Payers eye Medicare Advantage for growth

DRG Analysis looks at why it’s a smart move

Uncertainty clouds many sectors of the health insurance marketplace following Republicans’ recent failure to repeal or replace the Affordable Care Act. With or without Congress, many tools remain available to Donald Trump to undermine Obamacare, and the president’s recent rhetoric suggests he is willing to use them.

The exchange market will be drastically destabilized if Trump follows through on a threat to withhold subsidies to insurers that allow them to reduce out-of-pocket costs for consumers. The off-exchange commercial market also could take a hit if the administration moves to weaken Obamacare’s employer mandate by, for example, not enforcing it or rewriting the federal government’s definition of a full-time employee to be less inclusive. Managed Medicaid enrollment could also be reduced because of forces outside the U.S. House of Representatives and Senate. Many states have ideas for tightening enrollment eligibility, and their proposals are likely to find a receptive audience in the Trump administration. Arizona, for example, will continue to submit waiver proposals, such as work requirements, denied by the previous administration.

But there remains at least one haven of stability amidst the choppy seas of the American health insurance industry: managed Medicare. Many payers have taken note and are increasingly looking toward their Medicare Advantage plans to stabilize and grow their business. A Decision Resources Group analysis of Medicare Advantage enrollment and penetration data confirms there are opportunities for substantial enrollment gains nationwide. More on that, including forecasts for 2018 managed Medicare enrollment, below.

Like the Affordable Care Act, Medicare Advantage provides private coverage heavily subsidized by the federal government, but without the political baggage associated with Obamacare. The program is popular and serves a powerful voting bloc (seniors), which effectively shields it from the type of political opposition that would threaten insurers’ enrollment or margins. To the extent Medicare changes are under serious consideration in Washington, they would serve only to increase managed care’s role in administering benefits (e.g., House Republicans’ call for a premium support system and a proposal from Democrats’ to allow younger Americans to “buy in” to Medicare).

Even under the status quo, the percentage of Americans who are choosing Medicare Advantage over traditional fee-for-service Medicare administered by the federal government continues to grow steadily. Add to that an increasing number of Baby Boomers retiring each year, and it’s not hard to understand why payers see an attractive growth opportunity: It’s not just their slice of the pie that’s getting bigger, but also the pie itself.

The nation’s leading Medicare Advantage carrier, UnitedHealthcare, saw its MA business jump 17 percent to $16.7 billion in the second quarter, and CEO Steven Nelson said on the earnings call that he can see MA penetration among Medicare beneficiaries “approaching 50 percent” in the years ahead. No. 2 Humana is hiring hundreds at its Louisville headquarters to handle the anticipated workload during the upcoming open enrollment period, according to Louisville Business First.

Upstarts also are diving in. Clover Health, an MA provider that heavily utilizes data science to manage members’ care, recently achieved “unicorn” status and is expanding from New Jersey to three other states. And Minnesota-based startup Bright Health is partnering with local provider networks to bring its accountable-care-organization model to MA markets in Alabama, Arizona, and Colorado in 2018.

DRG’s analysis of enrollment data supports a bullish outlook for Medicare Advantage. The penetration of Medicare Advantage plans soared from 24 percent of the Medicare-eligible population in 2009 to 33 percent in 2017. As a result, while the total number of people eligible for Medicare increased at a compound annual growth rate of 3.25 percent over that period, the number of Medicare Advantage enrollees rose more than twice as fast at a CAGR of 7.8 percent.

We expect this dynamic to be even more pronounced in 2018, when DRG forecasts the number of Medicare-eligible individuals will grow 1.5 percent to 59.4 million while the number of Medicare Advantage enrollees grows 8.1 percent to 21.2 million, pushing Medicare Advantage penetration to nearly 36 percent. If the current trends hold, Medicare Advantage penetration will reach the 50 percent mark, anticipated by UnitedHealthcare’s Nelson, in 2026. But that forecast assumes that there will not be diminishing returns as Medicare Advantage saturation increases.

If the state of Minnesota is any indication, we should not expect Medicare Advantage penetration to hit 50 percent quite so fast. With a penetration rate of 57 percent, Minnesota is Medicare Advantage’s most popular state. But, while the number of Medicare Advantage enrollees continues to grow faster than the overall Medicare-eligible population, the growth rate has slowed substantially since 2009, when Minnesota’s penetration rate was 36 percent, just above the national penetration rate today.

In conclusion, while the steady growth in the number of retirees in the U.S. presents enrollment opportunities across the board, the data suggests payers will maximize that potential if they focus especially on markets where the penetration rate is near or below the national average.


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The Best Part Of The Health 2.0 Fall Conference Agenda

There’s still time to secure your ticket before prices increase to this year’s Health 2.0 11th Annual Fall Conference. Whether you’re a Health Provider, Entrepreneur or Investor; the Fall Conference is the place to see the latest health technology, to hear from some of the influential innovators impacting the landscape, and to network with hundreds of health care decision makers. Click here for the full agenda.
Health Providers Agenda Highlights 
Entrepreneurs Agenda Highlights 
  • MarketConnect: A live matchmaking event designed to accelerate the health tech buying and selling process by curating meetings between pre-qualified healthcare executives and innovators.
  • Exhibit Hall: Gain access to 90+ exhibitors, including Startup Alley, is the premier gathering of innovative companies and individuals. The exhibit floor is also home to MarketConnect Live.
  • Developer Day: Expect your day to be filled with strong technical sessions in relation to interoperability and user testing as well as opportunities to network from others in the industry.
  • 2 CEOs and a President Session: Three top health tech executives sit down for separate intimate interviews with a journalist. They will be dishing on both their personal and company journeys.
Investors Agenda Highlights 
  • Investor Breakfast: Bringing together leaders in the Health 2.0 investment community and our innovative startup network for an exclusive breakfast meeting.
  • Investing in Health 2.0 Technologies: Panel experts will address what’s in store for the rest of the year and predict the next big bets in Silicon Valley and beyond.
  • Launch!: Ten brand new companies unveil their products for the very first time and the audience votes on the winner!
  • Traction!: Annual startup pitch competition that recruits companies ready for Series A in the $2-12M range. Teams will compete in two tracks, consumer-facing, and professional facing technologies.

Click here to register for the Annual Fall Conference! Prices increase after September 4th!

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A New Pothole on the Health Interoperability Superhighway

On July 24, the new administration kicked off their version of interoperability work with a public meeting of the incumbent trust brokers. They invited the usual suspects Carequality, CARIN Alliance, CommonWell, Digital Bridge, DirectTrust, eHealth Exchange, NATE, and SHIEC with the goal of driving for an understanding of how these groups will work with each other to solve information blocking and longitudinal health records as mandated by the 21st Century Cures Act.

Of the 8 would-be trust brokers, some go back to 2008 but only one is contemporary to the 21stCC act: The CARIN Alliance. The growing list of trust brokers over our decade of digital health tracks with the growing frustration of physicians, patients, and Congress over information blocking, but is there causation beyond just correlation?

A recent talk by ONC’s Don Rucker reports:

One way to get data to move is open APIs, which the 21st Century Cures Act mandates by tasking EHR vendors to open up patient data “without special effort, through the use of application programming interfaces.”

Rucker emphasized the distinction—without quite naming what it is—between open APIs for vendors and open APIs for providers. “We’re hard at work at defining those,” he said. One difference is how the APIs are implemented: Vendors must allow for the APIs technologically, in their products, and providers must actually take advantage of the APIs.

Trust brokers on the health information highway are like the checkpoints of militias in a war zone. What gets through is limited in scope to the lowest common denominator and limited in distance to the path that crosses the fewest boundaries.

The 8 trust brokers did not arise by popular demand of the physicians and patients. Before the era of big EHR vendors for big hospitals, information flowed among physicians and patients over mail, fax, and phone using open and public interfaces and without the “added value” of trust brokers. Faxes are free, universal, and there’s no blocking on the basis of “trust”. When faxes fail, it’s typically obvious, and coupled with a phone call, reliability is high. The current situation is worse for patients as the new digital alternatives add confusion because they vary greatly from provider to provider and add frustration by being unpredictable and unreliable.

It’s hard to put a toll booth in a forest. But as the health information highway became paved (with massive taxpayer subsidy), a growing list of rent-seeking intermediaries have seized the opportunity to put a checkpoint and associated toll booth where none existed before. Hindsight is always 20/20 but the massively bipartisan 21stCC (the Act passed with 392 votes in the House and 95 votes in the Senate) gives the new administration’s ONC the opportunity to begin to take down the checkpoints.

One way to take down the trust broker’s checkpoints is called patient-directed exchange. (The word patient is preferable to consumer because patients have significant legal rights beyond mere consumers and because clinicians have a relationship with us as patients, not as consumers.) Under HIPAA, Meaningful Use Stage 3, and ONC’s API Task Force recommendations, patients get a free pass down the paved health information highway. The pass is literally free in that patients, unlike providers, cannot be charged for sending information down the new digital highway to anyone they specify. It’s as if the toll booths apply only to trucks and private cars are free. Could patient-directed exchange spell doom for trust brokers by giving patients a pass on the highway we already paid-for with taxes?

Here’s where CARIN comes in. An unaccountable and unpublished list of members gets together as an “alliance” to develop yet another set of trust rules as new potholes in the information highway. These rules don’t directly create a checkpoint but they damage the road enough to add costly maintenance to patient-directed exchange. Part of this maintenance cost is to have alliance process closed to non-members. This practice distinguishes CARIN from standards groups and other private industry collaborations that are allowed to coordinate without running afoul of antitrust law.

As the API Task Force concluded, the law is clear that “trust” and “trust framework” do not apply to patient-directed exchange. Epic, holder of medical records for 54% of the US population, provides a leading example of this under their Open.Epic API initiative. More than 30 hospitals using their most recent software are already listed on the Open.Epic website. One of them happens to have records for my 91 y/o mom and, as her proxy, I had a password to that major hospital’s patient portal for many years. After a 30-second online verification of my own name, I was able to use that portal password to access the hospital’s FHIR API and send live EHR information to a new app without any trust framework or other information blocking interference. This is not a fluke. I checked with the hospital’s CIO after the fact.

CARIN’s claim to “Consumer-Directed Exchange” is just the latest attempt to slow-walk and confuse interoperability. Trust frameworks do not apply to patient-directed exchange. Elimination of the trust framework by Open.Epic is only the critical first step in implementing the “without special effort” clause in 21stCC. The HEART workgroup, co-chaired by ONC, recently issued the first specifications for how to improve the patient experience of interoperability, including standards for automated app registration and a refresh capability to allow the patient to determine how long it is before they are asked for their portal password again. ONC should hail the Open.Epic demonstration as an example of making patients first-class citizens in control of our own data and a first step toward a new approach to interoperability based on patient rights.

The public comment period for the Trusted Exchange Framework and Common Agreement will end on ­­­­­­­­­August 25, 2017. A version of this post will introduce the specific comments of Patient Privacy Rights. If you care about the promise of digital health and would like make longitudinal health records a reality, please consider submitting your comments as well.

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How to Make Homemade Roasted Tomato Basil Marinara Sauce (no sugar added!)

Ever wondered how to make your own marinara sauce? It’s so easy! For this Homemade Roasted Tomato Basil Marinara Sauce you’ll only need a few ingredients…no added sugar included! As this blog of mine continues to grow I couldn’t be more proud of the recipe library Linley and I have created on this baby. It…

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