Humana Bolsters Care Management Capabilities with Acquisition of SeniorBridge

Humana announced an agreement this past week to acquire SeniorBridge, a New York-based provider of in-home care services to the chronic care and senior populations. The acquisition marks the latest example of Humana’s attempt to position itself as a more retail-focused company through a series of acquisitions and strategic initiatives.

Over the past eleven years, SeniorBridge has established itself as a leader in managing complex chronic conditions for seniors in the self-pay (or private-pay) market. Through the acquisition, Humana will be presented with a host of opportunities to leverage SeniorBridge’s model across a broader market base:

• Medicare – upon receipt of Medicare certification, Humana will be able to leverage SeniorBridge’s suite of care management capabilities across its nearly 2 million Medicare plan members.
• Humana Cares – SeniorBridge bolsters the Humana Cares segment of the company, which provides on-the-ground care management services to over 185,000 chronically ill plan members. The Humana Cares segment of the company has been vital to Humana’s emergence as a leader in the Medicare Advantage Special Needs Plan (MA-SNP) market.
• Other Payer Groups – several reform related initiatives, such as reimbursement reform and medical loss ratios, have positioned in-home care to be a large growth area for SeniorBridge given its significance to payers as a cost-saving tool (managed care has traditionally only contributed to a small portion of SeniorBridge’s overall business).

Humana has been among the most progressive payers in promoting member self-management and wellness through a number of initiatives, including:

• Humana Guidance Centers – “store-front” hubs located in select cities provide members with access to a suite of wellness and self-management products.
• Remote Medical Monitoring – provides real-time condition monitoring solutions to help address member health challenges in real-time.
• Humana Center for Health & Well-being – Humana’s LifeSynch subsidiary provides face-to-face health coaching resources to plan members. In addition, the Company has established a partnership with MinuteClinic to provide quick-access to routine treatments.

In addition, Humana’s recent acquisition of Concentra, along with several urgent care clinics from NextCare, signaled their entrance into the provider marketplace. These strategic moves have provided Humana with a mechanism to execute on their strategy to become more consumer-facing and the flexibility to adapt to some of the new realities established through health reform as they are implemented over the next few years.

Other recent investment activity in the payer marketplace signals that Humana might not be alone in their efforts to diversify and establish an “on-the-ground” presence (for example, UnitedHealth’s purchase of Inspiris, BlueCross Blue Shield of Florida’s investment in CareCentrix).  Payers appear to have realized the disconnect that has existed historically between themselves and their customer base. Given the “bets” that payers have made across the landscape, it is clear that payers are seeking to re-orient themselves around the consumer and provide consumers with an opportunity to take a greater role in controlling their healthcare. While a variety of strategies are being used, payers have been prioritizing investments and services around the “consumer experience” to increase overall access and transparency.

Let us know what you think.

Joe Long

Joe Long is an analyst at TripleTree covering the healthcare sector, with a focus on the approaches and technologies surrounding health insurance exchanges.  You can email him at jlong@triple-tree.com.

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Medicare Advantage…Here Today, Here Tomorrow…

CIGNA put a stake in the ground for the long term prospects of Medicare Advantage (M.A.) with its recent announcement that it would be acquiring HealthSpring for $3.8B (a 37% premium over its closing price prior to announcement).

HealthSpring primarily operates as a M.A. plan covering over 340K lives across 11 states (including over 800,000 Medicare Part D members).  CIGNA previously had a very limited presence in M.A. with ~44,000 lives entirely in Arizona.

CIGNA has been focused on diversifying its core US healthcare presence, so the move isn’t too much of a shocker, although many thought its approach would include international expansion versus a bold move into the government market.  It’s likely the HealthSpring business model was too alluring for CIGNA to pass on when you consider HealthSpring’s:

• Tight integration with network physicians including a high level of capitation and risk sharing;
• Strong leadership team lead by Herb Fritch whom possess the experience and know-how to operate a unique, physician-centric, coordinated care model; and
• Consumer brand presence within the senior market.

There is a large opportunity for CIGNA to leverage and replicate HealthSpring’s coordinated care model across their commercial book of business to drive efficiencies and deliver better care.  Additionally, CIGNA will benefit from its ability to cross-sell HealthSpring into new markets.

CIGNA is not the only health plan making moves in the M.A. market – recent M&A activity within the sector over the past 18 months include:

• Wellpoint – CareMore (2011)
• Aetna – Genworth’s Medicare Supplement (2011)
• Humana – MD Care (2011) and Arcadian Management Services (2011)
• HealthSpring – Bravo Health (2010)

HealthSpring was one of the few remaining M.A. plans with size and scale, and CIGNA’s move could prompt additional consolidation within the sector over the coming 12-18 months.  The list of targets with viable M.A. populations (100K+ lives) is becoming quite limited.  Some of these include Universal American and Wellcare, public M.A. plans with 100K+ lives; and XL Health, SCAN, Aveta and Universal Healthcare as examples of private M.A. plans with scale.

There have been recent headlines about increased pressure on reimbursement rates and minimum medical loss ratio (“MLR”) requirements posing a threat to the future of M.A.  My view, however, is that M.A. will not only survive, but thrive going forward and recent M&A activity would suggest the same.  Let me know what you think.

Judd Stevens

Judd Stevens is an associate at TripleTree covering the healthcare industry, specializing in the impacts and transformation of health plans in a post-reform world.  Follow Judd on Twitter or e-mail him at jstevens@triple-tree.com.

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Mini-Med Plans & Unintended Consequences of Health Reform – 10/01/10

The gap between health insurance affordability and accessibility may have just become wider. Current economic conditions are driving employers to consider hiring hourly and part time workers and labor statistics underpin that this trend may persist for some time.

For some time, health insurers have offered “mini-med” plans as an inexpensive way to cover basic medical needs (primary care doctor visits, or prescriptions) for part-time or hourly employees who otherwise could not afford or necessarily want full coverage insurance (e.g. a major medical plan).

Health Reform (aka ObamaCare) has set in motion a series of dictates from agencies like the National Association of Insurance Commissioners, a coalition of state insurance regulators. High on this organization’s list of priorities is how to address the Medical Loss Ratio (MLR) constraints being thrust on health plans. The MLR is a financial metric that calculates the percentage of premium dollars that are directed to medical costs versus general business and administrative overhead. The ratios aren’t yet finalized and will vary by size of employer from 80% – 85% (which is a higher, more efficient ratio than found in most health plans where some industry sources cite an average MLR in the mid seventies); but it is clear that those who don’t meet federal thresholds, will pay a penalty (possibly in rebates to members).

Yesterday, news broke through various sources that McDonald’s Corporation may be considering dropping its mini-med health plan for nearly 30,000 workers unless the MLR constraints for its health plan (BCS Insurance Group) are modified. The news, as reported in Wall Street Journal, stated “last week, a senior McDonald’s official informed the Department of Health and Human Services that the restaurant chain’s insurer won’t meet a 2011 requirement to spend at least 80% to 85% of its premium revenue on medical care.” The rationale for missing this threshold stems simply from the nature of employment in the food service industry…high turnover; low claims revenue and high administrative costs.

The debate continues as additional posts and stories emerge which both support and debunk what the Journals and other outlets initially reported.

Regardless, it brings to light a few realities:

• Small health plans and specialty plans will consider exiting the market altogether
• Effectively modeling the impacts of health reform is absurdly difficult
• Federal spending on simply “explaining” to the U.S. citizenry what the heck is going in will cost billions (if not more)
• In their quest to become more efficient, health plans continually scramble for solutions to address product marketing, pricing and packaging aimed at consumers, and not employers or groups
• Employers will need to quickly begin a steady campaign of internal messaging to concerned employees
• Self-insured employers (e.g. Wal-Mart) will look increasingly brilliant as they side-step these federally placed economic land mines
• Mini-med plans will likely fade from memory in the next three years

Let us know what you think, and have a great weekend!

Chris Hoffmann

Chris Hoffmann is Research Director at TripleTree covering Cloud, SaaS and enterprise applications and specializes in CRM, loyalty and collaboration solutions across numerous industries. Follow Chris on Twitter or e-mail him at choffmann@triple-tree.com.

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Prospective Payment Review: The MLR “Silver Bullet” for Health Plans – 09/28/10

As healthcare spending levels swell to unprecedented levels, commercial and government payers alike have been looking for ways to stem the amount of fraud, waste, and abuse (FWA) prevalent in the U.S. health system. Within an already overwhelmingly complex payment environment these issues are anything but an easy-to-fix problem.

For years the payer industry has been relying on a “pay-and-chase” or retrospective method for recouping billions of dollars of excess and unnecessary payments. This archaic approach is extremely inefficient, employing labor-intensive processes that in some cases take years to complete.

Most are out-matched and watching the size and scope of the FWA problem increases to unprecedented levels. For some perspective, the National Health Care Anti-Fraud Association (NHCAA) estimates that of the 70% of payers that employ an anti-fraud and abuse system with the vast majority still following a retrospective approach.

By shifting focus to the pre-payment setting, payers can generate millions in incremental savings through a reduced medical loss ratio (MLR). MLR discussions are heating up as health plans come under pressure to increase their revenue contribution per dollar spent by members to actual care by reducing administrative tasks (like payment reviews) and other fees (like broker commissions). Legislative mandates for MLR thresholds will push the dollars spent on actual care from 65 cents to 85 cents (or more) as health reform evolves. The process improvements needed to accomplish these levels are significant.

Effectively conducting a prospective payment review process via commoditized editing and claims processing solutions won’t cut it. Rather, sophisticated technology solutions which include analytics, clinical content, and skilled human intervention are table stakes.

TripleTree is convinced that an integrated, end-to-end approach incorporating each of these elements is the most effective means of paying the claim right the first time – and represents the silver bullet in stemming losses associated with FWA. Prospective payment review simultaneously reduces the incidence of FWA and curtails the enormous expense associated with identifying, chasing down, and collecting overpayments after the checks have been cashed.

Successful vendor solutions from the likes of TC3 Health, iHealth Technologies, and HealthCare Insight (a Verisk company) go far beyond administrative automation by providing integrated technology-enabled platforms utilizing predictive payment analytics, deep clinical content derived from hundreds of trusted sources, and experienced payment policy specialists and clinicians. These important components are proving the ability to drive MLR savings of 0.5% to 2.0%, which in turn can improve a health plan’s operating profits by as much as 25-50%.

Our advisory work of assessing best-in-class vendors who are optimizing the medical claims payment processes and driving down administrative costs for health plans around FWA is extremely active.

Let us know what you think and have a great week!

Seth Kneller & Chris Hoffmann

Seth Kneller is an Associate at TripleTree covering the healthcare industry, specializing in revenue cycle management, clinical software solutions, geriatric care and healthcare analytics. Follow Seth on Twitter or e-mail him at skneller@triple-tree.com.

Chris Hoffmann is Research Director at TripleTree covering Cloud, SaaS and enterprise applications and specializes in CRM, loyalty and collaboration solutions across numerous industries. Follow Chris on Twitter or e-mail him at choffmann@triple-tree.com.

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B to C Marketing, Sales and Service: The New Battlefield for Health Plans – 09/17/10

Historically, commercial health plans have leveraged a traditional “B to B to C” model for marketing, selling and servicing health insurance products to their members. The breakdown for this distribution model is as follows – Health plans “B” create a product catalog for their broker network “B”; and brokers in turn sell to employers or groups “C”.

The pressures of a post-reform world are forcing a shift in the sales strategies of payers. Medical Loss Ratio compliance rules for example, are pinching the income statements of health plans so significantly that getting closer to the member (i.e. eliminating the broker) will be table stakes if they choose to remain competitive. Net result? The traditional model will fade and be replaced by a direct-to-consumer (“B to C”) strategy.

This threat to the broker-driven sales model is compounded by consumer “connectedness” (everywhere-WiFi + prolific mobile devices + social applications) where empowered individuals are becoming engaged relative to researching, monitoring, communicating and paying for their own health care.

Around our shop, we’re referring to this shift as ‘consumer engagement’; a concept pioneered by a few BlueCross organizations who successfully cultivated direct-to-consumer messages via TV, radio, print and online media for some time. Early on these consumer-direct campaigns were an anomaly, but we’re now seeing this approach take hold more broadly. This is more than simply educating potential members about “the right health plan” – it’s a 1:1 marketing approach with messaging the places the health plan in a new light as an entity capable of tailoring health and wellness services (bundled inside of health insurance) to individuals.

Consider what UnitedHealth Group did during this summers’ PGA Masters Tournament. The health plan behemoth aired variations of its “Heath in Numbers” television spots to showcase an optimized health experience for their members thanks to uniquely intelligent tools and services.

If Cigna, Aetna, Wellpoint and others haven’t taken note, they will – and rest assured the big ad agencies will be quick to offer them ideas honed from decades long slugfests in industries like consumer retailing and banking. These health plans are stepping onto a new competitive battlefield, and will likely find themselves trying to out-market the likes of Walmart and Target.

TripleTree is way out in front of other strategic advisors on this topic and has strong viewpoints on where the next set of industry inflection points will occur. Principally, we’re convinced that the health plans can’t go it alone successfully – they lack the internal resources and specialized skills to tackle consumerism, much less the turn-key solutions need to support the state health insurance exchanges.

We’d like to know what you think, and have a great week!

We’d also like to invite you to participate in our one question survey:
Given the momentum around consumer engagement, prioritize the five initiatives below relative to your experience as a member of a health plan.

Chris Hoffmann & Michael Boardman

Chris Hoffmann is Research Director at TripleTree covering Cloud, SaaS and enterprise applications and specializes in CRM, loyalty and collaboration solutions across numerous industries. Follow Chris on Twitter or e-mail him at choffmann@triple-tree.com.

Michael Boardman is an associate at TripleTree covering the healthcare and technology industries, specializing in clinical software solutions.  Follow Michael on Twitter or e-mail him at mboardman@triple-tree.com.

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