Navigating government programs

Loren

- Hi everyone, my name is Loren Koerber, I'm Vice President within Optum's Advisory Services. And today I have a few questions for my colleague Amy Jensen about how small, community-based, and regional health plans can stay competitive in the government space. Amy helps our health plan clients respond to state RFP bids. So Amy, do small plans even have a role in state Medicaid?

Amy

- Thanks, Lauren. And the short answer is yes, but it's a heavy lift to enter and remain in a Medicaid or even a Medicare or ACA line of business. States with managed Medicaid programs either accept applications for participation or they issue competitive requests for proposals, or RFPs. And our team helps payers respond to the RFPs. In the RFP responses, payers need to demonstrate that they are a low-risk choice for the state. So no matter the size or state relationship, states want MCOs who will be successful at managing their beneficiaries.

Loren

- Interesting, so are there some states that prefer to work with community-based plans?

Amy

- It's a great question, and the answer is yes. Historically states like Oregon, Colorado, and Minnesota have favored community plans, while states like Mississippi, Louisiana, Nevada, Missouri, and Kentucky tend to favor national MCOs.

Loren

- So Amy, what kind of numbers are we looking at in the government space?

Amy

- Sure, yeah, the numbers show tremendous growth. So CMS reported a $614 billion spend in Medicaid and an $800 billion spend in Medicare in 2018. And they project that national health spending will grow at an average annual rate of 5.4% all the way through 2028.

Loren

- So how does a plan really get into a new line of business or a new market then?

Amy

- Sure, yeah, so health plans have an opportunity to acquire their share of this market. For health plans to tap into this market, we recommend they initially complete an organizational assessment or gap analysis based upon their current state of business to project a full range of possible scenarios.

Loren

- And then what are some considerations then they need to be thinking about during that gap analysis?

Amy

- Health plans will need to examine pricing, risk adjustment, reserve settings, and things like potential competitive threats for existing and new lines of business.

Loren

- Wow, Amy, this has been so helpful. Any closing thoughts from you?

Amy

- Sure, thank you. Health plans really should allow enough time to complete the organizational assessment and gap analysis to prepare their entry roadmap. So for example, in Medicaid, states have a set schedule and generally re-procure every three to five years. So plugging into that procurement timeline will be very helpful.

Loren

- Wow, thank you, Amy. Thanks for your time and expertise today. I look forward to chatting with more of our experts from our government programs practice about other considerations payers should be contemplating.