Entries in health plans (70)


Two Papers on the Health Plan Medicare Opportunity

By Clive Riddle, August 2, 2019 

Oracle has released an Executive Insight paper on the Opportunity Ahead for Agile and Efficient Medicare Advantage Plans,  cautioning that “While the opportunity is great, MA plans are not automatically a wise or profitable business decision for all health insurers. There is growing competition as new players enter the market, and cost and margin pressures continue unabated. To make the most of this opportunity, MA plans must look to accelerate innovation while optimizing costs across their enterprises— from marketing and enrollment to plan configuration, claims processing, compliance, and renewal.”

They report on three development plans should consider now:

  1. It is “Time to flex strength with expanded flex benefits. In 2019, MA plans were cleared to offer new flex benefits, designed to move plans toward expanded population health capabilities.”
  2. “MA plans look to differentiate on other fronts and deliver high levels of service—without placing profitability and stability in peril.”
  3. Payers are eager to bring new urgency and focus to improving claims accuracy and delivering innovative provider payment models.

HealthEdge has just released results of its Voice of the Market Survey, a study of 201 health insurance executives directly involved in Medicare lines of business. 92% responded that they are trying to grow their Medicare Advantage book of business faster than their traditional Medicare Supplement business.


Here’s some key findings from their survey:

  • 53.2% said the value-based model of Medicare Advantage significantly factors into a desire to grow the business, while 42.8% said it moderately factor in.
  • Expanding to new service areas ranked first in level of importance as the steps being taken to attract new Medicare and Medicare Advantage members, followed by (2) Appealing to tech-savvy digital consumers; (3) Providing incentives for healthy behaviors; (4) Addressing social determinants of health; and (5) Marketing/advertising to prospective members
  • Applicable steps above get re-ordered somewhat when ranking importance to retain current Medicare and Medicare Advantage members: (1) Appealing to tech-savvy digital consumers; (2) Addressing social determinants of health; (3) Providing cost transparency; (and 4) Providing incentives for healthy behaviors; (5) Providing education services to members about their benefits
  • There is not consensus on what is the biggest challenge to acquiring new members in the Medicare or Medicare Advantage (MA) line of business.  29.4% said it was funding/executing marketing outreach to  attract new members; 23.8% said competitors who  dominate the market; 22.4% said offering the variety of  plans necessary to satisfy members; and  19.9% answered differentiating  between MA and  traditional Medicare.
  • When asked “what is the biggest external challenge your organization faces in the Medicare and Medicare Advantage line of business.” Competitors seem top of mind, with 34.3% responding “competition”; and another 29.9% stating “members unwilling to switch plans from a competitor. Other responses were 19.9% replying “regulations” and 15.9% saying “member demands.”



Our Dunning-Kruger Healthcare System

By Kim Bellard, July 11, 2019

Psychologist David Dunning, originator of the eponymous Dunning-Kruger effect, recently gave an interview to Vox’s Brian Resnick. For those of you not familiar with the Dunning-Kruger effect, it refers to the cognitive bias that leads people to overestimate their knowledge or expertise. More importantly, those with low knowledge/ability are mostlikely to overestimate it.

Dr. Dunning believes that we tend to think that this effect only applies to others, or only to “stupid people,” when, in fact, it is something that impacts each of us As Dr. Dunning told Mr. Resnick, “The first rule of the Dunning-Kruger club is you don’t know you’re a member of the Dunning-Kruger club. People miss that.”

So, how does this relate to our healthcare system?

We brag about our excellent care, our great hospitals and doctors, and all those healthcare jobs powering local economies. Yet we have by far the most expensive healthcare system in the world, which is expensive not because it delivers better care or to more of its population than health systems in other countries, but because it feels it is justified in charging much higher prices. Our actual outcomes, quality of care, and equity are all woefully mediocre on a number of measures.

How many of you live in an area that has at least one hospital system claiming to be one of the “best” hospitals in the country? Similarly, how many of us like to believe that our doctors are “the best”? Perhaps they even have “best doctors” plaques in their offices to support this claim.

Statistically speaking, most of us receive average care, and some of us receive sub-standard care. We don’t live in Lake Wobegon. We can’t all be getting the best care, or even above-average care. Just look at how few hospitals earn high ratings from The Leapfrog Group.

In The Atlantic, Olga Khazan reported on a new study that suggests that, despite all their supposed superior knowledge, doctors don’t really make better patients than the rest of us. They get C-sections about as often, and about as unnecessarily as we do, they get about the same amount of unnecessary/low value tests, they’re not better at taking needed prescriptions.

As Michael Frakes, one of the authors told Ms. Khazan, the doctors “went through internships, residencies, fellowships. They’re super informed. And even then, they’re not doing that much better.” Professor Frakes speculated that even physicians tended to be “super deferential” to their own physicians, despite their own training and experience.

It is widely accepted that as much as a third of our healthcare services are unnecessary or inappropriate — even physicians admit that — but, of course, it is other physicians doing all that. No one likes to believe it is their doctor, and few doctors will admit that they are the problem.

Dunning-Kruger, indeed.

Much as they’d like us to, it is not enough for us to always assume that our healthcare professionals and institutions are qualified, much less “the best.” It is not enough for us to trust that their opinions are enough to base our care recommendations on. It is not enough to believe that local practice patterns are right for our care, even when they are at variance with national norms or best practices.

“Trust” is seen as essential to the patient-physician relationship, the supposed cornerstone of our healthcare system, but trust needs to be earned. We need facts. We need data. We need empirically-validated care. We need accountability.

Otherwise, we just fall victim to healthcare’s Dunning-Kruger effect.


This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting.


Analyzing Blue Cross Blue Shield Plan Administrative Costs

By Clive Riddle, June 13, 2019

Sherlock Company in the June issue of their Plan Management Navigator examines administrative cost trends for Blue Cross Blue Shield Plans, analyzing year end 2018 vs 2017 data.  They found that costs “increased by 5.5% per member, up from an increase of 5.1% for 2017. Reweighting to eliminate the effects of product mix differences between the years, per member costs increased by 6.7% as compared with 5.9% in 2017. ASO/ASC increased as commercial insured membership declined. Medicare Advantage continued to grow rapidly.”

 Their key findings included:

  • Most clusters of expenses grew at rates less than last year.
  • Uniquely, Account and Membership Administration’s growth rate increased.
  • Growth in Information Systems was the single most important reason for administrative expense increase in 2018.
  • The shift in favor of products and market segments that are lower cost to administer muted the real growth.


Sherlock’s benchmarking study “analyzes in-depth surveys of 14 Blue Licensees serving 37 million members. Surveyed Plans comprise 52% of the members of Blue Cross Blue Shield Plans not served by publicly-traded companies.” 

Why does this benchmarking matter? Because the non-publicly traded BCBS plans provide a meaningful universe to benchmark, and plan administrative expenses are highly scrutinized, and certainly more controllable than medical expenses. As Doug Sherlock states, “in the current environment, optimizing administrative expenses is a high priority for health plan managers. Plans have completed their adaptation to the Affordable Care Act and the bulge in Exchange and Medicaid members. Plus, administrative expense visibility has been heightened by the rhetoric of presidential candidates.”

Here’s some key specific data from their report:


  • For the universe as a whole, the median total costs were $38.51 per member per month, higher than last year’s $34.99. 
  • By functional area, median pmpm costs were: Sales & Marketing $9.21; Medical & Provider Management $5.03; Account and Membership Administration $16.10 and Corporate Services $5.92
  • Median pmpm costs by product categories included: Commercial insured $49.84; Commercial ASO $28.32; Medicare Advantage $112.08; and Medicaid $46.08.
  • The median administrative expense ratio was 9.0% compared with 8.9% last year.
  • The median administrative expense ratio by product categories included: Commercial insured 10.8%; Commercial ASO 7.1%; Medicare Advantage 12.5%; and Medicaid 9.3%.
  • Staffing ratios increased by 6.8%, especially in Information Systems. 
  • Approximately 19 FTEs serve every 10,000 members in the commercial products. 
  • Compensation, including all benefits except OPEB, increased at a median rate of 3.8%. 
  • The median proportions of FTEs that were outsourced was 11.0%.
  • After the effect of the Miscellaneous Business Taxes, total administrative expense PMPM increased by 17.9% compared with a decline of 2.3% in the prior year 





ACA Exchange 2020 Final Rule Changes and Survey of Exchange Health Plan Participation and Expectations

By Clive Riddle, May 31, 2019 

Last month CMS issued their final rule with ACA benefit and payment parameters for 2020. Their changes for 2020 included: 

  • The method for calculation of premium assistance for lower-income enrollees (projected to lower the total amount of financial assistance provided by $900 million, when compared with 2019, and result in 100,000 fewer exchange enrollees in 2020.)
  • Allowing plans to make mid-year changes to their drug formularies
  • Allowing plans to implement cost-sharing requirements if enrollees choose a brand-name drug when a medically appropriate generic version of the drug is available (even when out-of-pocket spending maximum is reached)
  • Allowing plans to implement copayment accumulator programs for prescription drugs
  • Lowering user fees for the 2020 coverage year by half a percentage point
  • Increases maximum out-of-pocket spending limits by 3.2%, from $7,900 to $8,150 for individual plans and from $15,800 to $16,300 for family plans      


How will these changes, and overall market forces, impact health plan participation in the ACA exchanges for 2020? eHealth has just released survey results from 17 plans that collectively cover 80 million lives that participate in ACA exchanges, that found “more than twice as many insurers intend to increase plan offerings for 2020 as compared with 2019, with premiums holding fairly steady.”



Here’s some of their detailed findings: 

  • 45% intend to add to the number of ACA plans they'll offer in 2020, compared to 21% who did so for the 2019 plan year
  • 42% expect to raise premiums between 5 and 10 percent over 2019 rates. 33% do not expect to make any noteworthy changes to premiums, while 23% expect to reduce monthly premiums by 5 percent or more.
  • 69% said that sales during the last open enrollment period were within 10 percent of their expectations. 15% reported that sales outpaced expectations by 10 to 15 percent, while another 15% of said sales were 10 percent or more below expectations.
  • 71% said they are paying attention to public discussions about "Medicare for all" but don't expect major changes, compared to 67% in 2018




Consumer Insights and Kaiser Initiative on SDOH

By Clive Riddle, May 10, 2019

McKinsey has just published various insights from their 2019 Consumer Social Determinants of Health Survey, which found that compared to those whose social need is met, respondents (2,010 surveyed with government program coverage or uninsured and below 250% of federal poverty level) that:

  • Reported food insecurity were 2.4 times more likely to report multiple ER visits, and 2,0 times more likely to be hospitalized
  • Reported unmet transportation needs were 2.6 times more likely to report multiple ER visits, and 2,2 times more likely to be hospitalized
  • Reported unmet community safety needs were 3.2 times more likely to report multiple ER visits

Encouraging news from the survey for health plan advocates of SDOH was that 85% of respondents reporting unmet social needs said they would use a social program offered by their health insurer. Regardless of their social needs, respondents were interested in these types of health plan SDOH programs as follows: 

  • 50% were interested in grocery store discounts for healthy foods
  • 48% were interested in free memberships at local gyms
  • 45% were interested in a wellness dollar account used towards wellness services of their choice
  • 41% were interested in total reimbursement of home improvement purchases to address health issues
  • 40% were interested in after-hours drop-in clinics at lower or no cost 

Speaking of health plans, Kaiser Permanente has just announced their new Thrive Local initiative, a “a social care coordination platform” with “a network of public agencies and community-based organizations that will support” Kaiser “members to meet their social needs.”


Kaiser says that “starting this summer, closed-loop and bidirectional communication will provide confidence that referral, follow-up and ongoing patient/family engagement happen. Improved cross-sector collaboration and communication will also reduce the unintentional trauma and stigma that our patients and families may experience. Beyond Kaiser Permanente members and patients, community-based organizations will also benefit through improved decision support, automation, and relevance of the referrals they receive from their health system. This connectivity and interoperability between health care and social organizations and agencies will redefine the meaning of ‘provider network’ in this new world as the network of providers of health, health care, and social needs to address total health of our communities.”


Kaiser Permanente is partnering with Unite Us to launch the program, as tells us that Thrive Local within three years “will be available to all of Kaiser Permanente’s 12.3 million members and the 68 million people in the communities Kaiser Permanente serves.