If you’re thinking about starting a new health plan or expanding your offerings, you are not alone.
Take Medicare Advantage. In response to the fast growth in the Medicare-eligible population and strong interest in Medicare Advantage, both new and established insurers have seized this opportunity. In the past five years, the number of MA plans has soared nearly 75%, with a 13% increase in the past year–during the height of the pandemic. That brings the total to 3,550 plan offerings, according to an October 2020 KFF report. In fact, KFF reported, the typical Medicare beneficiary has access to 33 MA plan types.1,2
Given the proliferation of plan types, physicians and health systems have their pick. How, then, can any plan type or insurer, especially a startup, stand out in a crowded marketplace and build a plan to last?
For MA and all other lines of business, the key is a shift in strategy and implementation that focuses on a much closer alignment of the plan and its contracted providers. Importantly, it must include financial arrangements that work for both, with provider-specific pathways to success in value-based payments. It also requires plans to supply providers with tools, such as advanced IT and analytics capabilities, to support value-based care.
Building a partnership of equals that fosters collaboration and cooperation is essential for managing population health and total cost of care. Plans that bake in a provider-aligned approach can offer a much more attractive proposition for providers, especially the top performers. Without the right providers, the plan is at a distinct disadvantage.
We recently helped a mission driven start-up health plan, eternalHealth, launch a member-centric, provider-friendly Medicare Advantage plan in Massachusetts, the first start-up MA plan not associated with an academic medical center in the state since 2013. Some key lessons from that experience:
1. Get the fundamentals right.
Clearing the basic hurdles to launch a new plan type or start a new insurer takes about 18 months. Obtaining authorization to administer lines of business requires running the gauntlet of state and federal licensure, registration and other necessary applications, which typically include submitting hundreds of pages of documentation.
All plans must analyze, understand and meet complex state requirements, which can vary in its detail, breadth and applied scrutiny from state to state. For example, plans generally need to prepare pro formas detailing numbers of expected members, expenses and losses/profits for the first three years for any state. Some states also require plans to escrow capital, usually based on the number of members.
Plans also usually need to apply in the current plan year to the Centers for Medicare & Medicaid Services in order to administer a federal program, such as Medicare Advantage, for the subsequent plan year. The application generally includes the pro formas along with attestations and copies of vendor contracts to demonstrate compliance with the federal code.
Another important requirement of the health plan build is network contracting to meet adequacy standards, which usually takes 8 to 12 months. Network adequacy refers to a health plan’s ability to offer access to care in a reasonable and timely manner to its beneficiaries. CMS, for example, establishes time and distance parameters, such as access to general surgeons and inpatient hospitals within a ten-mile radius of any Medicare beneficiaries in a major city.5
2. Leverage technology and data to help providers succeed.
While plan IT platforms must execute core functions, such as claims processing and member enrollment, delivering centralized, accessible and actionable data to its contracted providers will be a critical differentiator as the industry continues its acceleration to downside risk. Providers across the spectrum servicing populations under any line of business in any state want data captured at the point-of-service in real-time. They can use that information to derive key insights on their performance against quality and cost benchmarks in their risk-based contracts, risk score accuracy and referral management.
Plans managing data across the continuum of care through a singular source of truth have a distinct advantage over competing plans, most of which execute their operations through antiquated, siloed systems that frequently overburden providers.
3. Align compensation across the spectrum.
Plans capable of implementing a glidepath to value based payment compensation models that align incentives across all providers will succeed in both attracting high-performing providers to the network and retaining membership through the delivery of high-quality, low-cost care.
Plans have yet to experience the desired success in value-based care, a critical driver in the healthcare industry over the next decade, due to both a misalignment in provider compensation models and insufficient incentive for primary care physicians to adapt their practice management. To avoid these pitfalls and meaningfully move from volume to value, plans need to achieve three milestones: substantial membership, setting financial and quality expectations with providers and aligning all points of care on realizing value-based goals.
Providers will not be incentivized to contract in value-based arrangements until a critical mass of attributed membership has enrolled in the plan’s products. Incentives under risk will not materially impact a provider’s potential revenue under a contract with low membership.
However, once plans have reached a membership threshold of significance for the provider’s practice, providers will be much more receptive to engaging and collaborating with plans on low-risk forms of value-based contracting, such as quality incentives with no downside, to start on the path towards increased risk and rewards that properly incentivizes PCPs to adapt their practice management.
By aligning all entities under risk-based contracting, including hospitals that have traditionally received fee-for-service rates, plans can truly transform quality and cost outcomes by engaging providers across the beneficiary’s care journey. While incentives for hospitals to contract under capitated risk models generally remain low, the impetus in the industry to hold all points of care collectively accountable for beneficiary outcomes provides plans with the leverage to begin carving hospital payments into value-based care arrangements. Plans will, in turn, achieve greater reduction in cost, realization of quality goals and universal engagement in value-based care.
4. Engage with your members.
Population-specific, culturally competent membership engagement strategies addressing social determinants of health (SDOH), such as health care accessibility, poverty, racism, and food security will be critical tools for plans to improve performance and to attract and retain membership.
To build a competitive edge, plans need to be capable of:
- Executing data collection and analysis on key focus areas for their member populations.
- Establishing a network of community-based organizations (CBOs) and other partners to reduce SDOH and health equity barriers.
- Setting financial management practices that balance program investment against ROI.
These levers will help insurers succeed in delivering sustainable health equity, lowering costs long-term and retaining membership.
The focus on equity and social determinants is particularly important going forward. Optimizing SDOH data collection remains a common point of contention for plans, so solving this problem can deliver a major leap forward for payer and provider alike.
It starts with a deep understanding of publicly available data, from CDC data tracking social determinants to reliable sources local to the plan’s membership, such as a state agency overseeing public health trends, a local health system’s community health needs assessment or an association interfacing with the chronically ill. Plans can consolidate, analyze and use this information to inform the direction of and specific SDOH interventions.
To deliver SDOH interventions, plans need to develop a CBO network capable of administering services to beneficiaries. Already, some plans are coordinating with both private and local organizations, such as working with Uber to provide non-emergency medical transportation or working with Area Agencies on Aging (AAAs) to deliver meals to the home for qualifying elderly populations.
The final step to ensuring success in SDOH programming is the implementation of financial management practices consistently measuring return on investment (ROI). Plans can measure ROI by tracking the cost of SDOH service delivery against the savings accrued from the applicable population’s reduction in high-cost service utilization.
For example, a plan may achieve cost savings in the form of reduced readmissions rates through the implementation of a meal delivery program that provides three medically tailored meals per day to the home of at-risk patients immediately post-discharge from an Inpatient or Skilled Nursing Facility (SNF) stay.
ROI provides critical feedback to plans on both the sustainability and efficacy of its SDOH services. Per the provided example, if at-home meal delivery does not materially impact readmissions rates for at-risk populations, greater investment in a medication adherence system or an in-home supports and services program may more effectively achieve the plan’s cost-savings goals.
Building a better insurance plan
As health care delivery and payments are rapidly evolving to population health management and capitation, so too must insurers adapt their strategies, focus and investments to succeed with the new models. Putting the fundamentals in place remains essential—but it’s no longer enough.
Plans need to prioritize close alignment and collaboration with contracted providers and health equity for all beneficiaries. That means providing tools including advanced IT and analytics capabilities for managing populations, including addressing SDOH. It also requires developing provider pathways to value-based care based on advantageous financial arrangements.
By using these levers to support members and providers on the journey to value-based care, insurers can build better plan types as well as better businesses.
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1Medicare Advantage 2021 Spotlight: First Look, KFF, October 29, 2020
2Excludes SNP, EGHP, HCCPs and PACE plans
3COPE Analysis of Medicare Advantage Enrollment Data, MA State/County Penetration Rate3
4Medicare Advantage in 2021: Enrollment Update and Key Trends, June 21, 20214
5Assumes the major city resides entirely in a county classified as “Large Metro” by CMS MA Network Adequacy standards