a darwinian moment in government health programs · 2018-05-24 · a darwinian moment in government...

A DARWINIAN MOMENT IN

GOVERNMENT HEALTH PROGRAMS

A Presentation to Gorman Health Group’s 2016 Client Forum

JOHN GORMAN

EXECUTIVE CHAIRMAN

APRIL 2016

Copyright © 2016 Gorman Health Group, LLC

• Government health programs represent

sole growth opportunity

• Best macroeconomic conditions in

years, but most dangerous compliance

environment

• Disruptive growth, share aggregation,

and new entrants

• Star Ratings, risk adjustment drive the

market, and bar is rising

• “A Darwinian and Edisonian moment”

CUT TO THE CHASE!


Membership Accounting and Reconciliation

Proactive Member Service

Risk Adjustment Adaptation

Collaborative, Accountable

Providers

“Make It Work” Care

Management

Star Ratings Mastery; PBM

Oversight

PROVEN TACTICS TO THRIVE IN GOLDEN

AGE OF GOVERNMENT PROGRAMS

3


Exchanges MedicaidMedicare

AdvantageDual Eligibles

“TIPPING POINT” IN GOVERNMENT-

SPONSORED PROGRAMSCommercial Group: Declining, Shifting

Government: Sole Source of Organic Growth

2016 2025

1 M

11 M

2016 2023

18 M

29 M

2016 2022

63 M

82 M

2016 2020

13 M

20 M


• Government programs now

comprise largest source of

revenues and growth for

major payors

• Medicare Advantage (MA) and

Medicaid are driving

industry consolidation

• Dual eligibles migration to

health plans already a seismic

event for PBMs, home health,

and other stakeholders

“TIPPING POINT” IN GOVERNMENT-

SPONSORED PROGRAMS


INSANE member shopping and switching among re-enrollees =

extreme price sensitivity, need for value-based insurance design

GROWTH AND VOLATILITY IN

OBAMACARE ENROLLMENT

6

Source: HHS-ASPE, Barclay’s and GHG research


= EPIC Reconciliation and member service challenge in 2016-2017

GROWTH AND VOLATILITY IN

OBAMACARE ENROLLMENT

7

Source: HHS-ASPE, Barclay’s and GHG research


STATE EXCHANGES BY TYPE, 2016

8

Source: https://kaiserfamilyfoundation.files.wordpress.com/2015/12/state-health-insurance-marketplace-types-healthreform1.png


• Expect 8 more states to adopt expansion once Obama leaves office

• Expect more complexity and variability in “conservative principles”

STATUS OF STATE

MEDICAID EXPANSION

9


STATE DEMONSTRATION PROPOSALS TO ALIGN

FINANCING AND/OR ADMINISTRATION FOR DUAL

ELIGIBLE BENEFICIARIES — MARCH 2016


MANY STATES MOVING ON

DUALS/LONG-TERM CARE (LTC) Many States Participating in Multiple HCBS Waivers/Options

Source: http://kff.org/medicaid/report/medicaid-and-long-term-services-and-supports-a-primer/


MANAGED LTSS MOVES ON

STATE BUDGETARY CRISES


Enabling

Social

Clinical

• Meals

• Transportation

• Personal care

• Habilitation

• Assistive devices

• Home modification

• Communication services

• Light cleaning, personal care

• Caregiver respite

• Care coordination

• Skilled nursing

• Caregiver training

• Palliative/EOL care

CHALLENGES FACING PLANS:

CHILDLESS ADULTS, DUALS, AND LTC


CURRENT CONTRACT SUMMARYNO. OF

CONTRACTS

MA ONLY

ENROLLEES

DRUG PLAN

ENROLLEES

TOTAL

ENROLLEES

Total “Prepaid” Contracts 692 2,012,677 16,219,640 18,232,317

Local CCPs 464 1,428,122 14,193,699 15,621,821

PFFS 7 81,568 154,866 236,434

MMP 61 0 372,070 372,070

1876 Cost 16 327,733 272,287 600,020

1833 Cost (HCPP) 9 49,864 0 49,864

PACE 118 0 34,709 34,709

MSA 3 2,925 0 2,925

Pilot (2) 3 56 0 56

Regional PPOs 11 122,409 1,192,009 1,314,418

Total PDPs 72 0 24,678,061 24,678,061

Employer/Union Only Direct Contract

PDP

5 0 113,178 113,178

All Other PDP 67 0 24,564,883 24,564,883

TOTAL 764 2,012,677 40,897,701 42,910,378

MA MEMBERSHIP

National Snapshot – March 2016

14

Source: Medicare Advantage, Cost, PACE, Demo, and Prescription Drug Plan Contract Report – Monthly Summary.

Total reflects enrollment as of the March 1, 2016 payment. The March payment reflects enrollments accepted through February 5, 2016.

Includes:

2,158,197 SNP

3,339,235 Series 800

4,119,651 Local PPO


GEOGRAPHY OF MA GROWTH,

2006-2015


DEMOGRAPHICS = DESTINY


SOLID MA GROWTH?

Source: Barclays and Gorman Health Group research and Company Documents.

Medicare Advantage Population Projections: 2014-2023E

• Overall Medicare population expected to grow ~3% yearly (baby boomers)

• Age-ins overtake Fee-for-Service (FFS) conversions by 2019

• MA penetration GROWS to ~42.5%, grows 7.0% yearly

• We estimate 29M MA members, revenue at $376 BILLION by 2023

Medicare Advantage 2014 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E

Beginning 15,146,627 16,632,565 18,091,997 19,741,380 21,024,830 22,297,434 23,651,552 25,089,563 26,598,497 28,121,837

Age-ins 804,729 893,359 991,195 1,054,753 1,140,087 1,224,105 1,294,708 1,355,959 1,431,227 1,495,853

FFS to MA 1,484,341 1,406,861 1,343,650 1,277,329 1,227,197 1,180,164 1,133,708 1,087,906 1,042,387 999,529

Involuntary Terms (283,999) (299,386) (307,564) (355,345) (388,959) (423,651) (461,205) (501,791) (545,269) (590,559)

Voluntary/ Other, Net (519,134) (541,402) (377,899) (693,286) (705,721) (626,500) (529,199) (433,139) (405,005) (383,669)

Ending 16,632,565 18,091,997 19,741,380 21,024,830 22,297,434 23,651,552 25,089,563 26,598,497 28,121,837 29,642,992

YOY Growth 9.8% 8.8% 9.1% 6.5% 6.1% 6.1% 6.1% 6.0% 5.7% 5.4%

MA Penetration 31.0% 32.7% 34.6% 35.8% 36.9% 38.0% 39.2% 40.4% 41.5% 42.5%

Age-in Penetration 28.0% 30.0% 32.0% 33.5% 35.0% 36.5% 37.5% 38.5% 39.5% 40.5%

FFS Conversion Rate 4.0% 3.8% 3.6% 3.4% 3.3% 3.1% 2.9% 2.8% 2.7% 2.5%

Involuntary Lapses 1.88% 1.80% 1.70% 1.80% 1.85% 1.90% 1.95% 2.00% 2.05% 2.10%


TROUBLING TRENDS FOR MA

18

• Plummeting MA growth vs. population growth, net member loss to

Medigap

• Knowing disenrollment triggers critical to improved retention and

member experience


Source: CMS, Barclay’s.

• Top 15 plan market share has grown 2620 bps in less than 10 years.

• Only 1 change in top 5 since 2006 (Aetna) and none since 2010.

• Only 2 changes in top 10 since 2006 (Cigna and BCBS-MN).

• 4 plans control 53% of the market today. The top 15 represented 46% in 2006.

Dec-06 Members MKt Share Dec-10 Members MKt Share Mar-15 Members MKt Share

UnitedHealth 1,482,004 13.2% UnitedHealth 2,149,605 18.3% UnitedHealth 3,448,799 19.9%

Humana 1,007,362 8.9% Humana 1,763,312 15.0% Humana 3,175,197 18.3%

Kaiser 888,243 7.9% Kaiser 998,487 8.5% Kaiser 1,295,498 7.5%

WellPoint 281,309 2.5% WellPoint 488,579 4.2% Aetna Inc. 1,251,364 7.2%

Highmark 244,569 2.2% Aetna 436,127 3.7% Anthem 581,934 3.4%

Aveta 201,081 1.8% Highmark 313,827 2.7% Cigna 495,991 2.9%

Health Net 195,777 1.7% HealthSpring 304,360 2.6% Blue Cross Blue Shield of Michigan394,160 2.3%

Independence 179,627 1.6% Universal American 288,729 2.5% WellCare Health Plans, Inc.341,084 2.0%

EmblemHealth 126,624 1.1% Coventry 224,371 1.9% Highmark Inc. 300,204 1.7%

Aetna 121,588 1.1% Health Net 221,925 1.9% Health Net, Inc. 294,824 1.7%

HealthSpring 113,331 1.0% Aveta 184,439 1.6% Aveta, LLC. 200,255 1.2%

SCAN 90,894 0.8% EmblemHealth 169,517 1.4% EmblemHealth, Inc. 184,543 1.1%

WellCare 89,221 0.8% Cigna 145,655 1.2% Medica Health Plans 178,863 1.0%

Coventry 79,435 0.7% Medical Card System 124,738 1.1% Medical Card System, Inc. 172,072 1.0%

Regence 75,096 0.7% SCAN Health Plan 124,671 1.1% Blue Cross and Blue Shield of Minnesota168,970 1.0%

Top 5 3,903,487 34.7% 5,836,110 49.7% 9,752,792 56.4%

Top 10 4,728,184 42.0% 7,189,322 61.2% 11,579,055 66.9%

Top 15 5,176,161 46.0% 7,938,342 67.6% 12,483,758 72.1%

• Largest 10 MA Plans = 67%

• United and Humana = 38%

• Non-Anthem Blues = 12.2%

• All others = 32.9%

SHARE AGGREGATION WILL CONTINUETop 15 Market Share in MA Plans 2006-2015


• Rates and Trend

• Normalization Factor

• Encounter Data

• Employer Group Waiver Plan (EGWP) Bidding

• Star Reduction Policy

• Low-Rated Plan Termination

• Opioid Overutilization POS Edits

CMS made changes to the following

proposals:

SUMMARY OF MAJOR CHANGES

IN THE 2017 MA CALL LETTER

20

• New Risk Model for Dual Eligibles

• Star Ratings Dual Eligible Interim Adjustment

• Compliance and Enforcement Actions

• New Audit Protocol Release

CMS adopted the following proposals:


SUMMARY OF MAJOR CHANGES

IN THE 2017 MA CALL LETTER

21


PART C TRENDS FOR 2017

22

Benchmark Trends

Final

Notice

2017

Advance

Notice

2017

Final

Notice

2016

Underlying trend in PMPM 2.98% 2.68% 2.14%

Prior law benchmarks (“applicable amount”)

Cumulative prior year correction

(added to underlying trend)0.10% 0.24% 2.90%

Net applicable amount trend 3.08% 2.92% 5.04%

ACA benchmarks (“specified amount”)

Cumulative prior year correction 0.15% 0.38% 1.94%

Net specified amount trend (also the FFS

Trend)3.12% 3.06% 4.08%

Weighted Average Trend (2/16 Enrollment) 3.12% 3.06% 4.13%


106.0% 103.6% 102.6% 101.6% 101.6%

$600

$650

$700

$750

$800

$850

$900

$950

80.0%

85.0%

90.0%

95.0%

100.0%

105.0%

110.0%

115.0%

120.0%

125.0%

130.0%

2014 2015 2016 2017 2018

PM

PM

Rat

io o

f B

en

chm

ark

to F

FS

Medicare Advantage Benchmarks — Impact of CMS Trends, Rebasing, and ACA Phase-In — National Average

Benchmark as Percent of Published FFS - National AverageNew Law Blended BenchmarkOld Law BenchmarkEstimated FFS

Basis: 2014 and 2015 published benchmarks, 2% trend for following years

2016-2018 MA BENCHMARKS:

THE COMING TAILWIND

First Round of

ACO Demos

Expires 2016-17


Full Dual

Partial/Non-Dual

RISK ADJUSTMENT

HCC Model Change

24

• The HCC model has “underpaid” health plans for complex, dual eligible beneficiaries and “overpaid” for lower risk, non-dual eligible beneficiaries.Assumption:

• Recalibrate the HCC model, accounting for inaccuracies in payment, and awarding appropriate payments to increase coverage and care to our most vulnerable populations.

Reaction:

• CMS is estimating a net overall reduction in payments of 0.6% as a result of increased payments to health plans respective to the full-dual eligible membership and reduced payments for partial-benefit and non-dual beneficiaries.

Impact:


• Beneficiary Landscape

• Financial Impact

• Market Trends

Analytics

• MembershipAccounting

• Enrollment

• Reconciliation

Operations• Member

Engagement

• Benefits

• New Products

Strategy

RISK ADJUSTMENT

HCC Model Change

25


10/90 25/75 50/50

RISK ADJUSTMENT

RAPS / Encounter Data

26

Key Challenges

• Multiple data hand-offs and

rejection points

• Lack of standard data quality

benchmarking

• File formats vary and change

• Submission process creates

unnecessary work

• Verification processes vary

• Data submission requirements and

communication

• Reliance on vendor clean-up and

accuracy

• Provider data completeness and

accuracy

• Unknown financial impact

• Edit and error reviews and resolution


Analysis

• Systems

• Process

• Financial • Member

• Provider

Data Governance

• Conversion

• Pre-validation

• Error prioritization

• Submissions

• Reconciliation

• Post-submission analysis

• Error analysis

• Error management

RISK ADJUSTMENT

RAPS / Encounter Data

27


Vendor Support

Data Management

and Submissions

Analytics

Retrospective Chart Reviews

Prospective Interventions

Quality Assurance and

Oversight

Provider and Member

Strategies

Clinical Quality and Medical Management

Alignment

Product/Benefit Design and

Strategy

RISK ADJUSTMENT

Best-In-Class Infrastructure

28


2016 R

AT

ING

S

Contracts earning their

3rd consecutive Part C

or Part D rating <3

stars in fall of 2015

would receive non-

renewal notices in

February 2016.

Termination will be

effective 12/31/2016..

2017 &

BE

YO

ND

CMS will continue to

issue non-renewal

notices every year in

February to plans

receiving their 3rd

rating <3 stars in the

preceding year. HOWEVER… CMS may “stay” a

termination (including

notification of

beneficiaries) if the

organization holding

the poorly-rated

contract is prepared to

consolidate that

contract into a higher-

rated contract during

the bid cycle for the

upcoming plan year.

TERMINATING PLANS <3 STARS

29

CMS will not publish or calculate Star Ratings for these plans in the non-renewal year.

Plans should not expect to improve performance and re-negotiate.


• CMS will apply a Categorical Adjustment

Index (CAI) factor to each plan’s Star

Ratings:

o Based on proportion of dual eligible

(DE)/LIS and disabled beneficiaries.

o Effectuates a case-mix adjustment for

DE/LIS and disability status.

o Additional adjustments will be made for

Puerto Rico contracts.

• CMS developing a permanent solution to

better adjust quality ratings for dual

eligible and disabled populations.

STAR RATINGS & DUAL ELIGIBLES

An Interim Solution

30


STAR RATINGS DRIVE THE MARKET

• Medicaid, Obamacare already

following MA approach

• MA plans beat commercial in

HEDIS

• <4-Star plans “circling the

toilet bowl”

• ≤3-Star plans “dead men

walking”

• .5 Star = ~ $15-$50 PMPM

Star Rating Complaints/ 1,000

% Disenroll Annually

0.91 21.5%

½ 0.55 17.48%

0.42 14.79%

½ 0.33 9.27%

0.22 6.92%

½ 0.15 4.89%

0.16 1.91%


2014

2015

2016

3.84AVG STAR RATING 3.92

AVG STAR RATING

4.03AVG STAR RATING

49% of MA-PDs (179

contracts) earned ≥4

Stars

71% of MA-PD enrollees

are in contracts with ≥4

Stars

40% of MA-PDs earned

≥4 Stars



Stars

Final Year of

Star Ratings

Demo

ACHIEVING THE GOAL


2014

2015

2016

3.84AVG STAR RATING 3.92

AVG STAR RATING

4.03AVG STAR RATING

49% of MA-PDs (179

contracts) earned ≥4

Stars



Stars

40% of MA-PDs earned

≥4 Stars



Stars

Final Year of

Star Ratings

Demo

ACHIEVING THE GOAL

BUT …

- 369 plans were

rated in 2016.

- 188 more are on

the chase.


204-Star

thresholds

decreased in

2016

Very little low-

hanging fruit

remains

6Part D measure

average ratings

decreased16Part C measure

average ratings

decreased

THE GAME GETS TOUGHER

Noncompliance

1 Star!


• The “Divine Dozen”

o New/returning: CIGNA, Sierra,

Tufts, Group Health (MN),

Essence

o Repeat rock stars: Kaiser, Martin’s

Point (ME/NH), Gunderson

• Six “Walking Dead,” 3 eligible for

termination end of 2016

• SNPs improved = HMOs/PPOs

• No rest for the weary: 4-Star plans

in 2016 won’t be in 2017

STAR RATINGS IN 2016


35% of Rating = patient experience,

access, and complaints

11% of Rating = add’l CAHPS/HOS

measures

12% of Rating = improvement

95%

90%

85%

80%

75%

70%

Getting Needed CareGetting Appts &

Care Quickly

Customer Service

Rating of Health Care Quality

Rating of Health PlanCare Coordination

Rating of Drug Plan

Getting Needed Drugs

MEASURING NUANCES: CAHPS

Star Ratings

must be strategically

managed as a

program.

= 2016 5 Star cutpoint

= 2016 4 Star range

= 2016 3 Star range

= 2016 2 Star range


2016 PART C STAR

RATINGS MEASURES


2016 PART C STAR

RATINGS MEASURES (CONT.)


2016 PART D STAR

RATINGS MEASURES


2016

IDMeasure Description

2016 Avg

Stars

D15 MTM Program Completion Rate for CMR 2.3

C12 Osteoporosis Management in Women With Fx 2.5

C08 Special Needs Plan (SNP) Care Management 2.5

C18 Reducing the Risk of Falling 2.7

C06 Monitoring Physical Activity 2.9

C13 Diabetes Care – Eye Exam 3.1

D03 Appeals Upheld 3.3

D08 Rating of Drug Plan 3.3

D09 Getting Needed Prescription Drugs 3.4

WEAKNESS IN THE 2016 NUMBERS


THE MEMBER EXPERIENCE:

NOW HALF OF STARS


Culture

• Embedded in practice

• Mission-driven

• Exceed expectations

Services

• Community-based

• Holistic (meals, transport)

• In-home

• Integrated mental health

• Palliative/EOL

Operations

• Team-based

• Multidisciplinary

• Labor-intensive

• EMR adoption

• Stratified coordination

COMMON FEATURES OF LEADERS

IN PERSON-CENTERED CARE

42


OPPORTUNITIES FOR NEW RETAIL

PHARMACY COLLABORATION

• Medication adherence

• High-risk medications

• Annual influenza vaccine

• Care for older adults — medication

review, pain screening

• Disease management — A1c

control, controlling BP

• RA, osteoporosis management

• Reducing fall risk

Evaluate opportunities for retail pharmacists to expand services to

high-risk members through MTM-like programs and expanded services.


NEXT BIG THING IN MA AND PART D:

VALUE-BASED INSURANCE DESIGN

MA/Part D VBID/MTM Demos

Rethinking formulary and benefit design

MTM gets real

Medicare Policy Changes

Aligning payment with medication optimization for the chronically ill

NEW NORMAL

Larger role for pharmacists as providers

Value-based approaches


• Increases in member cost-

sharing lead to a reduction in

the use of essential services,

worsening health disparities,

exacerbating overall costs.

• Effects worse among low-

income individuals and

beneficiaries with chronic

illness.

COST SHARING = BARRIER TO ACCESS

45

Source: Goldman D. JAMA. 2007;298(1):61–9. Trivedi A. NEJM.

2008;358:375-383. Trivedi A. NEJM. 2010;362(4):320-8.. Chernew M.

J Gen Intern Med 23(8):1131–6.


IN MA, HIGHER OOP COSTS = WORSE

HEALTH & DISPARITIES, INCREASED COSTS

46

Out-of-Pocket Expenditures for MA Beneficiaries, 2011-2015

Source: Univ. of MI Center for V-BID, 2016


• Impose no more than modest

cost sharing on high-value

services

• Reduce cost sharing in

accordance with patient- or

disease-specific characteristics

• Relieve patients from high cost

sharing after failure on a

different medication

• Use cost sharing to encourage

patients to select high-

performing providers and

settings

APPLYING VBID TO

SPECIALTY PHARMA

47


1. All healthcare is local. Start by

tailoring best practices to a

specific panel of members.

2. Addressing social determinants

must be first priority before

quality measures can improve.

3. Reduce cost sharing for specific

drugs/classes, e.g., oral agents,

insulins.

4. Reduce cost sharing for

enrollees with chronic conditions.

5. Create multi-tier cost sharing

arrangements for high-value

providers to encourage their use.

6. Exempt specific drugs/classes

from cost sharing in the “donut

hole:” target those patients with

high annual drug spending for

greatest benefit.

7. Incentivize members to

participate in medication therapy

management (MTM) programs.

8. Team-based proactivity is key –

must be ahead of the curve on

quality measures and hard-wired

into workflow.

VALUE-BASED INSURANCE DESIGN

Lessons From Medicare Advantage/Part D

48


• CMS compliance activity will be

at an all-time high

• Priorities:

o Consumer protections

o Network adequacy

o Risk adjustment coding

o Compliance effectiveness

2016: THE YEAR SCORES GET SETTLED


Source: CMS, Medicare Parts C & D Oversight and Enforcement Group 2014 Part C and Part D Program Annual

Audit and Enforcement Report , October 13, 2015; CMS Audit and Oversight Conference, June 16, 2015.

CHALLENGES FACING PLANS:

MEDICARE ADVANTAGE / PART D

Lessons From Medicare Advantage/Part D


Membership Accounting and Reconciliation

Proactive Member Service

Risk Adjustment Adaptation

Collaborative, Accountable

Providers

“Make It Work” Care

Management

Star Ratings Mastery; PBM

Oversight

PROVEN TACTICS TO THRIVE IN GOLDEN

AGE OF GOVERNMENT PROGRAMS

51


• Government programs have reached

the tipping point and now drive

revenue/earnings for health plans

• Star Ratings now drive the market in

Medicare, Medicaid, and Obamacare

• PBM is major vulnerability

• Retail pharmacy = huge collaboration

opportunity

• No innovation without collaboration

• “Vision without execution is

hallucination.” – Edison

CONCLUSIONS

52


Gorman Health Group, LLC (GHG) is a leading consulting and software solutions firm specializing in government health

programs, including Medicare managed care, Medicaid and Health Insurance Marketplace opportunities. For nearly 20 years,

our unparalleled teams of subject-matter experts, former health plan executives and seasoned healthcare regulators have

been providing strategic, operational, financial, and clinical services to the industry, across a full spectrum of business needs.

Further, our software solutions have continued to place efficient and compliant operations within our client’s reach.

GHG offers software to solve problems not addressed by enterprise systems. Our Valencia™ software reconciles membership

of more than 10 million members in Medicare, Medicaid and the Health Insurance Marketplace. Over 3,000 compliance

professionals use the Online Monitoring Tool™ (OMT), our complete Medicare Advantage and Part D compliance toolkit, while

more than 33,000 brokers and sales agents are certified and credentialed using Sales Sentinel™. In addition, hundreds of

health care professionals are trained each year using Gorman University™ training courses.

We are your partner in government-sponsored health programs

T

E

JOHN GORMAN

Executive Chairman

202.255.6924

[email protected]

53

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