April 10, 2010
Despite all their protests to the contrary, health insurance companies and managed care organizations are the big winners in health care reform. Despite new mandates, elimination of pre-existing condition clauses, and mandated loss ratios, there will be more consumers for commercial health insurance options.
The biggest winners will be the managed care segment within Medicaid and Medicare. The Medicaid managed care segment will see the most immediate increase driven by two factors. First is the obvious – states are struggling financially right now and Medicaid managed care is one way to balance the books. The second is a gift of health care reform – allowing states with Medicaid managed care programs to receive drug rebates. The feds created the Medicaid Drug Rebate Program in 1990, which requires drug manufacturers to enter into an agreement with HHS to offer the rebate to Medicaid state programs. Until health care reform, however, Medicaid managed care pharmacy programs were not eligible, which meant some states carved out pharmacy from their managed care program so they could take advantage of the rebate. That will no longer be an issue.
The second area for big growth of managed care programs is Medicare. I know that the Obama administration has not been a ‘friend’ of the Medicare Advantage plans. But, with some normalization of medical loss ratios, Medicare managed care will become an acceptable option – the only alternative option – the Obama administration has to provider rate cuts – rate cuts that are none too popular right now.
In all this growth in managed care is a significant opportunity for provider-sponsored accountable health plans. However, the opportunity is not without its challenges. There are two competencies that will shake out the winners from the losers – whether commercial managed care plan or provider-sponsored plan. First, is the infrastructure question – with advantage going to the organizations with good real-time information systems that combine both clinical and financial information for decision-making (see my recent piece on bioconnectivity and strategy, New Thinking for Your Five-Year Plan: Why Leaders Need to Rise With Bioconnectivity Right Now ). Second, advantage will go to the plans that have well developed programmatic approaches to managing consumers with chronic diseases and complex social situations. Those core competencies are key to being competitive in the new environment.
Monica E. Oss
Chief Executive Officer, OPEN MINDS