Wakely Risk Insight for Medicare Advantage (WRI-MA)

Understanding Profitability in the Medicare Advantage Markets

It is impossible to manage what you cannot measure, and measuring performance in the risk adjusted environment is now more challenging than ever. We used to be able to look at drivers of cost in order to gain insight into the experience. In a risk adjusted environment – drivers of profitability can be counter intuitive, for example the older, sicker and costlier individuals may actually be improving the financial performance of the plan than vice versa. 

Wakely Risk Insight (WRI) performs two key functions. It allocates important financial items such as non-benefit expense, DIR, risk corridor, fees and taxes, etc. at the member level. Secondly, it applies a sophisticated slicing and measuring algorithm to isolate drivers of profitability for further analysis. 

The report includes:

  • Analyzing and comparing profitability of your organization by:
    • Standard Groupings
      • Plan Type (i.e., HMO, PPO, etc.) and Coverage Type (i.e., MAPD, PDP, etc.)
      • Member Characteristics, such as Eligibility (Aged/Disabled), Age, and Gender
      • Part C and Part D Risk Model
      • Months of Enrollment During the Coverage Year
      • Number of Hierarchical Condition Categories (HCCs) by Member, and HCC Groupings
      • Risk Score Quintile
      • Member Status, such as ESRD/Hospice/Other, Low Income/Non-Low Income, and DE#/NDE#
    • Client Defined Groupings
      • In addition to the Standard Groupings noted above, clients may choose to add any variable that may be driving profitability.  Some examples might be:
        • Drug Adherence
        • Provider Group
        • Rating Area
        • Acquisition Channel
  • Benchmarks, including:
    • High level utilization and unit cost by service categories
    • Utilization and unit costs for the top 100 drugs by NDC
    • Medical costs as a percentage of the Medicare Fee Schedule
    • Generic and Brand discounts and dispensing fees
    • Impact of dropped diagnoses between years

Allocation and Segmentation

One of the keys of WRI-MA is the allocation of key financial amounts (e.g. taxes, fees, risk corridor, non-benefit expense, DIR, etc.) at the member level. Once amounts are allocated, a sophisticated algorithm similar to a decision tree searches through various member segments to calculate their relative importance in driving plan profitability. In this manner the key drivers of profitability are revealed and can be monitored over time. 


The member-level file, including allocated amounts, is available to the client as well.

Informed by Unique Data Assets

Wakely has unique assets including a database of over three million member months of Medicare Advantage data. We have crafted key benchmarks that are included in the WRI-MA exhibits for useful comparisons. 

Analyzing Drivers of Profitability

In the WRI-MA analytics, we examine a number of hypotheses to identify drivers of profitability for a given health plan. The standard set that we test includes demographics, aged/disabled eligibility, risk model, medical conditions or HCCs, plan type, etc. In addition, we have the flexibility to test client-specific inputs such as profitability by acquisition channel, providers, hospital networks, and others. 

Understanding and Adapting to Change

WRI-MA is not static. We constantly curate the exhibits to make them relevant, useful, and effective. There are also important regulatory changes that may have significant financial implications for sections of the Medicare Advantage population.  

Next Steps

For more information on WRI-MA or to schedule a discussion/demonstration, please contact us at WRIMedicare@Wakely.com.

For additional background and information, a recording of a recent webinar detailing the National Medicare Advantage Profitability Study can be found here.