Major health systems aren’t confident of success with Medicare Advantage plans

The growth in the Medicare Advantage (MA) market has attracted the attention of executives at major healthcare systems and led some to begin planning to launch their own plan in the next four years—even though few are confident their organization to launch a plan successfully.

In a survey of 90 healthcare executives conducted by Lumeris, 27 percent of respondents said they’ll launch a MA plan in the next four years. When asked why, executives pointed to the chance to capture more value from a growing population of Medicare beneficiaries as their systems’ Medicare margins shrink. Overall in the MA market was cited as another key driver in this decision.

Of those executives planning to launch a MA plan, only 29 percent felt confident their systems can do so successfully.

“These survey findings are consistent with our conversations with healthcare executives across the country who are feeling a sense of urgency around Medicare Advantage strategies but also realize that this type of work is vastly different than traditional health system operations,” Jeff Carroll, executive director of health plans at Lumeris, said in a statement.

Challenges with running a MA plan cited by respondents included the significant financial investment needed as well as “an overall lack of expertise in the health plan space—59 percent of respondents said they’re likely to seek outside resource to help with the launch.

Provider-sponsored health plans in general carry plenty of risks for health systems, perhaps thanks to the lack of a specific blueprint for success. These kinds of plans also make up a small chunk of the overall MA market, covering about three million beneficiaries or 14 percent of total MA enrollment.

That still represents a 20 percent increase in provider-sponsored MA plan since 2015, with Kaiser Permanente accounting for more than half of all MA members in provider-backed plans.

“Launching and managing a Medicare Advantage plan requires skills beyond the core competencies of most health systems, which is one reason many provider-sponsored plans fail in the first few years,” Carroll said. “Through those failures, it has become clear that providers who select the right partners increase the likelihood for greater success in a shorter period of time.”

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John Gregory, Senior Writer

John joined TriMed in 2016, focusing on healthcare policy and regulation. After graduating from Columbia College Chicago, he worked at FM News Chicago and Rivet News Radio, and worked on the state government and politics beat for the Illinois Radio Network. Outside of work, you may find him adding to his never-ending graphic novel collection.

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