Threats and Opportunities for Managed Care Organizations

Presented by Thomas L. Kelly at the 2nd Annual CEO Roundtable on September 15, 2016

As enrollment growth subsides, Managed Care Organizations (MCOs) will be challenged to re-validate their value proposition, and reconcile their role with provider-based organizations (integrated medical groups, Accountable Care Organizations and the like). The new populations - whether childless adults covered by Medicaid, Exchange members, or dual eligible populations - present far more challenges than the original Medicare and Medicaid enrollments (moms and kids, healthy seniors). The MCOs are challenged by complexity and the potential for front page exposure with regulators nervous and ready to pounce; and by a provider sector that aches to squeeze them into a narrower (and less profitable) role. This presentation will provide a better understanding of the mixed opinions among regulators around the conversion of complex populations into managed care, and the broad-based desire to see the provider sector take a broader and more dynamic role.

Transcript

1. Thomas L. Kelly, HealthSmart
2. Threats and Opportunities for Managed Care Organizations
3. THREATS & OPPORTUNITIES FOR MCOS  Threats > Managing state expectations for quality > Surviving bad rates > ACO-frenzy > Avoiding page 1 (or 6) > Life in the land of the giants 1
4. THREATS & OPPORTUNITIES FOR MCOS  Opportunities > delivering on integration of physical and behavioral health > charting the path to delegation (& learning how and when to let go) > reinforcing the difference > exposing the ACO solution (the emperor with no clothes) > providing a transition route from the for-profit world 2
5. MANAGING STATE EXPECTATIONS FOR QUALITY  For many states, more is always better  Most quality measures rely on provider performance. MCOs ability to influence is limited. Quality competition can be mostly about measurement.  Redundancy adds to cost and confusion  Can’t afford to leave delegation issue un-addressed 3
6. SURVIVING BAD RATES  There are no bad groups (populations), just bad rates  Rate-making in areas with benefit variability and pent up demand almost sure to be biased low  Transitions from capitated (e.g. behavioral health carve-out) are scary  Big MCOs will continue to buy a place at the table, and remain confident of favorable selection Lead the effort for better risk adjustment Don’t be the good, broke guy 4
7. ACO-FRENZY  States are interested in ACO-development. Many see it as a way to leverage away from big MCOs  General conclusion: states very worried about duals, and suspect that big MCO value prop is played out  Effective integration with traditional providers and insight/assistance in resolving rural health issues potential differentiators  Potential administrative nightmare if states decide to mix the MCO and ACO models (e.g. PPS in NYS) 5
8. AVOIDING PAGE 1 (OR PAGE 6:)  Concerns about quality and comprehensiveness of duals programming at top of state’s issues list  Carve-out providers finding their way back in – fueled by knowledge of populations and providers  Plausible deniability at state level makes page 1 penalties brutal 6
9. LIFE IN THE LAND OF THE GIANTS  Will the national MCOs dominate the market – they could, but I don’t think so  Capital is their big asset. Scale (low administrative costs) is a possibility but not a reality  Willingness to tolerate low margins (1% - 3%) very limited now that growth spurt is ending – you can expect multi-line carriers (Anthem, United, Aetna) to exit markets  Corporate culture/core strategy to cheapen up the product (but not lower the price) almost inescapable 7
10. INTEGRATION OF PHYSICAL AND BEHAVIORAL HEALTH  The holy grail, rarely achieved, single most significant issue in all populations other than kids 8
11. CHARTING THE PATH TO DELEGATION  High-performing primary care addressing the full needs of the member is the end game  MCOs can and should play a critical role in making this happen – and not allowing it to happen too soon  Quality reporting mostly belongs at the provider level, and we can’t be satisfied until providers report their own quality scores, and there is a single validation  Design of a mixed model (oversight & delegation) difficult but essential  Scope of primary care delegation a critical consideration 9
12. EXPOSING THE ACO  Another nice idea from CMS  An opportunity for the 800-pound gorilla to strike a happy, non-threatening pose  More administrative junk….and the physicians are still not in charge We love clinical integration, but it’s rare. 10
13. REINFORCING THE DIFFERENCE  Local, accountable, reliable, accessible – advantages to be strengthened at every opportunity  A political and regulatory voice independent of the big MCOs a must (and not whiney!)  Joining with local (responsible) providers, but not forgetting managed care skills & disciplines and not cow-towing to size a tough but essential strategy 11
14. TRANSITION FROM THE FOR-PROFIT WORLD  With Medicaid leadership, build a view of the future  Help make that view practical – timelines and benchmarks  Be open to fundamental change  Find opportunities to prototype and test It’s an executive-level activity, and at least some of your leadership team will hate you for it. 12
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