In the Medicare Advantage (MA) space, we are continually searching for opportunities to grow enrollment, either by adding new products or expanding our service areas. While both are certainly viable methods, it is important to approach the expansion process in a fiscally responsible way. Conducting a feasibility study can help make this process clearer and more achievable.
To help evaluate your potential growth opportunity, consider the following tips from GHG.
When examining service areas, benchmarks (and factors that play into the maximization of benchmarks) are critical.
- How are benchmark rates trending from year to year?
- Does the pre-Affordable Care Act (ACA) rate limit growth, or the amount of bonus for new plans and plans that achieve the 5% quality bonus?
- Do any areas qualify for the double bonus?
- Is there any upcoming legislation that may impact payment rates?
To evaluate membership potential, conduct a thorough study of the markets under consideration.
- How many health plans and products are available?
- What is the growth in the number of beneficiaries joining Medicare Advantage (MA) plans?
- How much of the population is aging in?
- What types of plans are growing membership?
- Do I have existing populations through individual commercial or group pIans to whom I can market?
- Can I co-brand with a provider group or hospital system?
Existing operations and performance can have a tremendous impact.
- What kind of “lift” will it take to build my network?
- Are there any risk arrangements?
- Will I need a new Centers for Medicare & Medicaid Services (CMS) contract?
- What amount of effort will it take with my existing systems to add a new service area or product?
- How is medical management on my current population?
- Will my Star Ratings positively or negatively impact the benchmarks used?
- If I’m not already in MA, what kind of lift will it take, and what will it cost?
Completing a feasibility study and conducting a sensitivity analyses can help plans make these decisions.
- For new plans: It is important to know just how sensitive certain factors can be. These factors include provider contracting and expected improvement in contracting rates, utilization management relative to Fee-for-Service and how much improvement there will be from year to year, risk adjustment trends, Star Ratings, administrative costs and trends, and membership. CMS expects plans to have a positive margin by the fifth year of business.
- For existing plans: Plans must understand the cost for expansion/growth and any revenue implications that may change. Plans need to be aware and prepare to face revenue adjustments to avoid being surprised during the next bid season.
At GHG, we have provided expertise to government-sponsored plans in conducting feasibility studies. We have extensive experience in the bid process as well as forecasting. Feel free to reach out and discuss how we can assist you in developing a feasibility study for any markets and products in which you may be interested.