Skip to main content

Health Plans Talk Strategy in 3Q Earnings Calls

 |  By Margaret@example.com  
   November 06, 2013

Senior health plan executives sound upbeat about health insurance exchanges, Medicare Advantage plans, and collaborative risk-sharing agreements with providers.

Despite the well-publicized enrollment issues of healthcare.gov, senior executives at major health insurers were upbeat about the opportunities presented by public health insurance exchanges during their third-quarter earnings calls in October and November.

"We continue to believe that these emerging retail marketplaces can be successful over the long term," stated Mark Bertolini, Aetna's chair, CEO, and president. HIX—both public and private—as well as Medicare Advantage and payer-provider relationships were among the topics covered during the third-quarter earnings calls. Here are the highlights:

Public health insurance exchanges
Senior health plan executives say they were prepared for the difficult start of the HIX program and have their own resources in place to provide full-time exchange support. Still, payers are counting the days until Dec. 15, which is the last day to enroll in a plan that takes effect on Jan. 1.

They are worried that the time it will take to make the necessary repairs to the HIX system won't leave enough time for enrollees to be processed. They are also keeping a wary eye on Congress, which seems determined to intercede, perhaps in the form of extending open enrollment or delaying the individual mandate. Neither move is popular among health plan executives, who maintain that the program must cast a wide net to calibrate for adverse selection.

Most insurers are taking what Bertolini described as a "prudent approach" to the products they offer and the HIX markets where they participate. Cigna, for example, has HIX offerings in only five states (Arizona, Colorado, Florida, Tennessee, and Texas). Any expansions will be carefully considered.

Private HIX
Insurers say they are seeing a marketplace shift to private HIX as employers convert their self-funded plan memberships to defined contribution models and become fully insured plans. The upside for employers is that private HIX can be used by employers to transition to a defined contribution strategy where the employer puts a cap on how much to spend on employee healthcare benefits.

The upside for insurers is that fully insured membership typically generates four to five times the profit contribution of self-insured membership. In addition, large group employers are moving their retirees and Medicare-eligible employees into private exchanges for their Medicare benefits.

UnitedHealth expects to offer products on a private HIX, but also sees opportunities through its Optum subsidiary in providing a platform (myCustom Health) that can be used by payers, providers, state governments, employers, and other businesses developing exchanges.

Medicare Advantage
Despite rate pressures and a funding gap, insurers remain bullish on Medicare Advantage. To maintain their MA product revenue stream, insurers are embracing care coordination, investing in clinical quality improvements, and implementing value-based rewards for physicians and healthcare systems.

WellPoint is in the process of evaluating the MA markets it serves, capturing risk score revenue, and improving its star ratings.

The Medicare Advantage star program plays an important role in the MA strategy with insurers committing resources to improve their star ratings. Now in its sixth year, the ratings program was created by CMS to monitor health plan quality and performance.

Billions of dollars in bonus payments are shared by plans that achieve at least three stars because five-star plans—there are only 14 in 2014—can enroll members throughout the year rather than for the short, seven-week open enrollment period each fall.

Cigna, whose HealthSpring of Florida plan scored one of the elusive five-star ratings, cites its physician engagement model, which rewards improved health outcomes, customer value, and patient engagement.

Provider partners
As the delivery of healthcare services shifts from volume to value, payers and providers are forming collaborative risk-sharing agreements that focus on care coordination and the management of chronic conditions. For example, Aetna is building high-performance networks in several states, including one in Virginia with Bon Secours.

And Cigna just added nine new collaborative accountable care programs to its tally and now has 75 relationships in place across the country. UnitedHealth created an ACO in Wisconsin that includes a collaborative of four hospital systems and the Medical College of Wisconsin.

WellPoint CEO Joseph Swedish, reported that the giant insurer is seeing a lot of provider interest in payment reform and it is expanding its provider relationships based on value-based payment methodologies. It has more than 50 ACOs in place and more than 700 hospitals are part of its pay-for-performance system.

Pages

Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
Twitter

Tagged Under:


Get the latest on healthcare leadership in your inbox.