SummaryIn episode 1 of our series Fred Bentley, Sean Creighton, and Kenny Kan discuss the new supplemental benefits offered through Medicare Advantage plans for 2019.
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Fred: Hello and welcome to another Avalere podcast. My name is Fred Bentley and I serve as a Vice President with our Health Plans and Providers group here at Avalere. This session is going to focus on the new landscape for supplemental benefits in the Medicare Advantage program. As many of you likely know, in April of this year, the administration provided guidance on the expanded definition for supplemental benefits, specifically going beyond what had traditionally been primarily health related definition for MA (Medicare Advantage) supplemental benefits to a much broader category that would include a host of nonmedical benefits that are targeted at improving outcomes and, in particular, reducing the utilization of high-cost emergency services.
Joining me during this session to explore this in more detail are two experts—I would say two heavy-weights in the industry. First of all, Sean Creighton, who is a vice president here at Avalere, is focused on all things related to Medicare Advantage. Importantly, Sean spent about 15 years with CMS (Centers for Medicare & Medicaid Services) really focused on a host of Medicare Advantage related issues. Also, honored to have Kenny Kan here as well as a vice president at Avalere and former chief actuary with both Humana and CareFirst.
To kick off the conversation, Sean, would love to get a sense for what we’re seeing in the market related to the supplemental benefits.
Sean: Thank you, Fred. The first thing that ought to be said is that supplemental benefits are not new. Medicare Advantage plans in certain markets have been providing supplemental benefits at a high-level for quite some time now. Typically, those supplemental benefits have covered hearing, vision, and dental benefits at a particular level. I think what’s new for 2019 and moving into the future is not so much a change in the big three but an uptick in the provision of other supplemental benefits that have been available in certain areas such as transportation, over-the-counter medication, and safety equipment in the home. We’ve seen a big uptick in the provision of these, if you like, semi-frequent supplemental benefits. The other thing that we’ve seen this year that’s truly novel is a large uptick in the provision of new supplemental benefits, and there are a number of items in this category—the most common of which appears to be nicotine cessation programs, but there are other benefits of interest particularly around in-home support and personal care services, adult day care, mental health, among others. In sum, I would break it down into the three categories: the big three remain and are relatively constant, some other benefits that have been provided are now seeing an uptick, and lot of new benefits where people are experimenting.
Fred: Kenny, curious to get your take, on why it is that plans are adopting these new benefits?
Kenny: In 2019, there was significantly higher tick-up rate that what CMS has expected. This doesn’t surprise me. Plans are instituting these new benefits for three reasons, in my opinion. Number one, a benign regulatory environment from CMS, which encourages innovation and benefit design flexibility. Number two, given the favorable rate environment, and temporary suspension of the health insurer fee, plans want to invest in growth. Number three, there has been some evidence that suggests that some of these benefits bend the total cost curve, so the thought leaders are experimenting with such benefits. Avalere expects plans to make bolder changes in 2020 and perhaps be more mainstream in 2021.
Fred: And picking up on that Kenny, thinking about 2020, what is it that plans should be doing now to get ready, as it relates to supplemental benefits?
Kenny: At Avalere, we are advising MA plans that are at various stages of implementing this. For companies that are in the initial phase, my suggestion is to have your MA benefit strategy finalized by the first quarter of next year, because you need time to submit bids and implement this. I would view this as portfolio of bets in terms of growing and maximizing profitable growth. As a former Chief Actuary, for plans that are further down the road, you may want to think about the rule of eight. For example, on a nutrition benefit, what is the benefit? What is the targeted sub-population? What triggers benefit eligibility? How long is the benefit? How do you measure the ROI (return on investment) and price? How do you file and submit bids? How do you change your IT systems and administer? What happens if the ROI results are lousy?
Sean: Thank you, Kenny. I think that’s very helpful. I would add that, here at Avalere, we’re working with our health plan clients and are ready to assist plans at a variety of levels and thinking through their supplemental benefit strategy and providing an evidence-based approach to implementing supplemental benefits. You know, the research is not perfect, and in some cases is thin. However, there is research out there that addresses the impact of supplemental benefits, the relationship between these benefits, in particular, clinical conditions or social determinants of health that one can bring to bear. I believe the real question for any health plan is what is the goal that you are trying to achieve? Is it growth? Is it cost savings? Is it revenue maximization? What is the benefit or outcome you are trying to achieve, and how do you fit the provision of supplemental benefits into that overall strategy?
Fred: Alright, that wraps up our brief podcast on the new landscape for supplemental benefits. Be on the lookout for more data and insights from Avalere and certainly reach out to us—whether you are in the early phases or in the later stages of developing your supplemental benefits strategy. We are here to help.
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