Market Place Summary

Now that we know private fee-for-service (PFFS) is dead on January 1, 2011 in all but the most rural markets, how will the health plans who have significant PFFS business respond?

UnitedHealth is the first health plan to report earnings this quarter and I thought they had the right answer. From their earnings call transcript (Ovations CEO commenting):

We have had a strategy of deliberately positioning ourselves in favor of network based Medicare Advantage rather than private fee-for-service over the years, because we think we can unleash more value from Medicare that way and because of what we perceive to be a slow burn risk, if not a risk that is now crystallized, in the new law.

So the direct impact on us is minimal, because only around 7% of our Medicare Advantage membership is in private fee-for-service and all those 100,000 or so members 3/4 live in areas either unaffected by the law or where we already have network based alternatives. [The growth opportunities are great for us] because obviously the end of deeming will mean that perhaps 80% of the private fee-for-service market will now over the next two years have to migrate to a network -based product and that’s something that we’ve been critically positioning ourselves for.

Potentially 1.7 million private fee-for-service members are going to be triggered into shopping and as the largest operator of network based Medicare Advantage...we hope to be able to capitalize on that opportunity.