为什 么联邦演示的增长会停滞不前.docx

North America Equity ResearchJune 7, 2019J.PMorganTaking Another Look at the Dual-Eligible OpportunityWhy Did Growth of the Federal Demos Stall?Could New Integration Requirements Stall Current D-SNP Growth?Who Is Best/Worst Positioned? Why Is Humana Frequently Discussing Duals?Healthcare Facilities & Managed CareGary TaylorAC212-622-6600J.P. Morgan Securities LLCAnthony Makdessi212-622-3682J.P. Morgan Securities LLCInstitutional Investor Client Conference CallFriday June 7, 20199AM ETContact your JPM salesperson for detailsSee the end pages of this presentation for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.JPMorganWhy Did MMP Disappoint vs Wall Street Expectations?MMP History - The Medicare/Medicaid Plan (MMP) Federal demonstration projects were mandated by ACA (2010) and launched by CMS CMMI in 2013, created fully-integrated dual enrollment (FIDE) plans that took a combined capitated payment funded by Federal & State sources. Wall Street was excited about a potential opportunity sized in the hundreds of billions($) with millions of potential enrollees.Results - Enrollment plateaued quickly (<400k, see preceding slide) and ultimately fell far below initial expectations. Intended for 2-3 years, most participating states extended for 4-5 years into2019- 2020 (and CMS recently offered an opportunity for further extension). Data on cost savings and care coordination results remain limited but Med PAC has generally summarized available data as positive.MMP Shortcomings 一High opt-out rates from passive enrollment as FFS providers encouraged beneficiaries to remain in FFS;1) Initial capitation rates deemed insufficient by some and plans have withdrawn from the program as enrollment failed to scale;Care coordination requirements proved burdensome; particularly the requirement for in- person meetings of interdisciplinary teams including the primary care physician.Source: 2018 MedPAC report, CBCNY report on Dual-Eligible Individuals in NYS10JPMorganGary Taylor | D-SNP (including FIDE SNP)Estimated D-SNP Market Growth1Estimated D-SNP Market Growth1Enrollment (#in M)3.0M2.5M2.0M1.5M$30.1B$27.1B$24.1B2.5M1.0M1.7M1.8M2.0M2.2M0.5M0.0M2015E2016E2017E2018E2019ESource: JPM estimates, 2017 MedPAC report, CMS Medicare Enrollment and Rate Reports, 2018 MAC PAC ReportNotable Recent Updates/Next Steps:Feb'18Bipartisan Budget Act of 2018 (BBA):(a) D-SNP made a permanent feature of the MDCR program(b) Beginning in 2021, D-SNPs must meet one or more of the following 3 options: (i) be a FIDE SNP or provide LTSS and/or BH services under capitated contract with state MDCD (ii) coordinate LTSS and/or BH according to new set of contract requirements (iii) assume clinical and financial responsibility for all MDCR and MDCD benefits if D-SNP is offered by parent organization of MDCD plan providing LTSS and/or BHApr/ 18Final Part C & D Rule for 2019 - Through MDCR rulemaking, CMS permitted default and passive enrollment into D-SNPsDec'18CMS Letter to State MDCD Directors - Letter aiming to make states more aware of dual-eligible programs including D-SNPNextSteps:-Due to BBA, D-SNP now has permanent authorization and state MDCD agencies have enhanced interest to align D-SNP + MLTSS programs (states w/ the most extensive D-SNP contracts generally have well-established MLTSSprograms)-States continue to retain flexibility on preferred model of integration & contract arrangement w/ D-SNPs (i.e. requiring D- SNPs to offer MLTSS plan, limiting D-SNP to FBDEs,etc.)$40.0B$35.0B$30.0B$25.0B$20.0B$15.0B$1O.OB$5.0B$0.0BPrem. Rev ($ in B)$45 .OBJPMorganGary Taylor | 11(1) Based on current market enrolled in Managed Care. JPM estimates are only for premium revenue. Total enrollment figures are based on actuals.(2) Includes Puerto Rico and District of Columbia and excludes FIDE SNPlivesWhy Is D-SNP Accelerating?I1Types of PlansDescriptionModelsStates (2019E)Lives (2019E)Rev. (2019E)2.D-SNP(Dual-Eligible Special Needs Plan)Started in 2006Type of MA plan designed for dual-eligible population. Contracts vary in the extent to which D-SNPs coordinate a beneficiary's MDCD benefits (MDCD services not required). As of 2013, D-SNPs required to have contracts with state MDCD agencies but not states are not required to contract with D-SNPs.FIDE SNP + Non FIDE SNP(Separate Medicaid and MedicareContracts)Plans bid against MA benchmarks41 22.3M229% Partial Benefit$36B23.FIDESNP(Fully Integrated DE Special Needs Plan)Started in 2012Sub-type of D-SNP that provide beneficiaries with a single integrated plan, including coverage MDCD acute care + LTSS but not BH. Can receive higher payments if enrollees have sufficiently high frailty levels.Sub-type of D-SNP(Separate Medicaid and MedicareContracts)Plans bid against MA benchmarks10191K<1% Partial Benefit$5BD-S NP History - Dual-Eligible Special Needs Plans are a type of Medicare Advantage plan created by CMS in 2003, beginning operations in 2006. The plans are intended to coordinate and integrate the provision of Medicare and Medicaid services and benefits in order to reduce spending inefficiencies and address gaps in care.Results - Enrollment has been growing 8% CAGR over the last decade, led by UNH's 31% share of the market. Plans are apparently profitable and generally well regarded, except for D-SNP uLook- Alike“ plans that have proliferated (we estimate enrollment at “several” hundred thousand nationally) in MMP states which have capped D-SNP enrollment (Look-Alike plans are ordinary Medicare Advantage plans targeted to duals, with much higher Medicare cost-sharing that is picked up by Medicaid FFS benefits).Why Is D-SNP Enrollment Accelerating?1) Duals are richly rewarded in CMS risk-score payment model, plans are profitable and attracted to high PMPM capitated rates;Historically, integration and care coordination requirements have been minimal;2) Managed care health insurers have separately experienced significant growth in both their Medicare and Medicaid enrollments over the last decade (as commercial risk enrollment has continued to decline, migrating to ASO) - they have more experience managing such patients and working with federal and state governments.Source: 2018 MedPAC report, CBCNY report on Dual-Eligible Individuals in NYS12JPMorganGary Taylor | New Integration Requirements for 2021Background- Since 2013, CMS has required that all D-SNPs have contracts with states to provide Medicaid benefits or “arrange" for such benefits to be provided. CMS never definitively defined “arranged"，which enabled plans to provide little more than FFS or MCO (if applicable) contact information to dual beneficiaries.BBA18 - The Bipartisan Budget Act of 2018 requires that all D-SNPs meet certain new minimum criteria for integration by 2021 by either covering Medicaid benefits through a capitated payment or meeting a minimum set of requirements determined by the Secretary of HHS. States can establish more stringent criteria, and some have (which would constitute a threat to non-aligned/non- capitated D-SNPs). Penalty is possible D-SNP enrollment sanction (freeze).New Integration Requirements Published in 4/16/19 Federal Register Final RuleA D-SNP must either meet the requirements of a FIDE or the newly defined HIDE; or enter into a capitated contract with the state Medicaid agency to provide LTSS and/or behavioral services. OR1) A parent organization of a D-SNP that is also the parent of a MDCD MCO providing LTSS and/or behavioral services must assume uclinical and financial responsibility" for benefits provided to dual-eligibles that are enrolled in both of the parents health plans (e.g people enrolled in non-D-SNP MA plan and MDCD MCO plan). OR3)D-SNPs that are neither FIDE/HIDE must “coordinate” (not required to “provide”)thedelivery of Medicaid benefits and must noMfy the state Medicaid agency or its designee (MCO) when a high-risk, full-benefits dual-eligible individual has a hospital or nursing homeJPMorganadmission.New Integration Requirements for 2021Additional BBA18 Requirements Finalized in 4/16/19 Federal Register:1) Clarifies D-SNP Requirement to “Provide or Arrange” 一 By removing any misinterpretation that D-SNPs must cover LTSS and behavioral services; a D-SNP must at minimum, coordinate the delivery of Medicaid services for individuals who are eligible for such services (and must also document in the state Medicaid agency contract its responsibility to do so) by facilitating a beneficiary's meaningful access to such benefits (insufficient to merely provide MDCD agency or MDCD MCO contact information).2) New/Refined Definitions for:a) FIDE = Tully Integrated Dual-日igible” MA plan that is fully capitated for all MDCR and MDCD servicesHIDE = "'Highly Integrated Dual-Eligible” MA plan that may be capitated for either LTSS or behavioral ("every FIDE is a HIDE, but not every HIDE is a FIDE")or is part of parent organization that has a MDCD MCO that is capitated for either LTSS and/or behavioral services.b) Aligned Enrollment = Occurs when a full-benefit dual is a member of a D-SNP and receives coverage of full MDCD benefits from the D-SNP or a MDCD MCO owned by the same parent organization.JPMorganTop Eight Indicators that Dual Integration Will Accelerate1) History - First dual demo in 1996 (Wisconsin), SNPs created in 2003, D-SNPs began in 2006, MMP (FIDE) capitated demos mandated by ACA 2010 and launched by CMMI in 2013Expanded MCO LTSS Role - MCO capitated contracts for LTSS expanded from 8 to 24 states between 2004-2018 (80% of all full-benefit duals reside in these 24 states)2) Expanded PCS MA Benefits in 2020 - MDCR FFS does not cover PCS, MDCD does. The lines between MDCR & MDCD benefits are beginning to blur and CMS allows the same plans to manage both benefitsIncreased FFS Penetration by MA Plans in General - MA MCOs business models are built around coordinating care and reducing excess FFS utilization, duals are a target rich environment to apply managed care techniques3) Increased Payor Integration - Over the last decade, most large insurers have acquired both MA and MDCD MCO plans and capabilitiesBBA18 Explicitly Establishes New Integration Requirements by 20214) Numerous Surveys of State Officials Find Widespread Support for Increased Integration - However, the ability to implement such programs are often limited by resources and difficulty interfacing with federal officials at CMS. To that end, see #8CMS Letter to States (4/24/19) Offering to Reopen MMP + Encouraging New Integrated State Models - The letter acknowledges state requests to pursue new integrated models and CMS offers to partner with states to do so. CMS is willing to extend current MMPs, expand current MMP geography and allow new states to enter MMP program and the managed FFS demos where states share in MDCR savings from MDCD FFS interventions (i.e. medical homes)JPMorganCould New Integration Requirements Actually Stall D-SNP Growth?1) There Could Be Delays for Non-Aligned D-SNPs to Implement the Notification Requirement Provisions with the StatesStates May Choose to Implement More Stringent Provisions than Required by CMS 一 As have ID, MA & NJ (which allow only FIDE D-SNPs to operate) and CA, AZ, NM, TX, MN, Wl, IL, TN, NY, RI (which at least require some “alignment” between their D-SNP andMLTSS programs). This would compel non-aligned D-SNPs to “become aligned" via capitation arrangements, a significant and time-consuming endeavor2) Non-Aligned D-SNPS Must Conform to the New Provisions Governing the uArrangement of MDCD Benefits 一 Which could curb/slow health plan interest at the marginCMS Is Considering but Has Not Yet Acted to Curb D-SNP “Look-Alike” Plan Growth - We estimate at least “several“ hundred thousand enrollment nationally. Note this would curb reported individual MA enrollment, not D-SNP enrollment perse3) Plans Accepting CMS Invitation to Expand MMP or Alternative Models May Choose to Cap D-SNP Enrollment to Favor MMP Enrollment - This could serve as a direct barrier to growing D-SNP enrollment. Some MMP states won't allow broker commissions for D-SNP in order to incentivize MMP enrollment1616JPMorganBest & Worst Positioned for D-SNP Growth?We look for health plans with the greatest overlap between their current individual MAfootprints (for MA expertise and scale), MDCD footprint (to satisfy increasing integration and possible MDCD capitation requirements) and current dual-eligible footprint density.BestFrom an individual MA footprint perspective, UNH and proforma CNC/WCG have current overlapping individual MA and MDCD enrollment footprints in states where 68% and 66% of total U.S. dual-eligibles reside respectively.WorstFrom an individual MA footprint perspective, Cl and HUM have current overlapping individual MA and MDCD enrollment footprints in states where only 6% and 15% of total U.S. dual-eligibles residerespectively.respectively.UNH% of Total Dual-Eligible(in Respective Geographic Footprint)Commentsadd NC & excl IA68%CNC/WCG (PF)66%add NC&IACNC55%add NC& IACVS/AET48%add KSANTM44%add NC & exit KSMOH35%WCG27%add NCHUM15%Cl6%17Source: SNL Statutory filings, CMS Medicare Enrollment reports, JPM EstimatesJPMorganWhat Is HUM'S Duals “Obstacle" & How Can They Solve It?Background - The Bipartisan Budget Act of 2018 requires that all D-SNPs meet certain new minimum criteria for integration by 2021 by either covering Medicaid benefits through a capitated payment or meeting a minimum set of requirements determined by the Secretary of HHS. States can establish more stringent criteria, and some have. Penalty is possible D-SNP enrollment sanction (freeze). If states choose to establish more stringent criteria, or if CMS regulations evolve further, D-SNPs may be increasingly required to maintain capitated MDCD MCO contracts; HUM does not have very many of those contracts today. 9m remaining FFS duals represent 24% of the remaining 38m FFS MDCR enrollment opportunity. With its current MDCD footprint, HUM could find itself competing for only 80% of that total market opportunity.Humana's Footprint Obstacle - HUM is the second largest MA plan in the U.S. (3.4m individual MA enrollment in 44 states) but has a relatively smaller MDCD footprint (461k enrollment in 2 states FL/IL excl. KY/WI; 9