TODAY S AGENDA CUT TO THE CHASE! THE OUTLOOK FOR GOVERNMENT HEALTH PROGRAMS IN THE TRUMP ADMINISTRATION

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1 THE OUTLOOK FOR GOVERNMENT HEALTH PROGRAMS IN THE TRUMP ADMINISTRATION A Presentation to Industry Collaboration Effort (ICE) Annual Conference JOHN GORMAN EXECUTIVE CHAIRMAN DECEMBER 4, The Outlook for ACA, Medicaid and Medicare Advantage Under Trump 2. Evolving Star Ratings Imperatives 3. Medicare Advantage/ Part D Draft Regulation 4. Deep Dive on Compliance Priorities for Conclusions and Q&A TODAY S AGENDA 2 CUT TO THE CHASE! Government programs = sole growth opportunity Election result = o Medicare Advantage and Part D: only safe games in health insurance now o Medicaid: major changes certain o Exchanges and subsidies: expect major reductions in coverage Growth, aggregation, new entrants Star Ratings drive market, bar rises A Darwinian and Edisonian moment 3 1

2 TIPPING POINT IN GOVERNMENT-SPONSORED PROGRAMS Commercial Group: Declining, Shifting Government: Sole Source of Organic Growth Exchanges Medicaid Medicare Advantage Dual Eligibles 20 M 82 M 29 M 11 M 74 M 11 M 20 M 1 M GOP TAX BILL IS AN ALL-OUT ASSAULT ON SAFETY NET Slashes Medicaid by $1 TRILLION over 10 years Cuts Medicare by $25 billion/year, starting in 2018 Repeals ACA s individual mandate and pre-existing condition protections Uses that money to cut taxes for 1%ers and corporations Adds $1.5 TRILLION to Federal debt, likely triggering further cuts to entitlements in GUERILLA WAR AGAINST OBAMACARE INSIDE HHS Multiple Approaches to ACA Sabotage for Trump Administration Uncertainty on/withholding exchange subsidies Undermining open enrollment and eligible outreach Refusal to enforce individual/employer mandates Regulatory rollbacks Continued underfunding of reinsurance * Official White House portrait 6 2

3 TRUMP EXECUTIVE ORDER AND FREEZE OF ACA SUBSIDIES Executive Order: Directs HHS and Labor to implement rules No immediate impact as regs take months to promulgate Would eliminate pre-existing condition protections Would allow sale of junk insurance policies on exchanges Would remove contraceptive coverage mandate Encourages development of Association Health Plans 7 TRUMP EXECUTIVE ORDER AND FREEZE OF ACA SUBSIDIES 8 ROUGH POLITICS OF ACA SABOTAGE Most ObamaCare beneficiaries live in Republican districts Half of Medicaid expansion states have Republican governors, voted for Trump 9 3

4 MEDICARE ADVANTAGE MEMBERSHIP National Snapshot November 2017 Includes: 2,490,792 SNP 3,875,370 Series 800 5,038,911 Local PPO CURRENT CONTRACT SUMMARY NO. OF CONTRACTS MA ONLY ENROLLEES DRUG PLAN ENROLLEES TOTAL ENROLLEES Total Prepaid Contracts 674 2,327,347 17,718,332 20,045,679 Local CCPs 449 1,714,307 15,608,839 17,323,146 PFFS 6 60, , ,399 MMP , , Cost , , , Cost (HCPP) 9 72, ,057 PACE ,607 40,607 MSA 3 5, ,766 Regional PPOs ,242 1,257,024 1,378,266 Total PDPs ,408,220 25,408,220 Employer/Union Only Direct Contract PDP , ,477 All Other PDP ,284,743 25,284,743 TOTAL 738 2,327,347 43,126,552 45,453,899 Source: Medicare Advantage, Cost, PACE, Demo, and Prescription Drug Plan Contract Report Monthly Summary. Totals reflect enrollment as of the November1, 2017 payment. The November payment reflects enrollments accepted through October 11, GEOGRAPHY OF MA GROWTH, MACRA S SEISMIC CHANGE TO MEDIGAP IMPACTS MA AND PDPS TODAY MACRA Bans Sale of First-Dollar Coverage Supplements in

5 MACRA S SEISMIC CHANGE TO MEDIGAP IMPACTS MA AND PDPS TODAY MACRA Bans Sale of First-Dollar Coverage Supplements in MACRA S SEISMIC CHANGE TO MEDIGAP IMPACTS MA AND PDPS TODAY MACRA Bans Sale of First-Dollar Coverage Supplements in GROWTH OPPORTUNITIES FOR MEDICARE ADVANTAGE Baby Boomers o 50% enrolling in MA in first two years of eligibility o More affluent skew toward PPOs Medigap conversions o First-dollar coverage plans (e.g., Type C and F) banned in 2020 Prescription Drug-only plan conversions Retiree group/egwp/series 800 Dual Eligibles/MLTSS populations 15 5

6 NOVEMBER 7, 2017: HUGE ELECTION FOR MEDICAID Maine passes statewide referendum for Medicaid expansion Democrat wins VA Governor, expansion for 400,000 in play Several other states now considering expansion, including UT, KS BUT THEN, SAME DAY: o CMS administrator Verma attacks her own program, lays out ugly conservative pro-red State agenda 16 STATUS OF STATE MEDICAID EXPANSION AS OF NOVEMBER 7, MEDICAID ENROLLEES AND EXPENDITURES 18 6

7 73% OF ALL MEDICAID BENEFICIARIES ARE ENROLLED IN HEALTH PLANS 19 DUAL ELIGIBLES ARE THE INSURANCE INDUSTRY S BIGGEST OPPORTUNITY 20 STATES WITH PROGRAMS FOR MANAGED LONG- TERM SERVICES AND SUPPORTS (MLTSS) 21 7

8 CAN SPECIAL NEEDS PLANS (SNPS) MAKE MONEY? SNPs generally are more profitable than ALL other types of MA plans Category 2012 Margin SNPs (total) 8.6% Non-SNPs (total) 4.3% SNPs, non-profit -0.6% SNPs, for-profit 11.5% 50%+ partial dual eligible 12.9% 50%+ full dual eligible 5.7% Source: MedPAC 2015 Report to Congress, Table 13-6, p.332, March CHALLENGES FACING PLANS: CHILDLESS ADULTS, DUALS, AND LTC Enabling Social Clinical Meals Transportation Personal care Habilitation Assistive devices Home modification Communication services Light cleaning, personal care Caregiver respite Care coordination Skilled nursing Caregiver training Palliative/End of life care 23 MA/PART D DRAFT REGULATION FOR 2019 Reverses meaningful difference requirements Benefit/cost-sharing flexibility for bennies with special medical needs Narrows scope of CMS-reviewable marketing materials Fraud detection activities can be included in MLR win for NAIC Drug management programs for those at-risk of opioid abuse Clarifying Any Willing Pharmacy rules Generic cost-sharing for biosimilars Expedited submissions of generics and mid-year formulary changes Laying groundwork for recycling drug rebates 24 8

9 2018 CMS COMPLIANCE OUTLOOK CMS compliance activity will be at an all-time high Penalties doubled for most infractions Priorities: o Delegation oversight, especially PBM o Appeals and grievances o Network adequacy and provider directories o Risk adjustment coding o Compliance effectiveness CMS COMPLIANCE OUTLOOK Medicaid plans relatively new to Medicare Advantage are disproportionately out of compliance: Appeals and Grievances RADV Part D benefit testing FDRs CMS reconciliation FDRs are overwhelmingly out of compliance Nationwide benefits vendors unprepared for audits, local vendors even worse FDR staff not versed in CMS requirements or expectations Ineffective CAPs applied to FDRs DRUG BENEFITS COMPLIANCE PRIORITIES Annual PBM delegation audits required for MA- PDs/PDPs not happening Extreme use of opioids new in OIG work plan MTM audits: Emphasis on data integration Eligibility screenings CMRs must be multi-modal Preferred networks: quality over reimbursements Antitrust: CVS/Aetna and 27 9

10 STAR RATINGS CHANGED THE GAME IN GOVERNMENT HEALTH PROGRAMS % Percent 60% 50% 40% Average Star Rating 30% % of Members in 4+ Star Contracts Average Rating STAR RATINGS SUPPORT A CULTURE OF EXCELLENCE Complaints per 1,000 % Disenrollment Star Rating ½ ½ ½ Star Rating ½ 20% 20% 17% 16% ½ 11% 11% 10% 8% ½ 7% 6% 4% 5% 29 NEW ENTRANTS FACE HEADWINDS LENGTH OF TIME IN PROGRAM % of MA-PDs EARNING 4+ STARS <5 years 18% 5-10 years 37% 10+ years 57% 58% of MA-PDs have been in the program 10+ years <3 stars 3 stars 3.5 stars 4 stars 4.5 stars 5 stars 30 10

11 A TALE OF TWO BELL CURVES Overall Rating # of contracts Overall Rating # of contracts stars 11 3 stars stars 41 4 stars stars 5 5 stars stars 3 3 stars stars 98 4 stars stars 52 5 stars THE PURSUIT OF QUALITY BONUS PAYMENTS Net: 870,000 beneficiaries WellCare: Net +100,000 Cigna: Net +80,000 Humana: Net +15,000 **41 plans gained 4 th star in 2017** Net: 1,400,000 beneficiaries United: Net -340,000 Centene: Net -130,000 Aetna: Net -70,000 Anthem: Net -30, plans lost 4 th star 21 plans gained 4 th star 32 WHERE ARE STAR RATINGS INFLUENCING QUALITY? 2017 Ratings by County 2018 Ratings by County 33 11

12 CAHPS AND THE MEMBER EXPERIENCE: EVERY MEMBER MATTERS 95% 90% % 80% Stars 75% 74 2 Stars 70% Cut Points Getting Needed Care Getting Appts and Care Quickly Customer Service Rating of Health Care Quality Rating of Health Plan Care Coordination Rating of Drug Plan Getting Needed Drugs 34 LEVERS OF LOYALTY Varying Factors Impact the Member Experience Source: Deft Research, 2016 Medicare Member Experience Study 35 STEPS TO SAVE THE STAR Help members understand benefits Aggressive oversight of PBM performance, especially appeals Maintain accurate provider directories Use members preferred communication channels Simplify written communications 36 12

13 PRODUCT DESIGN: THE FOUNDATION FOR EXCELLENCE MLR Management Carefully Designed Interventions Micro-targeting Actionable Analytics Copays, cost-sharing, formulary design Care management, disease management, and other supportive programs Palliative care and wellness programs Referral requirements Ancillary benefits (vision, dental, hearing, nutrition, transportation) Provider and pharmacy networks Programs and resources to support social determinants of health 37 EXECUTION, EXECUTION, EXECUTION! Corporate Strategy, Mission & Culture Provider Star Member Engagement Engagement Ratings Care Management & Coordination Operational Effectiveness Understand and effectively segment membership Support the physician/patient relationship Match interventions to members needs Eliminate single-purpose outreaches and interventions Prioritize and integrate medical, clinical, behavioral, and pharmacy issues in member interventions Support and coordinate care for members across settings, particularly during transitions of care and upon new diagnoses Meet members where they are with empathy Empower staff to go the extra mile 38 CONCLUSIONS Government programs drive revenue/earnings for insurers o Medicare Advantage: safe, stable o Medicaid: major changes coming o Individual market: unpredictable, declining PBM compliance and improving the member experience is key to longterm survival 39 13

14 40 JOHN GORMAN Executive Chairman b265/