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Centers for Medicare and Medicaid (CMS) to reduce reimbursements to MADP payers. Though the reduction percentage is in ux and politically sensitive, it could be as much as 3%.
Challenges
MAPD
Approaches
Increase renewals and improve conversion rate. Reduce acquisition costs. Reduce process complexity. Use analytics to create better member experience and wellness programs.
Process controls to drive quality. Moving to value-based care. Better risk adjustment capture risk codes. Intensive intervention medical management. Improve star ratings.
Regulations, cost pressures and demands for higher quality add up to increased business and nancial risk for payers operating MAPD plans. Payers must deploy member-facing strategies and revamp business processes to create competitive advantages while also mitigating MAPD market risks. Figure 1
CMS
benchmark payment rates are set to decrease relative to Medicare fee-for-service (FFS) costs under the ACA (Figure 3, page 3). These rate reductions will vary as CMS phases in the new benchmarks. From 2013 to 2016, CMS will base the benchmarks on a percentage of new FFS Medicare rates in each county blended with pre-ACA payment levels.
At least one study has shown that when these new benchmarks are in place, overall MAPD plan payments will be reduced from 114% of spending in traditional Medicare to 102%.4 That said, benchmarks and reimbursements will uctuate from county to county, from 5% less than Medicare FFS costs to 15% more than those costs.5
88.3
92.8
(in millions)
in enrollment
The growth in Medicare enrollees represents prospective growth for MAPD plans. Payers must understand the increased business risks that come in tandem with the MAPD markets growth potential and how to mitigate them. Source: Based on CMS.gov data. Figure 2
95.60%
94.50%
2011
2012
2013
2014
2015
2016
2017
CMS is reducing its benchmark payment rates so that MAPD reimbursement rates will be close to and sometimes under Medicare feefor-service reimbursement rates in many service areas. Source: Based on CMS.gov data. Figure 3
MAPD
plans must meet a retrospective 85/15 medical loss ratio (MLR). CMS requires plans to return any reimbursement amounts exceeding the 15% limit on administrative spending and prot levels. CMS can prohibit plans failing to meet MLR requirements in multiple years from enrolling new members and potentially disqualify them from participating in the MAPD market.
tion in the spring and requires lings by June. This results in payers ling premium rates and benets designs for the coming plan year many months ahead of plans autumn open enrollment periods. Payers are then locked into the rates, regardless of the health conditions of newly enrolled members. This makes managing risk scores critical. Plans essentially rely on historical data to make population health and rate predictions. Medical costs are notoriously difcult to predict, and the margin of error rapidly grows wider the farther into the future the predictions must go. desk reviews are also becoming more comprehensive and sophisticated. CMS requires payers to respond quickly to audit issues. Its crucial that payers support their rates, or make rate corrections swiftly and with accurate data. Otherwise, they risk quoting
bid are substantial. The bottom line is that plan reimbursements are likely to decrease while the health demographics of MAPD members indicate they will need additional services. Controlling the costs of service delivery while ensuring the highest quality member experience will be a challenging balancing act. Failing to accurately forecast these expenses will negate a plans earning potential, even with increased membership (see Figure 4, next page).
Federal
enables plans to achieve bonus payments when scoring a 4 or greater (see Figure 5, next page). These scores are based on a wide range of criteria, from chronic condition management to member satisfaction, to customer service. In 2013 and beyond, quality scores also determine what portion of plan savings may be returned as rebates to plan members. These rebates are now set at 50% of the difference between a county benchmark and a plans bid (down from 75%). Plans with high-quality scores can receive greater rebates.
Counties
If trends continue, most Medicare Advantage enrollees will be in the highest-cost counties. When all ACA payment reduction requirements are complete, benchmarks for MAPD plans serving these counties will be at approximately 95% of Medicare FFS costs. Achieving optimal operating efciencies and high CMS star ratings that boost benchmark payments will be critical to maintaining viable margins for MAPD plans. Figure 4
eligible consumers, as well as members of lower rated plans, to seek out highly rated plans.6 Plan members may switch to Five-Star plans in their service area at any time. The CMS may terminate MAPD plans failing to meet a minimum of a 2.5 star rating for several consecutive years.
be equal or lower to FFS Medicare charges for certain services, and there are no applicable beneciary rebates for prescription drugs through decreasing drug costs and member cost sharing. Further, payers are left out of gain-sharing arrangements that ACOs enter into directly with CMS. 2013, the business risk of operating Special Needs Population (SNP) plans will increase because payers lose the authority to change the types of members enrolling in those plans. Whats more, such plans must be certied by the NCQA, adding to compliance requirements. Payers must be ready to react to new changes from CMS about how risk scores are handled for SNP populations, which may include a frailty adjustment in the CMS payment methodology for members eligible for both Medicare and Medicaid.
68.60%
After
Most payers are not realizing the full benets of the CMS quality bonus payment program, with almost 70% of MAPD plans failing to reach the Four-Star rating required to achieve a benchmark bonus. Rebates increase as well for higher rated plans. Figure 5
Analytics.
Payers must mine the data they collect for more insights about serving populations, pricing products and improving operations.
nity health population data into insights that will help payers efciently prepare accurate, data-driven bids and responses to CMS audit queries. The analytics can help payers create a comprehensive model for better risk management through more accurate risk scores and pricing estimates, mitigating some of the risk inherent in the CMS bidding timelines. process improvement, from internal clinical and administrative functions, to provider performance issues, to patient engagement and member health maintenance initiatives. These will be key to meeting CMS quality rating criteria.
mitigate the business risk built into making bids for care that will be delivered two years into the future. Increasing business process automation nets payers additional value by improving accuracy, making employees more productive and supporting enhanced member services.
gagement and health programs, deliver true competitive advantage in the MAPD marketplace and should be priorities. Non-core commodity administrative and claims processing activities can be entrusted to experienced service providers using industry best practices and a variable, volume-based operating cost model to make these expenses predictable. lower-cost, highly trained and experienced globally based clinical and administrative labor can help payers develop a cost structure appropriate to the extremely costsensitive MAPD market. ties can reduce the cost of service, improve STAR ratings and support member incentive programs.
>> Using
their bottom line results. Accomplishing this requires the ability to integrate the administrative and clinical data now locked in separate silos to gain greater visibility into processes and assess their impact on nancial results.
processing operations increases nancial forecasting accuracy. Payers can then conrm a claim was properly preauthorized and that all appropriate services were rendered to the member before the claim reaches the adjudication process. Visibility into the medical management decisions and the services rendered enables the payer to monitor for accurate CMS reimbursement and use the data to increase nancial forecasting accuracy on future rate lings. such as sales and marketing and enrollment, to gain 360-degree views of members. A comprehensive view of member health and resource use helps support personalized member health and patient engagement programs that enhance customer experiences and improve quality rankings. These create a strong marketing story for retaining existing members and attracting new ones, including converting current members to MAPD plans as they become eligible for them.
robust, compliance-centered platform. MAPD platforms must connect processes, increase efciencies, and create more comprehensive views of members from clinical and nancial perspectives so payers are better equipped to manage their business.
>> CMS
frequently adjusts and enhances its highly specic requirements for payers offering MADP plans. An MAPD platform must be based on industry-leading components or a single strong Medicare platform that offers the exibility to support the resulting new benet plan congurations and provider network management. It must have a compliance model at its core and incorporate business objects and rules so that adjusting one object propagates the required updates throughout all affected systems. Fast compliance with new regulations and procedures helps reduce vulnerabilities. platforms should incorporate a repeatable change implementation framework and asset set to ensure fast, reliable change management. platform must support industrialstrength integration with CMS for lings, responses to queries and to better prepare for
>> MAPD
unnecessary costs with streamlined workows and processes creates the nancial exibility required to meet MLR requirements and cognizant 20-20 insights
>> The
compliance with laws and regulations. This level of integration also helps streamline enrollment functions, reimbursements and billing reconciliation.
>> Build
process exibility to support unique MAPD needs, including fast compliance with frequent changes requested by CMS. a clear process for enacting plan changes and new enrollment applications, including those submitted on paper or faxed. that consistently delivers reliable and well integrated data entry, data validation, and data communications functions. entire enrollment workow.
>> Dene
tions to support an integrated, comprehensive view of members and member-centric services. It should integrate with analytics data to inform wellness, disease management and patient engagement programs. actively ag indicators, including when members dont take their prescriptions or follow dietary requirements. To that end, the platform must support digital health tools, such as in-home monitors and mobile health apps.
>> Make information accessible throughout the >> Execute process controls that drive quality
and enable monitoring of daily work activities and results. 4. Improved cost management.
>> Reduce
member acquisition costs even as revenues and market share increase, potentially to top-tier MAPD provider levels. and on-boarding processes for Medicare individual consumers boosting sales while driving down sales costs.
>> Develop analytics-based wellness and caremanagement programs, as well as custom offerings. rates.
>> Improve coding of risk parameters. >> Identify areas for streamlining revenue management and medical management functions. and resulting data and reporting.
process complexity by implementing a customer relationship management platform with a multi-channel sales and enrollment solution supporting both Medicare individual telesales and agent-driven activities.
by decoupling the business process from the targeted core administrative system and applying a consistent set of quality controls and data validations.
>> Utilize
outbound telemarketing campaigns to consult on products, up-sell and cross-sell products, generate sales leads and complete sales from an over-65 (O65) individuals prospect list. customer consultations, answer questions and complete sales on in-bound calls for O65 individual members.
>> Perform
>> Streamline
processes by channeling all sources of new enrollment information into a common entry point. cognizant 20-20 insights
In the MAPD market, IT investment has not been a priority because prots have been capped. But now, managing MLR and quality requirements calls for IT solutions that break down data silos, create single, integrated views of members and streamline marketing, enrollment, compliance and nancial capabilities. Payers must evaluate the nancial implications of buying or building these systems versus partnering with an experienced provider that offers a bundled, turnkey solution with end-to-end visibility, enhanced capabilities, and a single point of accountability for all MAPD processes and services.
and risk mitigation; and realigning resources to high-value, member-centric activities. Offering preventive care, enabling better collaboration with providers and proactively detecting health risks with analytics will help payers better manage business risk and control costs. These abilities will also permit payers to meet the quality and service demands of CMS and health consumers, and thus grow a sustainable MAPD business.
Footnotes
1
A Data Book: Health care spending and the Medicare Program, Medicare Payment Advisory Commission, June 2013, pp. 24. Medicare Advantage 2014 Spotlight: Plan Availability and Premiums, Henry J. Kaiser Family Foundation, Nov 25, 2013 | Marsha Gold, Gretchen Jacobson, Anthony Damico and Patricia Neuman, http://kff.org/medicare/issue-brief/medicare-advantage-2014-spotlight-plan-availability-andpremiums/#MarketDynamicsTurnover, accessed 11/26/13. Total Medicare Advantage Enrollment gures, Total Medicare Beneciary gures, Kaiser Family Foundation, kff.org/state-category/medicare, accessed 11/26/13. Realizing Health Reforms Potential. The Impact of Health Reform on the Medicare Advantage Program: Realigning Payment with Performance. Brian Biles, Giselle Casillas, Grace Arnold, and Stuart Guterman; October 2012, The Commonwealth Fund, pp. 1. Ibid, pp. 8. http://www.managedcaremag.com/archives/1301/1301.medicareadvantage.html, accessed 11/26/13.
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