Health Insurers Migrating to Medicare, Medicaid

Kai Tsai, Modern Healthcare

Different members, different needs

Over the past five years, Worcester, Mass.-based insurer Fallon Health’s government program membership has ballooned to 50% from 20% of its total membership, driven by growth in Medicaid and dual-eligible Medicare Advantage programs, while commercial membership has hovered around the same mark. Its core operation systems work across any product line, but the services that each population needs are different and require investment in staffing and provider partnerships, said Michael Nickey, Fallon’s vice president of state programs. 

Diversity among the plan’s Medicaid and dual-eligible members in some parts of Massachusetts requires an “incredible diversity of staff that mirrors the patient base” and membership materials in six languages. Many of Fallon’s Medicaid members in rural areas lack transportation, so the plan responded by operating a mobile health center with its accountable care organization partners to expand access. 

And because addressing social needs that affect health must take place at the point of care, developing strong partnerships with doctors and hospitals is key, Nickey said. Fallon invested in telemedicine equipment that physicians would use to see dermatology patients in rural areas lacking specialists. It also bought two SUVs for a local senior agency to use to drive patients to medical appointments. 

“Our providers have a very strong say in our Medicaid program and what goes on, so we’re really partnering incredibly closely to make decisions together, which is not something you would do, generally, in a commercial product,” he said.

Besides Anthem, other Blues Cross and Blue Shield companies, which have historically focused on commercial employer plans, are trying to capture more Medicare and Medicaid membership, but were late to game and are playing catch-up, said Doniella Pliss, a director at A.M. Best. Health Care Service Corp.’s business mix, for instance, was 31% government-sponsored in 2017, up from 10.7% in 2013, based on net premiums written, A.M. Best data shows. And recently, Blue Cross and Blue Shield of North Carolina won a contract to serve Medicaid members in the state.

“They have to build whole new capabilities because this is a very different clientele that they’re working with,” Pliss said, adding that insurers must also build systems to monitor compliance as they become more exposed to state and government regulations. 

Kai Tsai, managing director at Guidehouse, said health plans like the Blues that focused in the past on administering benefits to self-funded plans were not really managing risk. But “taking on Medicare Advantage, it’s a completely different environment, highly regulatory, with different competencies you need to learn to be successful. There are levers that are super important like risk adjustment and quality programs. If you don’t do those well, you’re going to be challenged.  

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