Catching up with Advisory Board’s Ken Leonczyk on the State of the Health Plan Industry and what health plan leaders need to know for 2022

By Claire Thayer, April 11, 2022

The pandemic has had a significant impact on health plans and in many ways has been a catalyst for change across the healthcare industry. Recently, Ken Leonczyk, Executive Partner, Advisory joined us for a lively discussion on what health plans need to know about key structural shifts of the peri-pandemic period. Ken identifies these six strategic points of inflection that will shift industry structure in the years ahead.

Value-Based Payment

Risk-based payment models will continue to grow, but who participates is an open question. The pandemic has done little to shift long-standing barriers in hospital financial needs, but plans have made headway with independent physician groups. Plans must now think about how the growing array of models fit together in a complex ecosystem.

Physician Alignment

An array of non-hospital suitors—plans, private equity firms, service partners, and national groups—are aligning more closely with physicians through a variety of partnership models. While hospitals may lose power, plans need to prepare to navigate relationships with all manner of new stakeholders throughout physician networks.

Home-Based Care

The wave of investment in home-based care today, centered around start-up financing or grants, does not guarantee long-term, systemic change. The industry may exacerbate existing challenges around staffing supply, care fragmentation, and health inequities. Plans must weigh how their policies will impact network access and marginalized patients.

Virtual Care

Most of the pandemic’s spike in virtual care came from traditional providers, but vendors are angling to transform their offerings to steal patient relationships— not just visits. As plans explore virtual-first products, they must ensure incentives are enough to influence consumers—and brace for fallout with local providers.

Price Transparency

The market will soon be inundated with an unprecedented level of pricing information, but disruption to historic practices will depend on the usability of the data. New vendors are emerging to parse and package the data for end users, so plans must prepare to clarify the broader context of their rates to members, purchasers, and providers.

Health Equity

The past few years brought health equity into stark focus, but to make true progress, leaders must cement equity as a business goal. As plans build equity goals into provider payments and care management actions, they must standardize data collection and analysis to generate evidence for sustainable interventions.

If you missed this informative webinar presentation, State of the Health Plan Industry: Unpacking the potential impact for 2022 planning, we invite you to watch this short webinar recap video here.

You can access the complimentary presentation slides presentation slides here and webinar video here.   To continue the conversation with Ken Leonczyk and learn more about how Advisory Board is working with other health care organizations, drop him an email at healthplan@advisory.com.

Spring is Here and Medicare Advantage is in Full Bloom

MCOL Staff, April 7, 2022

Mark Farrah Associates has released their assessment of Medicare Advantage  and Prescription Drug Plan  performance, market share and market penetration as of March, 2022. They report that total MA membership exceeded 29.4 million and Medicare stand-alone PDPs covered over 23.4 million members. Year-over-year MA plan enrollment grew by 8.5%, and PDPs experienced a membership decrease of -3.4%.

MFA tells us that:

• Texas experienced the most sizeable year-over-year increase of over 172,000 MA members.
• Stand-alone PDPs continued to see a significant decrease of approximately 824,000 enrollees between March 1, 2021 and March 1, 2022.
• CVS, Centene, UnitedHealth, Humana and Cigna were the top five companies that dominate 88.5% of the PDP market.

MFA reports that In the MA world, UnitedHealth in March 2022 holds the top position with 27.1% marketshare, followed by Humana with 17.4%, CVS Health with 10.7%, Anthem with 6.5% and Kaiser with 6.1%.

Also, here’s the March 2022 MA/PDP Snapshot recently released by MCOL in HealthExecSnapshot:

Google’s Alphabet, Facebook’s Meta, and now Anthem’s Elevance

By Clive Riddle, March 10, 2022

In 2015 Google unveiled Alphabet, a new name to brand the parent holding company separate from the Google identity. Last year, Facebook announced Meta in a similar fashion.  And now, 2,306 miles from Silicon Valley, an announcement emerges from Indianapolis that the separate parent name above the Anthem brand will become Elevance Health. Their announcement states that “the new name underscores the company’s commitment to elevating whole health and advancing health beyond healthcare.”

Anthem President and CEO Gail Boudreaux says the new name reflects “our transformation from a health benefits organization to a lifetime, trusted health partner.” Aetna in 2018 also shed the parent branding identity of a health benefits organization out of necessity, being acquired by CVS Health. While Cigna’s parent identity is still a health benefits organization - Cigna, their PBM Express Scripts acquisition in 2020 rolled up into Evernorth branding with new and existing applicable sister health service solution businesses. Last year Humana – like Cigna still sticking to parent health benefits organization branding – introduced CenterWell as the new brand for a range of its payer-agnostic health care services offerings. Not that this is a brand new concept in the health benefits organization world – UnitedHealth Group announced its "Optum" master brand for its health services businesses in 2011.

In their announcement, Anthem states its “family of companies has evolved to offer products and services beyond traditional health insurance. Through its digital capabilities, pharmacy, behavioral, clinical and complex care assets the company is able to address consumers’ full range of needs with an integrated, whole-person approach. It’s through these diverse assets that the company will deliver on its strategy, drive growth and exceed expectations for consumers.”

And their branding makeover won’t stop there. Anthem tells us that “the corporate rebranding is a first step in the company’s effort to optimize its brand portfolio. While Anthem Blue Cross Blue Shield health plans’ names will not change, the company does expect to streamline the number of other brands in the market to reduce complexities and improve consumer experiences.”

The company does more details in the form of FAQs in their new one-page website: https://www.elevancehealth.com/

What’s Next for Medicare Advantage: Part II - Next Up: Time To Get Real

by Lindsay Resnick, March 2, 2022

The is Part II of What’s Next for Medicare Advantage, offering a few observations and insights from the 2021-22 Annual Enrollment Period. The previous post, Part I - Frontline: Lessons Learned is available here.

Whether called ‘keys to success’ or ‘make it or break it time’ the following five challenges and opportunities are real. To be competitive in tomorrow’s Medicare Advantage marketplace plans need strategies for each.

Catch First-timers

On average 10,000 Americans turn 65 every day – THIS is Medicare Advantage’s new customer growth opportunity. While AEP will continue to be an important customer acquisition time of the year, fighting over fewer and fewer AEP switchers becomes a long, tough game to win. Individuals turning 65 choosing a Medicare plan for the first time and late market entrants (generally between ages 66 and 70) coming off an employer plan are the future of MA. For consumers, making the wrong Medicare insurance choice when they first enroll can not only be costly, but may mean they can’t get the best plan for them later. Plans with commercial Group and Individual business units have the extra advantage of capturing this ‘same brand’ existing customer cohort with an internal cross- over or cross-selling transition approach moving existing members to their Medicare products. Overall, the industry isn’t doing well here: only one-third of Medicare enrollees went to a plan with same group or individual carrier.

Grab consumers at their first Medicare enrollment decision, serve them well and plans can enjoy strong annual retention and profitable MA ROI. This is a year-round, always-on effort with significant LifeTime Value.

Leverage Retirement

The emotional charge around ‘retirement’ can be a persuasive response driver, supported by this eye-opening stat: A retired 65-year-old couple will need $300,000 for medical expenses…in addition to their Medicare coverage. Eighty percent of Americans age 65+ have a chronic condition and 68% have two or more. The link between retirement’s financial and healthcare concerns is extremely strong. In fact, one of the biggest post- retirement surprises cited by seniors is financial load of their Medicare coverage… I thought I planned for everything! Leveraging retirement planning into Medicare decision lead generation can be an effective direct response QOPC hook (Qualify, Offer, Product, Call-to-action). For example, ‘Take the Mystery Out of Retirement Planning‘ or ‘Financial Health in Retirement Depends on Your Medicare Choices‘ make compelling offers. Healthcare, long-term care and unexpected medical costs tops the list of retirement planning financial concerns...with both pre-retirees and retirees. It’s right up there with credit card debt, mortgage payments, savings, and Social Security.

Take the opportunity to speak with prospects at their “full” Social Security retirement: from 1943- 1954 it’s age 66, those between 1956-1959 its 66.4, and after 1960 full retirement age is 67.

Remove Friction

Again? Yes again…it’s time to deliver on high- performance customer experience/CX. Superior customer service goes a long, long way toward not only a top-level Star Rating, but it’s an essential part of customer retention and loyalty. Simply put: make sure the AEP switchers aren’t yours! Why pay the high price of acquiring new members just to see them walk out the back door? Investments in fixing and removing ‘points of friction’ throughout your MA plan, particularly inside your customer service organization, translate into improved profitability. And today, the bar is high. Even ‘satisfied’ customers walk out the door; ‘satisfactory’ performance is no longer enough to retain members---excellent, superior, first class and ‘the best’ need to be the plan’s goal. Once a plan has a ‘retention problem’ retroactively trying to keep members from leaving isn’t the answer. Rather, proactively delivering meaningful value and experiences that make members want to stay in the first place is a winning CX strategy.

CX represents an MA plan’s brand, it’s a marketable attribute that gets attention, and with recent adjustments to the new Star Rating guidance, having happy customers goes a long way.

Cultivate Partners

All the big retailers are in the Medicare game, either directly underwriting MA plans, selling plans through in-house agencies, or engaging MA customers through a branded primary care clinic or low-cost, convenience driven pharmacy service. During AEP these partnerships meant stores with high traffic area pop-up MA sales kiosks with agents and/or lead cards, co- branded Website tools and advertising, and pharmacist or clinic staff with “Ask Me About Medicare” buttons. For MA plans, it’s an if you can’t beat ‘em join ‘em moment to explore similar collaborative partnerships or joint ventures with national, regional, or local retailers. Collaboration is also being leveraged with providers. Either hospital systems or primary care physician networks sponsoring or affiliating with MA plans. Outside the strategic alignment that comes with this payer/provider relationship (aka Payvider), provider brand equity and trust can be a significant lead generation asset. Partnerships bring scale, which translates into financial and operating efficiencies, expanded market reach, and a better ability to address consumer demands for convenience, continuity, and consistency.

Teamwork makes the dreamwork. MA partnerships can yield big rewards: open new markets, extend product or service offering reach, and for consumers, better managed and more affordable health care.

Final Takeaway: Gut Check

The Medicare Payment Advisory Commission (MedPAC), a panel that makes recommendations to Congress on Medicare policy, expects beneficiaries in Parts A and B enrolled in MA plans to stretch past 50% in 2023.

Staying competitive in an increasingly benefit- rich, fast-paced growth market challenges even the best in the business. As Medicare Advantage plans strategize around their 2022 market moves, meaningful brand and product differentiation matter more than ever. On the marketing and sales frontlines, deploying the full power of distinction quickly separates winners from losers…those plans headed toward growth and profitability rather than a slow decline into obsolescence.

There’s no better time than the start of a new year to do a MA marketing ‘gut check’, an assessment to validate MA marketing assumptions, resource adequacy and comparative industry best-practice “gap analysis” to identify important areas of improvement. Here’s a 10-point checklist to guide your assessment:

A Trio of Value Based Care Surveys Indicate Technology Opportunities to Address Administrative Challenges

By Clive Riddle, November 10, 2021

The Guidehouse Center for Health Insights has just released analysis of an executive survey in conjunction with HFMA, the 2021 Risk-Based Healthcare Market Trends, that found health systems appear to be going big into risk sharing in 2022, with these percentages of respondents planning to advance into upside/downside risk sharing, professional capitation or global capitation for:

• Medicare Advantage: 59%
• Commercial Contracts: 52%
• CMS APMs: 49%
• Managed Medicaid: 36%
• Direct Employer Contracting 33%

Guidehouse's Richard Bajner tells us "We’re seeing increased interest from providers to own the premium dollar through risk-based arrangements. On the other hand, large payers have been more aggressive in building and even investing directly in primary care assets to gain control over the flow of care and better manage services delivered to members, compounding the need for payers and providers to align closely on market strategies. These moves have led health systems to gravitate toward programs more favorable for risk-based collaborations—or payvider models — such as Medicare Advantage, managed Medicaid, and self-insured models."

Guidehouse also share that “provider respondents to the survey cited data integrity, reporting, and the cost of technology (36%) as the No. 1 internal challenge in pursuing increased levels of risk. While half of respondents are building these capabilities in-house, 30% are partnering with payers to support risk-based capabilities and 21% are outsourcing services to a third-party organization.”

Avalere has just released their fifth annual outcomes based contract findings from a 50 question survey of  51 health plans and PBMs, indicating 56% have executed an outcomes based contract for prescription drugs. They also found 12% of payers reported having more than 10 OBCs currently in place, with another 6% of payers have 5–10 OBCs. This total 18% with 5+ OBCs decreased from 25% in 2020, although the portion with 10+ contracts increased from 2020.

Avalere’s Sarah Butler tells us “the significant increase in payers who have more than 10 OBCs in place is showing us that some payers are successfully executing these agreements. At the same time, however, the decline in payers that have tried 1 OBC indicates fewer new entrants in this space.”

Avalere reminds us that "OBCs typically include an agreement between health plans and drug or device manufacturers that ties product reimbursement to specific clinical, quality, or utilization outcomes. Although innovative contracting approaches, such as OBCs, aim to align cost with value, successful implementation and adjudication of an OBC or other type of value-based contract requires significant investment into infrastructure that can support outcomes tracking and coordination among entities involved. Therefore, while some payers may have successful experiences with OBCs, some payers may face significant administrative burden and have limited success in controlling costs."

Speaking of administrative burdens, the Medical Group Management Association (MGMA) recently released their 12-page Annual Regulatory Burden Report, finding that 91% felt the overall regulatory burden on their medical practice over the past 12 months has increased.

The Medicare Quality Payment Program (MIPS/APMs) ranked third (behind Prior Authorizations and COVID-19 workplace mandates) out of nine regulatory issues with regard to physician burden level, with 6% responding MIPS/APM were not burdensome; 6% slightly burdensome; 16% moderately burdensome; and 71% very or extremely burdensome. 79% said the move toward value-based payment (in Medicare/Medicaid) has increased the regulatory burden on their practice, and 70% said the program has not improved the quality of care for their patients, or been successful to date.

It should be noted survey responses were "from executives representing over 400 group practices. 70% of respondents are in practices with less than 20 physicians and 10% are in practices with over 100 physicians. Over 80% of respondents are in independent practices." Regulatory burdens might be anticipated to be greater with independent practices, and those with less than 20 doctors.

92% responded that CMS’ feedback was not actionable in assisting their practice in improving clinical outcomes or reducing healthcare cost related to the MIPS cost performance category, and 88% said the same for the MIPS quality performance category. 93% said positive payment adjustments do not cover the costs of time and resources spent preparing for and reporting under the program.

With respect to APMs, 80% said Medicare does not offer an Advanced APM that is clinically relevant to their practice, but 63% would be interested in participating in an Advanced APM if it was clinically relevant and aligned with their quality goals.

These findings would suggest an opportunity for value based care enabling applications that are designed to achieve program goals but also simplify participation and potentially reduce administrative burdens.

Dental and Vision Plan Satisfaction in 2021

By Clive Riddle, November 4, 2021

It’s time to see things eye-to-eye, and tell the tooth, about the state of vision and dental plan satisfaction. Setting Dad jokes aside, J.D. Power has just separately released their  2021 U.S. Dental Plan Satisfaction Report and their 2021 U.S. Vision Plan Satisfaction Report.

The J.D. Power Dental report tells us “overall customer satisfaction with dental plans increases slightly in 2021, driven by a combined 48-point increase in claims and reimbursement satisfaction (on a 1,000-point scale)  and customer service experience.” UnitedHealthcare Dental ranks highest with a score of 806. HumanaDental ranks second (793) and Aetna Dental ranks third (791).

Their vision report tells us “after a decrease in overall satisfaction in 2020, vision plan satisfaction is rebounding as doctor visits increase. Overall satisfaction is 769 (on a 1,000-point scale), an increase from 760 in 2020. Additionally, 5% more members visited their vision providers within the past six months compared with the same time in 2020.” UnitedHealthcare Vision ranks highest in customer satisfaction with vision plan insurers with a score of 825. Aetna Vision (816) ranks second and Davis Vision (775) ranks third.

The 2021 U.S. Dental Plan Satisfaction Report is based on responses from more than 1,203 dental plan members. The 2021 U.S. Vision Plan Satisfaction Report is based on responses from more than 1,110 vision plan members.

Both reports measure customer satisfaction applicable plans based on five factors (in order of importance): cost; coverage; communications; customer service; and reimbursement. coverage; cost; communications; customer service; and reimbursement.

Here are summaries that J.D. Power provided:

Utilization Drop in 2020 May Have Not Been as Much as Feared, and 2021 May be Seeing a Spike

By Clive Riddle, August 19, 2021

Analysis of California Health Plan data indicates 2020 physician encounters and inpatient days didn’t plummet as far as some worried earlier in the pandemic, due to deferred care, although as all aspects of everyday like opened up more in 2021, a spike in utilization was evidenced.  These findings are a preview of the complimentary webinar presentation:  California Health Plans By the Numbers: Key California Health Plan Data and Trends, to be held this Wednesday, August 25^th at 10AM Pacific.

California health plan physician encounters per member per year dropped from 2019 to 2020 in all three segment populations: Commercial from 5.1 to 4.4, Medi-Cal from 4.4 to 3.7. and Medicare from 8.4 to 8.4. But all three segment have increased in 2021 through June (5.4, 4.2, and 10.7 encounters respectively), with Commercial and Medicare surpassing 2019 levels. The 2021 jump is even more pronounced compared to the first six months of 2020.

California inpatient days per 1,000 members experience was somewhat similar. Comparing 2020 to 2019, Commercial dropped to 162.0 from 173.0, and Medicare dropped to 676.9 from 708.4. However, Medi-Cal days per 1,000 increased in 2020, to 356.1 to, 327.5. This was likely somewhat due to effects from a marked increase in new Medi-Cal members in 2020 (927k net new members in 2020, almost a 10% increase.) 2021 days per 1,000 increased over 2020 levels for all three segments, and 2021 Medi-Cal and Medicare days were materially higher than 2019.

Come join us this Wednesday to find out more!

Five Questions for Provider Data Experts on the No Surprise Act

by Claire Thayer, June 11, 2021

Recently, LexisNexis Risk Solution’s John Markoff, Senior Director, Provider Data Strategy and Laura Long, Vertical Solutions Consultant, Provider Data joined us in a webinar discussion on the new provider directory accuracy requirements that go into effect in January 2022.  We caught up with John and Laura on five key takeaways:

1. What are some of the common concerns with the No Surprise Act regulations that payers would want to be aware of?

John Markoff and Laura Long: 

• Can the payer outreach to all directory facing providers every 90 days?
• Initial accuracy of a payer’s database.
• Does the payer have ability to process changes from the outreach in a timely manner?
• How will downstream systems be impacted if a provider doesn’t verify, and they need to be removed from the directory?
• Can the payer outreach to all directory facing providers every 90 days?Initial accuracy of a payer’s database.Does the payer have ability to process changes from the outreach in a timely manner?How will downstream systems be impacted if a provider doesn’t verify, and they need to be removed from the directory?

2. Provider data is constantly changing, what are some of the key challenges you're seeing today?

John Markoff and Laura Long: 

It’s a challenge to maintain a high level of accuracy for data attributes that don’t have an authoritative source. Challenges stem from disparate systems, manual processes and out of date sources of data. Payers acquire companies, merge data assets and change systems over time. Resolving the issues that result from this require significant investment from IT, Operations, Data Governance and Provider Management.   

 

3. When evaluating provider data, what are the four key elements of quality?

John Markoff and Laura Long:

• Accuracy – Timely and Correct
• Timeliness – Providing updates in a timely manner
• Completeness – Depth and Breadth
• Governance – Ongoing maintenance and audit resolution

4.  Does this new legislation only impact government sponsored payers?

John Markoff and Laura Long:

This legislation is relevant for any provider listed on a member facing directory, regardless of product line.

5. What steps should payer organizations be taking now to be compliant with the new regulations by the 1/1/2022 effective date?

John Markoff and Laura Long:

• Payers need to start planning now to outreach to payers and ingest that data in a timely manner to meet the timelines presented in the Bill. 
• Conduct a third-party analysis of provider data within their system.       

If you missed this informative webinar presentation, No Surprise - Provider Data Accuracy Mandated, we invite you to watch the full On-Demand webinar video or short webinar re-cap video.

Springtime in Medicare Advantage Land

By Clive Riddle, April 9, 2021

The seeds are planted in the fall. Then as Spring arrives, you can assess what has been sowed.  Or, as Mark Farrah Associates puts it: “Health insurers compete by offering new pricing and product options to beneficiaries during the Open Enrollment Period for Medicare Advantage (MA) and prescription drug plans (PDPs), that runs from October 15th through December 7th of each year. Plans then begin to analyze final enrollment results in February and March to evaluate their standing and assess which competitors gained and lost members.”

Here's a summary of MA and PDP enrollment that appeared two weeks ago in MCOL’s HealthExecSnapshot:

Mark Farrah Associates has just released their analysis of March 2021 MA and PDP enrollment. They report that “as of March 1, 2021, total Medicare Advantage (MA), including Medicare Advantage with Prescription Drug Plan (MA-PD) membership, stood at 27,158,911 with a net gain of 2,408,192 members from March 1, 2020.  Medicare stand-alone prescription drug plans (PDPs) covered 24,268,611 members as of March 1, 2021, a net decrease of 926,333 from the previous year....MA plans grew by 9.7% while there was a -3.7% decrease for PDPs, year-over-year.”

They also note that:

• The top ten carriers covered 77.6% of all MA enrollees, with UnitedHealth remaining the market-share leader.
• Texas experienced the most sizeable year-over-year increase of almost 208,000 MA members.
• Stand-alone PDPs experienced a decrease of approximately 926,000 enrollees between March 1, 2020 and March 1, 2021.
• CVS, UnitedHealth, and Centene were the leaders amongst the top five companies that control 87% of the PDP market

Here are the top five national MA plans with their total March 2021 enrollment, % growth over March 2020. and national marketshare, from the Mark Farrah Associates report:

1. UNITEDHEALTH  | 7,221,432  | 13.7%  Growth | 26.6% Marketshare

2. HUMANA | 4,854,260 | 8.9%  Growth |17.9% Marketshare

3. CVS | 2,860,379  | 9.2%  Growth |  10.5% Marketshare

4. KAISER | 1,740,733 | 3.5% Growth |  6.4% Marketshare

5. ANTHEM | 1,530,894 | 15.4% Growth |  5.6% Marketshare

And here are the top five national PDPs from the Mark Farrah report:

1. CVS  | 5,738,786  | 1.0% Growth | 23.6% Marketshare

2. UNITEDHEALTH | 4,507,985 | -7.0% Growth |18.6% Marketshare

3. CENTENE | 4,131,374 | -6.5% Growth |17.0% Marketshare

4. HUMANA | 3,556,348 | -5.9% Growth |14.7% Marketshare

5. CIGNA | 3,194,589 | -3.3% Growth |13.2% Marketshare

Humana and the Payer-Agnostic Circle of Life

By Clive Riddle, March 19, 2021

Humana on Saint Patty’s Eve announced their new brand – CenterWell – “to describe and connect a range of the company’s payer-agnostic health care services offerings.”  Their senior-focused primary care facilities, including the multi-state Centerwell Primary Care, and Florida based Family Physicians Group will be included under the brand.

Centerwell will ultimately encompass Humana’s other health care services as well. Humana notes that in recent years it has “significantly expanded its health care services capabilities – from primary care to pharmacy to home care and more – in order to better serve its medical members, and to significantly strengthen its payer-agnostic care offerings. Now, the company is taking the next step with plans to unite various payer-agnostic services under the new CenterWell brand.”

“Payer-agnostic” is not a new term. A 2013 New England Journal article Payer Agnosticism, comes to mind, for example. But Humana has certainly been advancing the term to a whole new level during the past year, deploying the term seven times in their mpst recent announcement.

In January, during another “payer-agnostic” company announcement, Humana unveiled plans to open twenty more primary care centers during 2021, five more than in 2020; bringing the total Partners in Primary Care locations to 80 with a goal of 100 center by 2023.

The payer-agnostic approach for differs from a classic clinically integrated model in that the owned health care services are promoted and provided to serve multiple payers, instead of just the payer-owner. But never-the-less, it is interesting to see the Humana’s “circle of life” evolution of strategy of a healthcare provider turned health plan, now turned health plan / healthcare provider:

• 1972 - Founders David Jones and Wendell Cherry sold their nation’s largest nursing home company to capitalize acquiring hospitals
• 1974 – The new hospital company corporate name is changed to Humana
• 1984 – Humana starts its own health plan operations, as do other national hospital chains
• 1993 – Humana spins off its 77 hospitals to create Galen Health Care, similar to spin-off moves previously taken by other national hospital chains. But unlike they other chains, they spun of the hospitals as opposed to the health plans.
• 1994 – Galen Health Care is sold to Hospital Corporation of America (HCA)
• 2015 – Aetna acquisition of Humana is announced, but then falls apart over the next 18 month.
• 2018 – Humana participates with two private equity firms in acquisition of Kindred Healthcare.  Humana merges four owned Florida clinics from separate previous integrated plan acquisitions into one operating unit that will also service non-Humana patients
• 2020 - $600 million deal with New York-based private equity firm Welsh, Carson, Anderson & Stowe is announced to capitalize growth of Partners in Primary Care

Medicaid Plan Risk Adjustment: A Dime Yields $15

By Clive Riddle, March 4, 2021

Sherlock Company’s March issue of Plan Management Navigator tackles the topic of Medicaid risk adjustment expenses and premiums pmpm. Their analysis attempts “to measure the efficacy of risk adjustment expenses on premium rates” for Medicaid plans; because “as a result of the increased population of Medicaid members, there is a growing need to accurately capture risk scores so that compensation to the plan is commensurate with their health care requirements.”

So what exactly is “risk adjustment” in this Medicaid plan context? They explain “the Sherlock Benchmarks define Risk Adjustment as the expenses associated with the analysis of clinical data in order to match government compensation with the risk factors of members. This includes adjustment for the “three Rs”: permanent risk adjustment, transitional reinsurance and transitional risk corridors. For Medicaid products, this includes activities such as those supporting Chronic Illness and Disability Payment System (CDPS) system. Activities in this function include determining which members should be moved from TANF to higher capitation products.”

Their analysis is based on data from the Sherlock Benchmarks 2020 edition, which segments costs according to 70 functional or sub-functional categories. They captured risk adjustment chart review metrics including: total chart reviews, total charts subject to multiple passes, the risk score improvement percentage, and the dollar reimbursement yield.”

Their findings? “The modeled regression line implies that every $0.10 PMPM spent in Medicaid HMO Risk Adjustment results in about $15.00 PMPM in additional premiums. To put this in perspective, of the 14 plans included in this analysis, no plan spent over $1.50 PMPM in Risk Adjustment expenses.”

Not a bad ROI.

By the way, President Doug Shlock says there is always room for more plans to participate in their 2021 benchmarking study. Interested plans can contact Doug at sherlock@sherlockco.com.

Health Plan Companies Start New Year M&A Activity With a Bang

By Clive Riddle, January 8, 2021

The first week of the new year witnessed a flurry of merger & activity from health plan companies, highlighted by the continuing diversification trend in which many such organizations can’t really be labeled just a health plan company anymore.

UnitedHealth Group’s Optum has acquired Change Healthcare. We are told “Change Healthcare will join with OptumInsight to provide software and data analytics, technology-enabled services and research, advisory and revenue cycle management offerings.” The agreement calls for the acquisition of Change Healthcare’s common stock for $25.75 per share in cash and is expected to close in the second half of 2021.

In a statement, Andrew Witty, President of UnitedHealth Group and CEO of Optum commented “together we will help streamline and inform the vital clinical, administrative and payment processes on which health care providers and payers depend to serve patients. We’re thrilled to welcome Change Healthcare’s highly skilled team to create a better future for health care.” Neil de Crescenzo, President and CEO of Change Healthcare, who will serve as OptumInsight’s chief executive officer, added "this opportunity is about advancing connectivity and accelerating innovations and efficiencies essential to a simpler, more intelligent and adaptive health system."

Centene Corporation announced they will acquire Magellan Health for $95 per share in cash for a total enterprise value of $2.2 billion. We are told the transaction "will broaden and deepen Centene's whole health capabilities and establish a leading behavioral health platform," with the Magellan Health CEO and management to remain in leadership roles. Centene summarizes the additional benefits of the merger as including: a combined platform to deliver better health outcomes for complex populations through the integration of physical and mental health care; an important addition to Centene's Health Care Enterprises, under which Magellan Health will continue to operate independently; creation of a next generation behavioral health platform, aligned with Centene's technology strategy with additional growth opportunities in specialty care and pharmacy.

In a statement, Michael F. Neidorff, Chairman, President and Chief Executive Officer of Centene commented "This acquisition accelerates our diversification strategy and enhances our ability to build next generation capabilities in our specialty care business by leveraging our scale and investments in technology. Furthermore, we are very familiar with the range of Magellan Health's healthcare solutions as we have been one of their customers over many years.”

Molina Healthcare, Inc. announced that its acquisition of the Magellan Complete Care line of business of Magellan Health, Inc. closed on December 31, 2020. Magellan Complete Care serves approximately 200,000 members. The transaction helped clear the way for Centene's acquisition of Magellan Health.

Harvard Pilgrim Health Care and Tufts Health Plan announced their organizations have formally combined, effective January 1, 2021, having received all regulatory approvals. Tom Croswell , head of Tufts will serve as CEO for the combined organization, and Michael Carson, head of Harvard Pilgrim, will serve as President. We are told that "while Tufts Health Plan and Harvard Pilgrim Health Care are officially one organization, both heritage brands and products will remain in the market for a period of time, and the benefits, programs and services its members rely on will not change in 2021 as a result of the combination.  The new organization’s headquarters will be located in Canton, MA; move in is slated to begin in Q4 of this year.  The new organization also anticipates announcing its new name in the second quarter of 2021."

Smaller regional plans are at it as well. Physicians Health Plan of Northern Indiana  announced they acquired Core Benefits, Inc., effective December 31, 2020, to provide additional reach into the third party administration (TPA) and employee benefits market. And Bright Health announced it has signed an agreement to acquire Central Health Plan of California. Upon closing, Bright Health will serve approximately 110,000 individuals within its Medicare Advantage business.

What will the rest of January bring in the health plan M&A world, let alone the rest of 2021?

Five Things to Know from Humana’s 2020 Bold Goal Progress Report

By Clive Riddle, June 19, 2020

Humana in 2015 launched its Bold Goal program, their population health strategy targeting specific communities, and incorporating SDoH components with the goal of improving health of these communities in applicable measures by 20%. They have just released their 2020 Bold Goal Progress Report which details the company’s progress in meeting their goal, and their “ongoing efforts to help address the impact that social determinants of health and health-related social needs, such as food insecurity and loneliness, have on the physical and mental health of the Medicare Advantage population.”

For targeted communities and populations, their program “uses the U.S. Centers for Disease Control and Prevention (CDC) Healthy Days assessment tool to measure the mentally and physically unhealthy days of individuals over a 30-day period, covering Humana member populations through lines of business such as Medicare Advantage, Group and Medicaid.”

Here’s five things to know from the 2020 Progress Report: 

1. In their original (2015) seven Bold Goal communities, the number of unhealthy days reduced from 13.58 in 2015 to 13.27 in 2020, which non-bold goal communities increased from 13.42 to 13.45 during that time.
2. Of the seven communities, five reduced unhealthy days from 2015-2019, while two increased: San Antonio -8.6%; Baton Rouge -4.5%; Tampa -3.7%; New Orleans -2.2%; Knoxville -2.2%; Broward +0.6% and Louisville +7.4%
3. For the first time since Humana began benchmarking, Humana Medicare Advantage members across all markets improved their Healthy Days. 
4. Humana screened more than 2.6 million Humana members for social determinants of health in 2019. Humana found that each member screened had an average of 3.5 health-related social needs (e.g. food insecurity, socially isolated or lonely)
5. Depression had the most unhealthy days of six targeted chronic conditions, members with chronic obstructive pulmonary disease (COPD) had 17.94 unhealthy days (decreased 1.2% in 2019); coronary artery disease had 14.94 unhealthy days (decreased 1.8%); depression had 22.21 unhealthy days (decreased 2.9%), congestive heart failure had 17.29 unhealthy days (decreased 3.1%) and hypertension had 13.67 unhealthy days (decreased 3.2%)

COVID-19 and the Uncertainties for 2021 Health Plan Premiums

By Clive Riddle, June 12, 2020

What will COVID-19 do to next year’s health plan premiums? The American Academy of Actuaries have just released a new issue brief, Drivers of 2021 Heatlh Insurance Premium Changes: The Effects of COVID-19. They tell us one thing for certain, is COVID-19 brings a whole lot of uncertainty to the equation.

Academy Senior Health Fellow Cori Uccello explains that “premium changes are based on how costs of care, enrollment, and other factors are expected to change relative to insurers' assumptions that were used in setting premiums for the current year, and the COVID-19 pandemic has brought new unknowns and opposing trends into the mix. The pandemic has introduced both positive and negative cost pressures within the health care system, and uncertainties to key projections such as claims that could be sensitive to possible subsequent waves of infection and illness.”

Four key points of their nine-page issue brief include:

1. For the first half of this year, increased health spending due to the direct costs of diagnosing and treating COVID-19 has been more than offset by a reduction in non-COVID-19 health services

2. We don’t know how trends will continue through the remainder of this year.

3. COVID-19 has introduced significant uncertainty regarding projecting 2021 claims levels

4. How COVID-19 will impact 2021 premiums depends on assumptions involving:

• The emergence of subsequent COVID-19 waves in 2020 or in 2021
• Whether non-COVID-19 utilization continues to be deferred or eliminated in 2021 or whether treatment deferred in 2020 is provided in 2021
• The pandemic’s economic effects on shifts in insurance coverage and risk pool composition, and
• COVID-19 testing and treatment costs, the availability of new treatments and vaccines, increases in mental health and substance treatment needs, changes to telehealth utilization and costs, and changes to provider reimbursement rates

With such an uncertain immediate future, perhaps the best place to start in considering premium rate impact, is to ask the right questions. Last month, MIlliman released a seven-page white paper on this topic: COVID-19: Considerations for commercial health insurance rates in 2021 and beyond.

Milliman tackled the topic by addressing these issues, and their related questions going forward:

1. Acute treatment and vaccination for COVID-19: How will COVID-19 infections and prevention impact 2021 costs? How will the cost of treatment evolve? When will a vaccine be ready, and what will it cost?

2. Access and demand for healthcare: How will the pandemic and aftermath affect access and types of care received? How long will utilization declines last, and what will patterns look like in the aftermath?

3. Lasting impacts on population health: How will the pandemic affect overall population health? How will carriers adjust rating philosophies to manager COVID-19 risk?

4. Economic impacts on enrollment and utilization: How will collateral economic damage affect enrollment and utilization patterns?

5. Disruptions to provider networks: How will provider systems be disrupted? How might this affect future contract negotiations and reimbursement structures? How will costs swings interact with one-sided and two-sided risk-sharing arrangements?

6. Operational impacts: How will disruptions and cash flow volatility impact reserve estimates used for pricing? How will delivery systems need to adapt, and how will that influence risks and costs? How might general and administrative expenses be impacted?

The Yellow Brick Road to Savings $13B In Further Automated Healthcare Administrative Transactions

By Clive Riddle, January 24, 2020

CAQH has released their seventh annual report  - the 2019 CAQH Index - which measures "the progress made by the healthcare industry in reducing the costs and burden associated with administrative transactions through automation. Their 49-page report found that "of the $350 billion dollars widely cited as the cost of administrative complexity in the US healthcare system, $40.6 billion is spent on eight administrative transactions. Of that, the industry can save $13.3 billion, or 33 percent of existing annual spend, by transitioning to fully electronic processes." 

Regarding the $13.3 billion in potential savings through automation, the report tells us “$9.9 billion can be saved by the medical plans and providers, while $3.4 billion can be saved by the dental industry. In both industries, the greatest savings exist for providers as compared to plans.”

The Index report “analyzes levels of automation, spending and savings opportunities for eight administrative transactions related to verifying patient insurance coverage and cost sharing, obtaining authorization for care, submitting claims and supplemental information and sending and receiving payments.”

What are these eight transaction categories, and what were their corresponding rates of full electronic transaction processing in 2019 vs. 2015?

1. Eligibility and Benefit Verification:  84% 2019 | 71% 2015
2. Prior Authorization  13% 2019 | 10% 2015
3. Claim Submission  96% 2019 | 94% 2015
4. Attachments  20% 2019 | NA 2015
5. Coordination of Benefits  86% 2019 | 49% 2015
6. Claim Status Inquiry  70% 2019 | 57% 2015
7. Claim Payment  70% 2019 | 61% 2015
8. Remittance Advice  50% 2019 | 51% 2015

Of these eight transaction categories  - the term “Attachments” might be a little generic and require further definition. CAQH defines Attachments as "the exchange of patient-specific medical information or supplemental documentation needed to support administrative transactions and clinical decisions." They go on to say "serving as a bridge between clinical and administrative data, attachments are also critical to the success of value-based payment models" and that the majority of attachments are exchanges through mail and fax as opposed to electronically.

The largest remaining estimated savings opportunities from further automation are with:

• Eligibility and Benefit Verification:  $4.24 Billion
• Claim Status Inquiry: $2.16 Billion
• Remittance Advice: $1.85 Billion

CAQH’s call to action for the industry to achieve these savings centers around:

• Focusing efforts to reduce provider burden
• Accelerating standards and operating rule development to support harmonization of administrative and clinical data exchange
• Needing vendor adoption of all standards and operating rules; and
• Expanding research related to the administrative workflow

A Current Snapshot of Medicare Advantage, PDP Medicare Employer Group Enrollment

by Clive Riddle, November 22, 2019

As of November, Medicare Advantage now serves 22,584,367 enrollees. Another 709,746 are enrolled in related plans (Dual, Cost and PACE), for a total of 23,294,113 Medicare enrollees in managed plans. 88.3% of these total managed enrollees have Prescription Drug Plan coverage. Another 25,626,600 Medicare enrollees not in managed plans have PDP coverage.

14.1% of Medicare Advantage enrollees are in Special Needs Plans. 20.1% of Medicare Advantage enrollees are in Employer Plans. 18.5% of Medicare PDP only enrollees are in Employer Plans. Below is the CMS November 2019 enrollment contract summary report: 

Speaking of Employer plans, Mark Farrah Associates has just released a brief: Trends in Employer Group Medicare Advantage Enrollment. For the employer group segment, they identified the top five MA payers by group enrollment (Oct. 2019 data) to be:

• UnitedHealth: 1,387,052
• CVS/Aetna: 913,490
• Kaiser: 550,331
• Humana: 510,956
• BCBS Michigan: 378,890

These top five payers comprise 83.7% of total Employer Group MA enrollment, and “all 5 of the leading group MA health plans achieved double-digit growth in membership since December 2016.” Enrollment is also concentrated by state, with the top ten states (20% of the states) comprising 63.9% of Employer Group MA enrollment, with California on top with 622,404 enrollees followed by Michigan with 405,415.

Overall, they note that “employer group MA enrollment has increased by almost 321,000, a 7.7% increase, since December 2018. Moreover, group market enrollment has increased by approximately 1.3 million members since December 2016.”

Health Plan Medical Ratio and Administrative Expense Snapshots

by Clive Riddle, September 20, 2019

Two reports on health plan performance were released this week:  Mark Farrah Associates issued an analysis brief providing insights into mid-year profitability for commercial and government lines of health insurance business entitled: Health Insurance Segment Mid-Year 2019 Profitability; and Sherlock Company's September 2019 Plan Management Navigator summarized cost trends among Medicare-focused plans.

Key findings from the Mark Farrah report on health plan profitability include:

• At the end of second quarter 2019, the average medical expense ratio for the Individual segment was 73.9%, as compared to 69.0% the previous year.
• Growth in medical expenses pushed the average medical expense ratio for the Employer-Group segment up to 81.4% for 2Q19 from 80.5% in 2Q18.
• For Medicare Advantage, premium growth outpaced increases in medical expenses pushing the medical expense ratio down to 84.7% from 85.5% in 2Q18.
• An increase of 9.7% in medical expenses per member per month pushed the medical expense ratio for Managed Medicaid up to 92.0% from 88.8% in 2Q18.

Their report concludes “at mid-year 2019, all four health care segments are signifying reduced levels of profitability for health insurers over 2018.  Due to the minimum MLR constraints placed upon the individual segment, the stagnation of premium growth along with the rise in the mid-year med expense rations is not surprising, especially after the underwriting gains reaped in 2018.”

While Mark Farah Associates focused on profitability driven by medical expenses, Sherlock Company reported on administrative expenses and found that “for 2018, Medicare-focused plans experienced administrative cost growth, excluding Miscellaneous Business Taxes, of 6.4%. Account and Membership Administration [expenses were] also trending higher in 2018 at 7.0%, up from last year’s increase of 3.7%.

For Medicare-focused plans, they found “High cost Medicare Advantage grew at a median rate of 4.1%, Medicare SNP grew at a median rate of 5.7%, while low cost Medicaid increased at a median rate of 1.1%. The Commercial Insured product membership fell by a median rate of 2.1%, while Commercial ASO grew at a median rate of 3.5%. Overall, commercial membership decreased by 1.9%. Comprehensive membership in continuous plans fell by a median rate of 1.5%.

Health Plan Medicare Ratio and Administrative Expense Snapshots

by Clive Riddle, September 20, 2019

Two reports on health plan performance were released this week:  Mark Farrah Associates issued an analysis brief providing insights into mid-year profitability for commercial and government lines of health insurance business entitled: Health Insurance Segment Mid-Year 2019 Profitability; and Sherlock Company's September 2019 Plan Management Navigator summarized cost trends among Medicare-focused plans.

Key findings from the Mark Farrah report on health plan profitability include:

• At the end of second quarter 2019, the average medical expense ratio for the Individual segment was 73.9%, as compared to 69.0% the previous year.
• Growth in medical expenses pushed the average medical expense ratio for the Employer-Group segment up to 81.4% for 2Q19 from 80.5% in 2Q18.
• For Medicare Advantage, premium growth outpaced increases in medical expenses pushing the medical expense ratio down to 84.7% from 85.5% in 2Q18.
• An increase of 9.7% in medical expenses per member per month pushed the medical expense ratio for Managed Medicaid up to 92.0% from 88.8% in 2Q18.

Their report concludes “at mid-year 2019, all four health care segments are signifying reduced levels of profitability for health insurers over 2018.  Due to the minimum MLR constraints placed upon the individual segment, the stagnation of premium growth along with the rise in the mid-year med expense rations is not surprising, especially after the underwriting gains reaped in 2018.”

While Mark Farah Associates focused on profitability driven by medical expenses, Sherlock Company reported on administrative expenses and found that “for 2018, Medicare-focused plans experienced administrative cost growth, excluding Miscellaneous Business Taxes, of 6.4%. Account and Membership Administration [expenses were] also trending higher in 2018 at 7.0%, up from last year’s increase of 3.7%.

For Medicare-focused plans, they found “High cost Medicare Advantage grew at a median rate of 4.1%, Medicare SNP grew at a median rate of 5.7%, while low cost Medicaid increased at a median rate of 1.1%. The Commercial Insured product membership fell by a median rate of 2.1%, while Commercial ASO grew at a median rate of 3.5%. Overall, commercial membership decreased by 1.9%. Comprehensive membership in continuous plans fell by a median rate of 1.5%.

Two Papers on the Health Plan Medicare Opportunity

By Clive Riddle, August 2, 2019 

Oracle has released an Executive Insight paper on the Opportunity Ahead for Agile and Efficient Medicare Advantage Plans,  cautioning that “While the opportunity is great, MA plans are not automatically a wise or profitable business decision for all health insurers. There is growing competition as new players enter the market, and cost and margin pressures continue unabated. To make the most of this opportunity, MA plans must look to accelerate innovation while optimizing costs across their enterprises— from marketing and enrollment to plan configuration, claims processing, compliance, and renewal.”

They report on three development plans should consider now:

1. It is “Time to flex strength with expanded flex benefits. In 2019, MA plans were cleared to offer new flex benefits, designed to move plans toward expanded population health capabilities.”
2. “MA plans look to differentiate on other fronts and deliver high levels of service—without placing profitability and stability in peril.”
3. Payers are eager to bring new urgency and focus to improving claims accuracy and delivering innovative provider payment models.

HealthEdge has just released results of its Voice of the Market Survey, a study of 201 health insurance executives directly involved in Medicare lines of business. 92% responded that they are trying to grow their Medicare Advantage book of business faster than their traditional Medicare Supplement business.

Here’s some key findings from their survey:

• 53.2% said the value-based model of Medicare Advantage significantly factors into a desire to grow the business, while 42.8% said it moderately factor in.
• Expanding to new service areas ranked first in level of importance as the steps being taken to attract new Medicare and Medicare Advantage members, followed by (2) Appealing to tech-savvy digital consumers; (3) Providing incentives for healthy behaviors; (4) Addressing social determinants of health; and (5) Marketing/advertising to prospective members
• Applicable steps above get re-ordered somewhat when ranking importance to retain current Medicare and Medicare Advantage members: (1) Appealing to tech-savvy digital consumers; (2) Addressing social determinants of health; (3) Providing cost transparency; (and 4) Providing incentives for healthy behaviors; (5) Providing education services to members about their benefits
• There is not consensus on what is the biggest challenge to acquiring new members in the Medicare or Medicare Advantage (MA) line of business.  29.4% said it was funding/executing marketing outreach to  attract new members; 23.8% said competitors who  dominate the market; 22.4% said offering the variety of  plans necessary to satisfy members; and  19.9% answered differentiating  between MA and  traditional Medicare.
• When asked “what is the biggest external challenge your organization faces in the Medicare and Medicare Advantage line of business.” Competitors seem top of mind, with 34.3% responding “competition”; and another 29.9% stating “members unwilling to switch plans from a competitor. Other responses were 19.9% replying “regulations” and 15.9% saying “member demands.”

Our Dunning-Kruger Healthcare System

By Kim Bellard, July 11, 2019

Psychologist David Dunning, originator of the eponymous Dunning-Kruger effect, recently gave an interview to Vox’s Brian Resnick. For those of you not familiar with the Dunning-Kruger effect, it refers to the cognitive bias that leads people to overestimate their knowledge or expertise. More importantly, those with low knowledge/ability are mostlikely to overestimate it.

Dr. Dunning believes that we tend to think that this effect only applies to others, or only to “stupid people,” when, in fact, it is something that impacts each of us As Dr. Dunning told Mr. Resnick, “The first rule of the Dunning-Kruger club is you don’t know you’re a member of the Dunning-Kruger club. People miss that.”

So, how does this relate to our healthcare system?

We brag about our excellent care, our great hospitals and doctors, and all those healthcare jobs powering local economies. Yet we have by far the most expensive healthcare system in the world, which is expensive not because it delivers better care or to more of its population than health systems in other countries, but because it feels it is justified in charging much higher prices. Our actual outcomes, quality of care, and equity are all woefully mediocre on a number of measures.

How many of you live in an area that has at least one hospital system claiming to be one of the “best” hospitals in the country? Similarly, how many of us like to believe that our doctors are “the best”? Perhaps they even have “best doctors” plaques in their offices to support this claim.

Statistically speaking, most of us receive average care, and some of us receive sub-standard care. We don’t live in Lake Wobegon. We can’t all be getting the best care, or even above-average care. Just look at how few hospitals earn high ratings from The Leapfrog Group.

In The Atlantic, Olga Khazan reported on a new study that suggests that, despite all their supposed superior knowledge, doctors don’t really make better patients than the rest of us. They get C-sections about as often, and about as unnecessarily as we do, they get about the same amount of unnecessary/low value tests, they’re not better at taking needed prescriptions.

As Michael Frakes, one of the authors told Ms. Khazan, the doctors “went through internships, residencies, fellowships. They’re super informed. And even then, they’re not doing that much better.” Professor Frakes speculated that even physicians tended to be “super deferential” to their own physicians, despite their own training and experience.

It is widely accepted that as much as a third of our healthcare services are unnecessary or inappropriate — even physicians admit that — but, of course, it is other physicians doing all that. No one likes to believe it is their doctor, and few doctors will admit that they are the problem.

Dunning-Kruger, indeed.

Much as they’d like us to, it is not enough for us to always assume that our healthcare professionals and institutions are qualified, much less “the best.” It is not enough for us to trust that their opinions are enough to base our care recommendations on. It is not enough to believe that local practice patterns are right for our care, even when they are at variance with national norms or best practices.

“Trust” is seen as essential to the patient-physician relationship, the supposed cornerstone of our healthcare system, but trust needs to be earned. We need facts. We need data. We need empirically-validated care. We need accountability.

Otherwise, we just fall victim to healthcare’s Dunning-Kruger effect.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting.