launching a successful medicare advantage plan · launching a successful medicare advantage plan:...
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HMA HealthManagement.com
March 9, 2016
Launching a Successful Medicare Advantage Plan:
Key Strategic, Product, and Operational Considerations
Speaker: Mary Hsieh, PharmD MPH, Principal, HMA
Moderator:
Carl Mercurio, HMA Information Services
HMA
Outline of Today’s Webinar
• Rationale for Entering Into Medicare Advantage
• Overview of Medicare Advantage Market
• Strategic Drivers of Launch Success
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HMA
Guard against losing the patient base
Evolve to the next phase of value-based payment
Leverage investments in population health
Move upstream and manage risks
Get large or die
Tap market for growth
Leverage underlying infrastructure to manage highly
complex population
Protect existing members
Already managing the population
Additional revenues
Steady revenue stream
State requirement
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Reasons for Becoming a Medicare
Advantage Sponsor
HMA
Growth of the Older Population
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% o
f Tot
al P
opul
atio
n
Source: HMA Analysis of data from U.S. Census Bureau. Table 3. Percent Distribution of the Projected Population by Selected Age Groups and Sex for the United States: 2015 to 2060. 2010 U.S. Census.
12.9 14.8
16.6 17.8 17.3 16.4 17.6
2.0
2.0
2.1 2.5 3.7 4.5
4.3
0
5
10
15
20
25
2015 2020 2025 2030 2040 2050 2060
65 to 84 years 85 years and over
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Medicare Expenditure by Program Area
0
200
400
600
800
1000
1200
2010 2011 2012 2013 2014 2015 (P) 2020 (P) 2025 (P)
Parts A and B Part C (Medicare Advantage) Part D (Prescription Drugs)
Source: CBO Medicare Baseline (2011-2015) Note: 2010-2014 are actual expenditures; 2015-2025 are projected estimates
Tota
l Exp
endi
ture
s (in
bill
ions
of d
olla
rs)
65.8% 66.8% 63.8% 58.9% 53.9%
49.3%
62.2% 63.8%
22.6%
11.6%
24.1%
12.0% 10.3% 10.8% 11.1% 12.7%
13.8%
15.1%
35.6%
33.5%
28.4% 22.9% 25.3% 26.7%
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What is Medicare Advantage?
• A type of private health plan that contracts with CMS to provide Part A and Part B benefits
• Revenues come primarily from CMS in the form of capitated payment for each member
• Members may pay a premium
• Plans at risk for managing the member’s health care cost
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Total Medicare Private Health Plan Enrollment
10 *Includes MSAs, cost plans, demonstration plans, SNPS and other MA plans Source: MPR/Kaiser Family Foundation analysis of CMS MA enrollment files, 2008-2015, and MPR, “Tracking Medicare Health and Prescription Drug Plans Monthly Report,” 1999-2007; enrollment numbers from March, except 2006 (April).
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2015 Medicare Advantage Penetration
Source: KFF. http://kff.org/medicare/state-indicator/enrollees-as-a-of-total-medicare-population/#map
HMA
Strategic Drivers of Market Launch Success
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Types of Medicare Advantage Plans
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Key considerations in selecting the type of MA Plan:
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Enrollment by Product Type, 2015
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Cost [PERCENTAG
E]
HMO [PERCENTAG
E]
Local PPO [PERCENTAG
E]
PFFS [PERCENTAG
E]
RPPO [PERCENTAG
E]
HMO is by far the most popular product among enrollees, followed by Local PPO
Source: CMS Enrollment Files 2015. Excludes PACE, Employer-only, SNP-only, HCPP contracts
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Urban Counties Cost
[PERCENTAGE]
HMO [PERCENT
AGE]
Local PPO [PERCENT
AGE]
PFFS [PERCENT
AGE] RPPO
[PERCENTAGE]
Cost [PERCENT
AGE]
HMO [PERCENT
AGE]
Local PPO [PERCENT
AGE]
PFFS [PERCENT
AGE] RPPO
[PERCENTAGE]
Rural Counties
In urban counties, HMO is the dominant MA product; whereas in rural counties, PPO products are more prevalent
Enrollment by Product Type, 2015
Source: CMS Enrollment Files 2015. Excludes PACE, Employer-only, SNP-only, HCPP contracts
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Special Needs Plan
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The majority of SNP enrollees are in Dual Eligible Special needs Plans (D-SNPs)
Source: 2016 Special Needs Plan Comprehensive Report, CMS
Distribution by Total # of SNP Enrollees (n=2.14M)
Chronic or Disabling Condition (15%)
Dual Eligible (82%)
Institutional (3%)
Distribution by Total # of SNP Plans (n=568)
Dual Eligible (62%)
Institutional (14%)
Chronic or Disabling Condition (24%)
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Optional Supplemental Benefits
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OSB provide plans greater flexibility in plan design and is a source of revenue
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Premiums and Other Pricing Considerations
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Key considerations in premiums and other pricing factors:
HMA
Share of Beneficiaries with Access to Zero Premium MAPDs
19 Source: MPR/KFF Analysis of CMS’ Landscape and Penetration File, 2009-2015 Note: Includes only MAPD and cost plans
HMA
Weighted Average MAPD Premiums
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MA Plan Out-of-Pocket Limits
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% o
f Enr
ollm
ent
51% 51% 47%
33% 27%
25% 27% 30%
24% 28%
24% 22% 24%
44% 46%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2014 2015
<$3,400 $3401 - $5,000 $5,001 - $6,700
Source: KFF
HMA
Marketing and Distribution Strategies
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Key considerations in premiums and other pricing factors:
HMA
Where Do Medicare Advantage Members Come From?
Inquiry, Aug 2013, Morris et al. • New Medicare beneficiaries more likely to enroll in MA than
beneficiaries who had traditional Medicare coverage for at least one year (Miami-Dade County)
Health Affairs, Jan 2015, Jacobson G, Newman P, Damico A. • 22% of new Medicare beneficiaries elected MA over traditional
Medicare in 2011 vs. 15% in 2006
• < 5% of traditional Medicare beneficiaries switched to MA
• Beneficiaries ages 65-69 switched from traditional Medicare to MA at a higher than average rates
• Conclusion: initial coverage decisions have long lasting effects
• Dual eligible and <65 with disabilities disenrolled from MA at a higher than average rate
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Insights: What is Important to Beneficiaries?
Kaiser Family Foundation, May 2014, Jacobson et al.
• Premiums and out-of-pocket cost
• Access to desired providers
• Familiarity with name of the company (AARP)
• Favorable experience with plan representative
• Adequate coverage of health care needs
• Match spousal coverage 24
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Captive Scalability: Low
Cost: High Compliance Oversight: High
Channel Close Rate: High
Telephonic Scalability: High
Cost: Low Compliance Oversight: High
Channel Close Rate: Low
Brokered Scalability: High
Cost: High Compliance Oversight: Med
Channel Close Rate: Variable
Innovative and Emerging Channels
Distribution Channel Strategy
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Target Universe: Impressions, click-throughs, mail drops, DM pieces, etc.
Leads: Qualified leads generated, lead disposition, follow-up, etc.
100%
4%
1%
0.1%
0.2%
Marketing and Sales Funnel
Membership Goal
Distribution Channel Preference: Who goes first? Lead sweeps:
Continue to work warm and cold leads
Un-identified: CMS.gov, State Health Insurance Assistance Programs, etc.
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Other Operational and Strategic Drivers
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Key considerations in premiums and other pricing factors:
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Compliance Infrastructure
• Measures that prevent, detect and correct non-compliance
• Routine monitoring and ID of compliance risks
• Prompt response as they are raised
• Involvement of senior leadership in the issues
• Investigate and correct
• Monitor and auditing of entities that contract with the MA plans for their compliance with CMS requirements
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Implications of 5-Stars
• 5-star special enrollment period
• New plans -- 3.5 stars
• Reputational impact
• Bonus and rebates 29
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Overall Star Rating Distribution for MAPDs
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5.3 1.1 2.4 0.9
20.3
16.6 11.0 8.6
36.5
30.5
26.8
19.6
12.6
21.7 30.3
35.7
15.8 20.6 19.6
25.0
9.4 9.6 9.9 10.2
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2013 2014 2015 2016
2 Stars 2.5 Stars 3 Stars 3.5 Stars 4 Stars 4.5 Stars 5 Stars
Source: CMS. Fact Sheet – 2016 Star Ratings. Notes: % distribution is weighted by enrollment
% o
f Con
trac
ts W
eigh
ted
by E
nrol
lmen
t
HMA
AEP(8 weeks)
Bid submission (First Monday of June)
Strategic evaluation: opportunity assessment; feasibility analysis; Pro-Forma
Gap analysis: Infrastructure, systems and reporting, provider network, buy vs build
Year 3
Year 2
Year 1 Today
Timing
In Market with offering
Notice of Intent to Apply (Nov-Jan)
Application submission (Feb)
Marketing material creation and approval
Address application deficiencies
Draft HSD Table
Advanced Notice released
Product design finalized
Final Notice
Bids approved
Provider network and reimbursement strategies
Staffing model: build internally and vendor assessment (S&M functions, actuarial
Competitor analysis, enrollment scenarios
SEP Strategy
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Often Neglected Wisdoms
• Any sound business investment comes with a clear path for exit strategy
• Crunch the numbers and be realistic
• Timing is critical
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HMA Designed by: Business Model Foundry AG
Key Partners • CMS • Provider
network • Channel
partners
Key Activities • Product Dev • Compliance
oversight
Value Proposition
• Price • Quality • Star rating
Customer Relationships
• Agent contact • Star rating • Sanctions
Customer Segments
• Market size • Penetration • Pipeline
management • Switchers • New
Members
Key Resources • Actuarial • Product
Development • Compliance • Sales &
Marketing
Channels
• Telesales • Brokers • Captive agents • Others
Cost Structure
• Selling, General & Administration Expenses • Make vs. Buy • Entry, maintenance and exit costs
Revenue Streams
• CMS • Premiums • Stars Bonus, Risk Adjusted Payments
Roadmap in Launching A Successful MA Plan
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HMA HealthManagement.com
March 9, 2016
Q & A Mary Hsieh, PharmD MPH, Principal, HMA
[email protected] 404.834.5028