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.
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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.
Another Pound of Flesh for Government Health Programs This Fall?
With summer drawing to a spectacular close here in Washington, it's abundantly clear that the "train wreck" everyone's expecting won't involve the launch of ObamaCare, but rather an epic legislative pile-up in Congress. With the collision of the debate on Syria, the immigration bill tearing the GOP apart, and now a near-concurrent exhaustion of government funding and the debt ceiling at the end of September/early October, the President and Speaker Boehner will be picking up the pieces of their agendas come Halloween. The question is whether government-sponsored health programs will have to give up another pound of flesh in the process.
Congress returns from summer recess Monday, and it'll be all about Syria, and that will crowd out other Congressional priorities like immigration, continued government funding for the new fiscal year, and the positive bipartisan progress made on the long-awaited "doc fix" for Medicare fee-for-service physician payment rates.
Funding for the government expires on September 30, 2013. You'll recall that earlier this summer, a right-wing cabal led by Senator Ted Cruz (R-TX) threatened to use continued government funding as leverage to defund ObamaCare. While they don't have nearly enough votes in either House or Senate, they made enough noise for Speaker Boehner to try to mollify them. The GOP leadership pitch was "don't shut down the government over ObamaCare, that'll kill us in public opinion. Let's use the debt ceiling as leverage at year-end instead." But now the government is expected to hit the debt limit by mid-October, two months earlier than expected, so the calendar just called Boehner's bluff with his right wing.
All of this will erupt in late September and Boehner will have to punt. We expect a 6-12 week extension of government funding to the latter part of the year, and certainly no "grand bargain" with the President. In the meantime, capital markets will be a panic for months given uncertainty over continuing government operations and US credit ratings. So this whole noisy mess will drag on toward the holidays, right while ObamaCare's exchanges are launching.
While this is happening, the basic outlines of the last budget meltdown, the loathed across-the-board spending cuts called "sequestration," will remain in place. Syria raises the potential that sequestration is eased for the Pentagon so we have plenty of bombs and missiles on hand. Sequestration's cuts to domestic programs, and therefore the impact to Medicare and Medicaid, are likely to remain in place. But the Pentagon will need its pound of flesh, and Medicare and Medicaid are always at risk as the biggest contributors to the deficit. If this happens, we suspect Congress will get it in the form of higher beneficiary out-of-pocket costs like deductibles and physician copays.
The biggest casualty of this legislative train wreck may be the doc pay fix. Congress made significant bipartisan progress on the Medicare physician payment fix of the flawed "sustainable growth rate" formula which will cut 30% in 2014 unless offset. While the cost of a long-term fix was recently reduced (~$150B vs. $300B) and raised hopes for a deal, it will now get thrown into this latest manufactured budget disaster. This is significant for Medicare Advantage because a long-term doc fix means MA rates go up about 6-7%; no fix, no boost. So, ironically, physicians and beneficiaries could end up helping pay for bombs and missiles aimed at Syria, and plans may not get the very positive ripple effect of a doc pay fix. Sigh.
So, our prediction: punts on continued government funding and the debt ceiling until the holidays; a noisy, messy launch of ObamaCare exchanges; panicked global markets as this budgetary kabuki theatre act drags out; and physicians and beneficiaries extorted.
Resources
No matter what delivery system arrangement you currently have, or what course you intend to pursue, GHG can help. Visit out website to learn more.
Gorman Health Group Senior Vice President of Public Policy Jean LeMasurier, summarizes the final rule from CMS regarding exchange functions, eligibility for exemptions, and miscellaneous minimum essential coverage provisions.
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.
Call Center Metrics Reporting Should Be Robust and Actionable
Metrics reporting is as important to insurance call centers as the Law of Large numbers is to an actuary. Call centers use metrics reporting on sales and marketing campaigns to measure individual agent performance, track campaign results and more.
Sales and marketing metrics reporting should be robust and dynamic because you can't manage what you can't measure. Dynamic reports should cover all required CMS call center metrics as well as standard call center Key Performance Indicators (KPIs), call dispositions and marketing metrics at the individual toll-free number level. This in-depth reporting creates a true measure of cost per response, cost per lead, and cost per sale.
No matter how robust the reporting however, metrics are useless if they are not actionable. At minimum standard reports should include key performance indicators that allow you to take action. Examples include:
- Abandonment Rate, Drop Rate — length of time caller waited before they abandoned the call and the percentage of overall calls that were dropped. Look at these numbers daily at a minimum and ensure your call center is not missing opportunities through abandoned and dropped calls.
- Average Handle Time, Wrap-Up Time — the average time an agent spent with a caller during the call and in "wrapping up." Make sure your call center Managers are examining these items closely and coaching team members who fall outside the norms on these metrics to keep your center working at peak efficiency. Look for opportunities to streamline your processes in these metrics, too.
- Average Time in Queue — the average time callers waited before being connected to an agent. Look at this metric daily and in aggregate to ensure you aren't losing opportunities with your callers by keeping them on hold.
- Disposition Reporting — a summary of what happened on the call such as "Enrolled" or "Mailed Materials." Examine these closely daily and in aggregate to gain insight into the overall campaign outcomes.
- Quality Reporting — how agents scored on each call based on a client's metrics and/or metrics created by the call center. Bloom uses a minimum of 13 variables plus 9 pass/fail compliance variables when grading agent performance. Look at these reports individually and collectively to identify gaps in caller understanding, opportunities for training, and occasions for scripting improvement.
Are the reporting metrics received from your call center clear and actionable?
Resources
The Bloom Call Center is licensed in 48 contiguous states and offers marketing, call center and technology solutions to the health care industry. Since 2007, Bloom has participated in over 55 million conversations about insurance products, submitted over 200,000 applications for insurance, and set over 150,000 appointments for seniors to meet with Licensed Agents. Bloom is a proud partner of Gorman Health Group. Click here to learn more.
ACOs: Here to stay or gone tomorrow?
With the recent announcement by CMS that nine of the 32 Pioneers were dropping out of the program there has been much "Sturm und Drang" about the passing of ACOs into obscurity. A recent article in the Investor Business Daily has gone as far as to predict that not only are all ACOs going to fail, but while in existence they "will diminish the quality of care received" by Medicare patients.
Seriously? Is anyone buying this stuff? Think about it. The program, Pioneer and MSSP, has improved beneficiary access to services, and allowed better coordination of services. This is achieved by ensuring that patient information is shared among caregivers, which improves joint decision making between a care giver and the patient about treatment options. If it all goes according to plan, there should be a reduction in the cost trend because the elimination of unnecessary procedures or treatment results in less "stuff" to charge for. But even if savings do not materialize, isn't the prospect of earlier diagnosis and better treatment outcomes just as good of a result?
Interestingly enough, I do not recall any of the Pioneers who dropped out suggesting that they would stop their efforts at coordinating care or encouraging joint provider patient decision-making, etc.
What's the point you ask? The point is that the underpinnings of the Pioneer and MSSP programs, i.e. providing the right services in the right setting at the right time for the right price, will survive the ACO and will serve as the legacy for all who participated in the program --stay or leave.
Those of us in the healthcare industry committed to the improvement of clinical outcomes while curtailing costs see ACOs for what they are. ACOs are one small step for service delivery engineering, and one giant incentive for continued health care practice reform at the provider and payer level.
So let's stop wasting energy speculating whether, and or when ACOs disappear. The more important question is how do we build on the foundation that CMS has created with the Pioneer, MSSP and other demonstration programs designed to elicit service delivery and pricing innovations. Opportunity knocks.
Resources
If conceived and executed well, the ACO represents a unique opportunity for provider organizations to redefine their financial relationships with payers, beginning with Medicare. Read more on ACO opportunities in our white paper on the topic
Join us on August 8 to get practical advice on the best ways of getting into the MA market from GHG's Chief Development Officer, Aaron Eaton, Senior Vice President of Finance, William A. MacBain, and Senior Director of Compliance Solutions, Regan Pennypacker.
Our comprehensive management solutions provide ACOs in transition with the tools, processes, and expert guidance to drive overall performance through new models of finance, leadership, and clinical value. Visit our website to learn more.
The Market is Working in Part D (Just Like it Will in ObamaCare)
We've always maintained that Medicare Part D is one of the most successful market-based experiments this country has ever attempted, and that it provides the playbook for ObamaCare's health insurance exchanges. There's further evidence out today of the FACT that the government is capable of creating an insurance market from a green field, regulating the hell out of it, and achieving an enormously popular social good.
WaPo reported today that the average monthly premium for Medicare prescription drug plans will creep up by $1 next year, to $31. Average Part D premiums have held steady at around $30 a month for the past 3 years. We'd agree with CMS's assessment that the negligible increase means competition among drug plans is holding down costs, even as benefits have improved for seniors with high prescription bills. It's a dynamic that will become familiar in the exchanges in a few years.
But there's more: last year 7 out of the top 10 plans raised their 2013 premiums by double-digit percentages -- which means that by aggressively shopping, and by some 5,000-6,000 Baby Boomers aging into Medicare daily with low drug utilization, seniors helped keep the average premium from going up more than a buck. That speaks to the growing maturity of the Part D market now 7 years in operation (such as the shift coming in 2014 to "preferred" pharmacy networks), the availability of real consumer information to make good choices, and the improving sophistication of beneficiaries in making them.
Seniors have learned in these seven years some important but subtle tenets of plan selection, many of which are transferable to the exchanges. First is, the monthly premium isn't the whole story. Many seniors, especially those who take several drugs for chronic conditions, have learned that the best values for them often aren't the low-premium plans but rather those with drug formularies and benefit designs that don't penalize them for their health status in out-of-pocket costs.
Example:
- XYZ Health Plan offers a $20/month Part D program, but with a very tight "Tier 1" formulary with few drugs at lowest cost sharing (say, a $5 copay here) and the most common drugs for seniors on Tier 2 with a $25 copay.
- ABC Health Plan charges $40/month for its drug plan, but its Tier 1 covers most oral insulins, statins and cardiac therapies for a $5 copay.
- Therefore, the typical Medicare beneficiary taking one or more of those drugs gets a much better deal from ABC when total out-of-pocket costs are considered.
- Sure, XYZ plan's monthly premium is a fraction of ABC's ($240/year vs. $480/year), but that "savings" is wiped out by higher copays: three drugs on XYZ's Tier 2 gets you copays of $75/month or $900/year. At ABC, those same three drugs are $15/month or $180/year. So, interestingly, the 3-drug senior saves $480/year by joining the higher-premium plan.
I'm willing to bet that we're seeing mid-60's Boomers skew toward the low-premium plans as many aren't yet using multiple drug therapies and are unconcerned by tighter pharmacy networks; and older, sicker beneficiaries beginning to look to higher-premium plans with more generous formularies and cost-sharing. This kind of consumer sophistication takes a few years to take hold in a new insurance market. But it's exactly the kind of purchasing behavior we'll be seeing in the exchanges in 2014 and beyond.
The Part D experience shows how important it will be to bring the "bro's" and the "young invincibles" into the exchanges early to spread risk and help suppress premium growth, and how tight provider networks of high performers impact pricing. It also shows how wildly popular ObamaCare will be after what promises to be a rough first year of implementation and consumers finding their way through the confusion and white noise from the opposition.
Resources
In 2013, GHG Forum attendees went on a detailed walk-through of Part D rejected claims including frequency, sampling, data validation and documentation.
GHG Founder and Executive Chairman John Gorman addressed the critical issues issuers must address before the launch of the Exchanges at the 2013 GHG Forum. Click here to download the recording.
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.
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.
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.
Strange Bedfellows Come to Medicare Advantage's Rescue
If you can say anything about Medicare Advantage (MA), it definitely makes for strange bedfellows in both the private sector and in the halls of Congress. Last Friday the full lobbying fury of the industry was in evidence as three separate groups of legislators appealed to the Centers for Medicare and Medicaid Services (CMS) on its 2014 rate proposal.
First was a bizarre, bipartisan collection of Representatives: Reps. Bill Cassidy and John Barrow and 93 other lawmakers — mostly GOP, but some Dems — begged CMS to reconsider its approach to the 2014 MA rates, saying CMS shouldn't enact new risk adjustment policies and to assume that the 2014 Sustainable Growth Rate cuts will go into effect. "This reduction in funding will leave many vulnerable seniors with fewer benefits, higher out-of-pocket costs, and in some cases the loss of their current MA coverage," they wrote.
Then, Senators Max Baucus (D-MT) and Orrin Hatch (R-UT), leaders of the Senate Finance Committee, fired their own salvo. In a rare joint letter, they poked CMS for not giving MA plans enough notice on changes to the Star Rating calculation, and for assuming the SGR cuts would not be blocked, as they have every year for the last decade. This one change to CMS's proposal would restore about 5% to MA payments in 2014. "The lack of transparency surrounding this proposal is troubling," Baucus and Hatch wrote, asking CMS to delay changes until they can be vetted. Their voices are particularly important on the 2014 rates, as it is their panel that will handle the long-awaited confirmation of Marilyn Tavenner as CMS Administrator in the coming weeks.
Later that day a group of 22 other Senators sent a letter to CMS expressing their concerns about the 45-Day Notice. Another strange bipartisan assortment including several influential Democrats urged CMS to assume that Congress will address the Sustainable Growth Rate.
We don't have any doubt that CMS will walk back some of the draconian measures they included in the 45-Day Notice. The agency has the most discretion around its proposed risk adjustment changes, and I suspect many of them won't make it into the final rates on April 1. And while the most meaningful remedy is for CMS to assume an SGR fix will be passed later this year, the agency has never taken such a step and we don't expect they will here.
We believe an SGR fix will pass the Congress again, but not until later this fall and well after 2014 bids are due to CMS in June. That means we'll see a roughly 5% bump in MA rates in 2015 -- but still very tough times for MA plans and their members next year.
Resources
Click here to read the MA rate letter Max Baucus and Orrin G. Hatch sent to CMS on March 15, 2013.
To read the MA rate letter the US House of Representatives sent to CMS on March 15, 2013, click here.
Click here to review the MA rate letter the US Senate sent to CMS on March, 15 2013.
Gorman Health Group Senior Vice President Bill MacBain explains the logic behind the proposed rate change, and shares a brief analysis of the impact in this regulatory summary.
Click here to review GHG's comments in response to the Advance Rate Notice, submitted to CMS on March 1, 2013
Gorman Health Group Senior Vice President Jean LeMasurier summarizes the 2014 CMS Draft Call Letter.