Three Considerations For Those Entering Medicare Advantage

Every few months the industry hears news of new players getting into the Medicare Advantage (MA) game. And why not? According to the Kaiser Family Foundation, more than 19 million Medicare beneficiaries are enrolled in MA plans this year. Either someone is building from the ground up or purchasing an existing structure, such as CVS Health Corporation’s recent agreement to acquire Aetna. I don’t expect this will be the last pharmacy benefit manager to look for an insurer partner with the promise of being able to lower healthcare costs. While analysts argue over the benefits and concerns, one thing is for certain: you need experienced administrators at the helm. I borrow from the late Mitch Hedberg who summarized just because you can do something really well in one field doesn’t make you an expert in everything:

Whether you are building from scratch or partnering with an established entity, you might be adept at one thing but not necessarily everything related to it, nor should you be. In Hedbergian spirit, I’ve outlined three pieces of advice for those entering this arena.

1. If preparing for the Part C and Part D Application process, the clock is ticking. Make sure the right people are in place to implement this product. If the application submission is the wedding day, the implementation and execution are the marriage. What vendors are being considered vs. what will be built in-house?
   1. For those undergoing mergers, I speak from experience about its arduous process. Integration activities do not happen overnight, nor should they, but it is possible the drivers of success may get derailed during integration. Thoughtful engagement of the right people with the experience and skillset in the delivery of this product is imperative to make sure successful practices are not lost.
2. Focus on what needs to be done in order to be successful, but first, make sure everyone agrees on the definition of success. Is it fiscal success for long-term viability? Is it the establishment of a sustainable product set with steady membership growth? Are Star Ratings and other quality measures part of the equation? We always hear about top-down communication strategy, but for those responsible for implementation, lateral communication is essential. Ensure everyone understands the organization’s priorities, and remove silos that impede progress.
3. Know your members well. What does the market look like? What are their health and cultural needs? What are the product, benefit, and premium trends in the area? If you are submitting an application, you have likely already gone through these studies as outlined recently by my colleague Diane Hollie in a recent article on expansion strategy.

You do not want to set up your organization or team to fail – no one sets out that way. Before you apply for the first time, expand, or acquire an existing plan, establish the right team, be on the same page, and understand your market. If you need assistance, please contact me directly at rpennypacker@ghgadvisors.com.

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