THE OUTLOOK FOR GOVERNMENT-SPONSORED … OUTLOOK FOR GOVERNMENT-SPONSORED HEALTH PROGRAMS IN THE ... Health Care Tax Credit ... • Co-author of Ryan’s plans for Medicare/Medicaid

THE OUTLOOK FOR

GOVERNMENT-SPONSORED

HEALTH PROGRAMS IN THE

TRUMP ADMINISTRATION

JOHN GORMAN

EXECUTIVE CHAIRMAN

DECEMBER 5, 2016

Copyright © 2016 Gorman Health Group, LLC

• Government programs = sole growth

opportunity

• Election result =

o Medicare Advantage: only safe game

o Medicaid: if block grants, disaster

o Exchanges and subsidies: toast

“Replace” = ???

• Duals, LTSS exploding

• Growth, aggregation, new entrants

• Star Ratings drive market, bar rises

• “A Darwinian and Edisonian moment”

CUT TO THE CHASE!

2


• Repeal the Affordable Care Act (ACA)

• Block grant Medicaid

• Make individual health insurance tax

deductible

• Sale of insurance across state lines

• Expand Health Savings Accounts (HSAs)

• Provide price transparency

• Allow importation of drugs

TRUMP HEALTH PRIORITIES

3


ELECTION IMPACT: UNPREDICTABLE

4


What Probably Stays

• Pre-existing conditions ban

• Lifetime coverage cap

• Adult dependents on parents’

plans until 26

• State Innovation Grants

• CMS Innovation Center

What Likely Goes

• Individual Mandate

• Subsidies

• “The Exchanges”…in 2018-2019

• Medicaid expansion

• Taxes: Cadillac, medical devices,

insurer taxes, etc.

• Limits on HSAs

• Essential Health Benefits rules

• Independent Payment Advisory

Board (IPAB)

TRUMP’S ACA “REPEAL” = MARKETING

Problem: What’s Popular in ACA Depends on What’s Unpopular

5


• Gradually sunsets ACA

• Preserves subsidies, Medicaid expansion until replacement decided on

Budget Reconciliation

• Repeal ASAP, delay effect

• “Replace” consensus will take time Selective “Repeal,” Gradual “Replace”

2017’S TWO PATHS TO

“REPEAL AND REPLACE”

Assumes Restoring Lost Coverage Is Political Priority for GOP

6


• To fully repeal ACA, need 60 votes

• Reconciliation: Budgetary maneuver

which allows Congress to make tax,

spending changes with majority vote

o Limits to maximum of 20 hours of

debate and NO filibuster

• Utilized by Republicans in 2015,

largely symbolic move and vetoed by

President Obama

• With serious repercussions and lack

of veto, several Republicans may

waver due to consequences

RECONCILIATION IS A THING

7

Copyright © 2016 Gorman Health Group, LLC 8

• Would swiftly remove millions from coverage. Without a replacement plan in effect, this would very quickly cripple the uninsured rate.

Medicaid Expansion

Repeal

• Without replacement, repeal of tax subsidies would lead to drop in coverage due to unaffordability of premiums.

Elimination of Tax

Subsidies

• Would repeal two unpopular tax provisions of ACA: Medical Device Tax and Cadillac Tax. These two provisions have been fought over since the implementation of ACA.

Tax Repeals

Two-Year

Delay of

Repeal Date

• Though the plan would have delayed repeal by two years, insurers are already locked in to 2017 and preparing for 2018, leaving them in limbo

“RESTORING AMERICANS’ HEALTHCARE

FREEDOM RECONCILIATION ACT OF 2015”


NEW PREMIUM SUPPORT MODELED

AFTER EARNED INCOME TAX CREDIT?

9

Earned Income Tax Credit

(EITC) • Used to incentivize low income

individuals and families to continue

working

• Helps those who have some tax

liability and receive a credit that

reduces the amount of tax they

must pay

• Helps those who have no tax

liability and can receive a “refund”

when they meet requirements

Health Care Tax Credit • Low income individuals and

families can obtain a “refund” for

health insurance premiums when

they have no tax liability

• Credit is only paid after tax return

is filed

• Paid to insured (Obamacare

subsidies paid to insurer)

• Increases level of difficulty for both

insured and insurer in maintaining

coverage due to failure to pay

premiums


• Part of Trump’s campaign was to leave entitlement programs untouched

Campaign

• RYAN RE-ELECTED. Trump transition plan suddenly includes verbiage to “modernize Medicare”

Transition • Assertion that

Trump’s plan and Ryan’s “Better Way” plan are closely aligned

Ryan Plan

SPEAKER PAUL RYAN IS SAFE, HIS

HEALTHCARE AGENDA NOW IN PLAY

10


RYAN’S PLAN

11

Ryan states he plans to push “Better Way” Agenda, President-Elect Trump supports

Ryan asserts Obamacare rewrote Medicare and Medicaid, so these programs must also be overhauled

Will (or may) have to justify ACA savings – prior to ACA, Medicare’s trust fund was slated to run out in 2017

Unknown financial impact – Better Way currently lacks numbers


• Would change Traditional Medicare to Defined Contribution

• Seniors can choose from Traditional Medicare or buy Medicare Advantage or Private Plan

• Grandfathering Provisions for those near retirement

Premium Support Model

• Beneficiary out-of-pocket costs (OOPC) would increase or decrease depending on design

• OOPC would decrease if payment was tied to average plan bid in the area

• OOPC would increase if payment was tied to second lowest plan bid in the area

• BUT: 2013 CBO analysis found most Traditional Medicare enrollees would pay more than currently, regardless of plan bid methodology

Plan Bid Methodology – Average Plan Bid or Second Lowest

• Unclear if keeps same MA requirement of minimum coverage

• Some proposals require “actuarially equivalent” benefits

• Would result in issues with plan comparison

• Could cause adverse enrollee selection

• Risk-adjusted payments for sicker beneficiaries if condition worsens, low-income beneficiaries

Impact on Benefits

RYAN’S MEDICARE PROPOSAL

12


• Better Way lays out several MA

changes:

o Repeal Benchmark Caps

o Repeal ability to negatively adjust

MA payments based on coding

o Restore ability to switch into new

MA plan during first three months

of the next year

• Expand Medicare Advantage

Value-Based Insurance Design

(VBID)

RYAN’S MEDICARE ADVANTAGE

PROPOSALS

13


• Abolish (Rebrand) CMMI:

o January 1, 2020, Repeal

o Likely to be rebranded rather than

replaced

o Successful value-based payment

programs would remain

• Repeal Independent Payment Advisory

Board (IPAB)

• Combine Parts A and B, with single

deductible and cap on maximum out of

pockets

• Limits on Medigap coverage

OTHER MEDICARE PROPOSALS

14


Tom Price

• Former orthopedic surgeon; US Rep. (R-GA)

• Chairman, House Budget Committee

• Co-author of Ryan’s plans for Medicare/Medicaid

Seema Verma, MPH

• Medicaid consultant, former ASTHO staffer

• Architect of IN, IA, OH, TN and KY Medicaid expansions

TRUMP’S PICKS FOR HHS/CMS

15

Takeaway: Trump is serious about ObamaCare repeal and Medicaid reform


OUTLOOK FOR ACCOUNTABLE CARE

ORGANIZATIONS (ACOS)

16

Medicare Shared Savings

Program (ACA)

434

Pioneer (CMMI)

9

Next Gen (CMMI)

18

(2017 application out)


MEDICARE SHARED SAVINGS

AND PIONEER ACOS

17

Source: CMS = Pioneer ACO


MEDICAID ACOS

18

Source: http://www.chcs.org/resource/medicaid-aco-state-update/ September 2016

http://www.chcs.org/resource/medicaid-aco-state-update/









• Today: Feds pay majority

matching funds for states to:

o Cover specific populations

o Provide mandatory benefits

• Ryan/Price proposals would

convert Medicaid from

entitlement to annual per

capita appropriation, declining

annually

o Cuts $1.8 TRILLION from

Medicaid over 10 years

MEDICAID AND BLOCK GRANTS

19


• Major cuts in

eligibility and

benefits:

o 34% lower

spending by 2025

o 14.3-20.5 million

fewer covered

over 10 years

• States liable for

excess spending,

under guise of extra

flexibility

MEDICAID AND BLOCK GRANTS

20

Source: Urban Institute/Kaiser Commission on Medicaid, October 2012


• Medicaid

o 9 million newly covered in Red

states alone

o GOP governors that expanded

want to keep it

o Questionable Congressional

support for block grants

DOES RYAN’S PLAN HAVE A CHANCE?

21

• Medicare

o Trump yet to commit to reform, spoke about

“protecting Medicare”

o Reconciliation = simple majority vote, but

questionable in Senate

o Compromises required for passage =

tenuous savings


LIKELY HEALTH POLICY IN 2017-18

“ABOVE AND BELOW WATER LINE”

22

Regulations/Guidance

Star Ratings/QRS

Risk Adjustment

ACA Repeal/Replace Opioid Treatment

Medicaid Reforms MACRA Delays

Compliance

Abortion

Medicare Reform

Medicaid Waivers

Executive Orders


Exchanges Medicaid Medicare

Advantage Dual Eligibles

“TIPPING POINT” IN

GOVERNMENT-SPONSORED PROGRAMS

Commercial Group: Declining, Shifting

Government: Sole Source of Organic Growth

2016 2025

1 M

11 M

2016 2023

18 M

29 M

2016 2022

63 M

82 M

2016 2020

13 M

20 M

23


0% 200% 400% 600% 800% 1000% 1200% 1400% 1600%

WellCare

Cigna

Humana

United

Aetna

Centene

Carrier Stock Increases Since Passage of ACA

“TIPPING POINT” IN

GOVERNMENT-SPONSORED PROGRAMS

24


• Expect more states to adopt expansion once Obama leaves office

• Expect more complexity and variability in “conservative principles”

STATUS OF STATE MEDICAID EXPANSION

25


MEDICAID ENROLLEES

AND EXPENDITURES

26


MORE THAN HALF OF ALL MEDICAID

BENEFICIARIES ARE ENROLLED IN HEALTH PLANS


FINANCIAL ALIGNMENT DEMONSTRATIONS

FOR DUAL ELIGIBLES


CAPITATED MEDICAID MLTSS

WAIVERS STATUS – 2016

29


MANY STATES MOVING ON

DUALS/LONG-TERM CARE (LTC)

Source: http://kff.org/medicaid/report/medicaid-and-long-term-services-and-supports-a-primer/

Many States Participating in Multiple HCBS Waivers/Options

30


Category 2012 Margin

SNPs (total) 8.6%

Non-SNPs (total) 4.3%

SNPs, non-profit -0.6%

SNPs, for-profit 11.5%

50%+ partial dual eligible 12.9%

50%+ full dual eligible 5.7%

CAN SPECIAL NEEDS PLANS

(SNPS) MAKE MONEY?

SNPs generally are more profitable than ALL other types of MA plans

31

Source: MedPAC 2015 Report to Congress, Table 13-6, p.332, March 2015.


CHALLENGES FACING PLANS:

CHILDLESS ADULTS, DUALS, AND LTC

Enabling

Social

Clinical

• Meals

• Transportation

• Personal care

• Habilitation

• Assistive devices

• Home modification

• Communication services

• Light cleaning, personal care

• Caregiver respite

• Care coordination

• Skilled nursing

• Caregiver training

• Palliative/End of life care


CURRENT CONTRACT SUMMARY

NO. OF

CONTRACTS

MA ONLY

ENROLLEES

DRUG PLAN

ENROLLEES

TOTAL

ENROLLEES

Total “Prepaid” Contracts 694 2,029,864 16,529,650 18,559,514

Local CCPs 464 1,437,914 14,481,945 15,919,859

PFFS 7 79,434 149,730 229,164

MMP 62 0 363,593 363,593

1876 Cost 16 338,636 278,926 617,562

1833 Cost (HCPP) 9 50,047 0 50,047

PACE 122 0 37,092 37,092

MSA 3 3,252 0 3,252

Regional PPOs 11 120,581 1,218,364 1,338,945

Total PDPs 72 0 24,950,758 24,950,758

Employer/Union Only Direct Contract PDP 5 0 116,849 116,849

All Other PDP 67 0 24,833,909 24,833,909

TOTAL 766 2,029,864 41,480,408 43,510,272

MEDICARE ADVANTAGE MEMBERSHIP

National Snapshot – October 2016

33

Source: Medicare Advantage, Cost, PACE, Demo, and Prescription Drug Plan Contract Report – Monthly Summary.

Totals reflect enrollment as of the October 1, 2016 payment. The October payment reflects enrollments accepted through September 9, 2016.

Includes:

2,277,048 SNP

3,404,640 Series 800

4,244,458 Local PPO


GEOGRAPHY OF MA GROWTH, 2006-2015

34


Largest 10 MA Plans: 67%

United and Humana: 38%

All Others: 33% • Non-Anthem

Blues: 12%

SHARE AGGREGATION WILL CONTINUE

Top 15 Plan Market Share Has Grown 3000+ BPs In 10 Years

35


STAR RATINGS DRIVE THE MARKET

• Medicaid QRS follows MA

• MA plans beat commercial in

HEDIS

• <4-Star plans “circling the

toilet bowl”

• ≤3-Star plans “dead men

walking”

• .5 Star = ~ $15-$50 PMPM

Star Rating Complaints/

1,000

% Disenroll

Annually

0.91 21.5%

½ 0.55 17.48%

0.42 14.79%

½ 0.33 9.27%

0.22 6.92%

½ 0.15 4.89%

0.16 1.91%

36

Copyright © 2016 Gorman Health Group, LLC Copyright © 2015, Gorman Health Group, LLC

2014

2015

2016

3.84 AVG STAR RATING 3.92

AVG STAR RATING

4.03 AVG STAR RATING

49% of MA-PDs (179

contracts) ≥4 Stars

71% of MA-PD enrollees in

≥4 Star contracts

40% of MA-PDs ≥4 Stars

60% of MA-PD

enrollees in ≥4 Star contracts

37

Final Year of

Star Ratings Demo

2017

4.00 AVG STAR RATING

49% of MA-PDs (178

contracts) ≥4 Stars

68% of MA-PD enrollees in

≥4 Star contracts

ACHIEVING THE GOAL?


2017 AVERAGE RATINGS

38

Reducing the Risk of Falling 2.4

MTM Completion Rate for CMR 2.4

SNP Care Management 2.5

Plan All-Cause Readmissions 2.5

Improving/Maintaining Physical Health 2.6

Osteo. Mgmt in Women With Fx 2.7

Monitoring Physical Activity 2.9

Part C: Foreign Lang./TTY 4.2

Ben. Access & Performance Problems 4.2

Members Choosing to Leave the Plan 4.3

Adult BMI Assessment 4.4

COA – Medication Review 4.4

COA-Pain Assessment 4.5

Complaints about the Health Plan 4.6

MPF Price Accuracy 4.7


Measure 2017 Rating 2016 Rating 2015 Rating

Improving Physical Health

Diabetes Care – Eye Exam

Diabetes Care – Blood Sugar Controlled

Rheumatoid Arthritis Management

Getting Needed Care

Getting Appointments and Care Quickly

Customer Service

Rating of Healthcare Quality

Care Coordination

Members Choosing to Leave the Plan

Plan Makes Timely Decisions About Appeals

Reviewing Appeals Decisions

Rating of the Drug Plan

2.6

3.4

3.7

3.9

3.3

3.3

3.5

3.4

3.4

4.3

3.5

3.4

3.3

3.3

3.1

3.9

3.2

3.5

3.4

3.5

3.4

3.4

4.2

4.1

3.6

3.3

4.6

3.7

3.3

3.5

3.4

3.5

3.5

3.7

3.4

4.3

4.2

3.7

3.5

STAGNATION: NO CHANGE IN NATIONAL

AVERAGE (3 CONSECUTIVE YEARS)

39

And…no or negligible change in Average Rating or National Average:

• Annual Flu Vaccine

• Monitoring Physical Activity

• COA-Medication Review

• Plan All-Cause Readmissions

• Getting Needed Drugs


THE MEMBER EXPERIENCE:

NOW HALF OF STARS

40


35% of Rating = patient experience,

access, and complaints

11% of Rating = add’l CAHPS/HOS

measures

12% of Rating = improvement

95%

90%

85%

80%

75%

70%

Getting Needed CareGetting Appts &

Care Quickly

Customer Service

Rating of Health Care Quality

Rating of Health PlanCare Coordination

Rating of Drug Plan

Getting Needed Drugs

MEASURING NUANCES: CAHPS

Star Ratings

must be strategically

managed as a

program

= 2016 5 Star cutpoint

= 2016 4 Star range

= 2016 3 Star range

= 2016 2 Star range

41


Social Determinants of Health & Behavioral Influences on Health

Lifestyle & Health Literacy

Socioeconomic & Logistical Factors

Clinical Complexities & Higher Incidence of Comorbidities

Health Disparities

Cross-Product Leadership, Cross-functional Alignment, Multi-functional Investments

42

MEDICARE ADVANTAGE

Quality Measurement & Ratings

Compliance

Operations

Risk Adjustment, Data & Coding

Clinical Coordination & Care Management

Pharmacy

Systems, Tools

Data & Analytics

EXCHANGE/ COMMERCIAL


Compliance

Operations

Risk Adjustment, Data & Coding


Pharmacy

Systems & Tools

Data & Analytics

MANAGED MEDICAID


Compliance

Operations

Risk Management, Data & Coding


Pharmacy

Systems & Tools

Data & Analytics

STAR RATINGS / QRS = NEW NORMAL


QRS: DRIVING (RAPID) EVOLUTION

43

2006

2015

2016

2017

2018

2019

2020

2021

MA Star Ratings

program created

MA Quality

bonuses paid

only to high

Star-rated MA

plans

QHP QRS

pilot in 5

states

MMC QRS

regulations

issued

Medicare FFS

QPP created

THE PAST & PRESENT THE FUTURE

QHP QRS

implementation to

be completed

Inaugural

Medicare FFS

MIPS/QPP

measurement

period begins

CMS to release

guidance on the

MMC QRS the

measures and

methodologies for

public comment

Medicare FFS

merit-based

incentive

payments

(MIPS) begin

MMC QRS

must be

implemented

RAPID DEPLOYMENT OF TARGETED QI ACTIVITIES


Notification of Inpt. Admission

Receipt of Summary of Care Record

Engagement w/ Patient

within 30 Days of Inpt.

Discharge

Medication Reconciliation

Care Coordination for Members with 3+ chronic conditions

Comprehensive Assessment of Needs & Goals (Testing 2017)

Specialist Provides Visit Summary to

PCP (Testing 2017)

Follow-up after ED Visit within 7 days (Current Average:

34%)

A GLIMPSE INTO CMS’ CRYSTAL BALL:

EVIDENCE-BASED COORDINATED CARE

44

NCQA IMPAQ

Care Coordination Measures for Vulnerable

Populations

Patients with a Chronic Condition that have a Potentially Avoidable

Complication

Follow-up after Discharge from the ED for Mental

Health

Follow-up after Discharge from the ED for AOD

Follow-up after Hospitalization for Mental

Illness

Measures addressing gaps in coordination for

high-cost, high-prevalence chronic

conditions

Follow-up after Discharge from the ED for Diabetes

Follow-up after Discharge from the ED for Heart Failure

Follow-up after Hospitalization for Diabetes

Follow-up after Hospitalization for Heart

Failure

Duplication of HcA1c Tests


• CMS compliance activity will be

at an all-time high

• Penalties doubled for most

infractions

• Priorities:

o Delegation oversight, especially

PBM

o Consumer protections

o Network adequacy

o Risk adjustment coding

o Compliance effectiveness

2017 COMPLIANCE OUTLOOK

45


• CMS will reduce a measure to

1 star if:

o Biased or erroneous data is

submitted

o An underlying compliance issue

exists in the data

• Automatic reduction of overall

rating to 2.5 stars for sanctioned

plans suspended

• Important areas to monitor:

o HEDIS, CAHPS, HOS, MPF,

and PDE data requirements

o ODAG and CDAG processes

o Adherence to CMS-approved

POS edits

o Pass Data Validation such as

SNP and MTM

COMPLIANCE, DATA INTEGRITY,

AND STAR RATINGS

46


Source: CMS, Medicare Parts C & D Oversight and Enforcement Group 2014 Part C and Part D Program Annual

Audit and Enforcement Report , October 2016.

CHALLENGES FACING PLANS:

MEDICARE ADVANTAGE/PART D

47


Membership Accounting and Reconciliation

Proactive Member Service

Risk Adjustment Adaptation

Collaborative, Accountable

Providers

“Make It Work” Care

Management

Star Ratings Mastery; PBM

Oversight

PROVEN TACTICS TO THRIVE IN GOLDEN

AGE OF GOVERNMENT PROGRAMS

48


• Government programs will continue

to drive revenue/earnings

• Exchanges are dead in 2018-2019

• GROW Medicare Advantage

• Wait and see on Medicaid block

grants

• Hunker down on individual market

• Star Ratings/QRS now drive the

market in Medicare and Medicaid

• No innovation without collaboration

o Most effective innovation in

healthcare is low-tech, high-touch

CONCLUSIONS

49


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50


Gorman Health Group, LLC (GHG) is a leading consulting and software solutions firm specializing in government health

programs, including Medicare managed care, Medicaid and Health Insurance Marketplace opportunities. For nearly 20 years,

our unparalleled teams of subject-matter experts, former health plan executives and seasoned healthcare regulators have

been providing strategic, operational, financial, and clinical services to the industry, across a full spectrum of business needs.

Further, our software solutions have continued to place efficient and compliant operations within our client’s reach.

GHG offers software to solve problems not addressed by enterprise systems. Our Valencia™ software reconciles membership

of more than 10 million members in Medicare, Medicaid and the Health Insurance Marketplace. Over 3,000 compliance

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We are your partner in government-sponsored health programs

T

E

JOHN GORMAN

Executive Chairman

202-255-6924

[email protected]

51

Documents

THE OUTLOOK FOR GOVERNMENT-SPONSORED … OUTLOOK FOR GOVERNMENT-SPONSORED HEALTH PROGRAMS IN THE ... Health Care Tax Credit ... • Co-author of Ryan’s plans for Medicare/Medicaid