Understanding the Health Insurance Business: Medicare Advantage · 2019-07-18 · Understanding the...

Understanding the Health Insurance Business:

Medicare AdvantageThursday, July 18, 2019

Health Plan Advisory Council

Rachel Sokol

Practice Manager

The Advisory Board Company

[email protected]

mailto:[email protected]

© 2019 Advisory Board • All rights reserved • advisory.com

ROAD MAP6

Overview of Business Line1

2 Major Trends Impacting Medicare Advantage Plans

3 Understanding Key Advisory Board Resources

4 Questions

http://www.advisory.com/


7

Medicare Contains Several Coverage Options

Source: “Medicare 2017 costs at a glance,” CMS, https://www.medicare.gov/your-medicare-costs/costs-at-a-glance/costs-at-

glance.html; “Medicare Enrollment Dashboard,” CMS, https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-

Trends-and-Reports/CMSProgramStatistics/Dashboard.html; Health Plan Advisory Council interviews and analysis.

1) 1) Durable medical equipment.

Medicare in Brief, 2019

Part A

Hospital and long-

term care

insurance;

includes home

health, hospice

Part B

Medical

insurance;

includes tests,

prevention, DME1

Part C

Private Medicare

plans that

combine Part A,

Part B and

(usually) Part D

Part D

Prescription

drug coverage

Part D

Prescription

drug coverage

(if not already

included)

Medigap

Private

supplemental

insurance policies

END

Ineligible for

Medigap

(45.5 M Enrollees)

2. Add drug coverage?

3. Add supplemental coverage?

• Federally-funded

insurance for seniors

(65+) and disabled

• Part A funded through

payroll deductions

• Part A: No premium;

$1,364 deductible,

coinsurance only for

extended inpatient stays

• Parts B, C, D have

monthly premiums,

deductibles,

coinsurance/copays

Traditional Medicare

(38.1 M Enrollees)

Medicare Advantage

(22.7 M Enrollees)

21

Medicare Coverage Options1. What kind of coverage?


https://www.medicare.gov/your-medicare-costs/costs-at-a-glance/costs-at-glance.html

https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/CMSProgramStatistics/Dashboard.html


8

Understanding the consumer’s MA decision

1) Out-of-pocket.

Attractive Features

and Potential Benefits

Deterrents and

Potential Risks

Overwhelming set of

product choices

Coordinated, multi-

benefit package

Additional benefit

options (e.g., gym)

Restricted network of

providers and service regions

Utilization approval

rules and restrictions

Familiar customer service

(to employer-based coverage)

Lower or zero premium

costs, with OOP1 limits

Variable, confusing cost

sharing and coverage

Consumer considerations and drivers for choosing Medicare Advantage



9

Medicare Advantage Continues Record Growth

Source: “Medical Enrollment Dashboard”, CMS, https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Dashboard/Medicare-

Enrollment/Enrollment%20Dashboard.html; “A Dozen Facts About Medicare Advantage in 2019”. Kaiser Family Foundation, https://www.kff.org/medicare/issue-

brief/a-dozen-facts-about-medicare-advantage-in-2019/; Medicare Advantage: Total Enrollment,” Kaiser Family Foundation, https://www.kff.org/medicare/state-

indicator/ma-total-enrollment/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D; “Medicare Advantage Fact

Sheet,” Kaiser Family Foundation, http://kff.org/medicare/fact-sheet/medicare-advantage-fact-sheet/; “Medicare Congressional Budget Office’s January 2017

Baseline,” CBO, https://www.cbo.gov/sites/default/files/recurringdata/51302-2017-01-medicare.pdf; Health Plan Advisory Council interviews and analysis.

1) Projected.

5.6M

13%

19M

33%

31M1

41%

202720172005

MA Enrollment to Nearly Double by 2025

Total Enrollment and Percentage of

Total Medicare Population

0%-13% 39%-51%14%-25%

MA Penetration Varies by State, 2019

Total MA Enrollment as a Percent of

Total Medicare Population

26%-38%

MA enrollment

growth since 201098%


https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Dashboard/Medicare-Enrollment/Enrollment%20Dashboard.html

https://www.kff.org/medicare/issue-brief/a-dozen-facts-about-medicare-advantage-in-2019/

https://www.kff.org/medicare/state-indicator/ma-total-enrollment/?currentTimeframe=0&sortModel=%7b%22colId%22:%22Location%22,%22sort%22:%22asc%22%7d

http://kff.org/medicare/fact-sheet/medicare-advantage-fact-sheet/

https://www.cbo.gov/sites/default/files/recurringdata/51302-2017-01-medicare.pdf


10

Unpacking a favorable financial opportunity

Plans forced to lean on performance revenue amid fluctuating rates

Source: Jacobson, G, Damico A, Neuman, T, “A Dozen Facts About Medicare Advantage”, November, 2018, https://www.kff.org/medicare/issue-brief/a-

dozen-facts-about-medicare-advantage/; V, “CMS gives Medicare Advantage plans a raise, Modern Healthcare, April 2018;

https://www.modernhealthcare.com/article/20180402/NEWS/180409987/cms-gives-medicare-advantage-plans-a-raise; Medicare Advantage plans see

smaller rate hikes for 2020, Modern Healthcare, January 2019, https://www.modernhealthcare.com/article/20190130/NEWS/190139987/medicare-

advantage-plans-see-smaller-rate-hikes-for-2020; Ladsariya et al., “Medicare Advantage: Dispelling market misconceptions,” McKinsey & Company,

January 2014; Health Plan Advisory Council interviews and analysis.

2.95%

3.40%

2.53%

2018 2019 2020

Payment rate increases

continue to fluctuate

Annual MA payment rate increases

2015 2016 2017 2018

$3.0 B

$3.8 B

$5.9 B $6.3 B

Bonuses paid to MA plans more

than doubled over four years

Total bonuses paid out to MA plans (in billions)

Established and

new carriers offer

more products 18%Increase in number of

plan product offerings

available to consumers

between 2018-20191

New carriers offering MA plan

products in 2019, up from 7 in 2018

147


https://www.kff.org/medicare/issue-brief/a-dozen-facts-about-medicare-advantage/

https://www.modernhealthcare.com/article/20180402/NEWS/180409987/cms-gives-medicare-advantage-plans-a-raise

https://www.modernhealthcare.com/article/20190130/NEWS/190139987/medicare-advantage-plans-see-smaller-rate-hikes-for-2020


11

Medicare Advantage Payment a Multi-Step Process

Plans Required to Use Rebate to Supply Supplemental Benefits

“Medicare Advantage Program Payment System,” MedPAC, October 2016, http://www.medpac.gov/docs/default-

source/payment-basics/medpac_payment_basics_16_ma_final.pdf; Health Plan Advisory Council interviews and analysis.

1) Plan share of rebate varies by star rating.

Gym membership Dental

Vision Reduced cost sharing

Risk adjustment factorPlan Bid Rebate

+ =

Payment to plan

Examples of Supplemental Benefits Offered Through Rebates

Medicare Advantage Plan Payment Process

(0.5 to 0.7)1

Regional or local Medicare benchmark

×

Illustration Showing Plan Bid Below Benchmark


http://www.medpac.gov/docs/default-source/payment-basics/medpac_payment_basics_16_ma_final.pdf


12

Seniors May Have a Lot More to Shop For

CMS Increases Coverage Flexibility to Reduce Medical Costs

Medicare Advantage

Source: CMS, “CMS Finalizes Policy Changes and Updates for Medicare Advantage and the Prescription Drug Benefit Program for Contract Year 2019 (CMS-

4182-F)”, April 2018 https://www.cms.gov/newsroom/fact-sheets/cms-finalizes-policy-changes-and-updates-medicare-advantage-and-prescription-drug-benefit-

program; Foley & Lardner LLP, “Direct Provider Contract Alternative Payment Model - CMS/CMMI Issues Request for Information” April 2018; Health Plan

Advisory Council interviews and analysis; https://www.politico.com/agenda/story/2018/09/12/medicare-preventative-social-needs-000688.

1) Value Based Insurance Design

CMS' Finalized Changes to Medicare Advantage 2019

• Plans can design disease-specific

benefits for enrollees with chronic or

high-risk conditions

Custom(ish) Benefit Design

• Supplemental benefits can cover

services that diagnose, prevent or

improve effects of health conditions

Supplemental Benefit Expansion

Example Plan Services

Reduced co-pays for

diabetic enrollees

Additional tobacco cessation

sessions for enrollees with COPD

Transportation to primary

care appointments

Temporary and portable mobility

ramps for in-home safety

2019 Medicare Advantage Outlook

Leverage supplemental benefits for

Medicare Advantage growth

NEW ADVISORY BOARD

RESEARCH REPORT


https://www.cms.gov/newsroom/fact-sheets/cms-finalizes-policy-changes-and-updates-medicare-advantage-and-prescription-drug-benefit-program

https://www.advisory.com/research/health-plan-advisory-council/members/research-reports/2019/2019-medicare-advantage-outlook


ROAD MAP13




4 Questions



14

Success Requires Juggling Multiple Priorities

Source: Health Plan Advisory Council interviews and analysis.

Common Medicare Advantage Plan

Operational Priorities Challenges to Success

Accurate member risk coding

Greater reimbursement for

riskier member populations

• Collaborating with providers to collect member

health information

• Compelling members to complete HRAs

Attracting and retaining

enrollees

Increased revenue from member

enrollment

• Maintaining and increasing quality ratings

• Keeping premiums steady

Closing care gaps

Higher quality rating for managing

and screening members

• Recruiting providers to close clinical gaps

• Capturing member attention



15

What Is Risk Adjustment?

Process Assigns Member Risk Score Using Previous Year Diagnoses

Accurate Member Risk Coding

Source: “Primer Medicare Risk Adjustment,” The American Action Forum, https://www.americanactionforum.org/research/primer-

medicare-risk-adjustment/; Naveh, M, “Lax Coding by Physicians Hurts Medicare Advantage Plans,” Managed Care, January 2008,

https://www.managedcaremag.com/archives/2008/1/lax-coding-physicians-hurts-medicare-advantage-plans; Health Plan Advisory

Council interviews and analysis.

Member 1 Member 2

• 66 years old

• No chronic

illnesses

• 73 years old

• Diabetes and

hypertension

Factors Contributing to Risk Score

Diagnoses Age Sex

Accounts for

relative cost

difference

Purpose of Risk Adjustment

Risk Adjustment

The Cost of

Undercoding in

Medicare Advantage

“From a coding perspective,

these plans are often paid

$2,000 less than they should

be paid for these members

because of under-reporting of

ICD-9 codes.”

Al Lewis

Disease Management Purchasing

Consortium


https://www.americanactionforum.org/research/primer-medicare-risk-adjustment/

https://www.managedcaremag.com/archives/2008/1/lax-coding-physicians-hurts-medicare-advantage-plans


16

Casual Relationship Lacking

Few Clear-Cut Wins in Risk Adjustment


Coding Intervention Conducive Conditions Barriers to Success

Efforts to Improve Coding Accuracy

Direct Provider

Incentives

Plans with dominant

market share that can

offer substantial incentives

Providers working with more

than 10 plans unlikely to be

interested in one payer’s

incentives

Coding

Education

Providers at-risk for total

cost; smaller provider

groups needing support

Larger provider groups

who have not yet

assumed global risk

Embedded

Coders

Provider practices that

contain a majority of

plan’s membership

Larger practices with own

coders or small practices that

outsource billing operations

Home

Assessments

New Medicare

Advantage members

Employed members and

elderly members that

have recent utilization



17









health information



enrollees


enrollment



Closing care gaps







18

Are Stars Worth the Investment?

Majority of Members in 3+-Star Plans

Source: “Part C and D Performance Data,”, CMS, https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn/PerformanceData.html;

“Medicare offers improved access to high-quality health coverage choices in 2018,” CMS, https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-

releases/2017-Press-releases-items/2017-10-11.html; McKinsey Center for U.S. Health System Reform, “Addressing the 2017 Medicare Advantage Star ratings,”

http://healthcare.mckinsey.com/sites/default/files/Intelligence-Brief_2017-Medicare-Stars-Performance.pdf; Health Plan Advisory Council interviews and analysis.

1) For all data analysis, only plans with reported Part C data to generate

a star rating included.

Distribution of Plan Star Ratings, 2018

Number of Plans by Part C Ratings1

2

12

61

139

97

58

16

2 2.5 3 3.5 4 4.5 5

Contracts that retained a 4+ Star rating from 2014 to

2016 experienced more than 5 times the enrollment

growth of those that lost a 4+ Star rating

Implications for growth

Projected enrollees in 4+ star

MA-PD plans for 2018

73%

Star Rating Definitions

Excellent

Above average

Average

Below average

Poor

Rating domains: Prevention, managing

chronic conditions, member experience,

member complaints, customer service

Attracting and retaining enrollees


https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn/PerformanceData.html

https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2017-Press-releases-items/2017-10-11.html

http://healthcare.mckinsey.com/sites/default/files/Intelligence-Brief_2017-Medicare-Stars-Performance.pdf


19

11% 11% 11%

21% 24%29%

$0-$4.99 $5-$9.99 $10-$19.99 $20-29.99 $30-$39.99 $40 or more

Switching Relatively Low

But Those That Switch Do So For Lower Premiums and Better Quality

Source: Jacobson G, Neuman T, “Medicare Advantage Plan Switching: Exception or Norm?,” Kaiser Family Foundation, https://www.kff.org/report-

section/medicare-advantage-plan-switching-exception-or-norm-issue-brief/; Health Plan Advisory Council interviews and analysis.

1) Numbers don’t sum to 100 percent because of rounding.

2) Includes members who died, switched to traditional

Medicare, or involuntarily switched.

MA Enrollees Voluntarily Switching Plans

14%12%

9%

3%

2 or 2.5 3 or 3.5 4 or 4.5 5

2013 Plan Star Rating

By Premium Increase, 2013-2014

By Star Rating, 2013-2014

Change in Monthly Premium if Enrollees Did Not Switch

78% 11%

10%

Stayed with

same plan

Switched

plan

voluntarily

Other2

Distribution of

MA Enrollees

By Switching Status,

2013-20141Members more likely to

switch when facing higher

premium increase

Members in higher

rated plans less

likely to switch


https://www.kff.org/report-section/medicare-advantage-plan-switching-exception-or-norm-issue-brief/


20









health information



enrollees


enrollment



Closing care gaps







21

Closing Care Gaps A Key Piece of Stars Strategy

Closing Care Gaps


Staying Healthy:

Screening, Tests,

and Vaccines

Accessibility and

timeliness of care,

care coordination

and customer

service

Screening and

vaccines rates,

maintaining

physical and

mental health

Medication review,

functional status,

chronic condition

care, and all-cause

readmissions

Managing Chronic

(Long Term)

Conditions

Member

Experience with

Health Plan

Member

Complaints and

Changes in the

Health Plan’s

Performance

Health Plan

Customer Service

Plan quality

improvement, as

well as member

retention and

complaints

Appeals review

process and call

center capacity

Five Part C Stars Domains and Metric Areas

Care Gaps

Closing care gaps also essential

for managing member costs



22

Hard to Budge on Stars

Source: “Five-Star Quality Rating System,” CMS, https://www.cms.gov/medicare/provider-enrollment-and-

certification/certificationandcomplianc/fsqrs.html; Health Plan Advisory Council interviews and analysis.

Plan Star Performance, 2014-20161

325

12

Had available data

Changed star rating

Increased by 1 star

192

41%Plans keeping a

constant rating

over 2 years

Barriers to Closing Care Caps

• Plan data confusing and untimely

• Closing gaps may not be worth

provider time

• Plan communication confusing

• Members uninterested in plan

engagement

Recruiting providers Capturing member attention


https://www.cms.gov/medicare/provider-enrollment-and-certification/certificationandcomplianc/fsqrs.html


23

(Hook)ing Members

Annual Wellness Visit Focus Scales Marketing Efforts

Sample Case Study: Guided Actions

Source: Health Plan Advisory Council interviews

and analysis.

1) Pseudonym.

Orchid Health Plan1 Program Staff Responsibility

Marketing and risk staff

work together on

member roadmaps

Analytics staff generate

member lists with next

action items

Dedicated marketing staff

create member “hooks”

for identified actions

To: [email protected]

From: [email protected]

Subject: Take 3 minutes to schedule your free visit!

Happy New Year, Sam!

We’re excited to see you for your annual wellness visit this year. Take 5 minutes to schedule

your visit with Dr. Smith here. Looking forward to seeing you!

Sample Email





24

Adaptive Learning

Mass Customization Built on Consistent Messages


January

Betty,

Age 65

• Email: Schedule

your Annual

Wellness Visit

• Please discuss:

HRA, diabetes,

breast cancer

screening,

colonoscopy

cancer screening

Roadmap Examples for Orchid MA Beneficiaries

Betty went to her

wellness visit.

Phil

Age 71

• Letter: Schedule

your Annual

Wellness Visit

• Please discuss:

HRA, monitoring

mental health,

colonoscopy

cancer screening

Phil did not

schedule

wellness visit.

Email: Check

your blood sugar,

schedule diabetes

follow-up

appointment

Phone Follow-up:

Schedule your

Annual Wellness

Visit

Phil went to his

wellness visit and

scheduled follow

up with behavioral

health specialist.

Betty goes to

provider and has

new medication

issues.

Phone Follow-up:

See your doctor for

medication

reconciliation.

February March April

Phone Follow-up:

Schedule your

colonoscopy

screening.

May



25

Orchid’s Strong Improvements in Quality Performance

Star Power

Redesigned Messaging Yields Significant Bonus


Medicare Advantage

members getting annual

wellness visits, up from 6%

30%Increase in 1 year of

strategy implementation

1.5 stars

Knowing What You Want Your Members To Do

“If our communications confuse health plan and health system individuals,

even using the jargon that we all understand, how do we expect consumers in

the individual marketplace to understand what we’re saying? We had to figure

out a way of simplifying the message, not only so that people can consume it,

but so that we understand what we actually want them to do.”

Vice President, Quality



26

Guided Actions (cont.)


1) Pseudonym

Case in Brief: Orchid Health Plan1

• Regional health plan, with >300,000 Medicare Advantage members

• In order to qualify for the MA bonus, Orchid started a quality program a year ago

to steer members towards the MA metrics that carried the most weight

• Orchid sends its Medicare Advantage members customized mailings based on 3-

4 priority activities each member needs to complete

• Succeeding messages to member takes into account their clinical interactions

from the last month and the next action item with the heaviest measure weight

• They attained a 1.5-Star increase for MA Stars within 1 year of implementing the

strategy, associated with a 24% increase in annual wellness visits



ROAD MAP27




4 Questions



28

Other Health Plan Advisory Council Resources


Contact us at [email protected] for

access to more resources on Medicare

Advantage needs and priorities

The Medicare Advantage Stars

Improvement Guide

A custom toolkit for improving stars

performance

New Partnerships for

Risk Adjustment Accuracy

Tactics to encourage provider and

member behavior that supports your risk

adjustment strategy.

How to Give Providers

the Data They Want

Three steps to better data sharing

with providers

Three Major Avenues for Growth

in Medicare Advantage

Quick insight on Medicare

Advantage growth



ROAD MAP29




4 Questions


Understanding the Health Insurance Business: Medicare Advantage · 2019-07-18 · Understanding the...

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Transcript of Understanding the Health Insurance Business: Medicare Advantage · 2019-07-18 · Understanding the...