Every provider organization must be able to define what success looks like in Medicare Advantage. Effective models include four foundational principles – strategic contracts, accurate coding and documentation, optimal star ratings and exceptional care management.
The business principle “vision without execution is hallucination” is no exception in the burgeoning discipline of population health management for Medicare Advantage beneficiaries. As the fastest growing healthcare insurance product in the U.S., every provider organization must be able to define what success looks like in Medicare Advantage for their respective markets. A well-connected care delivery system that is centered on patient experience is key to an effective and sustainable population health management strategy, including for Medicare Advantage. However, in today’s value-based payment environment, providers must also focus on:
- Fostering growth and pairing appropriate levels of risk-based revenue and financial accountability with the prevailing plan designs and key characteristics of their patient population.
- Driving value and continuous quality improvement across the continuum of care.
- Improving performance and rewarding professionals for their contributions to providing the right care, at the right time, and in the right setting.
Many provider participants in Medicare Advantage are considering migrating to models that include additional upside or two-sided financial risk. Whether assuming delegation of administrative services or forming their own health plans, the reality is that risk-based Medicare Advantage programs are only successful for those that are prepared. Many providers and organizations are not yet equipped for these models, and some should not assume the financial risk at all. However, when appropriately evaluated and strategically implemented, risk-based Medicare Advantage models can be an effective way for provider organizations to manage costs, increase revenue and deliver high-quality care.
The success of Medicare Advantage has been centered on building four foundational principles, regardless of the model chosen.
1. Strategic contract arrangements that account for the risk profile of the population.
As the value-based payment environment evolves toward risk-based payment mechanisms, a complete reorientation across the healthcare industry is occurring. Providers must be proactive in preparing for and establishing the underlying architecture of risk-based contracts, such as for Medicare Advantage. This includes rigorous analysis and actuarially sound assumptions of utilization, unit costs that comprise risk-adjusted total cost of care targets and/or per member per month payments. Contracts should account for the full cost assumptions of medical cost risk in a given population. If the appropriate valuation of benchmarks, targets and rate-related terms are not part of these arrangements, the actual cost of managing the assigned population can be significantly undervalued. This increases risk and exposure to significant losses and contract failure.
2. Accurate coding and documentation.
The need to accurately code and document patient health status, including for social determinates of health and contributing factors beyond medical conditions, is critical. Holistic capture of health status will drive better care and outcomes and enable effective population health management. Outcomes that are the basis for strategic data-driven decision making can be significantly skewed without accurately coded care. This includes for risk scores measured through the Hierarchical Condition Category risk adjustment model, a crucial patient severity measurement in risk-based payment programs.
3. Optimal Medicare Advantage star ratings.
In every sense, mastering star ratings is “do or die” for both Medicare Advantage plans and their downstream provider networks. Only plans and their provider partners that score 4 or 5 stars are rewarded in the Medicare Advantage Star Ratings System. These significant bonus payments are more than 5 percent of the premium and include rebates applied in the benefit bidding process. The rewards ensure high-quality plans and the partnered provider networks are more profitable and able to offer richer, more competitive benefits. Plans below 4 stars are often unable to compete effectively long-term against those scoring 4 or 5 stars, risking termination of their contracts.
4. Exceptionally managed care across the expanding continuum.
Expanding the care continuum to include in-home assessments, pre-visit engagement and post-acute care partners is key to managing utilization, controlling costs and closing gaps in performance. This includes building strong in-network utilization incentives, patient outreach design (transportation, telehealth), and a focus on the importance of social determinates of health. Solid provider collaboration, broader coordination of care across the expanded care continuum and sharing performance outcomes with providers enables a collective mission for the population health strategy. Effective cross-continuum care management will result in higher-quality care, avoidance of unnecessary costs and better patient outcomes.
Success in Medicare Advantage can be achieved with proper preparation and an effective execution plan. Let Premier® help you build and implement a Medicare Advantage strategy that supports your vision.
With 25 years of industry experience, Todd leads the development and execution of strategic care and payment models. Specialties include physician/hospital alignment initiatives, payer/product development and contracting strategies, and government and commercial value-based payment model design.