It is recommended that an organization seek an external resource to conduct these evaluations. With our experience working with plan sponsors nationwide, our Senior Consultants and Clinical teams can take care of that assessment for you, leaving you with a report of gaps, risks, and recommendations on how to correct. Don't have the time? We can help you correct the deficiencies. Ask yourself when the last time a comprehensive risk assessment was performed; determine if you have time to conduct it on your own, and then contact us to discuss how we can help.
Resources
The annual risk assessment is an essential part of the ongoing risk management process that assigns priorities for mitigation plans. Learn more about how Gorman Health Group can help you identify and remediate inefficiencies >>
Join us December 11 from 2:00 — 3:30 pm ET for a lively session with Gorman Health Group strategy and data analysis experts who will discuss actual case studies that show how plans can mine data for precious insight that can help improve performance. Click here to register >>
Reading the Stars in Medicare in 2014-2015
Whatever you may think of healthcare.gov, CMS is killing it on the Medicare Star Ratings Quality Demonstration.
As we move into the final year of CMS's historic and controversial $8.5 Billion Quality Demonstration, we see clear evidence that quality incentives are working, plans are making major investments to improve their ratings, and quality is improving across the industry. One thing we can be sure of in uncertain times: proven performance-based payment systems like MA Star Ratings will spread to Medicaid, the exchanges, and commercial accounts in the next 3-4 years under banners of transparency and accountability. $8.5 Billion in a $3 Trillion industry seems infinitesimal, but Stars are moving the industry in ways outsize to their impact.
Many industry experts giggled at the Affordable Care Act ‘s (ACA) provision allowing MA plans to earn up to 5% additional reimbursement from the government for quality metrics based on the CMS star system, and 10% in double bonus (mostly rural) counties. The Star ratings system was, at the time, a laughable ranking barely 2% of beneficiaries paid any attention to. Not anymore. In 3 years, CMS has evolved Stars to an increasingly sophisticated carrot and stick for quality improvement, with massive financial implications for payers.
To date, each half-star rating equated to roughly $50 per member per month in bonus payments. For 2014, we estimate the enrollment weighted-average increase to plan paymentst from Star bonuses is approximately 4.75% and 3.3% in 2015. Anything below 4 Stars in 2015 means no bonus and a major financial headwind for plans. With MA plans seeing roughly 5% margins, 2014 being the worst year of MA reimbursement cuts from the ACA, and 2015 meaning the end of bonuses for plans below 4 Stars, plans are making significant investments to improve their ratings.
There was clear evidence that Stars incentives are working: 52% of MA plans are now at 4 Stars, up from around 37% of all MA plans. The average member weighted ranking for 2013 is 3.86, up from 3.7 in 2012. The biggest chunk of MA enrollment is now in 3.5 Star-rated plans: 30% or 4.4 million. There are now 16 5-Star rated plans up from 3 this year.
While tremendous progress is being made on Stars, GHG's analysis of the data also shows what a long, hard journey these performance metrics present to health plans. We have much improving to do in managing conditions like osteoporosis and mental health, where most plans scored badly. And the data shows a need to continually improve the service model, like providing interpreters, managing member complaints and coverage disputes.
MA plans in qualifying counties, mostly rural, can receive a "double bonus," the payment impact of which is significant. There are about 4 million MA members in double bonus counties, roughly 27% of the total MA population. Double bonus counties add about 100 basis points to payments across the entire MA program.
5-Star rated MA and Prescription Drug-only plans can enroll members year-round in 2014, rather than just during the annual enrollment period. This is a major strategic advantage for Star leaders, but one that few have taken full advantage of yet — and that's about to change. With big nationals finally attaining the honor, they'll be ready and hustling all year.
CMS has been very clear that it reserves the right to terminate MA contracts that are below 3 Stars for 3 consecutive years, citing its authority in an April 2012 final rule which became effective this year. About a half-million Medicare beneficiaries are enrolled in plans with less than 3 stars.
Resources:
Interested in seeing how your Plan's performance compares to others in your market? Download GHG's Star Ratings Database that combines the CMS-issued 2014 Star Ratings with those over the program's history from 2008 on.
Hear from GHG Stars expert Jane Scott on October 29th. GHG and AISHealth team up to present a 90 minute webinar: "Inside the 2014 Star Ratings for MA and Part D: Trends and their implications." Register now >>
Want to hear more from John? Decision-makers from Health Plans and Provider Organizations are invited to join GHG for a free webinar on November 19th: "The future of the Government sponsored health care." Register for this free event now >>
What ObamaCare's Glitches Mean for Health Plan Operations
It's been a rough couple weeks for the launch of ObamaCare. The only thing that's kept the Federal exchange's woes off Page 1 this week has been the continuing dysfunction on the Hill. Healthcare.gov traffic will wane, bugs can be recoded and dysfunctional processes redesigned pretty quickly, so we haven't seen anything fatal thus far, unless we're still having these problems a week away from the now-all-important effective date of January 1. But the sheer volume of Weeks 1 and 2, with CMS working on a shoestring with a night-shift staff in the middle of a government shutdown, and the hardest part of ObamaCare enrollment to come, has major implications for health plan operations in just a matter of weeks.
Here's what's keeping us up at night. All those back-end glitches in the Federal Exchange have yet to be identified, because the back end also includes the next phase of ObamaCare enrollment: subsidy eligibility verification. The key difference between ObamaCare and Medicare Advantage or Part D is the subsidy eligibility maze, and that there are several major steps to effectuate an enrollment that will hit plans in waves, not as a trickle.
ObamaCare is only open to American citizens and documented immigrants, so all applicants' status must be electronically verified with the Social Security Administration and the Department of Homeland Security. The exchanges also have to confirm that applicants are not already enrolled in another government health insurance program, like the Veterans Health Administration, the Department of Defense, the Office of Personnel Management, and the Peace Corps. Then the exchange has to check with the applicant's Medicaid/SCHIP program to see if they're already enrolled. Then the applicant has to apply for the subsidy based on their income, which has to be determined by IRS.
Finally, subsidy in hand, the applicant picks a plan. The exchange must then provide her information to the health plan she has chosen, which then has to reconcile all of that data with the exchange. In Medicare Advantage or Part D, the plan receives the application; in the exchanges, the plan flies blind and doesn't know who its members are until the exchange provides the members' coordinates. And then remember, applicants aren't official until they make their first premium payment, which could come in the form of a cashier's or personal check, cash, credit card or even a prepaid debit card. Only then is an enrollment effective, and all these steps mean big headaches for payers in the weeks ahead.
Think of it this way: 9 million-plus hit Healthcare.gov in its first week; most will return to apply for subsidies and have their eligibility confirmed and calculated; and then all of those folks will pick a plan. Those completed transactions ("834's") will hit the plans, in waves similar to those of the last two weeks. Things get really exciting starting the last week of January 2014, and then the last week of each month thereafter, as the plans must clean up all this data in the runup to the monthly payment. We have about 30 days before the waves start to hit — call it a "shopping lag" or a "glitch lag". We think those waves will look like this, as a function of enrollments and transaction volume for the plans over time:
Our conclusion: "crunch time" for the plans arrives in early December and goes through the end of February, and COOs and executive teams need to plan accordingly. And, oh, by the way: this crunch will happen as plans are trying to close their books for 2013 to make financial reporting deadlines, so grumpy CFOs will abound with their operations colleagues.
Yes it's been a messy launch, but the real mess has yet to arrive.
Innovation and Quality must go hand-in-hand
Plan sponsors are waiting with anticipation for their 2014 Medicare Star Ratings to be released. Just yesterday, Tufts Health Plan in Watertown, Massachusetts released the news that their Medicare Preferred HMO plan was awarded 4.5 out of a possible five stars. It reminds me of the old Ford commercial jingle where they said "Quality is Job 1". No truer words apply when it comes to maintaining high quality plan options for our nation's Medicare beneficiaries.
Recently I accompanied our founder and executive chairman on a field trip, where he enthusiastically addressed a large group of health plan decision-makers as part of their series on innovation. Now, innovation and quality do not always go hand in hand. I have purchased my share of aftermarket tech products to know that while a company might have employed innovation to make something less expensive, often times, it comes at the expense of quality. It's deflating when you finally get on your train with your discounted charger, plug your phone in, and you see the magical words: "not charging". Add it to the list of our countless first world problems, but it illustrates the point.
With the bonus payment going away for any plans earning less than a 4-star rating in 2015, 3.5 stars will not cut it, especially if you are counting on those funds or have incorporated them into your future year's budget. During his presentation, he drew our attention to outcome measures, and how heavily weighted they are. There are so many opportunities for a plan to innovate, not only for purposes of increased quality rating, but also for the most important factor of a plan: its membership. Loyalty can no longer be bought with just the $0 premium plan anymore. The customer service has to be stellar; their enrollment experience must be error-proof; and in times of sickness, when their utilization has to increase, the care management has to be more than just a pre-auth and a smile (and sometimes you don't get the smile). It is time to have a discussion in every department:
- What are we doing to be innovative?
- What are the best in the nation doing?
- What's low-hanging fruit and what requires more significant investment?
Our health plan partners are becoming more and more engrained in government programs, including Medicare Advantage, Part D, Medicaid, Duals, and the Marketplace. He also reminded us that organizations should be prepared for constant regulatory oversight, which comes with government-sponsored programs. True, some of the regulations are a challenge to implement, but when you've gotten to the point where you have met your compliance requirements, think about ways your organization can supplement that success to exceed a member's expectations - within the rules of course. Who is the town crier at your plan for the beneficiary's experience? Why can't it be you?
Resources
Coming soon: GHG's updated star rating database. We'll send an alert when it's ready! Join our subscription list to be sure you know when this free download is available. In the meantime, take a peek at last year's database that combines the CMS-issued 2013 Star Ratings with those over the program's history from 2008 on.
Register to attend our October 29 presentation "Inside the 2014 Star ratings for MA and Part D: Trends and their implications."
GHG Pharmacist, Lynne Civin, outlines the benefits of daily dispensing requirements in a new article: Short-Cycle Dispensing for Long-Term Care. Lynne discusses key attributes in long-term care , and outlines critical items that warrant further discussion. Download the whitepaper today.
The percentage of plan with an average or below average star rating is staggering - and CMS has made it clear, average just isn't good enough. Learn how GHG can help your plan effect meaningful change in your Star Rating and beat the curve.
Healthy Outlook for Medicare Advantage and Part D from CMS in 2014
Last week amid all the ObamaCare drama on the Hill CMS released the 2014 data for Medicare Advantage (MA) and Prescription Drug Plan (PDP) bids. The numbers show a better-than-expected 2013 and a healthy 2014 ahead for Medicare health plans. The market will see new service areas, lower bids, more zero premium plans, and more mainstreaming of Medicare Advantage as it approaches one-third of the program. CMS noted significant gains on plan quality measures, pointing out that more plans are receiving a rank of four -plus on Star Ratings, the minimum threshold for quality bonuses in 2015 when the quality demonstration expires. Overall there is clear evidence that CMS quality incentives are working, and that MA will continue its steady ~10% growth in 2014.
For MA, there were 35,070 bids for 2014, down 18% from 2013, but when you extract Private Fee-for-Service (graciously in its death throes), HMO/PPO/Special Needs Plan bids were only down 5.7%, and those largely due to consolidation among plan sponsors this year. Medicare health plans continue to wind down PFFS plans 61% year over year, and PDP bids showed similar stability, and evidence of continuing consolidation.
Some of the major points and trends we observed:
Medicare Advantage
- CMS indicates that Medicare Advantage membership will close 2013 with 10% growth, with similar gains expected next year. Three years after passage of the Affordable Care Act, and on the verge of its deepest cuts to MA phasing in in 2014, it's clear plans are adapting and evolving — and that there's no exodus in sight.
- Beneficiaries will have an average of 28 MA plan choices. The average MA national benchmark was around $31, and premiums are expected to increase by $1.64, or 5.3%, over 2013, at $32.60. There are thousands of benefit design changes coming in 2014, like plans adding and eliminating copays and deductibles. So while relative premium stability would suggest less volatility this enrollment season, benefit design changes will force millions of beneficiaries to go shopping this winter.
- As a barometer of the industry's continued health, each of the major publicly-traded MA companies are offering new HMOs in new markets for 2014:
- Humana is expanding its HMOs in PA and OK.
- UnitedHealth is expanding in VA, ME, MA, and NH.
- Aetna/Coventry has new HMOs launching in LA, TX and WV.
- Cigna is expanding in GA, AR, IN, NC and SC.
- WellPoint is expanding in WA, NH, IN, ME and MO.
- WellCare expands its footprint with its recent acquisition of Windsor Health Plans.
Medicare Prescription Drug-only Plans
- A stunning finding in all the clutter, likely the result of the move to preferred pharmacy networks and the effect of increased buying power from consolidation: the cheapest PDP plans available in 2014 are a better buy than in 2013, and have 31% lower premiums than those available in 2010. Unbelievable.
- ObamaCare haters take note: seven years after its launch, Medicare Part D serves as a shining example of how the Federal government can create an insurance market from a green field, regulate the hell out of it, and achieve a tremendous public good at much lower-than-expected cost.
- Channel partnerships have come to define the top of the PDP food chain. Humana now offers the cheapest PDP plan across all 34 regions. The company's Walmart Rx Plan has a monthly premium of $12.60 across every region, and this will be the fourth consecutive year that Humana is eligible for auto-assigns nationwide. UnitedHealth continues to make big gains with its AARP MedicareRx Saver Plus plan.
- WellCare was "most improved bidder", and is now be eligible for auto-assigns in 32 regions, up from 19 this year. Aetna is losing auto-assignment in 5 regions, though none with significant enrollment. These were evidence of clear strategic shifts by new Medicare leadership in both companies: WellCare deeper into the low-income segment, Aetna shifting more upscale.
All in all the CMS bid data shows Medicare health plan vital signs in hale and hearty territory for 2014. It's one ray of light — and should be a beacon for bipartisanship — as ObamaCare anarchy rages on.
Wall Street Consensus: 2014 Will Be a Big Growth Year for Payers
Since returning from summer vacation I've been making the rounds with friends and spies on Wall Street to see what the nation's checkbook is thinking about the seismic changes coming to our health system starting on October 1. Usually these guys are like long-tailed cats in a roomful of rocking chairs about disruptive events like ObamaCare. But a consensus emerged: 2014 is going to be a big year for health insurers.
Generally speaking, Wall Street analysts and investor types see ObamaCare's health insurance exchanges and the 8 million uninsured expected to enroll next year as having relatively little influence on payer financial performance in 2014. Even with most red states resisting Medicaid expansion (especially those with the highest rates of uninsurance, like Texas), the money guys see Medicaid and the transition of Dual Eligibles to health plans being the real driver of coverage and margins. They see a tough reimbursement environment in Medicare Advantage, but not enough to derail growth in 2014, and covering an outsize portion of SG&A. So, overall, a big year is coming, and driven by government-sponsored programs.
Analysts agreed there are some clear signals that coordinated care is actually working to reduce utilization, especially in high-profile cohorts like readmissions. They point out medical loss ratio (MLR) trends for all product lines came in below expectations and consistent with continued volume weakness reported by hospitals, with most publicly-traded plans now guiding to a decrease in costs for 2013. No publicly-traded health insurer missed their estimates for Q2 2013, and all beat expectations by at least 20%.
Expecting further weakness in government securities due to another budget crack-up in Congress, some analysts anticipate plans will actually deploy capital in 2014 to achieve longer-term strategic goals more quickly, like acquisitions and investing in ACOs and medical homes. There was complete agreement on a continued long-term trend of payer consolidation, with WellCare's purchase of Windsor Health Plan last week the latest omen.
Our friends noted that in second quarter the average publicly-traded plan Medicare Advantage MLR was 85.5%, up slightly year over year. Medicaid health plan MLRs actually decreased slightly to 87.5%, and revenue, membership, MLR and earnings all came in better than expected.
At least in our little informal focus group, Wall Street was unanimous: 2014 is going to be a big year for health insurers, with Medicare Advantage covering an outsize amount of plan operating costs, and ObamaCare's Medicaid expansion and duals transition driving the growth.
Resources
Listen in as Gorman Health Group Senior Consultant Nilsa Lennig shares the three most common misconceptions regarding marketing to the Dual population.
We're standing by to help you make sense of the regulatory landscape and chart a sustainable course for success in your Medicare business, visit our website to learn more.
Join us on Oct. 1 and hear Gorman Health Group's Chief Sales and Marketing Officer, RaeAnn Grossman, outline the components of a successful risk-adjustment program.