How Accountable Care Organiza4ons (ACO s) might impact the Medicare Supplement Industry

Transcription

1 How Accountable Care Organiza4ons (ACO s) might impact the Medicare Supplement Industry

2 BACKGROUND Pa4ent Protec4on and Affordable Care Act (ACA) Passed on March 23, 2010 Sec4on 3022 of the ACA required the establishment of the Medicare Shared Savings Program Intended to encourage the development of ACO s in Medicare The Shared Savings Program is a new approach to the delivery of healthcare aimed at: 1. beuer care for individuals 2. beuer health for popula4ons 3. lower growth in expenditures These are known as the: TRIPLE AIM

3 Why ACO s The trajectory of the na4ons health care spend is unsustainable. Change is coming one way or another ACO s are one of the value based purchasing ini4a4ves seeking to reduce the growth in healthcare expenditures While simultaneously strengthening the care delivered to beneficiaries

4 What is an ACO ACO s are Organized groups of Medical Providers. (Insurance Companies not allowed to apply to be an ACO), that become accountable for the quality, cost and overall care of the Medicare fee for service beneficiaries assigned to it Provider groups must file an applica4on and be approved by the Centers for Medicare & Medicaid Services (CMS) to become an ACO Minimum of 5,000 auributed FFS beneficiaries 3 year ini4al contract with CMS The ACO is a primary care driven ini4a4ve

5 What ACO s intend to do Provide coordina4on of care across the en4re health care spectrum (EMR and HIE) Reduces unnecessary services (Waste) Improve health to reduce u4liza4on of acute care services (Readmissions) Support the move toward value based purchasing Meet both the quality performance and savings requirements to be financially rewarded

6 How ACO s get paid CMS establishes a benchmark (in simplest terms- what the auributed popula4on cost Medicare averaged for the last 3 years) ACO has a minimum savings rate (MSR) they must achieve to qualify for shared savings ( MSR larger for smaller ACO s) If ACO achieves the minimum savings rate the savings are split back to dollar one ACO splits savings with CMS up to maximums defined in regula4ons

7 Characteris4cs of Who gets assigned to an ACO Fee For Service beneficiaries are the only Medicare beneficiaries auributed to an ACO (Medicare Advantage members do not par4cipate) ACO beneficiaries can pursue care from any Medicare par4cipa4ng provider ( Not limited to just ACO providers) ACO beneficiaries will s4ll need to purchase secondary coverage (Medicare Supplement)

8 Challenges faced by ACO s Service Leakage- AUributed beneficiaries can use non ACO providers Branding- ACO s will desire to engage in branding ini4a4ves but are limited by CMS regula4ons Medicare Supplement payments are not part of Shared Savings calcula4ons (Medicare is only responsible for 80% of Part B services)

9 Poten4al Impact to Medicare Supplement Endorsement or private labeling opportuni4es Lower Loss ra4os Medicare Select growth Medicare Select Part B Care Management opportuni4es Pay for Performance opportuni4es Market Dominance ACO entry into Medicare Supplement

10 Endorsement or Private Labeling Problem: Beneficiary awareness Solu4on: ACO s will engage in branding ini4a4ves to encourage ACO recogni4on Medicare Supplement provides a plaeorm for the ACO to communicate with beneficiaries ACO s may choose to endorse a compe44ve Medicare Supplement plan ACO s may desire private labeling

11 Lower Loss Ra4o s Problem: ACO s must reduce waste and acute care u4liza4on Solu4on: ACO Care Coordina4on Lower u4liza4on translates into lower loss ra4o s for Medicare Supplement plans Do Medicare Supplement plans price in an4cipa4on of reduced loss ra4o s

12 Medicare Select Problem: Service Leakage- ACO members using non ACO providers Solu4on: Medicare Select (Maybe both Part A and Part B networks) ACO s may choose to u4lize Medicare Select to encourage ACO hospital u4liza4on ACO s may seek ways to embrace Part B networks to reduce physician service leakage

13 Care Management Problem: Development of Care Management resources (Telephonic Nurse Case Managers) Monitoring of members during transi4on of care Solu4on: Medicare Supplement plans building care management for things like reduc4on in readmissions Medicare Supplement Plans may u4lize innova4ve plan designs to assist with care management - Admission no4fica4on - Transi4onal Care Management - Repor4ng to assist ACO s with performance

14 Pay for Performance Problem: Medicare Supplement claims payments are not included in shared savings calcula4on (Medicare only pays for 80% of most part B services) Solu4on: Seeking Pay for Performance opportuni4es from Medicare Supplement plans that have ACO members insured ACO s may seek opportuni4es to generate further financial upside as a result of successful popula4on management ACO s may demand pay for performance opportuni4es in exchange for lower loss ra4o s

15 OTHER THOUGHTS Market Dominance ACO entry into Medicare Supplement market

16 Market Dominance The perfect storm could be created for a Medicare Supplement plan to dominate a market If the proper dynamics are in place a Medicare Supplement plan could limit compe44on. (Private labeled Medicare Select plan with a Part B network with an ACO producing superior popula4on management results)

17 ACO market entrance ACO s could choose to enter the Medicare Supplement market as an insurer Some ACO s are already in the insurance business, MCO s with paper could quickly go to market and market Medicare Supplement insurance to their ACO beneficiaries

18 Fee for Service Medicare Is a changing Paradigm