In this post:
A favorite bed time story book in our house is "If I Ran a Zoo" by Dr. Seuss. If you don't have children, and also didn't have a childhood- this is a story about a naive boy who visits a perfectly good zoo, and decides he could do way better by adding a bunch of ridiculous animals that don't even exist- which is a perfect parallel for this blog post.
What are "patient access APIs"? Read my post about the basics to catch up.
Medicare Advantage (aka Part-C) is a federal program, where CMS will pay a Medicare Advantage Organization (MAO) a capitated amount of money per-member-per-month (PMPM) to assume the risk of managing that person's healthcare costs. This sounds like, but is not at all like, those calls you get about your car's extended warranty.
Three features of the Medicare Advantage program that deserve your attention are:
Each of these three create an opportunity for the MAO to receive payments from CMS that are above the "base rate".
Risk adjustment: if plan members are less healthy/more costly than the average member, the MAO will be paid more. So health plans want to make sure that their members are diagnosed with everything they could possibly be diagnosed with. For example, CMS will pay about 4x as much to the MAO for managing the same person after they've been diagnosed with rheumatoid arthritis
Star ratings: CMS grades plans across a range of 46 quality measures, and distills them down into a 5-star scale (in 1/2 star increments). These include things like: Did members get a breast cancer screening? Do diabetic members have their blood sugar under control? Is the customer service good? In 2021, 77% of Medicare Advantage enrollees were in a plan that had 4-stars or more (leaving 23% in plans with 3.5-stars or less).
Quality bonus payment (QBP): Plans that achieve 4 or more stars receive a bonus payment (up to 5% of the benchmark). The bonus payment doesn't go to the MOA's bottom line, it must be used to reduce member cost sharing, or to pay for "supplemental benefits". Using the industry rule of thumb, $1,000 is a good approximation of the benchmark. So by achieving 4-stars, the MAO can expect an additional $50 PMPM to improve their plan. With 24.1 million people enrolled in Medicare Advantage plans, and 23% of them in plans that didn't achieve 4-stars, collectively these plans are leaving ~$3.3BN per year on the table
(24.1MM * 23% * $50 * 12).
How Medicare Advantage plans are paid. Risk adjustment, Star Ratings, and QBP are opportunities to get paid more than the bid amount [image credit]
"It’s a pretty good zoo," Said young Gerald McGrew, "And the fellow who runs it Seems proud of it too. But if I ran the zoo," Said young Gerald McGrew, "I’d make a few changes. That’s just what I’d do.
Some things I might do if I ran an Medicare Advantage plan:
I'm sure some of these are already being done by MAOs. Maybe some of these are against the rules. But this my zoo / health plan.
Let's use some of what we learned about Blue Button 2.0 in the last post to try out a proof of concept. Use the "Click to Try" button below along with the test user credentials.
Your personal test user (reload the page for a new one):
Note: the data in Blue Button 2.0 is for original fee-for-service Medicare and MA-PDP, so it wouldn't actually be applicable for risk adjustment, star ratings, or QBP.
This proof of concept:
And boy! When I get him back home to my park, The whole world will say, 'Young McGrew’s made his mark.'
If I ran a health plan, I'd take a contrarian thesis and try to invert all of the usual expectations you have of an insurance company:
A boy can dream.
Do you know someone with an Aetna Medicare Advantage plan? Please send them to the HealthSouse home page. We may also be able to save your friend some money.
Still here? Thanks for reading! You seem like a nice person, who should send me an email: email@example.com. Encouragement and criticism are both welcome!