A variety of traditional and non-traditional investors are starting to capitalize on the stability of the Medicare Advantage program and expansion of the Medicare Advantage health plan market. These companies are leveraging sophisticated technological interfaces, data, and telemedicine to help improve the patient experience and to maximize the Triple Aim.
Why Medicare Advantage?
Medicare Advantage plans (“MA Plans”) are offered by private insurance companies subject to certain standards established by the Centers for Medicare & Medicaid Services. While the Medicare Advantage health plans are responsible for meeting specified levels of benefits and service standards and receive premium funding from the government, they have a high degree of autonomy on how they administer the plans to cover enrolled Medicare beneficiaries. Medicare Advantage funding is risk adjusted for the health status of the enrollee; as a result, effective MA Plans are highly dependent upon real-time data sharing.
Disfavored No More
Recent developments show that Medicare Advantage has more bipartisan support than the Affordable Care Act marketplace and is less susceptible to political intrigues. However, this was not always the case. Not too long ago, Medicare Advantage was considered a “privatization of Medicare,” and insurance companies were accused of making a profit off the Medicare program. In February 2013, federal officials announced a 2.2 percent cut to Medicare Advantage reimbursement. The political attacks on Medicare Advantage were not well received by the Medicare Advantage-enrolled seniors who vocally began to defend their beleaguered program. The patients began a campaign of communication to members of Congress, touting the benefits of engaged Medicare Advantage health care providers and health-related initiatives, such as fitness and nutrition counseling. This caught the skeptics between a rock and a hard place. Some members of Congress were torn because while they wanted to end the program, they could not do so because their senior constituents love it. After significant grassroots lobbying, coalition building, and industry efforts, the proposed 2.2 percent reduction was transformed into a minor increase by April 2013. This turnaround was primarily due to patient and provider advocacy with the campaign of communication resulting in letters from thousands of seniors to Congress, asking for protection of “their” Medicare Advantage program. Medicare Advantage went from a political pariah to a bipartisan tolerated program within a few years.
Medicare Advantage Is Here to Stay
Fast forward to 2018; Medicare Advantage is marketed as an innovative health care option that will provide more choices and lower premiums. The Trump administration is providing greater flexibility to companies offering benefits in MA Plans. Medicare Advantage is expanding beyond the retiree states of Florida, Arizona, and California with significant inroads in all 50 states. The growth has caught the eye of innovative health care investors, and market consolidation has produced larger plans with stronger infrastructure, including captive staff-model delivery systems. Medicare Advantage continues to grow with 33 percent of Medicare-eligible beneficiaries currently enrolled in MA Plans.
Significant opportunities exist for companies that already possess sophisticated data analytics and coordinated care systems. Notably, one such player, Clover Health, announced on August 27, 2018, that it will also be launching MA Plans in six new markets in 2019. Clover Health is a San Francisco-based startup that uses data analytics and artificial intelligence to deliver health care. Currently, Clover Health provides services for 30,000 seniors and others eligible for Medicare in parts of Georgia, New Jersey, Pennsylvania, and Texas. Only time will tell how successful startups, such as Clover Health, will be in the Medicare Advantage marketplace. However, this investment is one indicator that, despite the rhetoric around health care in America, Medicare Advantage is here to stay.
Succeeding in the highly competitive Medicare Advantage (MA) market requires more than just a sense that there are financial gains to be had in this growing health insurance segment.
Payers that wish to reap some of the many financial rewards of becoming an MA plan sponsor also need to deliver impeccable services to consumers, both in the clinic and at the help desk.
The Medicare Advantage Star Rating system is the most visible mark of success with the challenges of improving experiences, delivering quality care, and improving long-term outcomes for vulnerable beneficiaries.
Health plans that do not achieve the coveted five-star rating for their services risk falling behind the pack in an increasingly crowded field of offerings.
Julie Wright, Chief Medical Officer for Dean Plan Health, knows that hitting the five-star goal isn’t easy. It’s even harder to do in the first year of operating a new Medicare Advantage offering.
“We really wanted to go in shooting for five stars — adhering the right compliance and regulatory arrangements and making sure we knew exactly how to be successful within each Medicare Advantage area,” Wright said. “That also included building a growth strategy in order to scale our MA capabilities. A five-star entry was very intentional.”
Dean Health Plan also provides original Medicare products and services, but saw Medicare Advantage as an opportunity to improve quality and choice for its Medicare members.
“The most important decision-making factor for entering Medicare Advantage is to determine how this product aligns with an organization’s goal to provide superior services and high-quality outcomes for its membership,” Wright said. “Payers should ask themselves how they can help to expand those offerings and opportunities for beneficiaries.”
When Dean Health Plan launched its first MA option in 2017, the organization started by asking itself those very questions and preparing carefully for both short-term and long-term success. Health plans need as much information about their internal readiness as they do about the market they will be entering, Wright said. Before launching a new product, an MA plan should gather as much performance data and financial data as possible from each department, she said. The information allows a health plan to determine where a plan can succeed and what aspects of its operations may require attention.
“The MA entry was a health plan-wide initiation of a brand-new product line. And that's not something to undertake lightly,” Wright said. “We wanted to make sure that we could develop that, do it well, scale it, and grow it in a way that would align with our members’ needs. And we also wanted to evaluate if we could perform well for our members and employer groups.”
Collecting this data allowed Dean Health Plan to make an informed decision about whether the time was right to enter the Medicare Advantage market, and how to position its offerings to meet each of the MA Star Ratings criteria.
“We went through and evaluated our service capabilities compared to what each star measurement category asks for,” Wright said. “It took careful evaluation to determine where the best opportunities are to achieve high star ratings and be successful.”
“We then performed some analysis about which stakeholder would ‘own’ those different areas,” she continued. “We evaluated if a certain performance measure would require management from within the health plan or if a provider would be responsible. Then we started to link the responsible stakeholders to each measure.”
The payer also paid close attention to the compliance and regulatory requirements that form a core part of developing a new plan offering.
“This is absolutely one of the critical things a new Medicare Advantage plan has to prepare for,” Wright emphasized. “The preparation for the rigor, discipline, planning, and oversight for all of the compliance and regulatory aspects is critical. I cannot underestimate how important that is.”
“Our health plan had real strengths after planning around compliance and making sure that the plan reported on the right measures, she continued. “We ensured that we were compliant in every single step that we had to be, to honor our obligations both to CMS and to our members.”
Steering committees constantly monitor the quality and performance of each program, she added.
The plan leverages an extensive physician network of 2400 providers, 28 hospitals and 187 primary care sites to provide services such as embedded pharmacy programs, chronic disease management services for MA, and beneficiary engagement programs. The steering committees ensure that the programs within the network are geared towards achieving a five-star rating
“Steering teams, provider collaboration, constant oversight, and continuous monitoring of our MA programs drove our overall results,” Wright said.
Dean Health Plan boasts five-star ratings for diabetes care, care coordination, healthcare quality rating, beneficiary healthcare access, and medication adherence. Wright attributes the success to effective collaboration and the benefits of health IT.
Dean Health Plan’s quality department is largely responsible for making sure that beneficiaries not only had high-quality care, but also have quick access to healthcare services. The quality department assesses opportunities for clinical care providers to improve quality. Health IT systems help to organize and report on care management data.
“It’s very important that we have a close working relationship between our quality department here at the health plan and our contracted providers,” Wright said. “The quality department also ensured that care coordination teams knew exactly what services a patient needed as the beneficiary received care.”
Dean Health Plan currently offers five Medicare Advantage health maintenance organization (HMO) plans and six supplemental benefits for MA beneficiaries. Wright is hopeful that Dean Health Plan will expand its MA business segments beyond its current offerings with new health plan types and additional benefits that focus on quality.
A federal judge on Friday provided a big win for the health insurance industry, ruling that a Centers for Medicare & Medicaid Services final rule on overpayments was fundamentally unfair.
In a 30-page ruling that vacated the Medicare Advantage 2014 Overpayment Rule, U.S. District Judge Rosemary Collyer sided with UnitedHealth Group and said the final rule "will inevitably fail to satisfy the statutory mandate of actuarial equivalence."
Stephanie Trunk, healthcare cractice co-leader at Arent Fox, based in Washington, D.C., explained the ramifications of the ruling in an email exchange with HealthLeaders.
1. How will this ruling change the way health insurers do business?
Trunk: The ruling essentially invalidates CMS's 2014 final rule implementing the 60-day overpayment return requirement in the Affordable Care Act. Medicare Advantage Plan sponsors—such as UnitedHealth—still must comply with the ACA requirement to report and return any overpayment "after reconciliation" within 60 days after the date on which the overpayment was identified.
2. What were the factors that led to a favorable ruling for UnitedHealth?
Trunk: The court concluded that CMS's 2014 final rule implementing the 60-day overpayment requirement violated the Administrative Procedures Act because (1) it was contrary to the statutory requirement of actuarial equivalence between traditional Medicare and Medicare Advantage, and (2) the intent standard associated with "identifying" an overpayment in the final rule—when it has determined or should determine through reasonable diligence—adopted in the final rule was not as proposed in the proposed rule and heightened in comparison to the statute—actual knowledge of the existence of the overpayment or acts in reckless disregard or ignorance of the overpayment.
3. How could the government respond to this ruling?
Trunk: One can only speculate. CMS can appeal or they could initiate new notice and comment rulemaking with a new proposed rule to implement the a 60-day overpayment requirement.
4. How could the federal government adjust the final rule to make it comply with statute?
Trunk: CMS needs to move away from tying overpayments to Medicare Advantage plans to diagnosis codes, which is not the basis for overpayments in traditional Medicare. In addition, CMS needs to align the definition of "identify" in the rulemaking to the statute and ensure what is included in the proposed rule is not altered in the final rule.
5. What other effects do you see this ruling having?
Trunk: The ruling could have a direct impact on the intervened False Claim Act case United States ex rel. Benjamin Poehling v. UnitedHealth Group, Inc et al., Case No. CV 16-08697 (USDC, CD CA) pending in California.
The basis for the case is that UnitedHealth failed to return identified overpayments as required by the ACA, as it failed to delete invalidate diagnosis codes and return the risk adjustments associated with higher value, invalid diagnosis codes. This is based on the interpretation of the ACA overpayment obligation in the 2014 final rule, which the court invalidated.
Starting in 2019, Medicare Advantage plans will have the flexibility to target non-medical health-related services to members who have chronic care conditions. MA insurers will be able to target supplemental services such as minor home modifications to help accommodate walkers or wheelchairs, or home-delivered meals that are lower in salt or sugar for those with diabetes or chronic heart failure. How the supplemental benefits are implemented depends on policies issued by the Centers for Medicare and Medicaid Services.
This is expected around December, when CMS sets rates for MA plans, according to the Bipartisan Policy Center, which has issued its own recommendations. The supplemental benefits for chronic care conditions are part of the Bipartisan Budget Act of 2018, which was signed into law by President Trump in February. It allows Medicare Advantage plans to provide additional or supplemental services to those with complex care needs and to provide access to non-medical health-related benefits, including those that have proved successful in keeping patients in their homes. Medicare does not support these non-medical benefits, said Bill Hoagland, senior vice president, BPC.
About a third of all Medicare beneficiaries are in a MA plan. These plans are popular with both those who sign up due to the additional benefits they offer, and with insurers that have realized profits and decreased costs through narrow networks and aligned incentives. MA insurers recently got a boost from CMS when the agency said it would allow these plans to cross negotiate between Part B and D drugs to choose the least expensive alternative.
MA also outperforms traditional Medicare for the chronically ill, a study shows.
The Bipartisan Policy Center is concentrating on three areas in recommendations to CMS to implement the chronic care provisions of the law. The first is in striking a balance of flexibility for plans to offer supplemental benefits such as transportation, meals and minor home modifications, and guidelines so plans feel comfortable offering the services without fear of audits or sanctions. The second is in the implementation of new requirements to integrate Medicare and Medicaid dual eligibles. The third is around the grievances and appeals procedures. CMS has already begun gathering input for the implementation of a unified grievance and appeals process, the BPC said.
In MA plans, claims are paid while they are in dispute but this is not the case in traditional Medicare, according to Katherine Hayes, director of Health Policy for BPC.
New York and Minnesota have already integrated appeals process, she said. The law allows a shift from what is covered to what patients and their families need, Hayes said. Barriers to adoption include the current requirement that MA plans offer existing uniform benefits to all enrollees. CMS should allow plans the flexibility to determine supplemental benefits, BPC said.
Also, CMS needs to ensure insurers will not use supplemental benefits to avoid high risk members through plan marketing.
Medicare beneficiaries with four or more chronic conditions account for 90 percent of Medicare hospital readmissions and 74 percent of overall Medicare spending, according to the BPC. The number of older Americans will double by 2050. Recent Health Affairs study shows connection between meal supports and lower healthcare costs, from $843 per month compared to $1,413 for those without receiving meals specialized to meet needs of diabetes, hypertension, and other conditions. The study also showed fewer hospital admissions and trips to the ER.