Entries in health plans (44)


A Snapshot of Managed Care Pie

By Clive Riddle, August 4, 2016

MCOL’s Managed Care Fact Sheet webpages are being updated to reflect current data, so I took this opportunity to grab some Facts and provide this preview, baking this snapshot of managed care pie.

National HMO Enrollment is 92.4 million for 2016, up from 85.7 million in 2015, and a recent low of 66.8 million in 2007. The previous high was 81.3 million in 1999, just before managed care backlash whipped the numbers down. (1)

How does the managed care enrollment pie divide up?  33% are enrolled in HMOs, 57% in PPOs, 2% in POS plans and 7% in HDHPs.(1) - (3)  The top five national health plans by enrollment are United Health Group – 48.0 million; Anthem – 39.6 million; Aetna – 23.0 million; Cigna – 15.1 million and Health Care Service Corporation – 15.0 million. (14)

And what portion of the total national pie does managed care represent? 31% of Medicare beneficiaries are enrolled in Medicare Advantage plans, 63% of Medicaid enrollees are in Medicaid managed care plans, and 99% of commercial lives are enrolled in managed care. Factor in the 9% of the population that is still uninsured, and 70% of the total population is enrolled in some form of managed care plan. (4) – (10)

What are current resource use benchmarks in managed care – or how much of the pie is being eaten? HMO Hospital inpatient days per 1,000 members per year are 1,639 for Medicare, 395 for Medicaid and 231 for commercial; Commercial PPO are 237. HMO Physician visits per member per year are 10.2 for Medicare, and 4.8 for Medicaid and Commercial; Commercial PPO are 4.7. HMO Prescriptions per member per year are 29.9 for Medicare, 9.6 for Medicaid and 9.0 for Commercial; Commercial PPO are 11.8. (2) (11)

Getting back to pie, medical cost components – for a family covered by a PPO – are sliced up 31% for inpatient, 30% of physician, 19% for outpatient services, 17% for pharmacy and 4% for other services. (12)

So what does the pie cost? Single health plan premiums average $518 for HMOs and $548 for PPOs, and family premiums average $1,437 for HMOs and $1,539 for PPOs. Premium increases are estimated to be 4.3% in 2016, and have been under 5% after 2011, and under 8% after 2003. In 2002 – post managed care backlash -  they were 14.7%, but they were 8.1% or less in the pre managed care backlash era from 1993 to 2000, including a decrease of 1.1% in 1994.  Before that, double digit increases were the norm for a number of years.

(1) Total HMO Enrollment - Kaiser State Health Facts; Data Source: Health Leaders InterStudy, a Decision Resources Group Company July 2015 Data, accessed August 2016 www.statehealthfacts.org

(2) 2015 HMO-PPO Rx Digest Series, Sanofi www.managedcaredigest.com 

(3) New Census Survey Shows Continued Growth in HSA Enrollment, AHIP November 11, 2015  https://ahip.org/new-census-survey-shows-continued-growth-in-hsa-enrollment/     

(4) CMS Fast Facts: www.cms.gov/fastfacts/  

(5) Medicaid Enrollment Report as of January 2016: https://www.medicaid.gov/medicaid-chip-program-information/program-information/downloads/january-2016-enrollment-report.pdf 

(6) Kaiser Family Foundation State Health Facts Total Medicaid MCO Enrollment http://kff.org/other/state-indicator/total-medicaid-mco-enrollment/ 

(7) CDC Fast Facts, National Center for Health Statistics, Health, United States 2016: http://www.cdc.gov/nchs/ 

(8) Tricare Prime Beneficiaries 2016: www.tricare.mil/About/Facts/BeneNumbers.aspx 

(9) CDC May 2016: Health Insurance Coverage: Early Release of Estimates From the National Health Interview Survey, 2015 http://www.cdc.gov/nchs/data/nhis/earlyrelease/insur201605.pdf  

(10) Total U.S. Population data as of April 2016, U.S. Census Bureau: www.census.gov

(11) 2015 Public Payer Digest Series, Sanofi www.managedcaredigest.com

(12) Milliman Medical Index, Milliman, May 24, 2016 http://www.milliman.com/mmi/    

(13) Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2015. www.kff.org

(14) MCOL research from 2016 company reports


When the Disruptor is the Disruptee

By Dennis Bolin, Health Plan Alliance, June 28, 2016

I don’t know about you but I am becoming tired of hearing about “disruption” in the health insurance industry. I hear and read the term everywhere and I wonder if it is overused. I just returned from this year’s AHIP Institute and I heard the term repeatedly in presentations and discussions. Whether the word used is “revolution,” “transformation,” “innovation,” or “reimagining,” the pressure to integrate to “make it happen” is mounting. Clayton Christensen defines “it” as “combining, through a coordinated effort, the business models that must comprise the disruptive value network.”

The concept of disruption as a business strategy has been popularized by Christensen’s work. We had a member of his firm present at an Alliance meeting years ago – when the concept was still new – and we have been following the evolution ever since. In his book on the health care industry The Innovator’s Prescription Christensen says health care disruption is likely to come from 3 sources: 

  • Employers 
  • Corporate orchestrators
  • Integrated fixed-fee providers


At the Alliance’s recent Health System/Health Plan Value Visit we discussed with a Boeing executive that company’s initiatives to wrestle with health care costs, standardize quality and improve the customer experience. While we have heard about the strategy from Alliance member Providence Health Plan, I gained insights hearing it from the employer’s perspective. They have rolled out their strategy to a second market and anticipate a third market in 2017. In each case they identified a delivery system and provider network as their partner, driving costs, innovation and market share. More of our system owners are hearing directly from employers.

Corporate orchestrators

New entrepreneurial, venture capital-backed companies – corporate orchestrators – are also reshaping markets. Four are receiving a lot of attention:

  • Oscar. Now in 4 states (New York, New Jersey, Texas and California) and 140,000 members Oscar is changing the market by introducing a technology-driven consumer-friendly product. I met with the CEO of Oscar 4 years ago when all they had was a group of programmers in a nearly empty loft in SOHO. Only 2 of the senior team came from the health insurance industry and they were sure they could do it better. An example:  a PCP receives a real-time text message of a member in an emergency room with a pin number used to call the member. The physician is paid $24 to call the patient within hours.
  • Clover. A Medicare Advantage plan, they anticipate targeting only a small number of states. They are differentiating themselves through the use and availability of data. Using a cloud structure they do not have to worry about systems talking to each other. Instead data is deposited and accessed according to agreements on guidelines of usage.
  • Harken Health. Their model is focused on primary care centers and offer insurance to small groups and individuals on and off the exchange. They currently are in Chicago and Atlanta. United is an investor.
  • Bright Health Inc. They are unique in that as an insurance company they partner with a single provider system in the market to drive market share and partner to offer affordability and a differentiated customer experience. They anticipate entering the Colorado market in 2017.

Integrated Fixed-fee Providers

Christensen says that the challenge for integrated fixed-fee providers, such as Alliance members is that we are both the disruptee and the disruptor. In other words we are turning our own business and care models on their heads. In a truly integrated system the incentives are to keep people well. But flipping the switch on our business is not easy in ways the start-up disruptors can build from scratch. But we have one advantage:  we have all the components while none of the start ups do.

And integrated systems have the components necessary to create an enhanced enterprise-wide customer experience. Chris Fanning with Geisinger Health Plan shared their enterprise approach to customer experience at our Health System/Health Plan Value Visit. He will be going in-depth on their enterprise-wide Member Journey Roadmap at our Customer and Employer Market Strategies Value Visit July 19 – 21, click here for event information.  Geisinger has identified guiding principles around which they are organizing their customer-centered initiatives:

  • Navigate – helping members make their way through the health system and make decisions right for them.
  • Anticipate – help members know what to expect and help them with their needs in advance.
  • Simplify – make the health system, health plan, and physician groups easier to do business with.
  • Earn Trust – help members select the right plan based on their needs and work closely to resolve issues and assist beyond the traditional payer role.
  • Individualize – Customize and personalize information and communication to meet specific interests and needs

As Christensen counsels, being the disruptee as well as the disruptor is a demanding but not an impossible expectation. He points out that integrated fixed-fee providers are uniquely positioned to shift care to the most cost effective site possible, to coordinate care, to manage a population’s health, to give tools to consumers to make decisions and manage their health and to provide a distinctive customer experience. And every time Alliance members gather to discuss our initiatives we get more disruptive.

This post originally apperared on the Health Plan Alliance Blog on June 28th, 2016. You can see the original at www.healthplanalliance.org/News/160/When-the-Disruptor-is-the-Disruptee and see all the Health Plan Alliance Blog posts at www.healthplanalliance.org/hpa/Blog1.asp


Hot Healthcare M&A Market Starting to Cool

By Clive Riddle, May 6, 2016

Irving Levin Associates reports that healthcare merger & acquisition activity, which has been relatively overheated, is starting to cool a little. Lisa E. Phillips, editor of Irving Levin’s Health Care M&A News tells us “the slowdown in deal volume in the first quarter of 2016 might simply be fatigue setting in after a record-setting year in 2015. Also, some buyers are still figuring out where the best opportunities are, as the shift to value-based reimbursements gains momentum.”

Health Care M&A News states that “health care merger and acquisition activity began to slow down in the first quarter of 2016. Compared with the fourth quarter of 2015, deal volume decreased 7%, to 351 transactions. Deal volume was also down 7% compared with the same quarter the year before. Combined spending in the first quarter reached $79.5 billion, an increase of 87% compared with the $42.5 billion spent in the previous quarter.”

Here’s a snapshot the publication provided of the quarter’s activity:

How big was 2015?  Bigger than 2014, which was also a huge year.  Irving Levin’s Lisa Phillips says “health care mergers and acquisitions posted record-breaking totals in 2015. The services side contributed 62% of 2015’s combined total of 1,503 deals, which is even higher than 2014, when services deals accounted for 58% of the deal total.” A separate Irving Levin publication, the Health Care Services Acquisition Report, cites that “deal volume for the health care services sectors rose 22%, to 936 transactions versus 765 in 2014. The dollar value of those deals grew 183%, to $175 billion, compared with $62 billion in 2014. Merger and acquisition activity in the following services sectors—Behavioral Health Care, Hospitals, Laboratories, MRI & Dialysis, Managed Care, Physician Medical Groups, Rehabilitation and Other Services—posted gains over their 2014 totals. The exception was the Home Health & Hospice sector, which declined 33% in year-over-year deal volume.”

In the hospital sector, for 2015, they report that “activity remained strong in 2015, up 3% to 102 transactions, compared with 99 transactions in 2014. An average of 2.6 hospitals were involved in each transaction, compared with an average of 1.8 in 2014 and 3.3 in 2013.” Philips noted that “several deals resulted from the mega-mergers of 2013,” and that “we’re seeing more sales resulting from bankruptcies, especially in states that have not expanded Medicaid coverage.”


Et Tu, Oscar?

By Kim Bellard, February 25, 2016

Things seem to be going well for Oscar Health, the health insurance start-up that has been wowing investors and the media since it was founded in 2012.  Forbes reports that Oscar just raised $400 million in an investment round led by Fidelity, which effectively values Oscar at about $2.7b.  So why do I fear that perhaps they are taking the wrong path?

I've previously expressed my concern that Oscar and some of its fellow health insurance start-ups might be more about repackaging than reinventing.  I'm more concerned than ever after Bloomberg reported that Oscar is adopting a new network strategy: moving to "tight, exclusive networks with hospitals."  

There's no secret why Oscar is taking this approach.  It's about cost, with the expectations that narrower networks yield cost savings Closer relationships with providers and the ability to offer lower premiums without hurting quality.  If that's what Oscar is after with its new network strategy, what's not to like?

Well, plenty.  For one, with this strategy Oscar isn't innovating; it is buying into the strategy that most other health plans are trying to adopt.  That doesn't make it a bad strategy, but playing follow-the-leaders certainly doesn't fit the cool yet disruptive image that Oscar has so carefully cultivated. 

More importantly, it is the wrong strategy.  For Oscar.  For any health plan.  It is a strategy rooted in the 1990's, if not earlier.  The argument for networks, especially narrow networks, is that health plans can drive better bargains by promising more volume to specific providers.  I don't have a problem with health plans driving hard bargains with providers, especially if those bargains are performance-based.  What I do have a problem with is forcing consumers to use those, and only those. 

I think it is great when a health plan tries to find the highest quality providers, and to get a good deal with them.  What I wish they would do, though, is say, "here's the data that demonstrates their quality, and here's how much we're willing to pay them to take care of you.  If you can find providers that are better, that's great; go to them, and we'll still pay the same as we'd pay the providers we recommend.  No hard feelings." 

In other words, let the health plan act as the concierge, not the gatekeeper.

If a consumer goes to providers who charge more than the health plan would pay their designated providers, well, there's a price for choice; consumers might have to pay extra.  On the flip side, maybe the consumer should pocket some of the savings if they manage to find less expensive providers.

This approach might sound like reference pricing, because reference pricing is a start to where I think we need to go.  I'd rather we put more effort into that than in narrowing consumer's choices.  
Noah Lang, CEO of Stride Health, told Fast Company, "Oscar is primarily a consumer experience company."  I don't think restricting choice of providers is a very good consumer experience for any health plan, and especially not for one like Oscar who prides itself on its member experience.

Oscar thinks this new approach is their future.  If so, their future may be as just another health plan.  And that'd be too bad.

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


Revisiting the Health Cooperatives Morass

By Clive Riddle, January 22, 2016

A new Wall Street Journal article, Obama Administration Works to Fix Health Insurance Co-Ops, covered Andy Slavitt’s - acting CMS administrator – testimony to the Senate Finance Committee regarding how to recoup federal loans from failing co-ops, how so many co-ops failed, and what future fixes are planned for the cooperatives, including reducing funding restrictions. A graphic accompanying the article re-hashes the $1.5 billion lent to co-ops that have failed, which range from $265 million in New York to $60.6 million in Oregon. Yesterday’s edition of Inside Health Policy  reported that Slavitt has indicated risk adjustment changes proposed for 2017 may come sooner. The natural fallout from the failed and failing cooperatives continue to surface in the news. For example, this week it was announced the failed Kentucky Health Cooperative was placed in liquidation.

What CMS can do to mitigate the tenuous position the remaining cooperatives are in is news. But the bulk of current media discussion of cooperatives continues to beat the dead horse of the number of failed cooperatives, their cumulative losses and unpaid federal loans, all which was significantly covered in the fall. There was plenty of blame to go around: co-ops underpricing themselves in the market, CMS policy restricting their abilities to capitalize, CMS risk adjustment policy and congressional reduction in funding for said policy. The dead horse will continue to be beaten in the news – after all it is an election year.

But perhaps a more fundamental issue that wasn’t talked about enough was simply that start-up health plans are going to initially lose significant amounts of money in new markets even under the best of circumstances, and the start-up losses weren’t adequately budgeted, capitalized or communicated in setting stakeholder expectations.

If you’re keep tabs of the continuing status and travails of the cooperatives, two sites are worth bookmarking: U.S. Health Policy Gateway's Co-op Performance by State and the National Conference of State Legislature’s Health Insurance Purchasing Cooperatives and Alliances: State and Federal Roles.