Radar on Medicare Advantage

Increasing Focus on Dual Integration May be Key to Possible Humana-Centene Combination

May 23, 2019

As Centene Corp. and WellCare Health Plans, Inc. prepare to create a “premier” government-sponsored health insurance entity, news emerged earlier this month that certain Centene shareholders may be seeking to block the deal in favor of selling Centene to a large company such as Humana Inc. Although Humana declined to comment on reports of a possible friendly takeover, industry experts say acquiring a major Medicaid provider would make sense for the insurer given increasing integration of Medicare and Medicaid.

By Lauren Flynn Kelly

As Centene Corp. and WellCare Health Plans, Inc. prepare to create a “premier” government-sponsored health insurance entity, news emerged earlier this month that certain Centene shareholders may be seeking to block the deal in favor of selling Centene to a large company such as Humana Inc. Although Humana declined to comment on reports of a possible friendly takeover, industry experts say acquiring a major Medicaid provider would make sense for the insurer given increasing integration of Medicare and Medicaid.

Centene in late March said it planned to buy WellCare for approximately $17.3 billion. Reuters on May 6 reported that hedge funds Corvex Management LP and Sachem Head Capital Management LP are exploring challenging that acquisition; a report from StreetInsider followed that indicated Humana’s interest in pursuing a deal if Centene walked away from WellCare. But Centene spokesperson Marcela Hawn affirmed the company’s commitment to the transaction in an email to AIS Health.

The reported desire of Centene shareholders to have an “arranged marriage” with Humana is not necessarily surprising, given that Centene is the biggest player in Medicaid with a desire to grow its MA business, remarks Alex Shekhdar, founder of Sycamore Creek Healthcare Advisors. Such a deal would have less market overlap than Centene-WellCare and therefore involve fewer divestitures and an easier regulatory approval process, he suggests.

“This is all about duals, all about the interface of Medicare and Medicaid and the potential growth of MLTSS [managed long-term services and supports],” he says of a possible Humana-Centene combination.

CMS Extends Options to States to Test Innovative Dual-Eligible Care Models

May 8, 2019

Although independent evaluations of ongoing demonstrations to integrate care for dual-eligible Medicare-Medicaid beneficiaries are still underway, an April 24 letter from CMS Administrator Seema Verma signaled the agency’s commitment to proving the value of the models as well as testing alternatives.

By Lauren Flynn Kelly

Although independent evaluations of ongoing demonstrations to integrate care for dual-eligible Medicare-Medicaid beneficiaries are still underway, an April 24 letter from CMS Administrator Seema Verma signaled the agency’s commitment to proving the value of the models as well as testing alternatives.

In the letter to state Medicaid directors, CMS extended three new opportunities to “test state-driven approaches” for integrating duals’ care:

(1) For interested states with capitated Financial Alignment Initiative (FAI) model demos, CMS said it is “open to partnering on revisions.”

(2) For interested states without capitated demos, CMS said it welcomes interest in testing the model through new demos in additional states.

(3) CMS said it is open to partnering with states on testing new state-developed models to better serve dual eligibles and invited states to respond with ideas, concept papers and/or proposals.

Kevin Malone, a senior counsel in the Health Care and Life Sciences practice in the Washington, D.C., office of Epstein Becker & Green, P.C. and a former duals officer at CMS, predicts that, for states with existing demos, they will not only revisit their memoranda of understanding that outline the terms of their agreements with CMS, but will use it as a chance to amend their three-way contracts with CMS and plans. This presents a unique opportunity for the plans to suggest changes around certain programmatic requirements or provider training that may reduce some of their burden and streamline some of the technical details of their arrangements.

Leavitt Partners Presents Multiyear MA Framework

May 6, 2019

In the age of value-based contracts and social determinants of health, why shouldn’t plans have an opportunity to serve Medicare Advantage (MA) beneficiaries for longer periods of time and maximize the potential to improve health outcomes and reduce costs?

That’s the question at the center of “Multi-Year Medicare Advantage Plans: A Framework for Action,” a new white paper by consulting firm Leavitt Partners.

By Lauren Flynn Kelly

In the age of value-based contracts and social determinants of health, why shouldn’t plans have an opportunity to serve Medicare Advantage (MA) beneficiaries for longer periods of time and maximize the potential to improve health outcomes and reduce costs?

That’s the question at the center of “Multi-Year Medicare Advantage Plans: A Framework for Action,” a new white paper by consulting firm Leavitt Partners.

Under the MyMAP demonstration project proposed in the paper, MA insurers would be able to offer a multiyear product to beneficiaries with certain high-cost chronic disease needs or high-cost acute medical episodes and test the hypothesis that making “upfront investments” would be recovered over a multiyear period because they produced better care management and better outcomes for beneficiaries.

The authors recommended a contract period of at least three years between health plan and member. To incentivize members to enroll in a multiyear plan, the MyMAP framework suggested that plans could focus on attractive benefits and cost-sharing. Moreover, it might be possible for insurers to guarantee beneficiaries $0 premiums across multiple years of the model, they added.

Moving forward, “the idea will be acted on with specifics,” says former Utah Governor and HHS Secretary Mike Leavitt. He adds that the firm is working with two organizations that are not yet prepared to go public and that focus on certain conditions that would fit well within the framework.

“Multiyear contracting deserves further thought — perhaps as a demonstration,” says Michael Adelberg, a principal with Faegre Baker Daniels Consulting and a former top CMS MA official. “If beneficiaries are locked in, that begs the question of whether plan benefits, networks, service areas also will be locked in.”

Final Flexibility Rule Expands Telehealth Benefits Under Medicare Advantage

April 25, 2019

With the April 5 release of the Calendar Year 2020 Medicare Advantage and Part D Flexibility Final Rule that implements many provisions of the Bipartisan Budget Act of 2018, MA organizations may offer telehealth services on a scale that’s never been allowed before.

Under the final rule, MA plans starting in 2020 will be able to offer as part of the basic benefit package “additional telehealth benefits” beyond what is available to Medicare fee-for-service beneficiaries and to include more telehealth services in their basic benefit bid paid by the capitation rate.

By Lauren Flynn Kelly

With the April 5 release of the Calendar Year 2020 Medicare Advantage and Part D Flexibility Final Rule that implements many provisions of the Bipartisan Budget Act of 2018, MA organizations may offer telehealth services on a scale that’s never been allowed before.

Under the final rule, MA plans starting in 2020 will be able to offer as part of the basic benefit package “additional telehealth benefits” beyond what is available to Medicare fee-for-service beneficiaries and to include more telehealth services in their basic benefit bid paid by the capitation rate.

CMS also finalized a requirement that if an MA plan covers a Part B service as an additional telehealth benefit, it must also provide access to such a service through an in-person visit and not only through “electronic exchange.”

“I think this is going to be a positive impact from a health plan perspective and I think this is something that health plans wanted CMS to implement for a while,” remarks Brian Collender, specialist leader in the health actuarial practice of Deloitte Consulting. For those larger MA plans that already have telehealth relationships set up with national vendors, expanding telehealth is a low cost/low risk opportunity, he says. Smaller health plans, meanwhile, may not have the capabilities to offer telehealth as a benefit right away, but have options when it comes to vendors that specialize in telehealth.

Moreover, “by reclassifying telehealth services as Medicare-covered under Parts A and B, MA plans can offer telehealth without using up precious rebate dollars that fund supplemental benefits,” says Michael Adelberg, a principal with Faegre Baker Daniels Consulting and a former top CMS MA official.

Clover Health’s Challenges Offer Takeaways for Venture-Backed MA Firms

April 10, 2019

After breaking into the Medicare Advantage market five years ago with a focus on technology, San Francisco-based startup Clover Health is in the process of laying off 140 employees with the intent of acquiring more people with health care knowledge.

Founded in 2014 by an investment banker and a software engineer, Clover has reportedly raised close to $1 billion in financing. Clover began offering MA plans in 2015, and now serves nearly 40,000 members across seven states. At the time of Clover’s launch, its mission seemed simple: own the technology, control the outcomes. But the insurer in 2016 was fined by CMS for marketing violations and later reportedly ticked off customers when data-sharing negotiations resulted in members receiving unexpected medical bills for blood work.

By Lauren Flynn Kelly

After breaking into the Medicare Advantage market five years ago with a focus on technology, San Francisco-based startup Clover Health is in the process of laying off 140 employees with the intent of acquiring more people with health care knowledge.

Founded in 2014 by an investment banker and a software engineer, Clover has reportedly raised close to $1 billion in financing. Clover began offering MA plans in 2015, and now serves nearly 40,000 members across seven states. At the time of Clover’s launch, its mission seemed simple: own the technology, control the outcomes. But the insurer in 2016 was fined by CMS for marketing violations and later reportedly ticked off customers when data-sharing negotiations resulted in members receiving unexpected medical bills for blood work.

While there is a need for “consumer-grade technology and service,” plans should not “underestimate the underlying complexity in health care or the underlying importance of getting the technicalities right. You can’t gloss over those, especially in MA,” says Deb Gordon, senior fellow at the Harvard Kennedy School’s Mossavar-Rahmani Center for Business and Government.

Even with the right technology, “the realities are that it’s very hard and very expensive” once a plan starts performing the actual functions of health care and navigating the web of federal guidelines, state insurance regulations and consumer expectations, she adds.

Moreover, there’s a danger to acting “bigger than you are” when negotiating with other service providers, which may have been Clover’s downfall when attempting to get data from LabCorp and Quest Diagnostics, according to a CNBC report from 2018.