UnitedHealth Group Says 50% of Seniors Will Enroll In Medicare Advantage Plans within 10 Years; Clinical Laboratories Soon May Have Less Fee-For-Service Patients

Clinical laboratories will want to develop value-based lab testing services as the nation’s largest health insurers prepare to engage with Medicare Advantage patients in record numbers

UnitedHealth Group (UNH), the nation’s largest health insurer, forecasts wildly impressive growth of Medicare Advantage plans and value-based care. If this happens, it would further shrink the proportion of fee-for-service payments to providers, including medical laboratories.

Changes to how clinical laboratories and anatomic pathology groups in America get paid have been the subject of many Dark Daily briefings—such as, “Attention Anatomic Pathologists: Do You Know Medicare Is Prepared to Change How You Are Paid, Beginning on January 1, 2017?” August 22, 2016—and many others since then.

Switching to a value-based care reimbursement system, administered through Medicare Quality Payment Programs (QPPs), is one of the more disruptive changes to hit physicians, including pathologists. And, given UnitedHealthcare’s predictions, healthcare system adoption of QPPs will likely accelerate and continue to impact clinical laboratory revenue.

50% of All Americans in Value-based Care Systems by 2028

UnitedHealth Group also envisions more than 50% of seniors enrolled in Medicare Advantage plans within five to 10 years, up by 33% over current enrollments, Healthcare Finance reported.

“Where it can go, hard to tell, but I don’t think it’s unreasonable to think about something north of 40% and approaching 50%. It doesn’t seem like an unreasonable idea,” said Steve Nelson, CEO, UnitedHealthcare, a division of UnitedHealth Group, during the earnings call.

In light of UNH’s widely-publicized comments, clinical labs should consider:

• Preparing strategies to reduce dependence on fee-for-service payments;
• Developing diagnostic services that add value in value-based reimbursement arrangements.

For labs, more seniors in Medicare Advantage plans means fewer patients with Medicare Part B benefits, which cover tests in a fee-for-service style. In contrast, Medicare Advantage plans are marketed to seniors by companies that contract with Medicare. These insurance companies typically restrict their provider network to favor clinical laboratories that offer them the best value.

Why Insurers Like Medicare Advantage Plans

UnitedHealth Group is not the only insurer anticipating big changes in the Medicare Advantage market. Humana (NYSE:HUM) of Louisville, Ky., is reallocating some services from Affordable Care Act health insurance exchange plans to the Medicare Advantage side of the business, Healthcare Dive reported.

According to a Kaiser Family Foundation (KFF) report, these insurers are ranked by number of enrollees in Medicare Advantage plans:

• UnitedHealthcare—24%;
• Humana—17%;
• Blue Cross Blue Shield affiliates—13%.

Healthcare Dive noted that, in a volatile healthcare industry, payers seem to prefer the stability and following benefits of Medicare Advantage plans:

• Market potential, as evidenced by growing elderly population;
• Good retention rate of Medicare Advantage customers; and
• Favorable payments by the Centers for Medicare and Medicaid Services (CMS) to the insurers.

Cleveland Clinic Makes Deals with Humana, Blue Cross Blue Shield

Last year, Cleveland Clinic and Humana announced creation of two Medicare Advantage health plans with no monthly premiums or charges for patients to see primary care doctors, and no need for referrals to in-network specialists, according to a joint Humana-Cleveland Clinic news release.

And, along with Anthem Blue Cross and Blue Shield in Ohio, Cleveland Clinic also launched Anthem MediBlue Prime Select, a Medicare Advantage HMO plan with no monthly premium, a news release announced. For most of their care needs, members access Cleveland Clinic hospitals and physicians.

Control Costs as Medicare Advantage Plans Grows

These examples highlight the necessity for clinical laboratories to prepare as the Medicare Advantage program expands and accompanying networks narrow.

“Medicare Advantage plans will result in more pressure on providers [such as clinical laboratories] and hospitals to focus on the cost of care,” said Michael Abrams, Managing Partner at Numerof and Associates, told Healthcare Dive.

With an exploding elderly population, medical laboratories should analyze what the shift to value-based care and Medicare Advantage plans may mean for their revenues.

—Donna Marie Pocius

Related Information:

UnitedHealth Group’s David Wichmann on Quarter1 2018 Results, Earnings Call Transcript

UnitedHealth Group Grows First Quarter Profits Driven by Medicare Advantage

Medicare Advantage Will Have More Enrollment, Lower Premiums in 2018

Payers are Flocking to the Medicare Advantage Market

Medicare Advantage 2017 Spotlight on Enrollment Market Update Issue Brief

Medicare Advantage Benefits

UnitedHealth Group Predicts 50% of Seniors Will Choose Medicare Advantage

Medicare Advantage Plans Keep Growing

Cleveland Clinic and Humana Create Two New Zero Premium Medicare Advantage Plans

Anthem Blue Cross Blue Shield Ohio Collaborate to Deliver Integrated Care

Attention Anatomic Pathologists: Do You Know Medicare Is Prepared to Change How You Are Paid, Beginning on January 1, 2017?