Medicaid: An Edge of Your Seat View of Medicaid Risk Adjustment by Bonnie Burke

Traversing the Medicaid Risk Adjustment Obstacle Course Bonnie Burke, Staff VP, Health Care Analytics WellPoint

Altegra Health Partners Summit March 18-20, 2014

About WellPoint

•  WellPoint, Inc. was formed through the 2004 merger of WellPoint Health Networks, Inc. and Anthem, Inc.

•  Purpose Statement: Together, we are transforming health care with trusted and caring soluCons

•  Vision: To be America’s valued health partner

•  Ranks No. 47 on Fortune 500; No. 2 on Fortune 500 health care companies lisCng

•  Serves approximately 36 million people in branded health plans and more than 67 million people through subsidiaries

WellPoint Serves 4.3 Million Medicaid Members in 19 States 14 of These States Risk-‐Adjust Premiums Using 4 Main Methodologies

* The GBD began serving Medicaid members in Kentucky on Jan. 1, 2014. Membership data for this state is not yet available.

Risk-‐Adjusted MRx CDPS

CRG

CDPS + Rx ACG

CDPS + Rx CDPS

ACG

CDPS ACG

CDPS

CDPS MRx

CDPS + Rx

MRx: Medicaid Pharmacy, Todd Gilmer, University of California San Diego, California CDPS: Chronic Illness and Disability Payment System, Todd Gilmer, University of California San Diego, California CRG: Clinical Risk Groups, 3M Health InformaJon Systems, Murray, Utah ACG: The Johns Hopkins Adjusted Clinical Groups System, BalJmore, Maryland

Our Medicaid Landscape

The Medicaid Landscape: State Budget Pressures

COMPANY CONFIDENTIAL | FOR INTERNAL USE ONLY | DO NOT COPY 4

•  Our state partners face big financial challenges with some of the biggest budget shor_alls on record

•  Those challenges are only going to grow •  ConCnuing economic recovery and high unemployment •  Health Care Reform

•  By 2019 a majority of the $4.6T in health spending will be public (52%) versus private (48%)

•  States are looking for a Return on Investment on the front end

•  Premium rates typically lag behind medical cost trends by 12 or more months

The Medicaid Landscape: Competition


•  Medicaid Premium Risk Adjustment is a Zero-‐Sum Game

•  PopulaCon RelaCve Risk vs Individual •  States ensure budget-‐neutrality •  An MCO ‘wins’ by submiing complete and

accurate data

•  Return on Investment has 2 components •  What we prevent in redistribuCon to compeCtors •  Truly incremental premium

$1 in Premium From State to cover Medical Costs across 3 MCOs

If Relative Risk differs across the MCOs, then $1 is divided proportionally

6

2011 2012 2013 2014 2015 Market Characteristics • Expansion •  Increasing complexity

•  Increasing compeCCon

The Medicaid Landscape: Complexity & ROI

•  Few states apply risk-‐adjustment

•  CDPS dominant model naConally

• Medicaid ‘opCmizaCon’ by few large compeCtors

• Nearly all markets apply risk-‐adjustment

•  CDPS, ACG naConal models dominate

•  Large compeCtors, vendor services

• Nearly all markets • Mix of models: CDPS/Rx, ACG, MRx, CRG

•  Increased use of state weights

•  Increasing compeCCon

• Nearly all markets and the Exchange

• Mix of models •  Increased use of state/regional weights

•  Expect compeCCon

• Nearly all markets • Mix of models, expect increased localizaCon

•  Few players not ‘opCmizing’

•  Saturated compeCCon

Volume • ExponenCal growth

•  Increase target membership

•  3 states, 300k members

•  Limited volume • No medical record review

•  4 states, 500k members

•  Target volume 5-‐10% of membership

•  25-‐50k records

•  11 states, 3.6M members

•  Target 8-‐10% of membership

•  250k records

•  14 states, 4.2M members


• All markets, 5M members


Strategy • Core competency development

• Shil to prospecCve focus with greater ROI

•  Provider amestaCons to support diagnoses on encounters

•  Leverage market best pracCces

•  Expand core analyCcs

• Added Medical record reviews

•  Local support

•  Centralized governance

• Market-‐specific analyCcs

• Added member & provider campaigns

• Heavy dependence on Local support

•  Increased prospecCve intervenCons

• Monthly reporCng & accountability

• Dedicated Local support

•  Year-‐round prospecCve

• Medical records as default

•  IntegraCon with Quality, Care Management & Provider RelaCons

ROI •  Increased total value, net dampening over Cme

•  Limle to no incremental investment

•  <$3M Total Value •  ROI range 6-‐30:1

•  $1M investment •  $10M Total Value •  ROI range 5-‐15:1

•  $5M investment •  $36M Total Value •  $9M post-‐neutrality •  ROI range 2-‐7:1

•  $9M investment •  $40M Total Value •  $5M post-‐neutrality •  ROI range 0.6-‐5:1

•  $10M investment •  $42M Total Value •  $0M post-‐neutrality •  ROI range 0-‐4:1

Summary: Medicaid Premium Risk Adjustment

•  It is Complex and Becoming More Complex

•  MulCple risk-‐adjustment methodologies and data submission routes

•  Volume means you must have scalable operaCons

•  It has Lower ROI than Medicare

•  PopulaCon level risk and state budget-‐neutrality limit ROI

•  ROI shils from incremental premium to ‘saved’ premium – there is a plateau

•  High Level of Collaboration Required for Success

•  Heavy dependency on provider relaCons, contracts, local knowledge

•  IntegraCon into prospecCve outreach efforts with Quality, Care Management and Provider Engagement are essenCal


Medicaid: An Edge of Your Seat View of Medicaid Risk Adjustment by Bonnie Burke

Health & Medicine

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