medicare advantage overview - healthspottr...2015 –medicare access and chip reauthorization act of...

Medicare Advantage OverviewMARCH 2019

Agenda

©2019 LEAVITT PARTNERS 2

2

Overview & History1. MACRO DRIVERS Medicare Advantage2. Trends3. Basics: MA payment & contract schedule4. How to THRIVE5. Risk adjustment6. Stars7. Regulatory flexibility8. New entrants


Overview: Managed Care History

1973 – HMO Act of 1973- federal funds and policy available

2003 – Medicare Modernization Act – Medicare Advantage changes increased rates and established Part D drug benefit and HSAs

2010 – Affordable Care Act (ACA) – significant changes to increase access and create incentives focuses on quality and value based health care

2012 – ACA upheld by Supreme Court but changed Medicaid provisions

2015 – Medicare Access and CHIP Reauthorization Act of 2015 becomes law to revise physician payment to focus on quality and outcomes

2017 – Congress and Administration consider changes to marketplace plans in ACA

Adapted from : http://www.managedcaremuseum.com


Care Controller

Individual Provider Payor Provider

Teams

Payor and Provider Teams

PaymentMechanism

Payment based on Fee

Schedule

Payment Based on Risk

Fee Schedule with Quality Incentives

Risk based with Quality Incentives

Profit Mechanism

Profit Based on Procedure

Volume

Profit Based on Value and Incentives

Savings based on shared team

incentives

Risk on health outcomes

Overview: Delivery System Evolution

Risk Bearer

Government bears risk

Payor Bears Risk

Government and Provider

Share Risk

Risk shared throughout the System

Fee For Service

At Risk Models

Integrated Delivery

Population Health

PAST PRESENT FUTURE


Overview: Evolving Healthcare Delivery

Source: CMS, HC-LANrk

Category 1

Fee-for-Service –

No Link to

Quality & Value

Category 2

Fee-for-Service –

Link to

Quality & Value

Category 3

APMs Built on

Fee-for-Service

Architecture

Category 4

Population-Based

Payment

A

Foundational

Payments for

Infrastructure & Operations

B

Pay for Reporting

C

Rewards for Performance

D

Rewards and Penalties

for Performance

A

APMs with

Upside Gainsharing

B

APMs with Upside

Gainsharing/

Downside Risk

A

Condition-Specific

Population-Based

Payment

B

Comprehensive

Population-Based

Payment

*Risk-based

payments NOT linked

to quality

*Capitated payments

NOT linked to quality

Population-Based Accountability


Overview: Value-Based Programs


Macro Drivers: Medicare Advantage

Flexibility

Demand

Quality

Supply

Bipartisan Political Support


Macro Drivers – Demographics of US Population

Source: National Population Projections, 2017.

United States Population


Macro Drivers – Forecasted Medicare Spending

• Total annual Medicare spending continues to grow • The 2018 Medicare Trustees Report projects the Medicare Trust Fund to be insolvent by 2026• Medicare is likely to look for areas to cut reimbursement as spending continues to increase

• Alternative payment methods, including Medicare Advantage, will continue to gain momentum as costs increase

Source: Congressional Budget Office. The Budget and Economic Outlook: 2018-2018

Actual & Forecasted Net Medicare Spending | 2010–2028

CAGR: 4.1%

CAGR: 8.0%


Medicare Advantage Trends

Source: CBO, KFF, CMS, LEK: Why Medicare Advantage Is Marching Toward 70% Penetration.

Uptake Estimates

Historical Enrollment

Medicare AdvantageEmployer Group

Retiree (Non-EGWP)

Medicare Supplement

Original Medicare


Trends: Variation in Medicare Advantage Plans Across States

NOTE: Includes MSAs, cost plans, demonstration plan, and Special Needs Plans as well as other Medicare Advantage Plans. Excludes beneficiaries with unknown county addresses and beneficiaries in other territories other than Puerto Rico. SOURCE: Author’s analysis of CMS State/County Market Penetration Files, 2017. Kaiser Family Foundation.

Share of Medicare Beneficiaries Enrolled in Medicare Private Health Plans by State, 2017


Trends: Medicare Advantage Enrollees in Three Firms (or Affiliates)

NOTE: Includes MSAs, cost plans, demonstration plan, and Special Needs Plans as well as other Medicare Advantage Plans. Excludes beneficiaries with unknown county addresses and beneficiaries in other territories other than Puerto Rico.

SOURCE: Author’s analysis of CMS Enrollment files, 2017.

Medicare Advantage Enrollment by Firm, 2017


Trends: Urban vs. Rural

Source: MedPac 2018. “The Medicare Advantage Program: Status Report”

Share of Total Medicare Advantage Enrollment by Parent Organization | October 2017

Metropolitan Counties

Non- Metropolitan Counties

UnitedHealth Group Inc.

34%

Humana Inc.22%

Kaiser Foundation Health Plan

12%

Aetna Inc.11%

Anthem Inc.5%

WellCare Health Plans Inc.

4%

CIGNA3%

Blue Cross Blue Shield of MI

3%

Centene Corp.3%

Highmark Health3%

UnitedHealth Group Inc.

34%

Humana Inc.34%

Aetna Inc.9%

Blue Cross Blue Shield of MI

5%

Anthem4%

WellCare Health Plans Inc.

4%

Highmark Health2%

Blue Cross Blue Shield of TN

2%

CIGNA3% UPMC Health

System3%


Medicare Advantage – Payment and Benefit Basics

MA plans submit bids in early June to CMS representing what it costs them to cover all Medicare Part A and Part B benefits except hospice (“basic benefits”). The bid is compared to a county specific “benchmark.”• If a plan’s bid is above the benchmark, then the plan receives a base capitation rate equal to the

benchmark from CMS, and the enrollees pay a basic premium that equals the difference between the bid and the benchmark• If a plan bid falls below the benchmark, the plan receives a base rate equal to its standard bid and also

receives payment from Medicare in the form of a “rebate” - which the plan must then return to its enrollees in the form of “supplemental benefits”

Source: MedPac 2018: “The Medicare Advantage Program: Status Report”

Country Bid Mechanics

Bid Below Benchmark Bid Above Benchmark

County Benchmark

$850 $850

Plan Bid $750 $900

Savings (Premium)

$100 ($50)

Rebate % 65% n/a

Rebate $65 n/a

Comment Rebate used to enhance benefits Seniors pay premium


Medicare Advantage – Payment Basics, cont’d

Prior to the ACA, payments to MA plans were as high as 114% of spending in Medicare’s traditional FFS plan. The ACA mandated that over a period of 6 years, CMS would lower payments for plans that were being paid above average per capital FFS costs and increase rates for those operating below the average per capita FFS rates. Current payment rates referred to as the “benchmark” are still equalizing, but are likely to hover around 100% and then decrease.

SOURCE: MedPAC, CMS, Medicare Trustees Report,, The Commonwealth Fund, Barclays Research

MA Payment & Enrollment History


MA Basics: Planning Calendar

MA Planning Calendar to Renew and Expand Service Area for Plan on Jan 2020

2017 2018 2019 2020

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

HEDIS, readmits, pt safety X X X X

HEDIS hybrid, CAHPS & admin X X X

Network contracting for SAE X X X X X

File SAE application (2/13) X

Bid preparation for 2020 (final rate

notice 4/1)X X X

Bid filing for 2020 (based on 2017

experience)X

CMS Bid review & NAB published &

bids updated X

Marketing Material & distribution

readinessX

Marketing Period opens X

AEP (10/15-12/7) (INTENSE PERIOD

24/7)X

2020 Plan is live (focus on

operational excellence)X


Medicare Advantage – How to Thrive

1

2

3

4

5

6

7

8

n Sell with brokers, attract with differentiation

n Direct-to-consumer distribution channel

Risk Adjustment n Annually, accurately document member conditions for +/-5% of revenue

Stars (Quality) n 4 Stars score for 5% revenue bonus

n Drives membership growth, retention and amplifies rebate

Consumer Engagementn Consumer experience directly impacts star ratings & retention

n Increasingly can improve MLR

Compliancen Comply with MA-specific operating guidelines (e.g. marketing, outreach)

n Non-compliance represents significant financial risk

Provider Engagement (& Enablement)

n Enable and incentivize providers to optimize Risk Adjustment, Stars, medical cost management and value-based care

Medical Management n Optimize for Utilization Management vs. Unit Costs

n Focus on Chronic disease and conditions, Part D structure

Administrative Costs n Administrative costs and margins generally no more than 15% of revenue

Sales / Enrollment


- An increase of just 0.03 to the RAF score generated an additional $24/member/month

- For a 45,000 member plan, this equates to an annual revenue increase of $12,960,000

Risk Adjustment Factors Carry Significant Revenue Implications

SOURCE: Barclays Research

Diagnoses must be reestablished each year to ensure that next year’s payments will cover costs. For example, an amputation must be reported at least once per year to ensure that services related to this condition will be covered

n Documentation must support the diagnoses that are reported and a plan for each diagnoses

Oftentimes physicians get familiar with patients over time and neglect documentation of chronic stable conditions

Payment Formula


Traditional Risk Adjustment Process

Care is delivered to the Member (face-to-face encounter)

Care and Diagnoses are Documented in the Chart / Progress notes

ICD-10 CM codes are submitted on Claims based on the face-to-face

encounter clinical findings

Claims data diagnosis codes are converted to HCC codes

HCC codes data is submitted to CMS

CMS calculates MA risk adjustment

Plan & Providers can deliver better care and reimbursement is received


Stars Revenue Impact

SOURCE: CMS, Barclays Research

Stars Impact on Medicare


Average Star Rating Improvements

Source: McKinsey & Co.


Medicare Advantage Enrollees Contracts with 4+ Stars

NOTE: Includes MSAs, cost plans, demonstration plan, and Special Needs Plans as well as other Medicare Advantage Plans. Excludes beneficiaries with unknown county addresses and beneficiaries in other territories other than Puerto Rico. SOURCE: Author’s analysis of CMS Landscape and Enrollment files, 2013 – 2017.

Enrollment in Medicare Advantage Contracts by Star Quality Rating, 2013 – 2017


Regulatory Tailwinds: Increased Flexibility for Medicare Advantage

Beginning in 2019, MA plans will have greater flexibility when designing plan benefit offerings• New supplemental benefits allowed including adult day care, home-based palliative care, and in-home

support services• “Uniform flexibility” has been reinterpreted allowing for customized benefits for beneficiaries meeting

specific medical criteria

The distinction between all MA and SNPs and VBID demonstration plans is narrowing• Beginning in 2020, MA plans may incorporate additional, clinically appropriate telehealth benefits in to

annual bids beyond what is currently covered under part B

23


New Entrants to Medicare Advantage Markets

Source: Kaiser Family Foundation analysis of CMS Landscape Files for 2018 and 2019.

Note: D-SNPs are plans for people dually eligible for Medicare and Medicaid; C-SNPs are plans for people with certain chronic conditions; and I-SNPs are plans for people that require an institutional level of care. MSAs are

Medicare Medical Savings Accounts. Catholic Health Initiatives includes subsidiaries RiverLink Health, HeartlandPlains Health, and QualChoice Advantage.

New entrants to Medicare Advantage markets

8

New Entrants


Note: D-SNPs are plans for people dually eligible for Medicare and Medicaid; C-SNPs are plans for people with certain chronic conditions; and I-SNPs are plans for people that require an institutional level of care. MSAs are Medicare Medical Savings Accounts. Catholic Health Initiatives includes subsidiaries RiverLink Health, HeartlandPlains Health, and QualChoiceAdvantage.

New Entrants


New Entrants to Medicare Advantage Markets (cont’d)


Note: D-SNPs are plans for people dually eligible for Medicare and Medicaid; C-SNPs are plans for people with certain chronic conditions; and I-SNPs are plans for people that require an institutional level of care. MSAs are Medicare Medical

Savings Accounts. Catholic Health Initiatives includes subsidiaries RiverLink Health, HeartlandPlains Health, and QualChoice Advantage. 25

New EntrantsNew Entrants

Smart on Value

www.leavittpartners.com801-538-5082

Offices in Salt Lake City, Chicago, and Washington, D.C.

@LeavittPartners

medicare advantage overview - healthspottr...2015 –medicare access and chip reauthorization act of...

Documents