4 Questions healthcare executives should ask before launching a Medicare advantage plan

If you are a healthcare executive and concerned about how best to transition your organization to value-based care, you aren’t alone.

The implementation of value-based payment models continues to be a top challenge for healthcare organizations that must adapt to the decline in traditional fee-for-service reimbursement models from the federal government and commercial payers.

As healthcare providers seek out new ways to manage costs, generate income and control quality, many are considering the launch of Medicare Advantage (MA) plans. In fact, a recent Lumeris survey report found that 27 percent of major U.S. health system executives intend to launch an MA plan within the next four years.

Besides enjoying growing favor among seniors dissatisfied with traditional Medicare, healthcare organizations that launch MA plans pave the way for other value-based care models that reward providers for delivering better care at lower costs. When done right, a provider-sponsored MA plan offers significant upsides for health systems, including growth potential, financial rewards and the ability to deliver high-value, appropriate patient care.

However, establishing a provider-sponsored MA plan is not without risk, which is why smart healthcare executives should start to assess their organization’s readiness by asking these four questions:

1) Has your healthcare organization been successful engaging physicians to drive the changes needed for the delivery of value-based care?

Physician engagement is a priority with value-based care models because organizations must change the way care is delivered. Organizations must create a comprehensive physician engagement plan that includes a mix of resources, tools, programs, education and ongoing collaboration and technical support. More importantly, the compensation strategy must align physician incentives with the organization’s overall goals for cost-effective care and quality outcomes.

If your organization has not been successful engaging physicians, consider a strategy that motivates physicians to adapt the way they work and treat patients on a daily basis and includes a compensation program that aligns physician incentives with the goals of value-based care.

2) Does your healthcare organization have expertise in designing plan benefits and aligning contract incentives?

To successfully operate a provider-sponsored MA plan, healthcare organizations require new core competencies that are very different than those which are fundamental for the healthcare delivery side. A successful MA plan hinges on knowledge of Star Ratings, compliance, medical cost management, risk adjustment, data-driven patient-centered care, operational excellence and aligned incentives. A health system that lacks experience designing value-based health plan products and aligning contract incentives could be easily overwhelmed by the tremendous time, effort and expertise required to build out the required capabilities. The ideal model aligns the consumer, provider, and health plan toward improved quality and cost of care.

3) Does your healthcare organization have experience in payer operations like claims processing, member enrollment, health plan sales and marketing and utilization management?

Organizations that operate MA plans must handle a variety of operational tasks that are traditionally handled by payers. Health systems launching provider-sponsored MA plans often struggle to gain expertise with functions such as member acquisition and utilization management and adhering to the latest regulatory and compliance requirements. Other critical skills that healthcare systems sometime lack include the ability to manage variations in cost and quality, determine care pathways, and address the care needs of patient populations.

4) Does your healthcare organization have the population health infrastructure (e.g., analytics, care management programs, etc.) required for the successful management of MA populations?

Successful value-based MA plans require a high-level of care coordination, deep insights into patient populations, and the proactive management of at-risk patients. Many organizations begin managing risk with smaller populations, such as their own employees. This allows providers to gain vital risk-management experience that they can leverage when they begin serving larger MA populations. However, senior populations tend to be sicker and more complex to manage. Organizations that lack even small-scale risk experience are more likely to struggle when launching an MA plan.

If you have considered these questions and are concerned about potential organizational gaps in knowledge, expertise or operations, consider working with an operating partner that has experience launching MA plans. For most providers, working with a skilled operating partner is more effective than building internal MA capacities from the ground up. It also allows organizations to enter the health insurance business and more quickly gain a competitive advantage in their market.

Launching an MA plan can be challenging—even for the most seasoned healthcare executives. By aligning with an experienced strategic operating partner with proven playbooks, healthcare systems improve their likelihood of success while limiting execution risk and can enable their providers to focus on the delivery of high-quality, high-value clinical care.

By Jeff Carroll, Executive Director of Health Plans at Lumeris

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