1、North America EquityResearchJune 7,2019Taking 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?Institutional Investor Client Con

2、ference CallFriday June 7, 2019 9AM ETContact your JPM salesperson for detailsHealthcare Facilities & Managed Care Gary Taylor Institutional Investor Client Conference CallFriday June 7, 2019 9AM ETContact your JPM salesperson for details212-622-6600 HYPERLINK mailto:gary.taylor gary.taylorJ.P. Morg

3、an SecuritiesAnthony Makdessi212-622-3682 HYPERLINK mailto:anthony.makdessi anthony.makdessiJ.P. Morgan Securities LLCSee the end pages of this presentation for analyst certification and important disclosures, including non-US analyst disclosures.1J.P. Morgan does and seeks to do business with compa

4、nies 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.1AgendaTop Ten Facts aboutDua

5、lsWhat are “Dual-Eligibles”? Size of Market andGrowthHow are Duals CurrentlyCovered?Why Did Demonstrations Stall? Why is D-SNPAccelerating?New Integration Requirements Threat to Non-AlignedD-SNPs?Top Eight Indicators that Integration WillAccelerateCould New Integration Requirements Stall Current D-S

6、NPBest & Worst Positioned to Capture Increased MCO Penetration ofDuals?What Is Humanas Duals “Obstacle” and How Can They SolveIt?Enrollment Snapshot byStateCompany Exposure byProgramGlossary ofTermsDualsMktOverviewTimelineDualsDetailsDualsMktOverviewTimelineDualsDetailsMMPD-SNP(incl.FIDE)Integration

7、 Best/Worst PositionedHumanaEnroll.ByStateExposureByCo.Glossary12mAmericansaredually-eligible forbothMedicare (whichcurrently has60mtotalenrollment) and Medicaid (70m total current enrollment)The dual-eligible population is growing 3% annually (trailing CAGR), slightly faster thanthe traditional Med

8、icare population growth of 2.6%, with similar forecasted growth ratesThepartial-benefit dual-eligible population(30%oftotal)isgrowing6%annually(trailing10yr CAGR), materially faster than the full-benefit dual-eligible population (70%) growth of2%2.7m of 12m duals are in MCOs that “coordinate” their

9、Medicare & Medicaid benefits (of those, only 616k of those via capitation); 9.3m have FFS Medicare and/or MedicaidbenefitsThe dual-eligible market is 23% penetrated MCOs vs non-dual MDCR market 39% penetrated MCOs. FFSdualsalsorepresent24%oftheremainingFFSMDCRenrollment opportunity (9.3m of 39m)Incr

10、easing MCOpenetration ofdualshasyielded D-SNPenrollmentwith8.2%trailingCAGR, vs non-dual 7.4% trailing CAGRDualsconstitute10%ofcombined,discreteMedicare+Medicaid enrollment,but33%oftotal combined programcosts than 50%ofdualsfirstqualifyforMedicare duetodisability (notage),vsonly17%ofnon- dual Medica

11、re population. Duals are disproportionately older/female/white/higher risk- score/behavioral needs/poor health49% of dual-eligibles receive Medicaid services (SNF or PCS)The first dual demonstration project (non MMP) was conducted in Wisconsin beginning in199644ngDualsMktOverviewTimelineDualsDetails

12、MMPD-SNPngDualsMktOverviewTimelineDualsDetailsMMPD-SNP(incl.FIDE)Integration Best/Worst PositionedHumanaEnroll.ByStateExposureByCo.GlossaryWho?Dual eligible individuals are those who qualify for both Medicare and MedicaidImportanceThis population tends to be the highest cost/need. Lack of alignment

13、between programs drives a disproportionate share of FFS expenditures:Dualscomprise20%ofallMedicarelivesand34%ofMedicare spendingest.$240B(61%oftotal duals spend)Note:EstimatesbasedonDualscomprise15%ofallMedicaidlivesand33%of Medicaidspendingest.$192B(39%of totalduals spend)2017A total programspendiM

14、arket SizeAs of 2019E:Thereare12Mdual-eligiblebeneficiaries(see slide20) with3Mlives currentlycoveredinplansservingdual-eligiblelives$50B-$60Bpremium revenuein current mkt of duals in MCOs (MMP+D-SNPONLY)vs $430Btotal spend on dual-eligiblebeneficiariesChallenges/ ConcernsDiverse populationwith exte

15、nsive health needs and high health care costsProviders and plans have difficulty coordinating and managing care for this population with programs not designed to worktogetherPoliciesmayhavecompeting incentives(D-SNPvs. MMPrates)andmaybeconfusingtobeneficiariesCoordinatingcare may improveoutcomesandr

16、educe costsbutmodelsnot fullytested andnoone-size-fits-allsolutionEnrollment (# in M)Growth (MMP+D-SNP 1Prem. Rev ($ in B)Source: JPM estimates, 2017 MedPAC report, CMS Medicare Enrollment and Rate Reports, 2018 MACPAC Report(1) Based on current market enrolled in Managed Care. JPM estimates are onl

17、y for premium revenue. Total enrollment figures are based on actuals.Assumptions/Sources Used in Estimates Throughout:Enrollment (# in M)Growth (MMP+D-SNP 1Prem. Rev ($ in B)Source: JPM estimates, 2017 MedPAC report, CMS Medicare Enrollment and Rate Reports, 2018 MACPAC Report(1) Based on current ma

18、rket enrolled in Managed Care. JPM estimates are only for premium revenue. Total enrollment figures are based on actuals.Assumptions/Sources Used in Estimates Throughout:D-SNPEnrollment: Est. lives as of Apr15, Apr16, Apr17, Apr18,Apr19Medicaid PMPMs: $1,008.75 PMPM (based on 2017MedPAC report of$12

19、K FFS Medicaid 2013 spend per dual-eligible beneficiary).Assuming only FIDE SNPs receive payment for Medicaid ServicesMedicare PMPMs: Assuming MA Final Rate Notice growth 2016E- 2019E in calculated PMPMs (CMS 2015 Plan Paymentfiles)MMPEnrollment: Est. lives as of Jun14, Jun15, Mar16, Mar17,Mar18,Mar

20、19Medicare and Medicaid PMPMs: $1,008.78 PMPM for MDCDand$1,547.34 PMPM for MDCR (based on 2017 MedPAC report of $12K FFS MDCD and $20k FFS MDCR 2013 spend per dual-eligible beneficiary)PMPM Savings %: MDCR and MDCD Savings % assumptions for CapitatedPaymentsbyState(basedon2018MACPACReportand exclud

21、e PartD)Part D (For both D-SNP and MMP):ONLYincorporatingDirectSubsidy(riskadjusted)andexcluding Reinsurance + Low Income Cost SharingpaymentsGary Taylor HYPERLINK mailto:gary.taylor | gary.taylorDualsMktOverviewTimelineDualsDetailsMMPDualsMktOverviewTimelineDualsDetailsMMPD-SNP(incl.FIDE)Integratio

22、n Best/Worst PositionedHumanaEnroll.ByStateExposureByCo.GlossaryEstimated Enrollment by Member TypeMedicare60mDual-Eligible12m70mTotal Managed Care Duals Enrollment & Prem. Rev by CompanyMedicare60mDual-Eligible12m70m#% ofTotal2,912,839100.0%Enrollment$ (000s)% ofTotal#% ofTotal2,912,839100.0%Enroll

23、ment$ (000s)% ofTotal$51,513,975100.0%Prem. Revenue1 UNH918,31031.5%$15,981,64831.0%2 HUM256,6638.8%$4,455,2138.6%Plan Types3 ANTM209,9557.2%$3,443,8246.7%Serving Dual-4 WCG170,1165.8%$2,591,1595.0%Eligible5 MOH95,7893.3%$2,002,8523.9%Beneficiaries6 CNC69,5492.4%$1,600,5773.1%7 CI88,2753.0%$1,455,52

24、62.8%8 BCBS_NFP71,6652.5%$1,414,4542.7%9 CVS55,2771.9%$1,300,4642.5%1. D-SNP2. FIDE-SNP3. MMP4. PACEKAISERGTS79,68745,6162.7%1.6%$1,228,227$566,7832.4%1.1%2.3m0.2m0.4m0.04m12 ATHN3950.0%$8,3390.0%1. FL (339k)1. MA (54k)1. CA (113k)1. PA (6k)13 OTHER851,54229.2%$15,464,90830.0%Top 5 States2. NY (293k

25、)Top 5 States2. NY (293k)2. NJ (46k)2. OH (80k)2. CA (6k)3. TX (204k)3. MN (40k)3. IL (53k)3. NY (5k)4. PA (143k)4. NY (15k)4. TX (41k)4. MA (5k)5. CA (116k)5. CA (14k)5. MI (36k)5. CO (4k)Source: JPM estimatesSource: JPM estimates, 2017 MedPAC report, CMS Medicare Enrollment and Rate Reports, 2018

26、MACPAC Report5(1) Enrollment numbers by company utilize a JPM plan name to company mapping. Total enrollment figures are based on actuals.Gary Taylor HYPERLINK mailto:gary.taylor | gary.taylor# of Dually-Eligible and Beneficiaries (2006-2017)Dually-Eligible Beneficiaries as a Proportion ofAllMedicar

27、e Beneficiaries (2006-2017)Source: CMS Dec18 Data Analysis Briefrce: CMS Dec18 Data Analysis BriefDualsMkt# of Dually-Eligible and Beneficiaries (2006-2017)Dually-Eligible Beneficiaries as a Proportion ofAllMedicare Beneficiaries (2006-2017)Source: CMS Dec18 Data Analysis Briefrce: CMS Dec18 Data An

28、alysis BriefDualsMktOverviewTimelineDualsDetailsMMPD-SNP(incl.FIDE)Integration Best/Worst PositionedHumanaEnroll.ByStateExposureByCo.GlossarySou6SouTimeline/HistoryTimeline/HistoryDualsMktOverviewTimelineDualsDetailsDualsMktOverviewTimelineDualsDetailsMMPD-SNP(incl.FIDE)Integration Best/Worst Positi

29、onedHumanaEnroll.ByStateExposureByCo.GlossaryDescriptionMMPD-SNP incl. FIDEPACEMedicaid and Medicare operate as separate programs with Medicare as the primary payer for services while State Medicaid programs wrap around this coverage by providing financial assistance with Medicare premiums/cost shar

30、ing and additional benefits not covered by Medicare.Type of MA plan designed for dual eligible population. Contracts vary to extent which D-SNPs coordinate a beneficiarys MDCD benefits (MDCD services not required). As of 2013, D-SNPs required to have contracts with state MDCD agencies but states are

31、 not required to contract with D-SNPs.For most of its history, only NFPs were permitted, but now for-profits are allowed. Day center with interdisciplinary care team providing comprehensive medical and social services to beneficiaries aged 55 and older.2010: Under ACA, MMP Program established2011: C

32、MS announced MMP with the intent to further integrate programs services. Establishing 3 year federal duals demos programs in 2013Jul13: WA MFFSStartSep13: MN Admin Model StartOct13: MA Capitated Model StartMar14: IL Capitated ModelStartApr14: CA and VA Capitated Model StartMay14: OH Capitated Model

33、StartSep14: CO MFFSStartJan15: NY LTSS Capitated ModelStartFeb15: SC Capitated Model StartMar15:TX Capitated ModelStartMI Capitated ModelStartJul15: CMS provides opportunity for all states participating to extend demos by 2YRs to18YEApr16: NY I/DD Capitated Model StartJul16: RI Capitated Model Start

34、Jan17: CMS provides opportunity for all states participating to extend demos by 2YRs to20YEDec17: VA Capitated Model expired/endedMA, MN, WA offered 2 yearextensionDec17: CO MFFSexpired/endedApr19: CMS sends letter to state Medicaid Directors inviting additional states toparticipate2003: MMA establi

35、shed Special NeedsPlans2006: D-SNPs firstoffered2007: MMSEA extended SNP program from08YE to 09YE & imposed moratorium prohibiting CMS from approving new SNPs after1/1/082008: MIPPA lifted moratorium, extended SNP program to 10YE and required D-SNPs to contract with state Medicaid agencies (amended

36、by ACA to start in 13)2010: Under ACA, a new type of D-SNP was established called FIDE SNP (started 12). Also, extended SNP program to13YE2012: ATRA extended SNP programs to14YE2013:BBA of 2013 extended SNP program to15YEEffective as of 2013, D-SNPs required tohave contracts with state MDCD programs

37、FIDE SNP firstoffered2014: Protecting Access to Medicare Act of 2014 extended SNP program to16YE2015: MACRA extended SNP program to 18YE2018:BBA permanently authorizes SNPs to insurersDefault/passive DSNP enrollmentpermitted starting 2019Dec18: CMS Letter to State MDCD Directors aiming to make state

38、s more aware of dual eligible programs including D-SNP1979: HHS provides 4YR grant to developfirst consolidated model through ademonstration1990: The first Programs of All-Inclusive Care for the Elderly (PACE) receive Medicare and Medicaid waivers tooperate1997: Balanced Budget Act established PACE

39、model as a permanent part of Medicare and an option under state Medicaid programs1999: Interim regulation ispublished2003: Existing PACE demonstrationprograms became permanent PACEproviders2006:Final regulation ispublishedCongress awards grants of $500K to 15 organizations for rural PACEexpansionDec

40、18: CMS Letter to State MDCD Directors Letter aiming to make states more aware of dual eligible programs including PACEMay19: CMS finalizing a rule to update and modernize the PACE program. The changes will provide greater operational flexibility, remove redundancies/outdated information and codify

41、existing practice. The first major update to PACE since 2006Source: CMS, MedPAC & MacPAC Reports June2016-2018DualsMktOverviewTimelineDualsDetailsDualsMktOverviewTimelineDualsDetailsMMPD-SNP(incl.FIDE)Integration Best/Worst PositionedHumanaEnroll.ByStateExposureByCo.GlossaryDual Population Type and

42、Benefits ServedTypes of PlansDescriptionModelsStates (2019E)Lives (2019E)Rev. (2019E)(Based on Income Level)Full-Benefit (71%)(FBDE) Receives full Medicare services and Medicaid services offered by state; may receive assistance through Medicare Savings Programs (MSPs).vs.1.MMP(Medicare- Medicaid Pro

43、gram aka “Duals Demo” and “Financial Alignment Demonstration”)Medicaid and Medicare operate as separate programs with Medicare as the primary payer for services while State Medicaid programs wrap around this coverage by providing financial assistance with Medicare premiums/cost sharing and additiona

44、l benefits not covered by Medicare.Capitation (three-way contract between CMS, State, Health Plans)Rates set administratively (ramping to 4-5% savings/yr in first 3yrs) & quality withholds applied9 (CA, IL, NY,MI, OH, RI, TX,381K1%Partial Benefit$10BManaged FFS (States provide up-front investment an

45、d are eligible for retro perf. payment based on quality thresholds and savings targets)1 (WA)n.m.n.m.Partial-Benefit (29%)(PBDE) Receives full Medicare services but does not receive Medicaid services; however, Medicaid pays for Medicare premiums and cost sharing, covered through enrollment in MSPs.E

46、st. in 2010 (ACA)Alternative Model (Designed to align administrative functions in existing D- SNP program)1 (MN)n.m.n.m.2.D-SNP(Dual-Eligible Special Needs Plan)Started in 2006Type of MA plan designed for dual-eligible population. Contracts vary to extent which D-SNPs coordinate a beneficiarys MDCD

47、benefits (MDCD services not required). As of 2013, D-SNPs required to have contracts with state MDCD agencies but states are not required to contract with D-SNPs.FIDE SNP + Non FIDE SNP(Separate Medicaid and Medicare Contracts)Plans bid against MA benchmarks14112.3M29%Partial 1$36B3.FIDE SNP(Fully I

48、ntegrated 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 or BH. Can receive higher payments ifenrollees have sufficiently high frailty levels.Sub-type of D-SNP(Separate Medicaid and Medicare C

49、ontracts)Plans bid against MA benchmarks10191K1%Partial Benefit$5BBeneficiaries who are 55 and older and need level of care provided in a nursing home.Virtually all PACE enrollees are full-benefit dual-eligible. Provide all Medicare and MDCD covered services.(Program of All- Inclusive Carefor the El

50、derly)Started in early 1980s and perm. authorized in 1997For most of its history, only NFPs were permitted, but now for-profits are allowed. Day center with interdisciplinary care team providing comprehensive medical and social services to beneficiaries aged 55 and older.Standalone Model (three-way

51、contract between CMS, State, Health Plans)Plans bid against MA benchmarks31243K1%Partial Benefitn.m.Source: CMS, MedPAC & MacPAC Reports June 2016-20188Includes Puerto Rico and District of Columbia and excludes FIDE SNPlivesNoneofourcoveredpubliccompanieshaveenrollmentexposuretoPACEGary Taylor HYPER

52、LINK mailto:gary.taylor | gary.taylorDualsMktOverviewTimelineDualsDetailsMMPD-SNPDualsMktOverviewTimelineDualsDetailsMMPD-SNP(incl.FIDE)Integration Best/Worst PositionedHumanaEnroll.ByStateExposureByCo.GlossaryTypes of PlansDescriptionModelsStates (2019E)Lives (2019E)Rev. (2019E)1.MMP(Medicare-Medic

53、aid Program aka “Duals Demo” and “Financial Alignment Demonstration”)Medicaid and Medicare operate as separate programs with Medicare as the primary payer for services while State Medicaid programs wrap around this coverage by providing financial assistance with Medicare premiums/cost sharing and ad

54、ditional benefits not covered by Medicare.Capitation (three-way contract between CMS, State, Health Plans)Rates set administratively (ramping to 4-5% savings/yr in first 3yrs) & quality withholds applied9(CA, IL, NY,MA, MI, OH,RI, TX, SC)381K1%Partial Benefit$10BManaged FFS (States provide up-front

55、investment and then are eligible for retro performance payment based on quality thresholds and savings targets)1 (WA)n.m.n.m.Est. in 2010 (ACA)Alternative Model (Designed to align administrative functions in existing D-SNP program)1 (MN)n.m.n.m.Notable Recent Updates/Next Steps:2017-2018Capitation D

56、emoEvaluationReports(CA,IL,MA,OH)Reports show programs improvement in quality metrics but concerns with low enrollment (opt out), implementing care coordination, rate adequacy and the need for additional evaluationtimeMFFS Demo Evaluation Reports (WA, CO) Reports show WA (Y3, demo extended through D

57、ec20) w/ 11% cost savings and CO (Y1, demo ended Dec17) w/ 4% negative cost savingsApr19Letter to State MDCD Directors CMS announced they are inviting addtl states to participate in the Capitation program and asking states to propose new integrated care modelsNext Steps:Data delays in Capitation Dem

58、o made it difficult to assess results(primarilyMDCDdata)andearlyreportshaveshown general concern on limited enrollment (opt out), implementing care coordination and rateadequacy.Improving quality metrics have been encouraging, therefore efforts are being made to extend existing demonstrationsCMS wel

59、comes additional states to participate in the demonstration as well as propose new integrated caremodelsdPdPth1Enrollment (#inK)Prem. Rev ($ in B)Source: JPM estimates, 2017 MedPAC report, CMS Medicare Enrollment and Rate Reports, 2018 MACPAC ReportBasedoncurrentmarketenrolledinManagedCare.JPMestima

60、tesareonlyforpremium revenue.Totalenrollmentfiguresarebasedonactuals.Gary Taylor HYPERLINK mailto:gary.taylor | gary.taylorDualsMktOverviewTimelineDualsDetailsMMPD-SNP(incl.DualsMktOverviewTimelineDualsDetailsMMPD-SNP(incl.FIDE)Integration Best/Worst PositionedHumanaEnroll.ByStateExposureByCo.Glossa