Getting Ready for the New Challenges of Medicare Advantage

After a year of doubt, it seems that Medicare Advantage (MA) is here to stay. Indeed, the Congressional Budget office now estimates that MA will account for almost one-third of Medicare participants by 2023.

But MA plans can’t become complacent: The market is evolving, and CMS has made it clear that it wants better performance and better value out of this very important program. Yesterday’s successes won’t guarantee tomorrow’s survival. To succeed, MA plans need to keep advancing — building consumer value, deeply engaging providers, and ensuring they are “purpose built” to serve seniors.

Physician incentives? Half of Medicare Advantage plans don’t use them yet.

Medicare Advantage (MA) plans have a well-earned reputation for being ahead of the pack in adopting value-based care. But there’s still a long way to go. It’s a rare MA plan that has more than one-third of its providers on value-based contracts — more are closer to 10 percent. And physician incentives are by no means universal.

1What’s the most important thing Medicare Advantage plans should be doing?

It depends a bit on the plan, but in most cases, the quickest way to have an impact is to prioritize your market county by county. Medicare Advantage (MA) is an intensely local business, and the shift to value-based care is going to exaggerate that tendency. You need markets with the right infrastructure, high-quality care, and a history of MA acceptance. We know MA plans that lose money in half of the counties where they operate. That shouldn’t happen.
2What is your advice about financial incentives for healthcare providers?

They’re essential, and they’re worthy of serious attention — you won’t solve the cost and quality problem in healthcare as long as you reward doctors for the wrong behaviors. But financial incentives aren’t enough. The best value-based healthcare organizations display an extraordinary level of creativity and commitment. You can’t just buy that. You need physicians to see that you’re helping them to do a better job for patients, that you’re a real partner in achieving their goals.
3You say that MA plans need to think like retailers. Aren’t they already in a retail business?

They may be selling through a retail channel, but compared to retail chains or consumer goods manufacturers they know little about consumers. Here’s a famous non-Medicare example: Target not long ago figured out how to identify pregnant consumers through their buying habits so they could offer them special deals. Think of the impact health plans could have if they understood customers at that level — not just in selling more product, but in engaging consumers to be healthier.
4What big change would you like to see in Medicare Advantage?

We’d like to see MA divisions treated as unique businesses with their own leadership, organization, and strategy. When you look at the record, it’s absolutely clear that “purpose built” Medicare Advantage plans outperform MA plans that operate under the umbrella of traditional health insurance or that are “matrixed” into a multiline insurer. That shouldn’t be a surprise — the businesses are completely different. But the lesson has been very slow to sink in.