The healthcare landscape is dotted with new health plan ventures, including a bevy of opportunities to make money in federally sponsored insurance products.
Government-sponsored healthcare is the new black.
Thousands of Americans are newly eligible to enroll in Medicare every day, while millions of previously uninsured citizens have gained healthcare coverage through the new public exchanges as well as expansion of Medicaid in more than two dozen states.
One of the most attractive government business lines in the health insurance marketplace is Medicare Advantage, a value-based alternative to traditional fee-for-service Medicare.
Blue Cross Blue Shield of Michigan has embraced Medicare Advantage, scoring among the MA leaders in the federal government's 5-star system that rewards health plans for achieving high quality standards. "We're one of the few plans that leaves zero dollars on the table," Julie Smith, VP of federal business at BCBSM, told me last week.
She says there are several keys to success when operating an MA plan: managing quality to attain at least 4-Star ratings, reducing "retrospective coding" to ensure providers accurately document patient health status during visits, investing in the expertise needed to operate government-sponsored health plans, playing close heed to compliance, and building strong relationships with healthcare providers.
Smith says insurers expose themselves to grave risks if they view operating MA health plans or other government-sponsored health insurance products as an extension of their commercial business: "If you make a mistake, it can take years to turn it around," she says. "Treat it differently. Make sure you have dedicated resources. The mistake people make is they believe you can do this with the same people and technology you used in the past."
BCBSM did just that by bringing in new people and technology to achieve government-sponsored healthcare success through a partnership with Southboro, MA-based ikaSystems Corp.
"Two years ago, Blue Cross Blue Shield of Michigan switched to a new platform from their legacy platform," Joseph Marabito, president and CEO of ikaSystems, told me last week. "In the process, they halved their administrative costs. They avoid having to process manually 3.2 million claims annually."
Marabito says expertise and the ability to scale operations are critical factors to succeeding in government-sponsored healthcare markets. "You need to know what you're doing in the government business. If you do it poorly, you can really lose a lot of money," he says.
"Most health plans are regional plans; most are not national… How are you going to be competitive with a plan ten times your size? You need to be on a new platform [with] technology [that] scales better than a legacy platform."
In addition to expertise and the ability to scale up operations, Smith says BCBSM looks for a "proactive management infrastructure" when selecting partners in government-sponsored healthcare ventures. "I need my partners to be out there ahead of what the market trends," she says.
Marabito says he also carefully gauges the management of his company's health plan partners.
"I assess how committed they are to the [government-sponsored] business and how realistic they are. I look for people who are collaborative, people who are open-minded. Most health plans have been around for a long time. With that can come practices that are hard to change."
Marabito and Smith both say that insight about the inner workings of Washington and flexibility to adapt to regulatory changes are critically important when operating a government business line.
"The fact is, the rules change every day," Marabito says. "You just don't always understand what's going to happen. You have to be flexible."
Smith says the Medicare Advantage 5-Star quality program is a great example of the vagaries involved in government-sponsored healthcare.
"I plan for change, and I plan for surprises all the time because I know I'm going to have them," she says. "We are always striving to be ahead of what the expectations are of the government—high quality, members knowledgeable about the product. You have to pivot, and you have to have leadership that is willing to work in an abstract world."
Christopher Cheney is the CMO editor at HealthLeaders.