Become a Star: What MA-PD Plans can learn from Mickey Mouse
The Five Star Quality Rating System for Medicare Advantage Plans is run by CMS, and was put in place as part of an effort to help educate consumers on quality, and to make quality data more transparent.
Universal assets of a successful business are the links in Disney's "Chain of Excellence":
- Leadership excellence,
- people management,
- quality service,
- brand loyalty and
- inspiring creativity
are lessons which have been carefully developed by the Disney organization in its never-ending pursuit of excellence.
For 2012, the Stars consist of 50 measures hailing from 5 different rating systems: HEDIS, CAHPS, CMS, HOS, and IRE. Data to support these Star ratings come from surveys, empirical observation, administrative (claims) data, and medical records. CMS Star ratings are published annually and are available for viewing by all Medicare members prior to Open Enrollment and MAS-PD plan reimbursement are substantially tied to Star Rating scores.
Health plans have become adept at harvesting the "low-hanging fruit" consisting of clinical metrics as seen with HEDIS-like measures; however, attested by only three 5-Star plans for 2011, most MA-PD plans struggle with managing the CAHPS and HOS related measures. These are direct measures of customer satisfaction based on member surveys.
The struggle for MA-PD plans is how to move the needle for customer satisfaction. Health Plans are uniquely positioned to take many Disney concepts and adapt for inclusion. A couple of examples: healthcare has a strong, obvious common purpose that can be leveraged to align employees around improving the patient experience.
At Disney, the chain of excellence starts with leadership, moves into how you take care of your people, how your people then take care of your customers. And the loyalty and the financial results, for us, is not the goal, but rather it's the reward for doing something else really well, and that's that guest experience.
Corporate culture needs to be deliberate, by design, not by accident. Measureable goals then align to that. For example, crucial to Disney's strategy was the atmosphere, and Walt wasn't above picking up trash on Main Street since it was important to him. For Disney, "wow" experiences aren't the big things, but instead are all the little things. These are low cost additions that are sustainable. Paying attention to every detail of the delivery, and repeating it successfully, all add up to "wow!"
Companies can be proactive or reactive. To achieve excellence in customer satisfaction, Medicare Advantage plans must evaluate what within the existing business model works and what is missing the mark.
Satisfied members are loyal. Loyalty is really the reward for continually delivering on the brand's promise: a promise of magical experiences, experiences that exceed expectations. At the Gorman Health Group, we help our clients' laser focus on creating, nurturing and reinforcing life-long relationships at every touch point.
Insourcing: So you are thinking about internalizing risk adjustment . . .
We talk to health plans everyday that want to internalize risk adjustment. Bottom line: It is a good idea.
Taking control and building an expert, internal risk adjustment team is one of the best tactics a health plan can take. Here, we share an initial checklist of those areas needed for "in-sourcing":
 Claims based HCC filtering
 RAPS filtering and submission
 EDPS compilation and submission
 Medical record suspect generation
 Medical record retrieval
 Medical record coding
 Chart warehouse
 Hospital outreach for electronic encounter compilation
 Member evaluation suspect generation
 Evaluation development
 Member evaluation provider network
 Member evaluation findings integration
 Tracking & closing gaps in care with member outreach
 Member care report cards
 Primary care physician medical home
 Metrics, benchmarks, ROI, reports, and performance monitoring
Much of this you can internalize cost effectively, but you still need to be diligent. We've helped several health plans analyze their programs and vendors to determine what to pull in-house. Strategy, discipline, compliance and an engaged multi-disciplinary team willing to make decisions and push forward are critical elements for success.
Medicare Advantage Premiums Down, Enrollment Way Up in 2012
We've long said on these pages that all the predictions of the demise of Medicare Advantage following passage of the ACA and its steep cuts to the program were premature. Finally, confirmation from CMS: MA premiums will fall another 4% in 2012, and enrollment will grow by a brisk 10%.
The news was delivered Friday by Jonathan Blum, deputy administrator for the Centers for Medicare and Medicaid Services. Blum said health plans are also lowering co-payments and deductibles. He attributed the premium drop to the agency's strong negotiations with plans as well as the plans' continuing desire to serve the market.
Some color commentary on Blum's announcement:
- Government programs (Medicare and Medicaid in particular) are the only segments of the insured that are growing. MA, for instance, will grow over 7% this year, topping 12.5 million beneficiaries. Part D is approaching 20 million enrollees;
- Publicly-traded companies like MA leaders Humana and United are now dependent on Medicare, deriving twice their earnings from the program than they did a decade ago (average publicly-traded health plan earnings from Medicare in 1999: 13%; today, 26%, with some like HealthSpring and Universal American over 70%. Bottom line: the big boys ain't going anywhere.);
- Over 40% of beneficiaries aging into Medicare have enrolled in MA plans the last two years, indicating the Boomers are a much more plan-friendly population than the World War II generation given managed care trends in the commercial market (HMOs, PPOs and POS plans represent more than 90% of all insured Americans).;
- Market-leading plans are adapting to the challenges of the ACA by offsetting its payment cuts with intense focus on Star Ratings quality bonuses and mastering the new state of the art in risk adjustment: the prospective home advanced evaluation. It's working, enabling plans to hold the line on benefits and premiums, and maintaining the attractiveness of these products vs. Medigap or traditional Medicare.
As long as the Congressional deficit Super-Committee doesn't fire another broadside at MA plan payment rates this fall, 2012 is shaping up to be a VERY good year.
My Talk at AHIP's Medicare Conference
I had the pleasure of addressing a standing-room-only crowd at the AHIP Medicare conference yesterday, sponsored by our friends at TMG Health, our 4th year together there. That speech always keeps me on my toes, especially this year -- a tough, smart audience that demands a tough, smart message on how to survive in the new Age of American Austerity. Here are the main points of what I said:
- Volatility and Accountability will define the sext several years in Medicare. Volatility: rates, the Medicaid dual eligible explosion, the Congressional "Super-Committee", industry consolidation, and the 2012 elections. Accountability: it's already here. Star Ratings bonuses, minimum MLR regulations, compliance, rate reviews, RADV audits, and Accountable Care Organizations.
- The State of the Union in Medicare Advantage (MA) and Part D is strong. All predictions of the demise of the program following health reform were wildly premature. MA will grow about 7% this year, and over 40% of beneficiaries aging into Medicare have chosen MA in the last two years. Local PPOs with the drug benefit integrated remain the product of the future in MA, as do Special Needs Plans given the tsunami of dual eligibles -- a $300 Billion market alone. We think MA will pass 15 million members by the end of 2015.
- Medicaid managed care is risky (BIG) business. We've already seen major awards this year in TX, LA and KY. CA is prepping the biggest RFP in US history: 150,000 duals in plans by end of 2012; all duals in plans by end of 2015: a $21 Billion opportunity. WA, FL, NH, NE, MI and HI are all preparing to move duals into plans.
- Volatility: many of us thought we "gave at the office" in health reform when the ACA whacked over $120 Billion from MA rates over a 7-year period. There's more austerity to come from the Congressional "Super-Committee" on the debt. Best case scenario? The Super-Committee fails, sequestration occurs, and we get hit with a 2% cut in 2013, 2014 and 2015, compounded. And what about the "doc fix"? If they don't fix the SGR and docs take a 29.5% cut in Medicare reimbursement in 2012, MA gets hit by about 7% in 2013, and the beneficiaries take it in the shorts. Bar the exits! Consolidation is intensifying in both payer-payer transactions, and payer-provider deals like United/Monarch (CA). And then there's the elections. My money as of today is that Obama gets re-elected by the narrowest of margins, Democrats lose the Senate, and we have another 4 years of economic doldrums with the HUGE exception of the ACA's implementation in 2014.
- Accountability: it's already here, a cornerstone of the ACA. It's embodied throughout, in Star Ratings bonuses, Accountable Care Organizations, with growing incentives for chronic care improvement, member satisfaction, and compliance. The cornerstone is transparent data reporting. Berwick's legacy will be his embedding the "Triple Aim" in the DNA of CMS. And CMS says it will terminate MA plans with less than 3 stars for 3 years running. A "good" star rating is not a hedge against the rate cut: it is an existential issue -- and a management revolution.
- What to Do?
- Aggressive revenue management in the near term. Master risk adjustment and audit-proof the function by embedding it where it belongs in Medical Management, move from claims extracts and chart reviews to Prospective in-home Evaluations, and be a Star Czar.
- Care coordination and chronic care management over the mid-term (3 years). It will take years to see results, but this is what it's all about in the mid-to-long-term. High-touch with the frequent flyers.
- Commit to a Culture of Compliance. The regulator is the purchaser, and you keep this account happy by following their rules. To. The. Letter.
- Revisit the service model and move from reactive to proactive. Health care is still a service business and Boomers are tough customers.
- Establish and Invest in Medical Homes, Accountable Care Organizations, and Exclusive Provider Organizations. In the end, it's all about the docs.
Questions? You can always reach our team at ghg@ghgadvisors.com.
PS Join me for another talk September 25-26 in Arlington at the Opal Events MA Strategic Business Symposium. Complimentary passes are still available today.
Do Stars Matter?
I have occasionally made the point that MA can have a positive impact on members' lives in a way that fee for service Medicare can never replicate. Over the weekend, I was catching up on old journals and ran across a nice case in point. If you are like me, you have wondered from time to time whether there was a real point in some of the Stars and HEDIS data you collect (particularly some of the survey questions) or whether it was just filler to make a bureaucrat feel more useful. Well, here is a reassuring answer to that question:
You are probably aware that one of the HEDIS/HOS indicators is "the percent of sampled Medicare enrollees 65 years of age or older who had a doctor's visit in the past 12 months and who received advice to start, increase, or maintain their level of exercise or physical activity." (It takes at least a 60% positive from the sample to get a plan to four stars.) Another requirement (HEDIS) is that you measure BMI at least yearly in members less than 74 years old. Does all that really matter?
It will probably come as no surprise to you that 20% of adults over 65 are obese (BMI>30) and that the number is rising every year. What you may not have thought about is that obesity is now one of the major causes of frailty in the elderly. The archetypal "little old lady" slowly maneuvering across the room with her cane has been replaced by the very big old lady (or old man) maneuvering through a grocery store on a scooter.
A group led by the geriatricians at Washington University in Saint Louis looked at the problem: they did a one year controlled study of the effects of diet and exercise in the obese elderly.[1] One study group did what they had always done (or not done), a second group dieted, a third group exercised, and a fourth group dieted and exercised. Each group that did something did better than the group that did nothing but the fourth group did best of all. Their strength went up 35%; their gait speed increased 23%; the rate at which they lost bone decreased; their peak oxygen consumption (a reflection of the ability to be active) increased; their balance improved and their risk of falling decreased.
We are accustomed to thinking about weight loss and exercise programs in younger adults as ways to prevent hypertension, diabetes, and other chronic illnesses. It is a different matter in the elderly. For them it is a way to directly and significantly improve the quality of life.
So should MA plans take pride in the fact that they are collecting data about exercise and weight loss and that the good ones are finding better ways to use that data to help their members get thinner and more active? You bet they should.
[1] Villareal, Dennis et al, "Weight Loss, Exercise, or Both and Physical Function in Obese Older Adults" NEJM:364, 1218-1229, March 31, 2011
Consolidation in Medicare Advantage and Prospects for Regional/Local Plans
In the past 12 months three health insurers have each acquired a Medicare Advantage HMO: HealthSpring (Bravo), WellPoint (CareMore), and Humana (Arcadian). Large plans are finding that acquisitions make more sense than investments in organic growth in certain markets, and that enrollment will be driven by millions of plan-friendly Baby Boomers and employers seeking to transfer risk for retirees to Medicare. Investors that sat on the sidelines the last couple years during the financial crisis now need to invest, many large players are sitting on piles of cash, and there are many opportunities in the fragmented MA market. So consolidation will intensify -- what does that mean to regional or local MA plans?
First, there's plenty of room in MA's pantheon for regional and local plans. It doesn't take much enrollment to make the Top 25 in Medicare Advantage given revenues for MA members typically run 4-6x what commercial members pay -- take Independence Blue Cross in Philadelphia. They have about 85,000 members and they're among that hallowed group. 10,000-12,000 members is generally thought to be the "magic number" in MA, where a plan achieves actuarial stability with an enrolled pool big enough to weather the inevitable million-dollar babies at end-stage.
If you're above that number today, you can likely endure and thrive through the next several years of ACA transition and consolidation by following some specific best practices, especially around risk adjustment and Star Ratings management. If you're not there yet, this is going to be a very challenging couple of years ahead.
The best ways for local/regional plans to offset the rate cuts in ACA is on the revenue side. Risk adjustment and Star Ratings management best practices are the keys to survival for local and regional plans, and the methodologies of each actually favor these organizations. The new state of the art in risk adjustment is the advanced prospective evaluation -- a health risk assessment on steroids, conducted in the beneficiary's home by a trained physician (see the many posts by my colleagues Dr. Jack McCallum and RaeAnn Grossman on this subject). It's a complex process, arranging the scheduling, executing the visits, reporting the data to CMS -- but one managed more easily by local/regional plans with assets on the ground than large nationals.
Star Ratings quality bonuses from CMS actually favor local/regional plans as they're calculated at the contract ("H-number") level. Large national insurers typically have sprawling MA service areas: United in California, for example, has an MA contract for the entire state, requiring United to coordinate with literally dozens of physician groups to improve their Star Ratings. By contrast, tiny GEMCare Health Plan in Bakersfield, with a 5-county service area and only a handful of provider groups, is far better positioned to secure its Star bonus than United.
On the downside, minimum Medical Loss Ratio (MLR) regulations can be harder for local/regional plans to contend with. Beginning this year the ACA requires health plans to spend 80% to 85% of premium revenue on reimbursements for clinical services and activities that improve health care quality. Further, costs associated with conversion to ICD-10 coding, EMRs and e-prescribing are harder for smaller firms to absorb. But harder doesn't mean impossible, especially with effective planning and local leadership.
In the end, I think we're probably looking at one-third fewer contracts in MA by 2016 -- 671 today, down to about 400 by then, driven by acquisitions and a hard-nosed CMS pushing weak performers out of the program. That leaves plenty of room for local/regional plans -- if they can execute as well or better than the big dogs, especially on the revenue side of the ledger.
I'll be speaking on this and related topics at AHIP's Medicare conference here in DC on September 13, and again September 26-27 at the Opal Events 3rd Annual Medicare Advantage Strategic Business Symposium. For more information, click here. Hope to see you there.
United Acquisition of Monarch Healthcare (CA): Marx Meets Managed Care, Again
The Wall Street Journal reported this morning that United Healthcare is acquiring our longtime client, Monarch Healthcare in Irvine, CA. The transaction is further evidence that Marx (Karl, not Groucho) has met managed care: a payer controlling the means of production in an intensely competitive market.
There have been several other payer/provider deals in the last few months confirming the trend: WellPoint recently closed its acquisition of provider-owned Medicare Advantage plan CareMore; in June, Highmark bought West Penn Allegheny Health System; last December, Humana bought Concentra.
Expect to see many more of these kinds of deals, for clear strategic reasons: with greater emphasis on performance-based risk contracting arrangements in the future of healthcare financing, and an emerging focus on the patient's experience of care, in many markets it just makes sense for payers to own their supply chain -- and the day-to-day faces of the health plan with its members.
Medicare Advantage and PDP Plans Continue Robust Growth
The August enrollment numbers are in from CMS. 61,000 new MA members in August and 544,000 year-to-date. MA and PDP plans continued their robust growth on pace to exceed 2010's enrollment gains. Year to date it appears Boomer "age-ins" are continuing to choose MA at a higher rate than their forebears -- more than 40% for the last two years. With major MA/PDP sponsors like Aetna and HealthNet now relieved of marketing and sales sanctions from CMS, MA enrollment growth may exceed 7% for the year.
The story behind the numbers is clear: MA plans are adjusting just fine to the "new normal" post-ACA. Benefit designs have held relatively steady, and plans are making big investments in better revenue management, like mastering risk adjustment and the new Star Ratings bonuses, to offset the ACA's cuts. Many are revisiting their entire service model in response to Stars, recognizing that keeping members is the new selling.
At the pace we are on, MA will hit 15 million beneficiaries sometime in 2016. But that of course assumes Congress and the debt reduction "supercommittee":
- don't require another pound of flesh from the plans in whatever deal they hatch up in November
- get the Medicare physician pay fix enacted permanently. There's an enormous price tag of over $300 billion over 10 years for this, but without it, MA rates could be cut another 7% in 2013 and beyond. This is the single largest threat facing the program in the next several years.
Let's hope the noble experiments in creating insurance markets that are MA and Part D are allowed to continue when Congress reconvenes in September.
Hey Star Czars: Look Here
Blowing up the "Health Insurance" Service Model
In the 15 months since ACA passed, MA plans have scrambled to improve their Star Rating. Nothing motivates like the promise of a 5% premium bump in an era otherwise marked by dramatic payment decline. Also motivating: CMS appears to be making initial steps towards delivering on intimations that low-rated plans will have their contracts terminated.
Early efforts in the Stars focused on HEDIS scores and for good reason. Much of domains I and II are process and outcome-based HEDIS measures. But with C and D ratings taken together, less than 20% of the ratings are actually driven by these clinical targets. So where's the beef?
It's the service model. HEDIS aside, fully half the measures can be traced directly back to the service model--- and we're not talking call center hold times. The reliance on subjective survey measures for much of the Star scoring and the role of the service center in driving member compliance with clinical activities point to the increasing value of the relationship members have with the plan--- for better or worse.
This week, noted power point gurus Accenture released the results of a consumer survey regarding health insurance. The report shows that nearly half of insurance customers would be willing to pay more for health insurance that caters to their needs. Two specific items stood out to me:
- 85 percent of those surveyed rated interaction with knowledgeable employees as highly important, yet fewer than 50 percent were satisfied with current experience;
- More than 80 percent said dealing with one contact to resolve issues was important, but 60 percent said they currently were transferred to multiple contacts to resolve issues.
This sounds like the best very best rationale for the "Concierge" customer service model we've put in place at a few plans over the years. In the Concierge model, every member is paneled to a specific Rep, who also is tasked with making frequent, targeted and data-driven outreach to their panel. In other words, don't wait until the customers are unhappy until you talk to them. And while Concierge programs have proven to be no more expensive than traditional inbound models, this survey implies that your members would even pay more for it.