evolve or die: a darwinian moment in government-sponsored ... · evolve or die: a darwinian moment...

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EVOLVE OR DIE:A DARWINIAN MOMENT

IN GOVERNMENT-SPONSORED HEALTH PROGRAMS

A Presentation to the ICE 2014 Annual Conference

JOHN GORMANEXECUTIVE CHAIRMAN

DECEMBER 11, 2014

Copyright © 2014, Gorman Health Group, LLC

• The new healthcare financing landscape: Medicare, Medicaid and ObamaCare

• Outlook for the Affordable Care Act: the Republican Congress, SCOTUS, and King v. Burwell

• The rising bar in compliance, Star Ratings, and risk adjustment

• Conclusions

TODAY’S AGENDA


• Government programs are sole source of organic growth; massive opportunities – but only for the adaptable.

• What MA does, Medicaid and the Exchanges follow.

• Health plans and their partners must evolve or die:

most vulnerable patients + rapidly rising regulatory bar +

rising cost + rising complexity =

Survival of the most adaptable.

Golden Age of Government Programs Brings Innovation Imperative

Cut to the chase

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2


ENTITLEMENTS ARE UNSUSTAINABLE. DEFINED CONTRIBUTION = FUTURE.

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ORIGINAL MEDICARE IS UNSUSTAINABLE

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Commercial

• Group enrollment declining

• Rates flat• Margins

falling

Exchanges

• Enrollment growing

• Rates flat/ slightly up

• Margins unknown yet

Medicaid

• Enrollment exploding


• Margins growing

Medicare Advantage

• Enrollment growth of 6-10%/year

• Rates down• Margins

growing

Dual Eligibles

• Enrollment exploding


• Huge margin potential (10x commercial)

“TIPPING POINT” IN GOVERNMENT-SPONSORED PROGRAMS

140150160170

2014 2020

Commercial

0

10

20

30

2014 2020

Exchanges

40

90

2014 2022

Medicaid

12

17

22

2014 2020

MA

0

5000000

10000000

2014 2020

Duals

66

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• Try full repeal in budget recon• Try partial repeal in budget recon: HIX

subsidies, Medicaid expansion, individual mandate

• Try bipartisan partial repeal: device tax, IPAB, 40-hour workweek

Legislative

• SCOTUS and King v. Burwell seen as best hope for repeal

• GOP generating multiple ObamaCare cases with goal of reaching SCOTUS

Courts

WHAT THE REPUBLICAN CONGRESS IS PLANNING FOR OBAMACARE

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WHAT KING V. BURWELL WIN WOULD DO TO OBAMACARE

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• Undermines Federal Exchange in three dozen stateso IRS stops paying subsidies to 4.6M (2014) -

13.4M (2016)

o Causes insurance “death spiral”

• Eviscerates the individual mandate

• Eliminates the employer mandate

• Wipes ObamaCare from (Red) States with no state-run HIX, no Medicaid expansion


NOTHING LEFT TO DO BUT…

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4


• Enrollment +1 million YTD; up 8% YOY

• Tailwind coming in 2016-2017 + Medigapreforms

• Growth driven by PPOs and SNPs

MEDICARE ADVANTAGE BY THE NUMBERS

GHG

1010


MEDICARE ADVANTAGE MEMBERSHIP SNAPSHOT

November 2014: 10% YOY Growth

Source: Medicare Advantage, Cost, PACE, Demo, and Prescription Drug Plan Contract Report – Monthly Summary, October 2014

Number of Contracts Total EnrolleesTotal "Prepaid" Contracts 730 16,527,071Local CCPs 544 14,204,435PFFS 12 299,936Regional PPOs 11 1,262,156MA Subtotal 570 15,778,267Medicare-Medicaid Plan 27 166,5801876 Cost 16 499,2581833 Cost (HCPP) 9 52,463PACE 105 30,433Other Subtotal 160 748,804

Total PDPs 85 23,473,656TOTAL 815 40,000,727

Includes: 2,016,548 - SNP3,152,538 - 800 Series 3,703,731 - Local PPO

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THE DUALS OPPORTUNITY BY THE NUMBERS

Estimated Dual Eligibles 10-11 Million

Total Spend/Year on Duals $397 Billion

Duals % of all Medicare/Medicaid Enrollees 9%

Duals % of all Medicare/Medicaid Spend 37%

Average # Chronic Conditions – Medicare Only 1

Average # Chronic Conditions – Duals 4.6

States with LOIs to CMS for Duals Integration 37

% Duals Spend in Health Plans 16.8%

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THE DUALS OPPORTUNITY BY THE NUMBERS

$397

2016 Duals Premium

2006 PDP Spend Current Medicare

Managed Care

Current Medicaid

Managed Care

Remaining Medicaid FFS (mostly LTC)

Sources: CMS, CBO, Barclay’s

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2016 2019States Moving Duals to Plans 11 22

Organic Premium Opportunity $40 Billion $122 Billion

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FINANCIAL ALIGNMENT DEMONSTRATION STATES AND STATUS

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MANY STATES MOVING ONDUALS/LTSS OUTSIDE OF CMS DEMONSTRATION

Source: http://files.kff.org/attachment/medicaid-in-an-era-of-health-delivery-system-reform-results-from-a-50-state-medicaid-budget-survey-for-state-fiscal-years-2014-and-2015-report

1515

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OPT-OUTS HAMPERING DEMO GROWTH

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DUAL ELIGIBLE DEMONSTRATIONS: LESSONS LEARNED

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• Beneficiary opt-out• Actuarial soundness of rates• Network composition• Provider and staff training• Stakeholder input

Pre-Launch

• Call centers: volume lower, but calls longer• Data mining to find members• Reaching and engaging members• Health risk assessments, annual wellness visits

Go Live

• How to fund housing?• Member onboarding• Complex case management• Stars and risk adjustment management

Adaptation


Headwinds

• Flat/declining rate environment

• Rising medical/drug expense

• Greater transparency and accountability

• Consumerism

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106.0% 103.6% 102.6% 101.6% 101.6%

$600

$650

$700

$750

$800

$850

$900

$950

80.0%

90.0%

100.0%

110.0%

120.0%

130.0%

2014 2015 2016 2017 2018

PMPM

Ratio of Benchmark to FFS

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

2015-2017 BENCHMARKS: THE COMING TAILWIND

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CMS projects +2% MA trend for 2016; 2015

all-in was -3.4%

First round of ACO Demos

expires 2016-17


Red = 114%+

Pink = 104% - 114%

Light Blue = 100% - 97%

Blue = 95% - 98%

RATIO OF BENCHMARK TO UNMANAGED FFS MEDICARE, 2015

2020


Red = 114%+

Pink = 104% - 114%

Light Blue = 100% - 97%

Blue = 95% - 98%

RATIO OF BENCHMARK TO UNMANAGED FFS MEDICARE, 2017

2121

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Utilization = Bigger Driver than Price Increases

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RISING MEDICAL EXPENSE

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Prescription Drug Utilization Rising Quickly with ObamaCare

Source: IMS Data, Credit Suisse

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A Look at a Few Drug Categories Common Among Seniors, Uninsured

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Source: IMS Data, Credit Suisse


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GREATER TRANSPARENCY, ACCOUNTABILITY, AND CONSUMERISM

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Source: CMS, Medicare Parts C & D Oversight and Enforcement Group 2013 Part C and Part D Program Annual Audit and Enforcement Report , October 16, 2014

2013 CMS ENFORCEMENT ACTIONS: It’s All About Consumer Protection

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COMMON FINDINGS:• Unapproved quantity limits• Unapproved utilization management practices• Failed to properly administer the CMS

transition policy• Improperly effectuated a prior authorization or

exception request• Failed to provide a transition supply of a non-

formulary medication


WHY ARE STAR RATINGS SO IMPORTANT?

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• Commercial and Medicaid alwaysfollow Medicare Advantage

• Sub-3-Star plans on CMS “hit list” in 2015

o “Scarlet letter” on Medicare.govo Letters to members

• .5 Star = ~ $15-$50 PMPM

• Biggest factors in 2015: Appeals, Grievance and Adherence

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%

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THE STAR RATINGS BELL CURVE

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9.60%

19%

29.50%

26.10%

10.70%

2.30%0.10%

1.10%1.60%0

500000100000015000002000000250000030000003500000400000045000005000000

5 Stars 4.5Stars

4 Stars 3.5Stars

3 Stars 2.5Stars

2 Stars Low New

En

roll

men

t

Enrollment by Star Rating

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CMS Sanction Impact3+ Stars 2.5 Stars<3 Stars 1‐Star reduction

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IMPACT OF STAR RATINGS

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Domain PlansD-1: Drug Plan Customer Service 60D-2: Member Complaints, Problems Getting Care, and Improvement in the Drug Plan’s Performance

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D-3: Member Experience with the Drug Plan 17D-4: Patient Safety and Accuracy of Drug Pricing 1MA-1: Staying Healthy: Screenings, Tests, and Vaccines 2MA-2: Managing Chronic (Long-Term) Conditions 1MA-3: Member Experience With Health Plan 15MA-4: Member Complaints, Problems Getting Services, and Improvement in the Health Plan's Performance

10

MA-5: MA Health Plan Customer Service 4

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PLANS RECEIVING <2 STARS BY DOMAIN

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• High correlation between Stars, appeals and grievances compliance, member satisfaction and loyalty

• CMS sanction impact: now the Kiss of Death

• Leading cause of plans receiving <2 Stars by domain

• Biggest operational vulnerability for PBMso Part D average measure weight: 2.3x

o Part C average measure weight: 1.6x

WHY CONSUMER PROTECTIONS MATTER EVEN MORE IN 2015

Impact on Medicare Star Ratings

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• Overall MA Star Rating now 3.91, up 0.04 year over year

• Humana most improved, up 0.18; 90.2% in 4+ Star plans: +$410MM

• Can Medicaid plans compete?

STAR RATINGS OF THE PUBLICLY-TRADED MAJORS

3232


REGIONAL IMPROVEMENTS

3333

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REGIONAL IMPROVEMENTS

3434

Copyright © 2014, Gorman Health Group, LLC 35

CORRELATION OR CAUSATION

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D-SNP Contracts

Star Rating (2014)

0% 3.74

1-25% 3.68

25-50% 3.19

50-100% 3.24

CORRELATION OR CAUSATION?

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LIS Contracts

Star Rating (2014)

0% 3.74

1-25% 3.78

25-50% 3.38

50-100% 3.24

Source: Health Affairs

• MA plans with duals under-perform in 2 categories: SNP-specific measures and medication adherence, especially diabetes, HTN, HPL

• Medication review, functional status assessment, and pain screening low for D-SNPs

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Inovalon: Difference Between Duals and Non‐Duals on Specific Stars Measures

Milliman: Star Ratings Tend to be Lower When:

• RPPO or PFFS product

• Contract has service area of 20+ counties

• Contract is in Southern US or US territory

• Higher diabetes and HTN rates

• High rates of minority/ underserved beneficiaries

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RECENT FINDINGS ON DUALS AND STAR RATINGS

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PART C WEIGHTS AND MEASURES:2015

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ID Measure Weight

C01 Colorectal Cancer Screening 1

C02 Cardiovascular Care – Cholesterol Screening 1

C03 Diabetes Care – Cholesterol Screening 1

C04 Annual Flu Vaccine 1

C05 Improving/Maintaining Physical Health 3

C06 Improving/Maintaining Mental Health 3

C07 Monitoring Physical Activity 1

C08 Adult BMI Assessment 1

C09 SNP Care Management 1

C10 Care for Older Adults – Medication Review 1

C11 Care for Older Adults – Functional Status Assessment 1



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ID Measure Weight

C12 Care for Older Adults – Pain Assessment 1

C13 Osteoporosis Management in Women with Fracture 1

C14 Diabetes Care – Eye Exam 1

C15 Diabetes Care – Kidney Disease Monitoring 1

C16 Diabetes Care – Blood Sugar Controlled 3

C17 Diabetes Care – Cholesterol Controlled 3

C18 Controlling Blood Pressure 3

C19 Rheumatoid Arthritis Management 1

C20 Improving Bladder Control 1

C21 Reducing the Risk of Falling 1

C22 Plan All-Cause Readmissions 3

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ID Measure Weight

C23 Getting Needed Care 1.5

C24 Getting Appointments and Care Quickly 1.5

C25 Customer Service 1.5

C26 Rating of Health Care Quality 1.5

C27 Rating of Health Plan 1.5

C28 Care Coordination 1.5

C29 Complaints About the Health Plan 1.5

C30 Members Choosing to Leave the Plan 1.5

C31 Health Plan Quality Improvement 5

C32 Plan Makes Timely Decisions About Appeals 1.5

C33 Reviewing Appeals Decisions 1.5


PART D WEIGHTS AND MEASURES: 2015

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ID Measure Weight

D01 Appeals Auto-Forward 1.5

D02 Appeals Upheld 1.5

D03 Complaints About the Drug Plan 1.5

D04 Members Choosing to Leave the Plan 1.5

D05 Drug Plan Quality Improvement 5

D06 Rating of Drug Plan 1.5

D07 Getting Needed Prescriptions 1.5

D08 MPF Price Accuracy 1

D09 High-Risk Medication 3

D10 Diabetes Treatment 3

D11 Medication Adherence for Diabetes 3

D12 Medication Adherence for Hypertension 3

D13 Medication Adherence for Cholesterol 3


MOVING THE STAR RATING

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Leadership

Tools

Process

• Chief Performance Officer

• Action Plan• Align QI and Key

Providers

• Data Dashboard• Integrated Data Platform• Tactical Deployment

• Regular Audits and Remediation

• Delegation Oversight• MTM• Proactive Service

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MEDICARE ADVANTAGE DO OR DIE: RISK ADJUSTMENT MANAGEMENT

4343


• Risk adjustment data validation (RADV) audits are leading item in 2015 HHS Inspector General workplan

• Expect in 2015 call letter: o Plans have to hire an independent

auditor

o Number of annual RADV audits triples

o Plans subject to audit every 3 years

• HIX Plans must hire independent auditor by April 2015

RADV=4-LETTER WORD IN MEDICARE AND OBAMACARE

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• Don’t wait for CMS/HHS Audit notificationo Develop Risk Mitigation Plan

o Look for data outliers

o Perform mock audits

• Explore a “Plan B” for home visitso Assessments done in a retail clinic setting

o Embedded NP program

o Change in PCP incentive program

o Include in annual wellness visit

RADV=4-LETTER WORD IN MEDICARE AND OBAMACARE

Steps To Take Now

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• CMS likely to open up Value-Based Benefits, Rewards & Incentives: emphasis will be on member compliance/adherence

• Creative positive experiences while driving Quality Outcomes

• Important factors:

o Platform for engaging

o Customized to member

o Timely rewards

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PEEKING AHEAD

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Execution, Engagement, and the Member Experience

Identifying Members

Analytics and

Reporting

Stratification

Engaging and Managing Members

Case Management

Proactive Member

Experience

PBM/Vendor Performance

Integrated MTM Specialized services for chronically ill

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WHAT MATTERS NOW

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IT’S ABOUT CLINICAL AND FINANCIAL INTEGRATION

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Integrated Delivery System

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1. Government as biggest customer means tough rate environment, transparency, and accountability. Industry culture must evolve.

2. Unique operational and clinical capabilities required. IT’S ABOUT EXECUTION.

3. MA policy evolving around risk adjustment, Star Ratings and duals/low-income, appeals/grievances, value-added benefits.

4. Stars and MA-style consumer protections now reaching into Medicaid, ObamaCare exchanges.

5. Financial tailwind begins 2016-2017, just in time for ACO entry.

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CONCLUSIONS: EVOLVE OR DIE

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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 Exchange opportunities. For nearly 20 years, our unparalleled teams of subject-matter experts, former health plan executives and seasoned health care 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 the capitation payment of more than six million Medicare beneficiaries and continues to support customers participating in the Health Insurance Exchanges. Nearly 3,000 compliance professionals use the Online Monitoring Tool™ (OMT), our complete Medicare Advantage and Part D compliance toolkit, while more than 45,000 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]

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evolve or die: a darwinian moment in government-sponsored ... · evolve or die: a darwinian moment...

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