ice keynote 12-3-18 gorman · 2019. 3. 30. · 60% of a medicaid plan’s members struggle to find...

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JOHN GORMANDECEMBER 3, 2018

The The The The PostPostPostPost----Midterm Outlook Midterm Outlook Midterm Outlook Midterm Outlook for for for for Medicare Advantage in Medicare Advantage in Medicare Advantage in Medicare Advantage in Year 3 of Year 3 of Year 3 of Year 3 of

TrumpTrumpTrumpTrump

A Presentation to the Industry Collaboration Effort (ICE)

Annual Conference

© John Gorman, 2018

TODAY’S AGENDATODAY’S AGENDATODAY’S AGENDATODAY’S AGENDA

1. Impact of the Midterm Elections

2. The Outlook for Medicare Advantage and Dual Eligibles Under Trump

3. New Policy for Medicare Advantage/ Part D Benefits

4. New Trends and Opportunities

5. Conclusions and Q&A


• Government programs = sole growth opportunity for payers and providers

• Trump/Verma effect = Medicare Advantage is the only safe game in health insurance now

• New supplemental benefits policy is a game-changer

• Growth, aggregation, new entrants

• Risk Adjustment and Star Ratings drive market, bar rises

• “A Darwinian and Edisonian moment”

CUT TO THE CHASE!CUT TO THE CHASE!CUT TO THE CHASE!CUT TO THE CHASE!

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IMPACT OF THE MIDTERM ELECTIONSIMPACT OF THE MIDTERM ELECTIONSIMPACT OF THE MIDTERM ELECTIONSIMPACT OF THE MIDTERM ELECTIONS

• Blue Wave was real – Dems reclaim House with ~40 seat pickup

• Trump legislative agenda grinds to a halt, dozens of investigations to begin

• Medicaid was big winner of midterms:

• Red State blockade of ObamaCare Medicaid expansion crumbles

• Expansion ballot measures pass easily in NE, UT and ID

• Dems taking governorships in ME, KS and NM means expansion moves forward

• ~500,000 Americans will gain coverage

• Repeal of Affordable Care Act – now dead

• Block granting Medicaid – now dead

• Slashing Medicare/Social Security to pay for GOP tax cuts – now dead

• Health care investigations to come:

• DOJ failure to defend ACA in court

• Medicaid work requirement waivers


MEDICARE ADVANTAGE AND MEDICAID KEEP THE MEDICARE ADVANTAGE AND MEDICAID KEEP THE MEDICARE ADVANTAGE AND MEDICAID KEEP THE MEDICARE ADVANTAGE AND MEDICAID KEEP THE LIGHTS ON FOR THE INSURANCE INDUSTRYLIGHTS ON FOR THE INSURANCE INDUSTRYLIGHTS ON FOR THE INSURANCE INDUSTRYLIGHTS ON FOR THE INSURANCE INDUSTRY


CURRENT CONTRACT SUMMARY

NO. OF

CONTRACTS

MA ONLY

ENROLLEES

DRUG PLAN

ENROLLEES

TOTAL

ENROLLEES

Total “Prepaid” Contracts 698 2,624,898 18,627,235 21,501,520

Local CCPs 467 2,021,546 16,613,606 18,875,998

PFFS 6 48,347 101,163 147,026

MMP 50 0 379,620 377,391

1876 Cost 15 362,076 267,683 629,843

1833 Cost (HCPP) 9 71,500 0 71,598

PACE 124 0 42,151 43,303

MSA 3 6,508 0 6,671

Regional PPOs 24 114,921 1,223,012 1,351, 690

Total PDPs 63 0 25,358,315 25,566,837

Employer/Union Only Direct Contract PDP3 0 111,781 113,548

All Other PDP 60 0 25,246,534 25,453,289

TOTAL 761 2,624,898 43,985,550 47,068,357

MEDICARE ADVANTAGE MEMBERSHIPMEDICARE ADVANTAGE MEMBERSHIPMEDICARE ADVANTAGE MEMBERSHIPMEDICARE ADVANTAGE MEMBERSHIP

National Snapshot – September 2018

Source: Medicare Advantage, Cost, PACE, Demo, and Prescription Drug Plan Contract Report – Monthly Summary. Totals reflect enrollment as of the September 1, 2018 payment. The payment reflects enrollments accepted through September 11, 2018.

Includes:

2,783,271 SNP

4,167,191 Series 800

5,660,242 Local PPO

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PPOS ARE EXPLODING IN MEDICARE ADVANTAGEPPOS ARE EXPLODING IN MEDICARE ADVANTAGEPPOS ARE EXPLODING IN MEDICARE ADVANTAGEPPOS ARE EXPLODING IN MEDICARE ADVANTAGEGo-To Product for Affluent Boomers and Retiree Groups;

When Done Right, a MediGap Killer


MACRA’S SEISMIC CHANGE TO MEDIGAP MACRA’S SEISMIC CHANGE TO MEDIGAP MACRA’S SEISMIC CHANGE TO MEDIGAP MACRA’S SEISMIC CHANGE TO MEDIGAP IMPACTS MA AND PDPS TODAYIMPACTS MA AND PDPS TODAYIMPACTS MA AND PDPS TODAYIMPACTS MA AND PDPS TODAY

MACRA Bans Sale of First-Dollar Coverage Supplements in 2020


MACRA’S SEISMIC CHANGE TO MEDIGAP MACRA’S SEISMIC CHANGE TO MEDIGAP MACRA’S SEISMIC CHANGE TO MEDIGAP MACRA’S SEISMIC CHANGE TO MEDIGAP IMPACTS MA AND PDPS TODAYIMPACTS MA AND PDPS TODAYIMPACTS MA AND PDPS TODAYIMPACTS MA AND PDPS TODAY

MACRA Bans Sale of First-Dollar Coverage Supplements in 2020

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ANOTHER ANOTHER ANOTHER ANOTHER HEALTH INSURER TAX HEALTH INSURER TAX HEALTH INSURER TAX HEALTH INSURER TAX HOLIDAY IN 2020 HOLIDAY IN 2020 HOLIDAY IN 2020 HOLIDAY IN 2020 WILL DRIVE GROUP MA ENROLLMENTWILL DRIVE GROUP MA ENROLLMENTWILL DRIVE GROUP MA ENROLLMENTWILL DRIVE GROUP MA ENROLLMENT

5.50%

2.00%

13.80%

8.60%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

2015 2016 2017 2018

Y/Y Group MA Enrollment Growth

HI Tax Holiday

HI Tax

Reinstated

2019 2020

National Carriers Plowing Proceeds Into Richer Group Benefit Designs

~15%

~19%


• 27% of major U.S. health systems intend to launch a Medicare Advantage

plan in the next four years.

• Only 29% felt confident in their organization’s ability to do so.

• Drivers:

o controlling more of the premium dollar vs FFS Medicare

o senior population continues to grow and becomes a larger proportion of

providers’ patient panels

o market and regulatory trends supporting Medicare Advantage

HEALTH SYSTEMS FLOCKING TO MEDICARE HEALTH SYSTEMS FLOCKING TO MEDICARE HEALTH SYSTEMS FLOCKING TO MEDICARE HEALTH SYSTEMS FLOCKING TO MEDICARE ADVANTAGEADVANTAGEADVANTAGEADVANTAGE

Source: Lumeris, May 2018 survey of 90 health systems


EXPLOSIVE GROWTH IN MEDICARE ADVANTAGE EXPLOSIVE GROWTH IN MEDICARE ADVANTAGE EXPLOSIVE GROWTH IN MEDICARE ADVANTAGE EXPLOSIVE GROWTH IN MEDICARE ADVANTAGE CONTINUES “4CONTINUES “4CONTINUES “4CONTINUES “4----EVA”EVA”EVA”EVA”

21

23

26

29

34

0

5

10

15

20

25

30

35

40

2018 2019 2020 2023 2025

Enrollment in Millions, 2018-2025

8% 11.5% 11% 11% 11%

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FINAL CMS CALL LETTER FOR 2019 IS BEST EVER, FINAL CMS CALL LETTER FOR 2019 IS BEST EVER, FINAL CMS CALL LETTER FOR 2019 IS BEST EVER, FINAL CMS CALL LETTER FOR 2019 IS BEST EVER, AFFIRMS MA AS ONLY SAFE GAME IN INSURANCEAFFIRMS MA AS ONLY SAFE GAME IN INSURANCEAFFIRMS MA AS ONLY SAFE GAME IN INSURANCEAFFIRMS MA AS ONLY SAFE GAME IN INSURANCE

• 3.5-6.4% average gross revenue increase• 160 bps increase from draft

• Biggest pay raise since MMA of 2003

• 270 MA plans providing 1.5 million enrollees new types of supplemental benefits in 2019


SUPPLEMENTAL BENEFITS POLICY CHANGE IS A SUPPLEMENTAL BENEFITS POLICY CHANGE IS A SUPPLEMENTAL BENEFITS POLICY CHANGE IS A SUPPLEMENTAL BENEFITS POLICY CHANGE IS A GAME CHANGERGAME CHANGERGAME CHANGERGAME CHANGER

• CMS seeks to allow for benefits which “diagnose, prevent, or treat an illness or injury, compensate for physical impairments, act to ameliorate the functional/psychological impact of injuries or health conditions, or reduce avoidable emergency and healthcare utilization.”

• Opportunity for plans to offer more meaningful benefits that address social determinants of health, and include in the bid:

• Assistive devices in the home

• Food security

• Transportation to doctor’s appointments or to urgent care

• Telehealth


• Permanent Special Needs Plan (SNP) reauthorization

• CHRONIC Care Act (expand MA-VBID to all 50 states by 2020)

• Codifies expansion of supplemental benefits

• Allows plans to build telehealth into MA bid

• Jelly in the Donut Hole:

2019 BUDGET RESOLUTION = GOODIE BAG FOR MA2019 BUDGET RESOLUTION = GOODIE BAG FOR MA2019 BUDGET RESOLUTION = GOODIE BAG FOR MA2019 BUDGET RESOLUTION = GOODIE BAG FOR MA

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WHY FOCUS ON SOCIAL DETERMINANTS WHY FOCUS ON SOCIAL DETERMINANTS WHY FOCUS ON SOCIAL DETERMINANTS WHY FOCUS ON SOCIAL DETERMINANTS OF HEALTH (SDOH)?OF HEALTH (SDOH)?OF HEALTH (SDOH)?OF HEALTH (SDOH)?

POVERTY CHARGES INTEREST in health care. Addressing SDOH

makes business and medical sense.

SDOH are responsible for

half of all health care expenditures

New Medicare Advantage and

Medicaid policies now enable

benefit designs to address SDOH

New sources of cheap capital can help pay for new

services and interventions



Self-

Actualization

Importance

Belonging (friends, family)

Security (safety, shelter)

Survival (food, water, warmth)

THE SCIENCE OF MOTIVATING MEMBERS THE SCIENCE OF MOTIVATING MEMBERS THE SCIENCE OF MOTIVATING MEMBERS THE SCIENCE OF MOTIVATING MEMBERS TO IMPROVE HEALTHTO IMPROVE HEALTHTO IMPROVE HEALTHTO IMPROVE HEALTH

- I follow my doctor’s orders religiously. - I seek ways to improve my health.

- I take my medications as prescribed. - I have resources to meet my needs.

HIGHLY ENGAGEDHIGHLY ENGAGEDHIGHLY ENGAGEDHIGHLY ENGAGED

- I know how to improve my health. - I appreciate reminders from my MA plan.

- I generally follow my doctor’s orders.- I use good judgment regarding my health.

ENGAGEDENGAGEDENGAGEDENGAGED

- I know I should improve my health.- I know how to improve my health.

- Sometimes I don’t make good choices. - I give up when it gets hard.

ALMOST ENGAGEDALMOST ENGAGEDALMOST ENGAGEDALMOST ENGAGED

- I’m not willing to change my behavior. - Sometimes I need

- I don’t know how to manage my health. help from others.

NOT ENGAGEDNOT ENGAGEDNOT ENGAGEDNOT ENGAGED

- I don’t have resources to meet my needs. - I do not want to

- I rely on others for many daily activities. change.

DISENGAGEDDISENGAGEDDISENGAGEDDISENGAGED

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STORIES FROM THE FIELD: STORIES FROM THE FIELD: STORIES FROM THE FIELD: STORIES FROM THE FIELD: SETTING STRATEGIES THAT MOTIVATE MEMBERSSETTING STRATEGIES THAT MOTIVATE MEMBERSSETTING STRATEGIES THAT MOTIVATE MEMBERSSETTING STRATEGIES THAT MOTIVATE MEMBERS

40% of the members in a D-SNP are illiterate (to the

extent that they sign their name with an “X)

Vast majority of the members of a D-SNP reside in multi-story, aging, inner-

city apartment buildings with unreliable elevators

Almost 50% of a D-SNP plan’s members rely on

public transportation and live in neighborhoods where

gang/gun violence is at an all-time high

60% of a Medicaid plan’s members struggle to find

providers with appointments available

after 4pm

10% of an MA-PD plan’s members use a church-based clinic staffed by

locums tenens physicians

Almost 50% of an MA-PD plan’s members report

being food insecure

68% of an MA-PD report not being able to afford the

medications prescribed by their doctor using their

plan’s formulary structure


SOCIAL IMPACT INVESTING: SOCIAL IMPACT INVESTING: SOCIAL IMPACT INVESTING: SOCIAL IMPACT INVESTING:

WORKING CAPITAL FOR CLINICAL INNOVATIONWORKING CAPITAL FOR CLINICAL INNOVATIONWORKING CAPITAL FOR CLINICAL INNOVATIONWORKING CAPITAL FOR CLINICAL INNOVATION$50 Billion in Funding Available in 2019

Principal +5% Interest Expected After 8 Years


• Blues workgroup on supplementals, focus on palliative and home care

• Anthem “Essential/Everyday Extras” (GA, IN, KY, MO, OH, VA, WI, TN, TX, NJ, CA, AZ):

o Up to 16 home delivered “healthy” meals per health event, up to 64 per year.

o Up to 60 one-way trips per year to health-related appointments.

o Up to 124 hours of support from a home health aide or similar assistance.

o A $500 allowance for home safety modifications.

o Up to 1 visit per week for adult day services.

o Up to 24 acupuncture and/or therapeutic massage visits.

o In CA and AZ add a fitness program, acupuncture and/or therapeutic massage for pain management, and an outreach program aimed at addressing loneliness.

WHAT COMPETITORS ARE DOING ON WHAT COMPETITORS ARE DOING ON WHAT COMPETITORS ARE DOING ON WHAT COMPETITORS ARE DOING ON SUPPLEMENTALS AND SDOHSUPPLEMENTALS AND SDOHSUPPLEMENTALS AND SDOHSUPPLEMENTALS AND SDOH

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• Movement to reduce/eliminate copays and

deductibles

• Menu of tiered supplemental benefits

becomes the norm

• Vision, dental and OTC benefits become new

table stakes

THE NEXT GENERATION OF MA BENEFIT DESIGNTHE NEXT GENERATION OF MA BENEFIT DESIGNTHE NEXT GENERATION OF MA BENEFIT DESIGNTHE NEXT GENERATION OF MA BENEFIT DESIGN


• 2020: widespread offering of new evidence-based

benefits, especially home modifications, home and

palliative care, transportation, food security,

housing, loneliness

• 2021:

o Successful 2020 benefits go mainstream in large

urban markets

o Serious offerings on opioid treatment, polypharmacy

o emergence of mental/behavioral/dementia benefits

o more experimental options in telehealth, caregivers

THE NEXT GENERATION OF MA BENEFIT DESIGNTHE NEXT GENERATION OF MA BENEFIT DESIGNTHE NEXT GENERATION OF MA BENEFIT DESIGNTHE NEXT GENERATION OF MA BENEFIT DESIGN


MEDICAID ENROLLEES MEDICAID ENROLLEES MEDICAID ENROLLEES MEDICAID ENROLLEES AND EXPENDITURESAND EXPENDITURESAND EXPENDITURESAND EXPENDITURES

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DUAL ELIGIBLES ARE THE INSURANCE INDUSTRY’S DUAL ELIGIBLES ARE THE INSURANCE INDUSTRY’S DUAL ELIGIBLES ARE THE INSURANCE INDUSTRY’S DUAL ELIGIBLES ARE THE INSURANCE INDUSTRY’S BIGGEST OPPORTUNITYBIGGEST OPPORTUNITYBIGGEST OPPORTUNITYBIGGEST OPPORTUNITY


STATES WITH PROGRAMS FOR MANAGED LONGSTATES WITH PROGRAMS FOR MANAGED LONGSTATES WITH PROGRAMS FOR MANAGED LONGSTATES WITH PROGRAMS FOR MANAGED LONG----TERM SERVICES AND SUPPORTS (MLTSS)TERM SERVICES AND SUPPORTS (MLTSS)TERM SERVICES AND SUPPORTS (MLTSS)TERM SERVICES AND SUPPORTS (MLTSS)



Category 2012 Margin

SNPs (total) 8.6%

Non-SNPs (total) 4.3%

SNPs, non-profit -0.6%

SNPs, for-profit 11.5%

50%+ partial dual eligible 12.9%

50%+ full dual eligible 5.7%

CAN SPECIAL NEEDS PLANS (SNPCAN SPECIAL NEEDS PLANS (SNPCAN SPECIAL NEEDS PLANS (SNPCAN SPECIAL NEEDS PLANS (SNPSSSS) MAKE MONEY?) MAKE MONEY?) MAKE MONEY?) MAKE MONEY?

SNPs are generally more profitable than ALL other types of MA plans

Source: MedPAC 2015 Report to Congress, Table 13-6, p.332, March 2015.

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CHALLENGES FACING PLANS: CHILDLESS ADULTS, CHALLENGES FACING PLANS: CHILDLESS ADULTS, CHALLENGES FACING PLANS: CHILDLESS ADULTS, CHALLENGES FACING PLANS: CHILDLESS ADULTS, DUALS, AND LTCDUALS, AND LTCDUALS, AND LTCDUALS, AND LTC

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/End of life care


VALUEVALUEVALUEVALUE----BASED BASED BASED BASED CONTRACTING CONTRACTING CONTRACTING CONTRACTING GOES GOES GOES GOES MAINSTREAMMAINSTREAMMAINSTREAMMAINSTREAM

• Aetna: 50%+ of spend in VBC, 75% by 2020, investments in JVs with health systems (e.g., Inova in VA)

• United: 45% of spend in VBC ($52 billion), investing heavily in accountable care arrangements.

• Anthem: 58% of spend in VBC, with 75%+ in shared savings/risk. Invested $255 million in care coordination payments

• BCBS-MI: $100 million invested in IT, analytics, operations, and human resources, $1.5 billion in VBC

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STAR RATINGS CHANGED THE GAME IN STAR RATINGS CHANGED THE GAME IN STAR RATINGS CHANGED THE GAME IN STAR RATINGS CHANGED THE GAME IN GOVERNMENT HEALTH PROGRAMSGOVERNMENT HEALTH PROGRAMSGOVERNMENT HEALTH PROGRAMSGOVERNMENT HEALTH PROGRAMS

3.92

4.03 4.02

4.06 4.08

3.75

4.25

30%

40%

50%

60%

70%

2015 2016 2017 2018 2019

Av

era

ge

Sta

r R

ati

ng

Pe

rce

nt

% of Members in 4+ Star Contracts Average Rating % of contracts rated 4+ stars

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STAR RATINGS SUPPORT STAR RATINGS SUPPORT STAR RATINGS SUPPORT STAR RATINGS SUPPORT A CULTURE OF EXCELLENCEA CULTURE OF EXCELLENCEA CULTURE OF EXCELLENCEA CULTURE OF EXCELLENCE

Star Rating 2017 2018

�� ½ 0.55 .71

�� 0.40 .32

�� ½ 0.22 .21

�� 0.16 .10

�� ½ 0.10 .09

�� 0.08 .12

Star Rating 2017 2018

�� ½ 20% 20%

�� 17% 16%

�� ½ 11% 11%

�� 10% 8%

�� ½ 7% 6%

�� 4% 5%

Complaints per 1,000 % Disenrollment

THE PURSUIT OF QUALITY BONUS PAYMENTSTHE PURSUIT OF QUALITY BONUS PAYMENTSTHE PURSUIT OF QUALITY BONUS PAYMENTSTHE PURSUIT OF QUALITY BONUS PAYMENTS

37 plans lost 4th star

• Net: 1,400,000 beneficiaries

• United: Net -340,000

• Centene: Net -130,000

• Aetna: Net -70,000

• Anthem: Net -30,000• Net: 870,000 beneficiaries

• WellCare: Net +100,000

• Cigna: Net +80,000

• Humana: Net +15,000

**41 plans gained 4**41 plans gained 4**41 plans gained 4**41 plans gained 4 thththth star in 2017**star in 2017**star in 2017**star in 2017**

21 plans gained 4th star


THE BAR RISES AND EVERY BENEFICIARY MATTERS THE BAR RISES AND EVERY BENEFICIARY MATTERS THE BAR RISES AND EVERY BENEFICIARY MATTERS THE BAR RISES AND EVERY BENEFICIARY MATTERS IN STARS’ MEMBER EXPERIENCE MEASURESIN STARS’ MEMBER EXPERIENCE MEASURESIN STARS’ MEMBER EXPERIENCE MEASURESIN STARS’ MEMBER EXPERIENCE MEASURES

87

95%

90%

85%

80%

75%

70%

Getting

Needed Care

Getting Appts

and Care

Quickly Customer

Service

Rating of

Health Care

QualityRating of

Health Plan

Care

CoordinationRating of

Drug Plan

Getting

Needed

Drugs

7980

72

90

84

88

81

87

82

80

92

2018 Cut

Points

86

8081

74

92

88

83

88

82

88

83

86

81

91

88


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LEVERS OF LOYALTYLEVERS OF LOYALTYLEVERS OF LOYALTYLEVERS OF LOYALTY

Varying Factors Impact the Member Experience

Source: Deft Research, 2018 Medicare Member Experience Study


HIERARCHIES IN MEMBER CONTACTS HIERARCHIES IN MEMBER CONTACTS HIERARCHIES IN MEMBER CONTACTS HIERARCHIES IN MEMBER CONTACTS PER YEARPER YEARPER YEARPER YEAR

Plan Staff: 8-10

Outpatient Providers: 26

Retail Pharmacy: 40+

Member Materials: 220+


• Baby Boomers

o 50% enrolling in MA in first two years of

eligibility

o More affluent skew toward PPOs

• Medigap conversions

o First-dollar coverage plans (e.g., Type C

and F) banned in 2020

• Prescription Drug-only plan conversions

• Retiree group/EGWP/Series 800

• Dual Eligibles/MLTSS populations

GROWTH OPPORTUNITIES FOR GROWTH OPPORTUNITIES FOR GROWTH OPPORTUNITIES FOR GROWTH OPPORTUNITIES FOR MEDICARE ADVANTAGEMEDICARE ADVANTAGEMEDICARE ADVANTAGEMEDICARE ADVANTAGE

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• Medicare Advantage remains safe and

stable in Year 3 of Trump

• New tools to address social

determinants will be a major draw

• Expansions in PPOs and SNPs, huge

changes to Medigap

• Risk adjustment and Star Ratings remain

focal points of competition

• Improving the member experience and

managing medically complex patients

are keys to long-term survival

CONCLUSIONSCONCLUSIONSCONCLUSIONSCONCLUSIONS


JOHN GORMAN

202-255-6924

[email protected]

Tweeting @JohnGorman18

https://www.linkedin.com/in/john-gorman-

098b265/

ice keynote 12-3-18 gorman · 2019. 3. 30. · 60% of a medicaid plan’s members struggle to find...

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