After years of being a highly profitable market for health insurers, the regulatory sands may be shifting for Medicare Advantage payers. Star ratings have tightened up, with the average rating across all plans falling from 4.37 to 4.15 in 2023. That led to CVS announcing it could experience as much as a $1 billion decrease in revenue.
The Centers for Medicare and Medicaid Services (CMS) is also tightening auditing processes thanks to the Medicare Advantage final rule finalized earlier this year related to the Risk Adjustment Data Validation (RADV) program. The RADV process could recover nearly $500 million annually in overpayments when CMS begins contract-level audits in 2025.
That’s a considerable amount of money that Medicare Advantage payers could lose in the coming years. To combat those potential revenue losses, here are five actions health plans can take to enhance Medicare Advantage cost efficiency to boost profits:
Health insurance payers are awash in manual processes. Claims processing, prior authorization, eligibility verification, provider network management, member communication and engagement, and premium billing usually involve several manual processes.
For example, we found that Medicare Advantage members often send a check payment without a payment stub. The billing team may struggle to determine which account sent the check because it may combine multiple members or be on a child’s account. The typical process is to have someone review those checks and search the billing system for the correct member.
To automate that process, we built an AI solution that “reads” the check and suggests which accounts are most likely to be associated. A user then makes a decision. The AI learns from that decision, and its suggestions improve, streamlining the process. Typically, that leads to a 4X productivity gain.
Improve Chronic Disease Management
Prioritizing preventive care and chronic disease management is one of the most effective ways to control costs in Medicare Advantage plans. By identifying and addressing health issues early on, plans can reduce the likelihood of expensive hospitalizations and complications. Effective care management initiatives can significantly improve patient outcomes while keeping costs in check.
For example, Kaiser Permanente’s diabetes care management program focuses on a care team that provides supportive care – like medication management and lifestyle and behavioral change – by pharmacists, nurses, and nutritionists instead of frequent doctor’s office visits.
During the pandemic, Kaiser integrated more virtual care and remote patient monitoring into the care management program. Phone and video visits help the care team better connect to the member. Remote monitoring leverages a smartphone and Bluetooth-enabled glucometer to share blood readings. Those readings can lead to treatment activities based on real-time data.
Chronic disease management relies less on visits and more on a multi-pronged, technology-enabled approach. That approach limits costs while improving member outcomes.
Building a quality and efficient network of healthcare providers is crucial for managing costs in Medicare Advantage plans. Health plans should carefully evaluate and negotiate contracts with providers who offer high-quality care at reasonable rates. The aim is to balance the cost of care and the value to beneficiaries. By establishing strong partnerships with providers, plans can enhance care coordination, streamline referrals, and ultimately reduce unnecessary expenses.
Humana’s value-based care initiative is a prime example. Humana works closely with physicians and healthcare organizations to establish value-based reimbursement models. These models incentivize providers to focus on preventive care, care coordination, and managing chronic conditions effectively. By emphasizing value-based care delivery, Humana aims to reduce unnecessary hospitalizations, emergency room visits, and overall healthcare costs while improving the health outcomes of its Medicare Advantage members.
This approach encourages healthcare providers to deliver high-quality care while closely managing costs. It creates a win-win situation for the health plan and its members. The result? In 2021, Humana reported a 20.1% estimated cost savings when comparing Humana value-based members to original Medicare.
Invest in Fraud and Abuse Detection
Implementing robust fraud detection systems and conducting regular audits to identify and prevent fraudulent activities can reduce costs. By minimizing fraud and abuse, health plans can reduce unnecessary expenditures and protect the integrity of the Medicare Advantage program.
For example, Anthem (now Elevance Health) developed a comprehensive Fraud, Waste, and Abuse (FWA) program to detect and prevent fraudulent activities in healthcare.
Anthem’s FWA program utilizes advanced analytics, data mining techniques, and predictive modeling to identify patterns and anomalies that may indicate fraudulent behavior. The program focuses on billing, claims, and provider practices to identify potential fraud, waste, or abuse. The company also encourages its members and healthcare providers to report suspected fraudulent activities through dedicated hotlines or online reporting systems.
Promote Health and Wellness Programs
Offering wellness initiatives, health education, and preventive services to promote healthy behaviors among beneficiaries can reduce the need for costly treatments down the line.
- One-on-one support
- Coaching to create wellness goals,
- Self-management booklets on key risks like nutrition, exercise, and tobacco cessation
- Community Workshops teaching how to live with chronic conditions like asthma
The health plan even offers a Stepping On workshop. The workshop teaches those with balance and falling problems how to reduce risk. It’s a unique approach to reducing costs by educating at-risk members.
As the regulatory landscape changes and revenue potential tightens for Medicare Advantage payers, health plans must adapt to enhance cost efficiency and boost profits. Prioritizing automation, improving chronic disease management, optimizing networks, investing in fraud and abuse detection, and promoting health and wellness programs are key strategies that health plans can employ. By implementing these actions, health plans can navigate the evolving Medicare Advantage landscape and enhance Medicare Advantage cost efficiency.
Certifi’s health insurance premium billing and payment solutions help healthcare payers improve member engagement while reducing administrative costs.