Five Critical Steps to Enhance Revenue & Maximize Growth Potential

Everybody’s talking about revenue management and maximizing growth opportunities for health plans, but no one has laid out the steps for successful outcomes…until now.  Gorman Health Group (GHG) is giving you our recipe for enhancing your premium revenue and maximizing your growth potential in the following five-step plan:

Step 1.  Targeted Population/Demographics

Different populations have different needs.  Understand the makeup of your membership and their healthcare needs, their provider preferences, and understand what they want to experience when interacting with your health plan.  Is your health plan designed to meet the needs of your targeted population?

Step 2.  Optimizing Revenue and Performance-Based Payments

Revenue management is best performed at the member level.  Each member should be viewed as an investment needing optimizing.  Revenues for members are based upon bids or other established “base” amounts.  These base payments need to be optimized for each member.  Optimizing member-level revenue begins with an effective member onboarding and retention program, whereby the following factors can be assigned to each member:

• Health Risk Assessment (HRA) to identify potential Hierarchical Condition Categories (HCCs)
• Medical management needs
• Member-level attributes included in Star Ratings measures denominator (e.g., diabetes, rheumatoid arthritis, high-risk medications, etc.)
• Special payment status for Medicaid, end-stage renal disease (ESRD), hospice, long-term institutional, and other health insurance (OHI)
• Continuous vigilance for status changes that could impact payments (e.g., actively monitoring claims for indications of circumstances warranting special payment statuses)

Focus on keeping members by enhancing the member experience through the entire organization.  Member retention is the new “selling.”

Step 3.  Delivery System and Care Management Approach towards 85% Medical Loss Ratio (MLR)

It is imperative that health plans aggressively manage their medical costs as the most expensive component of healthcare operations. Employing the following programs can significantly impact MLR:

• Effective medical management
• Effective provider and network management
• Effective pharmacy management
• Effective Pharmacy Benefit Manager (PBM) contracting/re-contracting
• Effective claims processing and claims payment rules (Medicare vs. Commercial vs. Medicaid)
• Effective durable medical equipment (DME) management
• Effective hospice and end-of-life care
• Effective fraud, waste, and abuse (FWA) detection and prevention programs
• Effective payment responsibility/Coordination of Benefits (COB) processing
• Effective capitation leakage/correction processes

Health plans must spend at least 85% of premium dollars on healthcare.  Effectively managing MLR to below 85% of premium revenue enables a health plan to offer more attractive benefits, lower cost-sharing, offer best-in-class providers, and reward top delivery system performers.

Step 4.  Optimized Cost of Operations, Selling, and Administration

A well-run health plan should target cost of operations, selling, and administrative costs to a level at or below 10% of premium revenue.  This involves knowing your operational strengths and weaknesses and outsourcing the appropriate functions to experts.  This involves making brutally honest assessments of internal capabilities and a willingness to make tough decisions.  It is often best to have these “no sacred cows” assessments performed by external experts having an independent viewpoint.  In addition to the health plan core operational areas of Membership Accounting, Member Services, Claims Processing, and Appeals and Grievances, health plans must perform critical assessments to ensure:

• Effective financial management
• Effective benefit and premium design
• Effective sales and marketing
• Effective information technology
• Effective project management

The goal is to operate as efficiently and effectively as possible at a performance level that earns maximum quality bonus payments.

Step 5.  Profit Margins for Reinvestment in Growth

That leaves a profit margin of 5% of premium revenue.  This provides opportunity for strategic investments in:

• More staff and training
• Best practice processes (member onboarding, healthcare concierge, member/patient experience)
• Updated systems and analytics

These investments are key to serving your existing membership with best-in-class performance — all intended to place your organization heads and shoulders above your competitors.  In the current competitive environment, growth means attracting members from other health plans.  There will be winners and losers.

Winning!

GHG is comprised of some of our industries most experienced and proficient health plan subject matter experts.  Our consultants can help your organization with a “whole house” assessment or targeted assessments, and we can help you fix the problems we identify. Contact us today to get started.
Resources

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