Leavitt's Take on ObamaCare Mirroring Medicare Part D
Former UT Governor and Bush HHS Secretary Mike Leavitt had a terrific op-ed recently in the Washington Post examining similarities and differences between the launch of ObamaCare's health insurance exchanges and implementation of Medicare Part D in 2006. As always, Mike's insights are on-point and a rare constructive voice from the right on how to actually improve the program's takeoff.
Leavitt says at one point, "I'm not hoping for a wreck. That outcome would hurt ordinary people, not just politicians." That's a bold statement from a GOPer these days. When was the last time you heard an elected Republican official say anything other than "wreck and repeal" about ObamaCare? To the point, the Post had another piece on how many House Republicans, like Reps. Tim Huelskamp and Jason Chaffetz, have said flatly they will deny any assistance to constituents who call their offices looking for assistance with the law. So from that standpoint Mike offers a fresh perspective that will hopefully change some minds in the lower chamber and maybe a few statehouses.
Mike points out the extensive parallels between ObamaCare and the launch of Part D. Both were the result of fierce fights on the Hill and involved the creation of a heavily-regulated insurance market from a green field. Both suffer from an uninformed public and heavy opposition. Both involve data exchange on eligibility and enrollment that are enormously complex. The team writing the ObamaCare regulations are mostly folks from the Medicare Advantage and Part D offices of CMS, and they're building a system based on that experience. But the similarities end there, and Leavitt offers some insights into how the Administration can avoid the "train wreck" we've been hearing about is coming.
Leavitt is right that the challenge of a misinformed public and insufficient education and outreach is enormous: "With the ACA's initial enrollment period three months away, 78 percent of Americans lack awareness about the law and the changes it will bring. Four in 10 don't even know the law is set to take effect." He then details the PR effort he engaged in on Part D as HHS Secretary. But he's understating things here. The education push on ObamaCare will be hampered by unprecedented political opposition at both state and Federal levels:
- At the Federal level, Congress barely appropriated 10% of the Administration's request for Navigators, the impartial enrollment counselors, and are fighting all agencies who intend to help -- like the Education Department distributing brochures through libraries. The kinds of PR activities Mike engaged in as Secretary to support the Part D rollout would earn Secretary Kathleen Sebelius a Congressional subpoena today.
- At the state level, remember, the states were bought in on Part D as it shifted their Medicaid drug spend for dual eligibles to Medicare with only a maintenance of effort. Roughly half the states have rejected the ObamaCare Medicaid expansion and refused to build their own health insurance exchanges. Many of those states are actively resisting any participation in outreach or education.
So from the standpoint of public awareness, this is a huge difference between ObamaCare and Part D and it has a lot to do with the blind opposition of Leavitt's own party.
Next, Leavitt speaks to technology breakdowns and subsidy errors, pointing out rightly that the successful launch of ObamaCare is dependent in part on the "data hub" that will connect and transfer eligibility and enrollment data among health plans and several Federal and state agencies. He's correct on this point, too, but again, doesn't go far enough in illustrating the challenge.
CMS's own data systems to manage Part D and their interaction with the plans' systems created a hot mess that persisted through much of 2006. It was the seemingly-simple-but-insanely-complex task of getting "the pig through the python" of health plan enrollment shops, where people and processes got overwhelmed and applications piled up or got pushed through with human errors. The result was months of confusion and work-arounds as seniors arrived at pharmacies and couldn't access their benefits. This was after a year's worth of training camp in 2005 we called the Medicare discount drug card that served as a bridge to the "real" Part D.
ObamaCare's launch will be much more complex and therefore more prone to benefit-denying errors. There's no training camp for the exchanges. The eligibility and enrollment process is much more complex than Part D given the income tests that determine the amount of your subsidy and the number of agencies involved. And remember: Part D is a benefit; you qualify, pick a plan, get a member card, and most seniors opted to have their premiums deducted from their Social Security checks. The exchanges are all about the subsidy, which determines which plan you can afford. If CMS gets the subsidy wrong, it's a confidence-sucking hassle, and they couldn't try to claw that money back from low-income beneficiaries. And the workaround for those who don't have bank accounts to push the subsidy into makes your head spin. Every quandary will have a human story -- and right-wing media and social outlets like Twitter barely registered in 2006. In 2014 the news cycle and online vitriol will make each tragic story seem pervasive -- and the resulting "white noise" will get in the way of the outreach and education effort.
Finally Leavitt closes with advising ObamaCare policymakers to assume full responsibility for the mess to come. He recalled a briefing he gave to Senate Finance members on status of the Part D rollout. He spoke candidly about challenges and the Administration's plans to fix them, by when -- "candor bought us time," he says. This time around, candor will buy you a subpoena and endless finger-wagging from the talking heads.
Mike Leavitt is one of my favorite Republicans, but my friend dropped a whopper at the conclusion of his otherwise excellent op-ed: "The ACA reflects the belief that government should play a much bigger role in making our health-care decisions, while the drafters and implementers of Part D held the view that government's role in health care should be limited to organizing a system of competition, where consumers are empowered to make choices and are protected from unfair treatment."
Sorry, Mike, but the exchanges emerged from the conservative Heritage Foundation as just that: a system of regulated competition, modeled after Part D. I don't see a much bigger role for the government in making our healthcare decisions in ObamaCare, just a much bigger undertaking with a Presidency at stake.
Resources
The rapid changes to Part D regulations make the tracking and implementation of these CMS requirements exceptionally difficult. Visit our website to find out how GHG can help.
GHG's Founder and Executive Chairman John Gorman addresses the critical issues issuers must address before the launch of the Exchanges in this recording from the 2013 GHG Forum, June 13-14 in Washington, DC.
Join us on August 13 and hear GHG's Chief Development Officer, Aaron Eaton, and Independence Blue Cross' Senior Vice President of Health Care Reform Implementation, John Janney, walk through an operational readiness checklist to help make sure your health plan is ready to go live on October. 1.
The Human Cost of Red States' Middle Finger to Medicaid Expansion
The Kaiser Commission on Medicaid and the Uninsured is out with a new study illustrating the sickening human cost of the Red States throwing a middle finger to President Obama on the Affordable Care Act's (ACA) Medicaid expansion. Twenty-one states are not expanding Medicaid coverage under Obamacare and would gain considerably more than the 23 states that are expanding eligiblity. Partisans like Texas Governor Rick Perry and Kansas Governor Sam Brownback govern states with the highest rates of uninsured -- and millions of their own citizens won't get health insurance so they can score cheap political points.
In states that are expanding Medicaid under the ACA, the average percentage reduction in the number of people without health insurance is 40.9 percent. But in the states not expanding Medicaid, the average reduction of uninsured would have been 52.5 percent. The debate over Medicaid expansion continues in six states. The average rate of reduction in those states would be 54.1 percent.
Kansas is a great example of the dereliction of duty to the public good Red State governors and legislatures are engaged in, solely for "principled" resistance to the President's signature accomplishment. The number of uninsured people in Kansas would be reduced by almost half, or 47.6 percent, by accepting the Medicaid expansion funds in ObamaCare. But state legislators and Governor Brownback earlier this year chose to go against expansion, citing concerns about future costs.
Currently, the federal government covers about 60% of Kansas Medicaid costs. You'll recall that under the ACA, the Feds initially would cover 100% of the costs for newly eligible enrollees, and no less than 90% of those costs over the long term. So the cost argument tossed up by so many Red States is a farce, a sop to fiscal conservatives with no basis in fact. What they're really thinking is that those eligible for the expansion will skew Democratic in the voting booth, so why do anything for them? Kansas legislators actually passed a law barring the Governor from expanding Medicaid without "express approval" from the Legislature, which won't meet again until January.
Kaiser's report shows that expanding Medicaid in Kansas would cover an estimated 144,000 additional Kansans, and cost the state about $525 million over the first 10 years of the expansion. If Kansas does not expand Medicaid, the state won't receive about $5.3 billion in additional federal Medicaid funds 2013-2022, and Kansas hospitals would receive about $2.3 billion less in state and federal Medicaid funds for uncompensated care over the same period. So we're talking a huge net gain for the state in Medicaid funding if they expand, and a huge cost, both in state coffers and the human toll of not expanding. This makes the Red State cost argument baseless, and shows the raw, awful politics of ObamaCare at the hands of right-wing partisans.
The shameful thing about the unprecedented resistance to ObamaCare in Red States is that all those elected officials, from Brownback to Perry to the Florida State Senators who thwarted expansion, all took oaths of office to protect and serve their constituents, regardless of their party affiliation or insurance status. They're showing their true motivation, which is only to support laws of the land that benefit people who look and vote like them.
I, for one, hope they reap the whirlwind when those constituents figure out they didn't get something as vital as health insurance so their elected officials can have a punchline for a campaign ad.
Resources
Medicaid is undergoing its greatest change in a generation and the opportunity for health plans has never been greater. A unique model of care must be developed and then executed upon. Visit our website to find out how we an help.
Gorman Health Group policy expert Jean LeMasurier summarizes three new proposed regulations implementing provisions in the Affordable Care Act.
Listen as GHG's Executive Vice President, Steve Balcerzak, discusses the unbanked and the implications this population will have on the ACA.
Tip of the Iceberg
Most Americans get their health insurance from employer sponsored coverage. But this coverage has been eroding over the last twenty years. The Clinton health reform discussions realized that it was impractical and fiscally impossible to remove employer contributions from the financing of American health care coverage. And in subsequent health reform efforts, there have been a number of programs to shore up employer coverage including the Retiree Drug Subsidy and the Early Retiree Reinsurance programs which subsidized employers who continued to offer retiree medical and drug coverage. These subsidies didn't stop the troubled auto industry from shifting retirees from defined benefit plans to defined contribution plans and sending their retirees to an early version of a private exchange where they could choose among a number of insurance products. Now with the Affordable Care Act (ACA) health insurance Marketplaces coming on line this October, we are seeing a number of troubled public sector employers seeing an opportunity to unload their retiree health burden. Detroit and Chicago have announced plans to end employer coverage and send their under age 65 retirees to the new Marketplaces to buy health coverage. The savings are substantial, e.g. Detroit could reduce its health care expenditures from $185 million to under $40 million. The new Marketplaces not only provide an opportunity for retirees to easily find replacement coverage, but also avoid a penalty under the individual mandate since they would no longer have employer coverage that qualified as minimal essential coverage. These cities would not face a penalty under the ACA's employer mandate since the penalty applies to employee coverage and not retiree coverage. Other troubled municipalities and state and local governments are expected to follow suit since they would not only realize huge annual savings but also have an opportunity to offload GASB liabilities and improve bond ratings.
It is hard to predict the impact on the Marketplace risk pools. These retirees are older and may have more health problems on one hand, but on the other hand they have had excellent health care coverage throughout their public sector careers. In addition, the plans offered in the Marketplaces are age rated. But it is one more reason why the young invincibles need to be encouraged to sign up for Marketplace coverage.
Resources
Read Gorman Health Group's recap of the 2013 GHG Forum, which includes details regarding preparing for the health insurance exchanges. This free download is available on the Point.
Jean LeMasurier provides an overview of key takeaways from CMS' proposed rule CMS-9957- P-Patient Protection and Affordable Care Act; Program Integrity; Exchange, SHOP, Premium Stabilization Programs, and Market Standards.
The Exchanges will create a large risk pool that will allow risk to be managed more effectively with reduced administrative costs. The final regulation discussed in this white paper references estimates from the Congressional Budget Office (CBO) and more.
Now the Blood is in the Water
Last week, the Obama Administration issued a notice that the Affordable Care Act's (ACA) "pay or play" employer mandate and reporting requirements, which were set to take effect on January 1, 2014, are being postponed until 2015. Now the blood is in the water with all of Washington asking "what's next to be delayed?" It's not even clear the Administration had the legal authority to delay a provision of the law. While not a big deal for most employers or payers -- most employers already offer comparable coverage to full-time workers -- the political ramifications are huge.
This postponement means that an employer won't be penalized if it does not offer its full-time employees affordable health insurance in 2014 that's comparable to what will be offered in the exchanges -- with a penalty of $2,000 per full-time employee. The ACA also requires health plans and employers to report certain information on health insurance coverage to the IRS in 2014. The Administration also postponed this reporting requirement until 2015, though it still encourages these entities to voluntarily report coverage information in 2014. Like that'll happen.
Predictably the business interests that fought for the delay had nice things to say for the Administration's decision. "I think this is less about readiness and more about the fact that they're trying to be flexible in their implementation," said Rhett Buttle, Vice President of the Small Business Majority, which supports the ACA. "It does seem like an olive branch." But less charitable business interests will see this victory and will start lining up for additional concessions.
The implementation of the rest of the Act, including the health insurance exchanges, individual mandate and other reporting requirements, are unaffected by the announcement and, at least for the moment, are proceeding on schedule -- until they're not.
The event seems to be bolstering the arguments of both sides of the health reform chasm. The ACA's opponents just got their sneering "I told you so". They say the delay is Obama's admission of the law's failures, and once again the "repeal and replace" chorus just warmed up for another show. White House Senior Adviser, Valerie Jarrett, defended the delay as listening to employer concerns.
We can't lose sight of the fact that this is the second major delay in the implementation of ObamaCare, and it's playing right into the Congressional Republican narrative that the Administration can't get its act together and that this is going to be one hot mess starting in October. HHS Secretary Sebelius better have her own Capitol Hill parking spot lined up.
Resources
Read Gorman Health Group's recap of the 2013 GHG Forum, which includes details regarding preparing for the health insurance exchanges. This free download is available on the Point.
The Seismic Impact of the Baucus Retirement on Health Policy
Senate Finance Committee Chairman Max Baucus (D-MT) stunned Washington recently with his announcement that he was retiring and would not seek reelection in 2014. Next to the Majority Leader, he's probably the most powerful guy in the Senate -- and definitely so on health policy. Attention turned to who's next and what it means for Medicare, Medicaid and health reform.
The second in line on the Finance Committee now is Jay Rockefeller, but the towering liberal West Virginian has already announced that he too plans to retire next year. If Finance goes in order of seniority, as is customary, lefty firebrand and former Gray Panthers leader Ron Wyden (D-OR) would be in line to succeed Baucus as Chairman in 2014 if the Democrats hold the Senate -- the first year the Affordable Care Act's major health reforms like health insurance exchanges take effect.
It's a critical transition as Wyden was the only Democrat to work on a Medicare premium support plan with House Budget Chairman Paul Ryan (R-WI). They later diverged and Wyden didn't support the bill Ryan took to the House floor — but Wyden had already irked fellow Democrats both because they didn't like the policy and because he gave Ryan some bipartisan cover in an election season. Although Wyden did support President Obama's health care effort in 2009-10, he had spent many months trying to put together an alternative approach with then-Utah Sen. Robert Bennett, a Republican. That plan would have moved the country away from the employer-sponsored health insurance system to a market for individuals to buy their own insurance, with subsidies for low-income people.
So liberal lion as he is, Wyden remains the rare member of our upper chamber who's still willing to reach out to the other side to get things done, and that bodes well for the critical business of Finance, which will include a rewrite of the tax code, continuing Medicare reforms, and the inevitable tweaks to ObamaCare to come. You''ll be hearing much more from the senior senator from Oregon in 2014 and beyond.
Resources
Read Gorman Health Group's recap of the 2013 GHG Forum, which includes details regarding preparing for the health insurance exchanges. This free download is available on the Point.
GHG policy expert Jean LeMasurier provides an overview of key takeaways from CMS' proposed rule CMS-9957- P-Patient Protection and Affordable Care Act; Program Integrity; Exchange, SHOP, Premium Stabilization Programs, and Market Standards.
The ObamaCare Enrollment Push Begins
So we're less than 100 days away from the official launch of outreach and marketing for the new Health Insurance Exchanges, and the enrollment push began in earnest this weekend. It's happening in the face of some tremendous headwinds unlike anything seen since the launch of Medicare Part D in 2006, maybe ever. The Medicare drug benefit' s takeoff didn't have to contend with furious political opposition at both state and Federal levels, a horribly misinformed public, and the demographic challenges of ObamaCare.
Enroll America, the Obama-driven leftie coalition that's tasked with pushing enrollment in the exchanges, kicked off its boots-on-the-ground effort last week. Enroll America President Anne Filipic told POLITICO today that the first week went well as the group tried to change the conversation from politics to benefits. They had 1,000 volunteers out, 1,000 on a strategy call, 78 events in 25 states (they expected to do 50 in week one), and knocked on 3,200 doors. Not a bad start for a group that sprung from Obama's legendary campaign ground operation.
Changing the debate from politics to benefits is no small task for the pro-ObamaCare forces in the field. Health and Human Services Secretary Kathleen Sebelius has been getting slammed for her fundraising calls on behalf of Enroll America to industry stakeholders like insurance companies. Last week 28 GOP senators sent a letter to HHS Secretary Kathleen Sebelius asking her to "immediately stop" fundraising for Enroll America until she has answered more questions about it.
Then Sebelius called all the professional sports leagues last week to seek their help in outreach to potential ObamaCare beneficiaries this fall -- and Congressional Republicans wailed again. Senator Minority Leader Mitch McConnell (R-KY) and Senator John Cornyn (R-TX) wrote "Given the divisiveness and persistent unpopularity of the health care [law], it is difficult to understand why an organization like yours would risk damaging its inclusive and apolitical brand by lending its name to its promotion," in letters sent to the commissioners of the NFL, MLB, NBA, NHL, PGA and NASCAR. It appears most if not all of professional sports will not participate. It's too bad -- I loved the speculation of what the ads might look like.
All of this is of course happening against a backdrop of a terribly misinformed public, especially among uninsured prospective ObamaCare beneficiaries. An April Kaiser health tracking poll found 42% of Americans are unaware that the Affordable Care Act (ACA) is still the law of the land, including 12% who believe the law has been repealed by Congress, 7% who believe it has been overturned by the Supreme Court, and 23% who don't know whether or not the ACA remains law. And about half the public says they do not have enough information about the health reform law to understand how it will impact their own family, a share that rises among the uninsured and low-income households.
The biggest problem the ObamaCare rollout faces, though, is demographic. First, many ObamaCare eligibles are low-income, and not necessarily English-speaking. They may not see or understand ads on English TV channels this fall, and they'll need different messaging, outreach and hand-on counseling at the kitchen table. And with Congress literally appropriating 10% of what the Administration requested for insurance Navigators to help the uninsured through the enrollment process, and literally dozens of Red State governors in opposition and of no help on the ground, that's a tall order for Year One. CuidadoDeSalud.gov is getting a makeover this summer, and HHS announced it has opened its 24/7 call center, which is supposed to be able to handle millions of consumers' questions in 150 languages.
Second, the viability of the exchanges rests on risk selection, and that means if we don't get the "young invincibles" and the "bro's" to sign up to offset the risk of the sick uninsured we know will flock to the program, we'll fall into a rate-setting death spiral. The Administration is looking for 7 million enrollees in Year One, including 2.7 million young adults. And there's actually some encouraging news here: Kaiser's poll found more than 70% of those under 30 said that having health insurance is "very important," something they need, and that it's worth the money. Overall, just a quarter of those ages 18-30 feel they are healthy enough to go without insurance. Doesn't necessarily mean assured enrollment, but it is a ray of hope through all the white noise.
Things are sure to get Presidential campaign-level crazy right after Labor Day, when the Administration is convinced folks will start paying attention. Expect a blizzard of pro and con communications across every medium imaginable, and millions of confused uninsured consumers in between.
Resources
Read Gorman Health Group's recap of the 2013 GHG Forum, which includes details regarding preparing for the health insurance exchanges. This free download is available on the Point.
Listen to a GHG podcast from GHG's Executive Vice President Steve Balcerzak regarding the unbanked and the uninsured, and the implications this population will have on ACA enrollment. This podcast is freely available on the Point.
GHG policy expert Jean LeMasurier provides an overview of key takeaways from CMS' proposed rule that establishes financial integrity and oversight standards for Health Insurance Marketplaces, QHPs in FFMs, and states that operate risk adjustment and reinsurance programs. This regulatory summary is available to members of the Point.
Lessons from Part D for ACA Implementation
It was interesting to hear Mike Leavitt and Mark McClellan compare their experiences in launching the Medicare Part D program in 2005 and 2006 to the challenges facing HHS and CMS in launching the new Health Insurance Marketplaces at a recent Brookings Institution forum. There are so many parallels and yet important differences. The lessons from Part D are also discussed in a new report from Georgetown's Center on Health Insurance Reform funded by the Robert Wood Johnson Foundation.
Several of the parallels include:
- Outreach and Education Challenges — HHS began a public education campaign 15 months in advance of the Part D program including over 500,000 events and a bus tour by the Secretary and HHS officials. However at the start of enrollment 80 percent of beneficiaries reported they would not enroll or were uncertain about enrolling. 100 days before the Marketplace open enrollment period, HHS is just beginning its outreach program and they are using successful techniques from the Part D program, e.g. extensive use of partnerships and local events conducted by Regional Offices. However, funding for the ACA educational efforts is limited, timing is shorter, and HHS does not have a list of the target population for the individual marketplaces since they do not currently have insurance. Social media offers a shortcut to reaching a key target audience, the 18 — 35 year olds, who are essential to keep premiums affordable. However the challenge will be the messaging. HHS is hopeful that they will be able to build a culture of coverage with the offer of access to an insurance card for the first time and the encouragement from Mom.
- Public Skepticism — The lack of public support for health care reform has been consistently documented by the Kaiser Family Foundation surveys. However the recent discussions remind us that public opinion was actually less favorable for Part D where only 21 percent of beneficiaries had a favorable opinion in April 2005 compared to 35 percent with a favorable opinion of the ACA in April 2013. Mike Leavitt observed that now the sides supporting the change have reversed. A big difference in Part D was that the penalties for not enrolling carried on forever, thus spurring last minute enrollment. The ACA penalties are comparatively smaller and will not provide the same incentive. That will mean that we will need a longer window to assess ACA performance as enrollment continues to grow over a multiple year period.
- Plan Participation and Costs — CMS officials worried that stand alone drug plans that did not exist in the private markets in 2005 would not sign up to participate in Part D. There was also controversy about the cost and affordability of the premiums. It turned out that there probably too many choices under Part D and costs came in below projections. There are similar worries about plan participation in the Marketplaces. CMS reports that 120 plans applied to the Federal Marketplace, however participation in the state marketplaces is more uneven and particularly low in the SHOPs with no plans in the Mississippi SHOP and only 1 plan in the North Carolina SHOP. Most of the plan premiums have not been released, however early reports suggest that there will be variation by marketplace and the number of competitors. A study of 9 states by Avalere shows rates lower than CBO predicted. However, we have also read about an average 25 percent increase for plans in Maryland. HHS will post final rates in the FFM in September, although some states may release final rates in late summer.
- Market Readiness — Despite short timeframes, CMS was ready for enrollment in November of 2005, but we all remember the anecdotal stories of beneficiaries who showed up at pharmacies on January 1 unable to get their drugs. Fortunately, the states came to the rescue and the glitches were ironed out over time. The same concerns about operational readiness face the implementation of the ACA where the number of potential enrollees is higher, the systems more complicated and the subsidies more complex. The longer enrollment period will provide more time to iron out any problems. However, most states will not be willing or able to jump in if the federal roll-out stumbles.
Resources
Listen as Whitney St. Jean, Chief Administration Officer of Gorman Health Group, outlines the components of a successful go-to-market strategy for MA plan sponsors and their partners.
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, find out how GHG can help.
Gorman health group can help position you for the challenges—and opportunities—posed by health reform, designing a strategy that takes into account your service area, market environment, core competencies, and vision of the future, click here to find out how.
Sea Change at CMS
Administrator Marilyn Tavenner officially named Paul Spitalnic as the CMS chief actuary. I worked with Paul when he first came to CMS to implement the Part D program. He then served as the Director of the Part C and D actuarial group. Paul is very smart and will ably fill the shoes of other distinguished CMS chief actuaries that I have worked with including Guy King and Rick Foster. Both Guy and Rick were outstanding public officials who came to CMS from the Social Security Administration and from a tradition of government run social insurance programs. I guess experience with the managed care side of Medicare is no longer considered a handicap. To me this shows how much has changed at CMS. Part C is almost 30 percent of the Medicare program and Part D is administered through contracts with private plans. These programs are no longer step children. Congratulations Paul.
Humana's CEO on Implementing ObamaCare
Reuters got a nice scoop with Humana CEO Bruce Broussard, who took over from the legendary Mike McAllister in January, with an interview on their approach to implementation of ObamaCare in less than 100 days. It was good enough to reprint in full below. A couple impressions:
- Broussard points out how much the industry wants the launch of ObamaCare to NOT fail. Congressional Republicans could take a lesson: the time for foaming-at-the-mouth opposition is over -- it's time to roll up our sleeves and make this thing work for the good of the country.
- The comparisons to the launch of Medicare Part D, which Humana dominated with United, are appropos. There will be mass confusion and disruption in the system as outreach and marketing begin in October. There will be horror stories of administrative meltdowns keeping sick people from benefits. But it will work itself out in the latter half of 2014 and will become immensely popular. Let's just hope an eligibility screwup doesn't kill someone next year -- the media frenzy will be fueled by the reporters' credo to "afflict the comfortable and comfort the afflicted," and there's nothing more afflicted than a sick American thwarted by governmental or corporate ineptitude.
- Humana was brilliant is deploying its veterans of the Medicare Advantage and Part D wars earlier this decade to the front lines of ObamaCare. The similarities between the programs are stunning and the company is way ahead of most of its competitors by leveraging their own vast experience. Most plans made the mistake of thinking "individual = commercial" when it came to product strategy; the reality is that the exchanges will much more closely resemble government business, with much sicker enrollees and more administratively complex systems to reconcile.
- Note Humana's retail strategy at the conclusion of the interview. That's the same playbook that won the day on Part D: "wallpaper" presence in places like WalMart. It'll have the same result in the 14 states they're chasing exchange business in.
Humana's CEO on the massive undertaking of health reform
By Caroline Humer
(Reuters) - Bruce Broussard took over as chief executive of Humana Inc in January, just in time to steer the health insurer's entry onto the health insurance exchanges created by President Barack Obama's reform law.
Humana plans to sell subsidized insurance plans in 14 states, including Arizona, Colorado, Florida and Kentucky, where it is based, about the same number of states as rivals like WellPoint Inc and Aetna Inc.
The exchanges are expected to bring in 7 million people in 2014. Insurers must offer plans to any individual who applies, regardless of prior health problems. The government will provide subsidies to people who earn up to 400 percent of the federal poverty level, or $94,200 for a family of four.
Humana already has experience with government healthcare programs - it has more than 2.5 million members in privately administered Medicare Advantage plans for the elderly. It also manages Medicare pharmacy benefits for more than 3 million people.
Here is a discussion that Reuters had with Broussard this week on the effort to roll out "Obamacare":
Q: What has proven harder than you thought about the development of the exchanges?
A: This is a massive project. A number of months ago the industry met with the president and he made the comment this is probably the largest healthcare project since the Truman-Kennedy era, and he is right. We are taking on a very, very large project and so there are a lot of details that the states and the federal government are working on. It's keeping up with those and being able to implement them where they are already behind schedule, and trying to keep up so that we do fulfill the needs of the public promise that has been made.
Our challenge right now is it is moving so quickly, keeping up with it and being able to assist the state and federal governments for it to be successful because I think the last thing we want is for it not to be successful. So we are dedicated to helping it. But the details are coming out and they are coming out as quickly as the federal government can get them out.
Q: What did you think about the recent U.S. Government Accountability Office report that said some states are behind?
A: I'm not going to take a different stance than the GAO. I'll just say in general there are a lot of details and everyone is working hard to get this done. The industry is working hard, the states are working hard, the federal government is working hard, but this is a big task that's been taken on and I'm sure details will be get lost in the process just because of the size and the enormous effort that is required here.
Q: When consumers decide on which plan to purchase, would you expect that access to certain doctors and hospitals will play a large role?
A: It's going to be interesting. This is where price and choice are going to come at a crossroads here. I think a more cost-effective product is going to have less choice. It is a test. Most of our products are going to be narrow networks and limited providers because we feel that is the best way we can offer a product that is going to be cost-effective.
Q: How else can consumers judge the value of these products?
A: This isn't much different from (Medicare) Part D and Medicare Advantage when it came out in 2005. There was a lot of confusion around what it meant and there was a lot of time being spent on educating both around choices and options and subsidies to the type of plan.
As we look over the coming number of months, we look at that as a responsibility that we have in educating in the 14 states we will be in. We are going to take our market point sales group that today also handles the Medicare Advantage program, we are going to expand that and they will be an active part of the individual exchange. So we are going to have people on the ground helping people.
We also believe in having relationships where people are in their normal course of life, so retail chains are an important part of that. So not only are we going to have people go to their homes, but in addition we are working with partners with retail outlets so we can staff individuals where it is convenient to a potential member to incorporate in their life.
Q: Do you mean grocery stores and pharmacies?
A: Yes, that's right.
(Reporting by Caroline Humer; Editing by Michele Gershberg and Douglas Royalty)
Resources
Gorman health group can help position you for the challenges--and opportunities--posed by health reform, designing a strategy that takes into account your service area, market environment, core competencies, and vision of the future, click here to find out how.
Listen to a three-part podcast series where GHG Executive Chairman, John Gorman discusses the Importance of a Readiness Checklist for the Exchanges for Sales Marketing Enrollment and Risk Adjustment.
Visit our website to learn more about how Gorman Health Group can help support your Medicare Advantage goals.
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, find out how GHG can help.
Lake Wobegone Exchanges
One of the most frequent questions I've been getting on the health reform speech circuit has been what our expectations are for enforcement activity in the exchanges in Year 1 -- and the answer is just about none.
For the 16 states launching their own exchanges this Fall, much of the focus will be on basic administrative functions involved in getting the millions expected to enroll through the system. For the 27 states where the Federally-Facilitated Exchange will be operating, the answer is really nothing. The Feds are painting a picture of "Lake Wobegone Exchanges", where all of the plans are strong, all of the brokers and agents are good looking, and all of the stakeholders are above average.
Year 1 of the Exchanges was always going to be about getting the "pig through the python" of the enrollment and eligibility process. It was basic fulfillment functions like verifying "clean" enrollments, entering and reconciling new members into plans' systems, and issuing membership cards that tripped up the launch of Medicare Part D in 2006. The rollout of the Exchanges will see the same struggles. But CMS's latest rule points to an enforcement "hall pass" for participating plans in Year 1.
CMS's latest exchange regulation estimated that there will be more than 250,000 agents and brokers registered in the Federal Exchange -- and went on to say it expected to suspend or terminate 2. Not a typo. CMS seems to be saying that their agent oversight role is limited since states have primary responsibility for broker licensing and monitoring -- but still, 2 out of 250,000? Really? CMS further estimated there will be 409 Qualified Health Plans (QHPs) in the Federal exchanges, but only 1 civil money penalty and only 1 plan termination. Talk about a paper tiger.
CMS will not do much but play "whack-a-mole" with anything egregious that comes up in QHPs. There will be little to no unilateral state enforcement in the first couple years of the Exchanges. And there won't be any kind of organized compliance process for plans in the exchanges like we see in MA until at least year two or three. So bottom line: the plans don't have to worry about the hammer coming down in Year One -- unless they kill someone with an administrative screw-up. Lake Wobegone for sure.
Resources
Listen to a three-part podcast series where GHG Executive Chairman, John Gorman discusses the Importance of a Readiness Checklist for the Exchanges for Sales Marketing Enrollment and Risk Adjustment.
Learn how Gorman Health Group's web-hosted modular software solution, Sales Sentinel, makes sales agent training, credentialing, onboarding and ongoing oversight a smooth and seamless process.
When reconciling Plan data to CMS' records, you have to deal with a number of issues. Listen in as Gorman Health Group's Senior Consultant Chris Groves discusses these issues and the importance of reconciling member data.