Commercial insurers remain interested in competing for MA beneficiaries.
Projections show that national health expenditure growth is expected to average 5.5 percent annually to reach $5.7 trillion by 2026—higher than the projected increase in Gross Domestic Product (GDP). Fortunately, trends of insurers entering and exiting the program show that the Medicare Advantage (MA) market is stable yet dynamic—roughly the same numbers of plans enter/exit the program each year. Data shows that commercial insurers remain interested in competing for MA beneficiaries.
Given the benefits and challenges of value-based healthcare, stakeholders should gain a full understanding of Medicare Advantage (MA) plans, as well as strategies for optimizing this approach. What’s more, research indicates that the successes of MA are already having a positive impact on the broader healthcare delivery and payment landscape. In fact, fee-for-service Medicare spending has trended down in markets with high MA plan participation, indicating that doctors and other medical professionals operating in markets with high MA penetration adapt their practice patterns in alignment with MA plans’ strategies that control spending and use. This, in turn, helps to reduce use and costs for all their patients—including those enrolled in traditional Medicare and commercial/employer-sponsored plans.
MA plan coverage offered by private companies approved by Medicare provide all Medicare Part A (hospital insurance) and Medicare Part B (medical insurance) coverage.
Optimizing the MA Plan Opportunity
An effective MA plan that significantly improves outcomes takes a whole patient approach and applies an end-to-end solution designed to enhance care coordination using analytics, in-home care, retrospective solutions and care management.
Value-based contracting generates cost efficiencies and improves clinical outcomes in MA. The challenge is to design MA plans and risk-bearing entities to remain sustainable. This requires innovative quality and risk adjustment programs to meet the growing demand for effective care strategies. For instance, MA plans can gain clinical insight into risk-adjusting conditions to enhance their traditional analytical platforms.
Understanding a Risk Adjustment Model
Risk adjustment is an actuarial tool used to calibrate payments to health plans based on the relative health of the at-risk populations. If insurers are limited in the extent to which premiums can vary by health status or other factors that are associated with health spending, risk adjustment ensures that health plans are appropriately compensated for the risks they enroll.
Keep in mind that most claims in fee-for-service Medicare are paid using procedure codes, which offer little incentive for providers to record more diagnosis codes than necessary to justify ordering a procedure. In contrast, MA plans have a built-in financial incentive since the current risk adjustment model was introduced that prompts providers to record all possible diagnoses. This is important because higher enrollee risk scores result in higher payments to the plan.
Consider MA plans that rely upon Physician Record Review (PRR), a two-stage retrospective chart review process from a 1) certified coder and 2) board-certified physician. These same plans also use Prospective Health Assessments (PHA) to gain a robust view of members and their care needs. Providers also rely on PHAs to lay the groundwork for developing more accurate reporting documentation, improving patient engagement and compliance, enhancing disease management, and reducing utilization.
This kind of full-spectrum, end-to-end approach to care helps providers identify gaps in care and manage plan members more productively. It also helps health plans that are serving as intermediaries, executing solutions and assuming risk. Fortunately, plan members gain the most form this approach because they are guided toward more preventive care and self-management early in the care process.
Risk-Based Contracting on the Rise
Medicare beneficiaries in fee-for-service Medicare are normally required to pay multiple premiums and deductibles and face a confusing array of cost-sharing arrangements for benefits and services from physicians, pharmacies, and hospitals.
In contrast, when a Medicare beneficiary enrolls in a MA plan it is usually a comprehensive, integrated health plan that includes richer benefits and solid catastrophic coverage. Unburdened of siloed benefits and payments, MA beneficiaries’ plan structure is simpler, and they are able to receive more coordinated care.
The value-based world is enlarging to the benefit of MA patients. In a recent move, CMS expanded its definition of “primarily health-related” benefits that private insurers are allowed to include in their MA policies. These extras include, for instance, air conditioners for people with asthma, healthy food, rides to medical appointments and home-delivered meals. This means MA beneficiaries will have more supplemental benefits and be better able to lead healthier, more independent lives.
Jay Baker
Jay Baker is the senior vice president of quality and risk adjustment solutions at Advantmed, LLC. He was most recently responsible for the ACA risk adjustment strategy and execution for UnitedHealth Group’s Optum division. His accomplishments included standing up an end-to-end service offering and exceeding revenue goals for the first two years of the program. As one of the founders of Dynamic Healthcare Systems, he was responsible for the original design for each of their 10 Medicare Advantage software modules. He is an ACA and Medicare Advantage industry leader and expert in policy, compliance, systems and plans operations.
Advantmed recently developed a white paper that discusses federal policy and the economics of Medicare. Advantmed, LLC is a healthcare solutions company dedicated to partnering with health plans, provider groups and risk-bearing entities to optimize risk adjustment and quality improvement programs. Our integrated and technology-enabled solutions improve health plan financial results and offer insights on health plan members. For more information on Advantmed’s solutions visit www.advantmed.com.
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