Understanding the Implications of Medicare Advantage Growth

Learn about the growth of Medicare Advantage and its impact on the health care industry. Michael Gould and Cindy Henry discuss the popularity of Medicare Advantage plans, the potential effects of new regulations, and the importance of strong payer and provider relationships to improve the lives of beneficiaries. 

Please share your name, title, affiliation, and a bit about your background. 

Michael Gould: I'm Mike Gould, I'm Associate Vice President of Interoperability Strategy at ZeOmega. Our team heads up the Health Unity platform, which is focused on interoperability solutions for payers and providers. We leverage the HL7 Fast Healthcare Interoperability Resources, or FHIR standard, for the data exchange that we support for patient access, payer-to-payer exchange, and the hot topic of the year: prior authorization support in helping providers improve the provider, practitioner, and patient experience. I've been with ZeOmega for a little over a year and a half now after several years of prior experience on the payer and provider side.  

Cindy Henry: My name is Cindy Henry and I am the Director of Population Health Informatics at ZeOmega. I've been with ZeOmega going on 3 years and absolutely love it. I've been primarily focused on our quality and risk adjustment solutions. My specialty is government-sponsored health care, especially Medicare Advantage. Previously, I worked with a little bit of everything across the health care spectrum: health plans, IP and IPA, vendors, and pharmacy. But, I always seem to return to the government space in my line of business.  

Why is Medicare's annual enrollment period a critical window of time for Medicare health insurers?  

Michael Gould: It's that time of year when there's a large bolus of new enrollees as well as beneficiaries choosing to change from fee-for-service to a Medicare Advantage plan. This often happens because of improved benefit packages. Other enrollees may make a change in the reverse direction to meet their needs.  

Cindy Henry: Particularly for Medicare and Medicare Advantage, the annual enrollment period is huge for growing membership outside of individuals aging into Medicare benefits. This is the most critical time of year to attract new members. In this period, there is a lot of opportunity but there's a lot of competition. There are other things we're going to talk about today that will be important to relate back to annual enrollment.  

Why do Medicare Advantage plans need to prioritize automating prior authorization processes?  

Michael Gould: Prior authorization has become a real hot button issue. We've seen related congressional action in the last few years as well as regulation and laws enacted at the state level. Regional initiatives to improve the prior authorization process have been introduced, too. The prior authorization tool is useful for payers to ensure members have quality care and manage costs, which plays into the relationship between prior authorization reform and cost transparency.   

The other motivation for reform is that the prior authorization process is using obsolete and outdated processes and technology. It's difficult for providers to make a paradigm shift and it's difficult for payers to move away from fax, paper, and email transmissions. Modern information exchange technologies and automation could be leveraged to relieve the burden of managing multiple threads of entry and intake and standardization of the prior authorization process.  

The HL7 Fast Healthcare Interoperability Resources Standard, or FHIR standard, has been proposed by CMS to streamline information exchange that supports the prior authorization process. At large, the prior authorization process will remain the same. A provider must submit a request, needs to know when to submit that request, and then the payer must respond in a timely fashion. In between, there are the requirements for documentation to support the medical necessity and the administrative policies of the payer to ensure, again, that the patient gets the best care, in a timely manner as well as managing costs appropriately.  

Cindy Henry: Processes like prior authorization are always going to influence the patient's perception of the benefits and their provider. When a member or a patient is pursuing authorization for a service or surgery and they receive automated denials, it causes friction that certainly will have an impact on their perceptions of their health plan. This means there are both administrative and patient experience reasons why electronic prior authorization is so important and why we're seeing so much reform.   

Could you elaborate on why it is important for payers to adopt standards and APIs to manage the complexity of Medicare Advantagebenefits systems?   

Mike Gould: Patients and clinicians expect that these administrative processes can happen in real time, that there are preestablished rules and processes and supporting technology. The expectation is that a determination for prior authorization is something that could be turned around in minutes if not seconds. Payers really must drive because they own the prior authorization process and providers must work with the payers within that process. Payers need to lead the charge in terms of change and streamline the process and that is not a trivial change. There's a groundswell of motivation toward having one standardized process. Currently, there is no one way to pursue prior authorization.  

CMS proposed just last year a prior authorization rule that recommends the use of the FHIR standard to help streamline the process. While that proposed rule affects, for example, Medicare Advantage and other plans that are regulated by CMS, it's just as well for payers to implement it across their lines of business.  

Cindy Henry: I'll answer the question from two different perspectives. First, let’s approach this as whole person care. Whole person care is a wraparound care model that looks to address the immediate or acute health care needs of a member or patient but also behavioral health and social factors. When we talk about interoperability, we're really talking about drawing together the data for the extended care team that work together to make sure care is designed from a whole person perspective. If the care team has the data to address care barriers, they can really advance overall health outcomes. 

The second part I'll address is from the provider burden perspective. As we rely more and more on technology in health care, the burden gets shifted to the providers. They ideally have 20 minutes to meet their patients and address those needs in a way that their patients can understand. Meanwhile, they're trying to capture many different data points. With interoperability, we need systems that talk to each other so that important information does not fall through the cracks. We need to not overburden our providers outside of adequately documenting their care plans and diagnoses. If we can reduce time spent documenting and filling out EMR forms, they can focus more on connecting with their patients. That has a huge impact on overall health outcomes.  

Mike Gould: And just to add one more thing to that, we must be cognizant that there's an immense burden of documentation put on providers and practitioners with electronic medical records. At every doctor visit there's a computer that sits between the patient and the clinician. That's where automation comes in and can benefit the prior authorization process as well as the documentation process. That's another area where payers and providers can work together to reduce that friction and improve the overall experience.  

Let’s use a scenario of someone who goes for a hip replacement and then physical therapy. Prior authorization may be required to cover those physical therapy visits. The last thing a patient wants when they're managing their recovery and pain is to manage prior authorization so that they can go to physical therapy. That's an administrative burden that needs to be surmounted and streamlined and we can do that. Payers are making strides with the support of regulation that calls for the prior authorization status to be shared with the patient in an app of their choosing.  

Why do you expect the growth of Medicare Advantage to reach all-time highs nationwide and that premiums’ increases will be marginal? 

Cindy Henry: There are a couple of factors. One, over the last several years Medicare continues to have higher penetration in the market for beneficiaries. There are a lot of reasons why a beneficiary might choose Medicare Advantage over fee-for-service.  

For seniors, it is critical they stay socially connected and have a consistent routine We know these are important because the data shows when somebody becomes isolated it may worsen their chronic conditions. A lot of Medicare Advantage plans will have supplemental or extended benefits such as SilverSneakers and meal programs outside of general health care. This lends them a competitive advantage during the annual enrollment period. Many seniors are also living on fixed incomes, and they may not otherwise be able to afford supplemental benefits outside of their health care plan. 

We also know that the boomer population is aging into Medicare right now. At the same time, life expectancy is increasing every single year. These are all complex factors contributing to the growth we have seen over the past several years. I think we're at 60% penetration now and it's expected to continue to grow. 

Now to address the premiums, we're seeing new regulations around risk adjustment and the STARS program. Health plans have 3 primary sources of revenue: premiums, risk adjustment, and star bonuses. Those 3 things are the main components of MA revenue So since we've seen a lot of the headlines about the government cracking down on overpayments, that will take a chunk out of those revenue margins. This year's predicted lower star ratings were also still a little bit of a shock. When a plan goes from 4.5 stars to 4 stars, that translates to real dollars for the health plan.  

Where can the health plans compensate for these losses? Their premium. We've seen this during this annual enrollment period. There hasn't been too much of an effect just yet, but we can expect that as these other sources of revenue continue to be constrained through regulations and program changes, premiums are going to go up. And when we talk about competition in the market during annual enrollment period, the number one decision-making factor for most people shopping for Medicare Advantage benefits is going to be the overall cost.  

Is there anything else you’d like to share? 

Cindy Henry: In this industry, we talk a lot about value-based care. Oftentimes, we think about things like preventative care. But outside of the immediate care situation, what drives value-based care is improving administrative areas where we can reduce cost. When we're able to reduce administrative costs, more funds become available to enrich benefits for members. We’re not just concerned with what is happening in stars and risk adjustment that is changing revenue. We also need to ask how are health plans spending administrative dollars? How are they managing the MLR?  

Michael Gould: I'd also like to add that the technology piece can't be underestimated because mobile technology that leverages APIs today is a fact of life. Banking, shopping, travel—all of those are based on streamlined processes and set people’s expectations for health care. There is a great number of clinical and administrative rules behind the curtain, and we count on our doctors and insurance companies to manage the complexity for us.