Top health industry issues of 2018

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Medicare Advantage swells in 2018

Opportunity for health insurers in Medicare Advantage—the private alternative to government-offered Medicare—will expand in 2018 as more Baby Boomers reach age 65.1 But mounting pressure to deliver on government quality ratings and gain operational efficiencies may squeeze some insurers out of the market.

With more potential customers, competition among insurers in Medicare Advantage is intensifying. That means health plans must make smart strategic investments in customer experience designed to appeal to a growing population of tech-savvy seniors.

In 2017, more plans entered the market than exited, but new customers are flocking to plans with proven track records that cater to their individual needs.2 CMS assigns Medicare Advantage plans an annual ranking of one to five stars based on quality and performance. In 2014, 52 percent of Medicare Advantage enrollees were in the highest-rated plans with four or more stars; in 2017 that rate had increased to 68 percent.3

Medicare Advantage is projected to cover nearly 21 million people in 2018, a 5 percent increase over 2017.4 To win new members and achieve the highest star rating, plans will have to provide a high quality customer experience. Executives of Medicare Advantage plans surveyed by HRI indicated that consumer demands and expectations, along with consumers and providers taking on more risk, would have the greatest impact on how they do business in the next five years.5

“Experience is going to be more and more important going forward,” said Kurt Small, president of government markets at Blue Cross and Blue Shield of Minnesota. “What members can handle and digest today is different from what they could five years ago. For instance, Baby Boomers aging in are technologically literate. They’ve been buying groceries online and shopping on Amazon.” According to HRI’s consumer surveys, older adults are increasingly willing to use digital health services (see Figure).

Humana is already taking advantage of this shift in preferences. The insurer has teamed with San Francisco-based digital behavioral medicine company Omada Health to deliver an online health program that combines education, coaching and health monitoring for its Medicare Advantage members at high risk of developing diabetes. A year in, members enrolled in the program interacted with the digital platform an average of 19 times a week and had seen meaningful improvements in health, losing an average of 7.5 percent of their body weight.6

Humana also is thinking about how to better engage its Medicare customers by focusing on their social needs, addressing issues like access to safe and nutritional food and fostering optimism, the latter of which has been linked to an increase in healthy days.7 CareMore, a subsidiary of Anthem Inc., is taking a similar approach, which has resulted in a partnership with the ride-sharing company Lyft to give patients nonemergency medical transportation, using a chief togetherness officer to combat social isolation, and making an alliance with a fitness center geared to older adults.8

With these investments, CareMore’s benefits cost the government less than traditional Medicare benefits do, and its members have had fewer hospital admissions and shorter lengths-of-stay.9


Design products locally

Delivering a high-quality member experience starts by offering health plans tailored to individuals’ needs at the community level, such as managing certain conditions, and preferences, such as a desire to see clinicians virtually. Insurers should survey how local members value different plan features, then shape products accordingly—for example, balancing premiums with access to preferred providers, and deploying holistic care models that target prevalent health risks in a community, like diabetes.

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Invest in consumers early

Turnover in Medicare Advantage is relatively low, making it important for health plans to capture members early through analytics-driven marketing that targets messages based on geography and channel.[10] With computers being seniors’ most preferred platform to research and choose health insurance, insurers should prioritize easy-to-use websites.[11] Health insurers also should take advantage of social media platforms, which seniors increasingly use.[12] Companies should educate older adults about Medicare Advantage before they turn 65. Only 28 percent of consumers ages 50 to 64 surveyed by HRI said they were familiar with Medicare Advantage.[13]

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Be prepared for greater scrutiny

The federal government is ramping up reviews of Medicare Advantage plans.[14] To avoid penalties, health insurers should manage risk by focusing on members, paying particular attention to services such as timely member notifications, an adequate network, and up-to-date provider directories. They also should establish codes that accurately describe members’ conditions, and they should make sure doctors know the coding system.  

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1 United States Census Bureau, 2014 National Population Projections, Table 6, Percent Distribution of the Projected Population by Sex and Selected Age Groups for the United States: 2015 to 2060,

2 Gretchen Jacobson et al, “Medicare Advantage Plans in 2017: Short-term Outlook is Stable,” The Henry J Kaiser Family Foundation, Dec. 21, 2016,

3 Centers for Medicare and Medicaid Services, “2017 Star Ratings,” Oct. 12, 2016,

4 PwC analysis of “The 2017 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds,” The Board of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, July 13, 2017

5 PwC Health Research Institute Health Insurer Executive Survey, 2016-2017

6 Omada Health, “Study Finds Omada Diabetes Prevention Program resulted in 7.5% Weight Loss in Humana Medicare Advantage Population,” press release, Feb. 2, 2017,

7 Humana press release, “Survey: Sense of Optimism Linked to the Perceived Mental and Physical Health of Seniors,” Oct. 4, 2017,

8 Christina Farr, “Lyft is driving patients to see their doctors and saving insurers big money,” CNBC, Aug. 4, 2017,; CareMore, “CareMore’s ‘Be in the Circle: Be Connected’ Campaign Tackles Unmet Challenge of Senior Loneliness,” May 8, 2017,

9 Commonwealth Fund, “CareMore: Improving Outcomes and Controlling Health Care Spending for High-Need Patients,” March 28, 2017,

10 PwC Health Research Institute Consumer Survey, Summer 2016

11 Monica Anderson and Andrew Perrin, “Tech Adoption Climbs Among Older Adults,” Pew Research Center, May 17, 2017,

12 PwC Health Research Institute Consumer Survey, Fall 2017

13 Centers for Medicare and Medicaid, Part C and Part D Enforcement Actions,

14 Centers for Medicare and Medicaid, Part C and Part D Enforcement Actions,; United States Department of Justice, Office of Public Affairs, “United States Intervenes in Second False Claims Act Lawsuit Alleging that UnitedHealth Group Inc. Mischarged the Medicare Advantage and Prescription Drug Programs,” press release, May 16, 2017,; United States Department of Justice, Office of Public Affairs, “Medicare Advantage Organization and Former Chief Operating Officer to Pay $32.5 Million to Settle False Claims Act Allegations,” press release, May 30, 2017,


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