How Medicare Advantage steers the Silver Tsunami into coordinated, value-based care

https://www.healthcarefinancenews.com/news/how-medicareadvantage-steers-silver-tsunami-coordinated-value-based-care

CMS and other health insurers are using the program to deliver innovative and unique value to customers, both in terms of cost and quality.

Today’s Medicare Advantage plans are flourishing and the Silver Tsunami is among the reasons.

“Over the last four years, Medicare Advantage enrollment increased by more than 30 percent, while the number of people eligible for Medicare grew by about 18 percent,” said Steve Warner, vice president of Medicare Advantage Product for UnitedHealthcare Medicare and Retirement.

Other reasons for the growth: Innovative models from big insurers and upstarts alike that improve care for health plan members and drive revenue for payers as they look beyond fee-for-service.

IT STARTS WITH THE CONSUMER

Consumers are finding unique value in MA, both in terms of the quality of care and in the financial value.

Medicare Advantage, in fact, makes it easier for consumers to navigate the healthcare system and choose providers, in a way that traditional Medicare does not, said those interviewed.

“Actually it’s pretty hard to navigate the healthcare system on your own,” said Tip Kim, chief market development officer at Stanford Health Care. “Most Medicare Advantage plans have some sort of care navigation.”

Warner of UnitedHealth’s Warner added that Medicare Advantage also offers value and simplicity.

“It provides the convenience of combining all your coverage into one plan so you have just one card to carry in your wallet and one company to work with,” Warner said. “Most plans also offer prescription drug coverage and additional benefits and services not available through original Medicare, including dental, vision and fitness.”

REBRANDING FOR THE NEW ERA

MA plans did not emerge out of thin air. By another name, Medicare Advantage is managed care, a term that was the bane of healthcare during the height of HMOs in the 1980s.

“Medicare Advantage has rebranded ‘managed care’ to ‘care coordination,'” said consultant Paul Keckley of The Keckley Report. “Humana and a lot of these folks have done a pretty good job. Coordinating care is a core competence. Managed care seems to be working in this population.”

MA came along at the right time for CMS’s push to value-based care.

“I would suggest on the providers’ side, embracing Medicare Advantage is an opportunity to get off the fee-for-service mill,” said Jeff Carroll, senior vice president of Health Plans for Lumeris, which recently paired with Stanford Health Care on the Medicare Advantage plan, Stanford Health Care Advantage.

“Provider-sponsored Medicare Advantage plans are a way to put teeth into an accountable care organization,” Keckley added. “Medicare Advantage success is a silver tsunami among major tsunamis. Obviously it’s a profitable plan for seniors and profitable for underwriters. The winners in the process will get this to scale.”

MA is an innovative model that is not a government-run system, but a privately-run system essentially funded by the government.

PAYERS IN THE MA GAME

UnitedHealthcare has the largest MA market share of any one insurer.  Twenty-five percent of Medicare Advantage enrollees are in a UnitedHealthcare MA plan, followed by 17 percent in Humana, 13 percent in a Blue Cross Blue Shield and 8 percent in Aetna, according to the Kaiser Family Foundation.

Numerous insurers, in fact, have gotten into the MA market, including Clover Health in San Francisco, a five-year-old startup which has Medicare Advantage as its only business.

Clover is a tech-oriented company that boasts machine learning models that can accurately predict and identify members at risk of hospitalization.

Because Clover focuses only on MA, it can do a better job at problem solving the needs of an older population, said Andrew Toy, president and CTO of Clover Health.

“The problems we face in Medicare Advantage are very different from a younger generation,” Toy said.

Forty percent of the older population is diabetic. Most seniors will be dealing with a chronic disease as they get older.

In other insurance, whether its individual or commercial, the lower cost of the healthier population offsets the cost of the sicker population. MA has no way to offset these costs. Plans can’t cherry-pick consumers or raise premiums for a percentage of the population.

What MA plans can do is design plans that fit the varying needs of the population. A plan can be designed for diabetics. For younger seniors or those not dealing with a chronic disease, a plan can be designed that includes a gym membership.

“All these plans are regulated,” Toy said. “We have the flexibility to move dollars around. We can offer a higher deductible plan, or a nutrition plan. The incentives for us in Medicare Advantage are different than the incentives in Medicare. CMS has explored giving us more leeway for benefits. Consumers have a choice while still having the guarantees of Medicare.”

Toy believes regular Medicare is more expensive because MA offers a more affordable plan based on what an individual needs.

“When you need it, we get more involved in that care,” Toy said, such as “weight control issues for diabetics.”

The drawbacks are narrower networks, though Toy said Clover offers an out-of-network cost sharing that is pretty much in line with being in-network.

UnitedHealthcare’s Medicare Advantage LPPO plans offer out-of-network access to any provider who accepts Medicare, Warner said.

UnitedHealthcare also offers a wide variety of low and even zero-dollar premium Medicare Advantage plans and annual out-of-pocket maximums, Warner said. By contrast, original Medicare generally covers about 80 percent of beneficiaries’ healthcare costs, leaving them to cover the remaining 20 percent out-of-pocket with no annual limit.

“From a consumer value proposition, it makes Medicare Advantage a better deal,” Kim said. “One is Part B, 20 percent of an unknown number. Knowing what the cost will be in a predictable manner is a preferable manner.”

Stanford Health Care launched a Medicare Advantage plan in 2013. Lumeris owned and operated its own plan, Essence Healthcare, for more than eight years. Stanford and Lumeris partnered on Stanford Health Care Advantage in northern California, using Lumeris technology to help manage value-based reimbursementand new approaches to care delivery through artificial intelligence-enabled diagnostic tools and other methods.

“We are not a traditional insurance company,” Kim said. “We’re thinking about benefits from a provider perspective. It’s a different outlook than an insurance company. By definition we’re local.”

MA MARKET STILL HAS ROOM TO GROW

While the Medicare Advantage market is competitive, it is also under-penetrated, Brian Thompson, CEO for UnitedHealthcare Medicare & Retirement, said during a 2018 earnings report.

Currently, about 33 percent of all Medicare beneficiaries are in an MA plan, he added, but UnitedHealth sees a path to over 50 percent market concentration in the next 5-10 years.

It’s a path not so subtly promoted by the Centers for Medicare and Medicaid Services.

As a way to encourage insurers to take risk and get in the market, around 2009, CMS gave MA insurers 114 percent of what it paid for fee-for-service Medicare. The agency began decreasing those payments so that by 2017, traditional Medicare and MA became about even.

MA insurers instead thrive on their ability to tailor benefits toward wellness, coordinate care and contain costs within the confines of capitated payments, the essence of value-based care.

They have received CMS support in recent rate notices that gives them the ability to offer supplemental benefits, such as being able to target care that addresses the social determinants of health. Starting in 2020, telehealth is being added to new flexibility for these plans.

WHAT THE FUTURE MAY HOLD FOR MA

Medicare Advantage plans have expanded and, in so doing, opened innovative new options for plans and their customers alike at the same time that the ranks of people eligible for Medicare continues to swell.

So where is it all going?

Medicare Advantage is changing the way healthcare is paid and delivered to the point that Keckley and Toy agreed the future may not lie in Medicare for All, but in Medicare Advantage for all.

“I think a reasonable place to end, is in some combination where the government is involved in price control, combined with the flexibility of Medicare Advantage,” Toy said. “That’s really powerful.”

 

 

Segment 3 – Healthcare Reform Successes & Failures

Segment 3 – Healthcare Reform Successes & Failures

Slide15

In Segment 2, we looked at the history of medical care in the U.S. until 1965, the year Congress enacted Medicare and Medicaid.

In Segment 3 we will look at reform movements, starting with Medicare and Medicaid. We will look at why later reforms failed and where that leaves us now.

By the early 1960s, nearly all employees were covered by Blue Cross/Blue Shield.

But problems emerged. First, low-wage workers were often not covered by their small businesses, and elderly retirees were not covered. Costs were going up because pre-paid insurance increased patient demand for services. Harry Truman had proposed national health insurance after he surprisingly was re-elected in 1948. But the AMA launched a multi-million-dollar publicity campaign to deride the plan as “Communism” and “socialized medicine.” Truman’s public insurance plan failed.

The next attempt at reform was successful – the 1965 passage of Medicare and Medicaid. Lyndon Johnson succeeded because coverage targeted the uninsured poor-and- elderly, leaving the rest of the private for-profit health system unaffected.

Senator Teddy Kennedy tried in 1971 to extend Johnson’s success to build a single-payer system, and won support from President Nixon. But this plan was derailed by the Watergate scandal.

The next attempt came from Bill and Hillary Clinton. After Clinton took office in 1992, Hillary and expert panels devised a plan for universal coverage including essential benefits and pre-existing conditions with mandated employer insurance and expanded Medicaid. This plan failed because the insurance industry launched a stinging publicity campaign featuring a down-home couple named “Harry and Louise.” Americans also balked at the tax increases needed to fund it.

The Clinton’s failure made it necessary to find another solution to rising costs. Managed care, which had first appeared in 1973, became that solution. And it did work, slowing growth to under 6%. But around the year 2000 came a backlash over mammograms and so-called “drive-by” deliveries, which undermined the ability of managed care to control costs.

What do we make of this history? Here are the main take-aways that help us understand our present health system. First, there has always been a tension between the profit motive in the free marketplace and a health promotion motive. Second, Americans have given special treatments to the health industry in return for medical advances. And third, powerful vested interests (doctors, hospitals, insurance, drug companies) have often used polemics and ideological arguments to defend their favored status, not necessarily actual health outcome data.

Slide09

So, this leaves the US with the largest, most expensive healthcare system in the world. In 2011 shown here it took in payments of 2.7 trillion dollars, mostly private insurance, Medicare, Medicaid and out-of-pocket. The figure for 2015 was 3.2 trillion dollars, representing 1/6 of the entire economy of the entire Gross Domestic Product. Government’s share of payments was almost 50% in 2016.

Slide10

This graph shows the dollars spent in 2011 – mostly on hospitals, doctors, drugs, long-term care. Remember that 25% of this pie graph actually goes to administrative costs, not medical services.

Slide11

In defense of U.S. healthcare, in 2012 then-House-Speaker John Boehner and then Senate Minority Leader Mitch McConnell famously said, “the U.S. has the finest health care system in the world,” and further that “wealthy foreigners flock to the U.S. because of its cutting edge facilities.”

2017-10-13-boehner-mcconnell.png

However, the World Health Organization rates the U.S. 15th in performance (life expectancy and delays in care), and only 37th in overall attainment (including financial and service fairness).

In 2015 the Kaiser Foundation compared the US with 10 other developed countries. Here are their results showing areas in which US is better, equal or lacking.

Here are the Commonwealth Fund’s 20-11 rankings – US is in the middle of the pack for most areas but dead last on several others and overall rank.

Slide14Source: http://www.commonwealthfund.org/publications/fund-reports/2014/jun/mirror-mirror

What about “foreigners flocking-for-care”? This pertains to highly specialized treatments available only in certain centers such as Mayo, Cleveland Clinic or Hopkins. Some centers in Florida and Texas do market to wealthy foreigners, who pay the full charge in cash, not discounted insurance rates like the rest or us. Boehner and McConnell pointed to Canadians coming to Michigan hospitals, but the Commonwealth study found that Canada is worst in timeliness and 10th worst overall, just ahead of the US in 11th place, so not surprising.

The further truth is that, according to Centers for Disease Control, 3/4 million Americans go abroad each year for medical treatments, such as for holistic care or dental care, but mostly seeking lower cost.

In the next Segment we will talk about cost, namely how the rising cost of healthcare is affecting our economy, our politics, our society – and some say our very existence.

I’ll see you then.

 

 

 

UPMC fires back at state AG, seeks to join BCBS antitrust lawsuit

https://www.healthcaredive.com/news/upmc-fires-back-at-state-ag-seeks-to-join-bcbs-antitrust-lawsuit/548993/

Image result for upmc building

University of Pittsburgh Medical Center filed a counter lawsuit on Thursday against the Pennsylvania attorney general, who is seeking to force the healthcare giant into contracting with rival Highmark. The system is also seeking to insert itself in a broader lawsuit over the ways Blues operate.

The flurry of filings taps into big questions over payer competition and underscores tensions seen throughout the country between insurance companies and providers as they negotiate contracts, particularly in highly concentrated markets. States have stepped up their enforcement of consumer protections against rising healthcare costs — but UPMC is saying its regulators have greatly overstepped their bounds. 

Earlier this month, Shapiro alleged Pittsburgh’s dominant medical provider wasn’t living up to its charitable mission as a nonprofit, accusing the health system of “forsaking its charitable obligations” in exchange for “corporate greed.”

The legal duel stems from a contract dispute between UPMC and its rival Highmark. Until June 30, the two have a legal agreement protecting consumer access to the other’s network through a consent decree. UPMC refuses to modify the decree and contract with Highmark, which risks in-network access to UPMC hospitals for Highmark members.

In response to the attorney general’s initial complaint, UPMC alleges that Shapiro’s attempt to renew and modify an expiring agreement between the Pittsburgh health system and Highmark is “unprecedented and unwarranted.”  The modification would, among other things, remove the majority of UPMC’s board of directors and force the integrated system to contract with any payer. 

The state AG responded on Friday, accusing UPMC of ignoring its mission and noting it would not be intimated by the healthcare behemoth.

“With their filings today, UPMC has shown they intend to spend countless hours and untold resources on a legal battle instead of focusing on their stated mission as a non-profit charity — promoting the public interest and providing patient access to affordable health care,” said Attorney General’s Office spokesman Joe Grace.

In its notice to the AG, UPMC lays out five examples it calls frivolous enough to get Shapiro’s motion dismissed — including previous testimony delivered by Deputy Attorney General Jim Donahue in 2014, when he told state representatives there is “no statutory basis” to make the two companies contract with each other without setting a dangerous economic precedent.

“If we force the resolution in this case, we really could not avoid trying to force a similar resolution in all those other situations, and that is simply and unworkable method of dealing with these problems,” Donahue said at the time. “We’d be putting our finger on the scale, so to speak … and we’re not sure what those effects would be.”

One effect is a class action lawsuit, which UPMC filed separately Thursday. It alleges Shapiro has violated at least four federal laws: Medicare Advantage statutes protecting competition, the Affordable Care Act’s nonprofit payer regulations and the Sherman Act and the Employee Retirement Income Security Act of 1974.

“Purporting to act in his official capacity, General Shapiro has illegally taken over nonprofit healthcare in the Commonwealth of Pennsylvania,” UPMC’s class action states. “Without rulemaking, legislation or public comment, General Shapiro has announced new ‘principles’ that radically (and often in direct contravention of existing federal and state law) change how nonprofit health insurers and providers operate, now rendering the Attorney General the arbiter of how nonprofit health organizations should envision and achieve their mission.”

UPMC says Blues system bad for business

Separate from its battle with the state attorney general, UPMC is attempting to jump in the middle of a legal antitrust battle over how Blue Cross Blue Shield plans operate. UPMC is seeking both a preliminary injunction and a motion to intervene in the years-long federal case in Alabama.

UPMC is asking the Alabama court to stop the Blues plans from enforcing their own market allocation agreements that prevent UPMC from contracting with other Blues plans, according to the filing. UPMC says a significant chunk of its patients have a Blue Cross Blue Shield plan from a different provider other than Highmark.

Joe Whatley, co-lead counsel for provider plaintiffs in the Alabama case, told Healthcare Dive UPMC “presents a good example of how the Blues are abusing their illegal agreement for their benefit and to harm healthcare providers throughout the country.”

UPMC argues that it would contract with other Blue Cross Blue Shield plans, separate from Highmark, but cannot due to the way Blues operate — or limit how they compete with one another. BCBS plans tend to stake out their own geographic areas and avoid competition with one another, a practice the Alabama court has already found is in violation of antitrust laws. A BCBS appeal to the Alabama judge’s opinion was already struck down by the 11th U.S. Circuit Court of Appeals late last year.

UPMC is asking the Alabama court for an injunction, or to step in and stop the Blues plans from enforcing or complying with their own market allocation agreements that are preventing UPMC from contracting with other Blues plans, according to the filing. And because the hometown plan, Highmark, does not have a contract with UPMC after June 30, it means that other Blues plan members that have enjoyed in-network access to UPMC will soon lose access after the consent decree expires.

About 24% of UPMC’s hospital patients have a Blue Cross Blue Shield plan other than Highmark.

UPMC contends that it has tried to contract with other Blues but was turned down. “The average non-Highmark Blues patient does not know that UPMC has offered contracts to each of these plans and been turned down because the Blues’ illegal market allocation prevents them entering into such an agreement with UPMC,” according to the filing.

Without an injunction, UPMC alleges it will suffer irreparable harm to its reputation and will lose a significant number of patients who have a non-Highmark Blues plans.

The Pennsylvania attorney general’s office has not responded to Healthcare Dive’s request for comment and UPMC declined to discuss the case further.

 

 

 

 

How Policy, Business Decisions in Iowa Led to Higher Premiums

https://www.commonwealthfund.org/blog/2018/policy-decisions-iowa?omnicid=EALERT%%jobid%%&mid=%%emailaddr%%

Map of Iowa where premiums are higher due to policy decisions

This year, Iowa’s legislature took the extraordinary step of abdicating the state’s authority to regulate health insurance products. The bill, enacted in April, exempts health plans offered by the state’s Farm Bureau from state and federal insurance regulation, including Affordable Care Act (ACA) provisions designed to protect people with preexisting conditions and provide a minimum standard of benefits.

Proponents argue that such a law is needed to provide individual market consumers with cheaper health plan options than available under the ACA. Critics point out that younger, healthier consumers are most likely to benefit from these plans. And while details haven’t been provided yet, the Farm Bureau plans are expected to be medically underwritten, and not cover the ACA’s minimum set of benefits. As a result, older Iowans, those with preexisting conditions, and those who need comprehensive coverage are unlikely to find these plans affordable or attractive. And many could be denied enrollment outright. As enrollment in the ACA-compliant individual market becomes older and sicker, marketplace consumers who do not qualify for the ACA’s income-related premium subsidies will face increasingly higher premiums.

Iowa’s Farm Bureau statute is making a bad situation worse for the state’s individual market. Thanks to a number of decisions by state policymakers and the dominant insurance company – Wellmark Blue Cross Blue Shield – premiums in the state’s individual market are already among the highest in the country, with an average annual marketplace plan premium in excess of $10,000 in 2018.

A Study of Market Failure: Iowa’s Individual Health Insurance Market

The current dismal state of the ACA individual market in Iowa was not a foregone conclusion. In 2014, when the marketplaces launched, Iowa had four insurers competing in the ACA’s marketplace. In 2018, only one insurer is selling ACA-compliant health plans; it agreed to do so only after implementing an average 50 percent increase to unsubsidized premiums.

Iowa’s marketplace enrollment has also lagged that of other states. As of 2016, only 20 percent of eligible Iowans had enrolled (by comparison, that number was 40 percent in Illinois, 43 percent in Missouri, and 57 percent in Maine). Iowa is an outlier for a critical reason. Wellmark BlueCross BlueShield declined to participate in the marketplace for the first three years, entered only briefly in 2017 and then declined to participate in 2018, but is returning to the market in 2019. The insurer also maintained a large block of pre-ACA grandfathered and transitional, or “grandmothered,” health plans (see table).

Because the enrollees in these plans must pass a health screen before being allowed to enroll, they are relatively healthy. Because Wellmark was able to hang on to these healthy enrollees, the pool of people available for the ACA-compliant market was much smaller and sicker than it otherwise would have been.

Affordable Care Act Grandfathered and Grandmothered Health Plans
Grandfathered health plans Policies in effect before the March 2010  enactment of the ACA;  not subject to ACA standards and protections. Although these policies can be renewed indefinitely as long as they do not undergo substantial changes, they can’t be newly issued.
Grandmothered (transitional) health plans Policies issued after the ACA’s 2010 enactment but before 2014. Policies are not required to meet critical ACA protections.

Grandfathered and Grandmothered Policies: Policy and Business Choices with Long-Term Consequences

Due to the transitional nature of the individual market and the high administrative costs of maintaining grandfathered health plans, many insurers — other than Wellmark — discontinued these products over time. And unlike several states that prohibited these policies in order to ensure a healthier, more stable individual market, Iowa’s leadership embraced the Obama administration’s decision to allow the renewal of grandmothered health plans. Iowa stands out even among states that did not ban such plans:  an estimated 38,000 people remained in grandmothered policies as late as 2018. Indeed, approximately 60 percent of Iowans buying insurance on their own stayed with pre-ACA grandfathered or grandmothered health plans.

Left with a smaller and sicker pool of enrollees than they had projected, it is therefore not surprising that the insurers remaining in the market needed significant premium increases. The premium hike implemented in 2018 likely drove as many as 26,000 Iowans to drop their coverage this year.

Enrollment and Premiums Had Iowa Taken a Different Path

What if Iowa had taken a different path? If Wellmark had, like many other insurers, discontinued its grandfathered policies, and if the state had prohibited grandmothered plans, the individual market would be a lot healthier than it is today. In fact, doing so would have added up to 85,000 people to Iowa’s ACA-compliant market, according to a new estimate by Wakely Consulting Group. Those added enrollees, because they are relatively healthy, would have reduced average premiums for ACA-compliant plans by up to 18 percent (see table).1

Enrollment and Premiums in ACA-Compliant Market Due to Improved Risk Pool
  Without Grandfathered Plans Without Grandmothered Plans Without Grandfathered or Grandmothered Plans
Total change in ACA-compliant enrollment +25,000 to 40,000 +30,000 to 45,000 +55,000 to 85,000
Change in premiums -5% to -12% -5% to -12% -8% to -18%

Analysis by Wakely Consulting Group. Numbers have been rounded.

Looking Ahead

Iowa’s experience offers important lessons. The more the individual market is segmented between healthy and the less-healthy consumers, the more likely unsubsidized enrollees are to face unaffordable premiums. Federal proposals such as those to expand the availability of short-term and association health plans, to the extent they are not limited by state policies, could result in more state individual markets resembling Iowa’s. The primary losers in such a scenario are the working middle-class consumers: entrepreneurs who run their own businesses, freelancers and consultants, farmers and ranchers, and early retirees who earn too much to qualify for the ACA’s premium subsidies.

State leaders can protect these families by adopting policies that will expand the risk pool and maintain a balance between healthy and less-healthy enrollees. A number of states have already done so, through state-level reinsurance programs, expanded annual enrollment opportunities, and limits on short-term and association health plans. It’s not too late for other states to follow their lead.

 

 

Citing cost, BCBS North Carolina CEO Patrick Conway comes out against Carolinas, UNC merger

http://www.healthcarefinancenews.com/news/citing-cost-bcbs-north-carolina-ceo-patrick-conway-comes-out-against-carolinas-unc-merger?mkt_tok=eyJpIjoiTldGaU9Ua3lNall4WldSbCIsInQiOiJmSDNkSWVPXC9FWVlMbWY3OHFhc3RUTGVPQytZVEZSRUx6dHd2dldIamJvOUh5V2pNbFQ4dTQyY0JVQWFWVFpGZkI2VUlHV1BMVTNmTk9pSjk4T1B4ZGxRMUZRQXpNSEErSU9zdHExNVlBZkxxWDZ5YTEwdWxkXC9tTkl0dkNVZGFVIn0%3D

BSBC North Carolina office in Durham, NC Credit: Google Street View

 

The health systems touted the benefit of better leverage to negotiate deals with insurers when the proposed merger was announced in August.

BlueCross BlueShield North Carolina CEO Patrick Conway has come out against the merger between UNC Health Care and the Carolinas HealthCare System.

Should the deal go through, Conway said in a January 24 letter to the CEOs of the health systems, the cost to consumers would rise.

“Blue Cross NC has a responsibility to our customers to help slow rising healthcare costs,” Conway said in the letter. “After a thorough review of independent research which shows that when healthcare systems combine costs for consumers go up, Blue Cross NC cannot support your proposed combination.”

Conway told CEOs Bill Roper of UNC and Gene Woods of the Carolinas system that he was open to continued dialogue.

In August when the proposed merger was announced, executives of the two healthcare systems touted the benefit of the merger in giving them leverage to negotiate better deals with insurance companies and vendors.

Also questioning the deal is the UNC Board of Governors, according to The News & Observer.

UNC Board of Governors member Tom Fetzer, former chairman of the North Carolina Republican Party, reportedly sent an email to the board chairman on January 18, questioning whether the proposed partnership was being conducted legally, as the board was to be apprised of any policy changes.

The merger would result in efficiencies and $14 billion in annual revenue, according to the health systems.

Conway, MD, formerly headed the Centers for Medicare and Medicaid Services Innovation Center. He was named president and CEO of Blue Cross and Blue Shield of North Carolina on December 5.