The Centers for Medicare & Medicaid Services (CMS) released its 2018 Advance Notice and Draft Call Letter in February, proposing numerous changes for Medicare Advantage (MA) and Part D plan sponsors. The combination of benchmark, risk adjustment, quality Star rating, cost sharing and benefit design requirements, coupled with uncertainty of several 2018 payment variables and CMS recalibrations, will provide a mixed bag of good and bad news for each MA plan sponsor.
In an increasingly constrained pricing environment, aligning operational execution with an effective bid strategy is essential for plan sponsors to achieve their objectives in 2018 and beyond. The critical strategic decisions plans make during bids require them to understand and consider several factors:
- Actual versus expected historical results
- Emerging market dynamics
- Effectiveness of operational initiatives in achieving targets
- The programs’ complex rules and requirements
When working with health plans to develop strategies to achieve their business and financial objectives, our actuarial consultants often see gaps in communication between various operational departments of an organization. These gaps can lead to a lack of clarity on the operational objectives needed to achieve the organization’s financial goals. Clarifying and documenting operational goals during the bid process helps to align business requirements and establish realistic targets. We promote an ongoing, comprehensive and analytical approach to monitoring operational outcomes against these targets to maintain year-round communication and avoid gaps in future years.
Our focus is to call out impacts of the various management levers available, so that health plans can understand emerging experience on a real-time basis and maximize realistic and achievable operational alternatives in an increasingly constrained regulatory environment.
Access Optum Viewpoints on the 2018 CMS Call Letter in this downloadable Executive Summary.
About the Author:
Michael L. Rasmussen, FSA, MAAA
Director, Actuarial Services
Mike is a director of Actuarial Services in Optum’s Atlanta office with over 20 years of actuarial experience. As a senior actuary and project manager, he provides strategic and technical assistance with pricing, risk adjustment, reserving, and financial projections. Mike specializes in providing actuarial consulting services to Medicare Advantage plans.