At-Home Care Fueling Disruptive Medicare Advantage Startups

The Medicare Advantage (MA) landscape is heating up like never before, largely thanks to continued flexibilities from the Centers for Medicare & Medicaid Services (CMS) that allow plans to cover a variety of nonmedical benefits. 

Plans’ newfound ability to offer supplemental benefits such as home care and transportation for certain beneficiaries is drawing a number of new players into the space, many of whom are poised to create disruption.

In fact, there have been at least 16 new MA plan entrants this Annual Election Period (AEP), according to Patrick Phillips, CEO of Cavulus. 


Hilton Head, South Carolina-based Cavulus is a technology firm that caters specifically to the Medicare Advantage industry, providing plans solutions for marketing, sales, compliance and more.

More so than traditional payers like Humana, Aetna and others, MA startups are able to take risks in the home care realm, going after innovative offerings for beneficiaries and partnerships with providers. That’s one reason the startups are on track to revolutionize the industry, Phillips said. 

HHCN recently connected with Phillips to get his take on disruption in MA and where home-based care fits into the picture. 


You can find the rest of HHCN’s conversation with Phillips below, edited for length and clarity.

HHCN: Can you give me a little background on how Cavulus got started and what it’s goals are?

Phillips: I stood up the company following the Medicare Modernization Act back in 2004, when reimbursement rates hit a point that Medicare Advantage became profitable for the private health plan industry.

There was a lot of growth in Medicare Advantage plans being stood up and, obviously, enrollment coming into those plans. With that came a heightened level of regulation.

I really focused our technology and our research and development on ensuring protection for the senior population on how they were being sold and marketed to coming into Medicare Advantage plans.

That was an easy sell into the health plan vertical. [Plans] wanted to make sure they were operating in a compliant fashion so they didn’t receive stiff penalties and fines related to unethical sales tactics. 

Cavulus technology provides transparency in the field. That’s done in a real-time fashion and reported back to regulators and the compliance division within health plans so they know exactly what was communicated to beneficiaries. 

Everything is documented, from the first piece of marking they receive to what they inquired about to make sure [seniors] weren’t sold into the idea that a certain [benefit] was covered or a certain physician was in the PCP network — so there is an ease of enrollment and also [a record] for rapid disenrollment.

We [also] built a conduit to allow for member services to have full visibility on all the marketing an individual receives.

We’re touching about 25% of the lives in Medicare Advantage currently.

Talk about what you’ve seen in the past year since CMS first allowed MA plans to offer these in-home supplemental benefits, which previously weren’t covered.   

There are a number of new startup plans coming into the space. I’ve interacted with just about every one of them at this point. They really are poised to disrupt what has been going on with incumbent players — a lot of the existing health plans that had been in the space.

MA was never the golden, profitable aspect of their organizations, and that’s kind of [changed] over the past three or four years. MA is now one of the most profitable aspects of what insurers are offering.

New permitted benefit designs are really opening up doors for plans that are creative enough to leverage some of these new regulations in their benefit design. That’s what we’re seeing a lot of the new start ups grab hold of. 

There’s a handful of plans that have made news, especially financial news with the valuations they’ve been given and the money they’ve raised. That’s namely Devoted Health, Oscar Health and Clover Health. Oscar and Clover are backed by the Alphabet, the parent company of Google.

[They] really are technology-focused health plans. They all started out focused on the Affordable Care Act, but as that lost political support with the current administration, they really refocused on Medicare Advantage. And they are expanding their service areas pretty dramatically. 

Solace Health is another startup that’s very well funded and nimble in that they don’t have a health plan culture established yet, which is typically very bureaucratic and slow moving.

These plans can position themselves to be member-centric from the start and leverage technology to allow more direct interactions under a variety of different sales, marketing and enrollment channels — and also in designing their benefits in a more creative way.

Ride sharing companies [like] Lyft are now permitted to be baked into a Medicare Advantage benefit design. Mobile nursing units, in home visits and virtual monitoring — these are [also] things that are now being packaged and offered in.

These new plans are very well positioned to capitalize on this and leverage those new aspects of what CMS is permitting. 

How do you think these tech-focused startups will disrupt the MA industry?

Right out of the gates, I think it will be like with any other industry: Customer service for seniors when they inquire with some of the newer players will be vastly different than some of the experiences they have with incumbents.

We’re seeing more growth in the MA space with startups than we are with service area expansions among some of the larger players.

I know there are 16 new entrants this Annual Election Period (AEP).

Do new in-home benefits play an important role in this increased interested in the MA space? 

Oh, absolutely. First and foremost, utilization of benefits will increase dramatically when you have in-home monitoring and in-home nurse visits.

When you have an incapacitated beneficiary who has no way of really getting to a doctor’s office or the pharmacy … they’re often reluctant to get things filled or go to the doctor. 

What advice would you have for home-based care companies hoping to get involved with an MA plan?

It’s not unlike how we view winning relationships with Medicare Advantage plans.

It’s those that have a focus on adopting newer technologies to deliver care. Plans need to be willing to make that investment and make sure their members have adequate access to either a computer or an iPad or a cell phone that’s capable of providing some of these in-home monitoring technologies. 

One great thing about MA plans is that they all need to file their plan designs in the middle of the summer. There’s some level of visibility on exactly what these plans are doing and where they’re making their investments.

[Find] the plans that are more innovative in what they’re offering and [are] making some level of technological investment.  

With the telemedicine movement, we’re at the tip of the iceberg with that right now. That’s a huge disruptor in Medicare Advantage because we’re talking about a population that is not as mobile in getting around anymore.

The sky is the limit on how disruptive that can be in the future.

One thing that we’ve heard from bigger players is that it’s hard to offer a slew of new in-home benefits because there’s no additional money to make it happen. Is that less of a problem for these newer startups because they’re starting from scratch?  

Of course.

[Traditional MA plans] have baked in a lot of nonsensical benefits that their populations are accustomed to, even if there’s zero utilization of those benefits. Taking benefits away that the member population is accustomed to seeing can be detrimental.

These larger, incumbent plans are often stuck in the mud with things they’ve piecemealed on over the years.

One big movement is Silver Sneakers, or any gym membership that MA covers. The utilization of those benefits is miniscule but they’re already baked into a lot of these plans.

The other thing is a lot of these larger plans suffer from a culture that doesn’t allow them to move very quickly. The redesign of a benefit program is a Herculean effort for the actuaries and underwriters of a health plan.

Starting from scratch every year to do what’s most attractive to the market is an exercise that’s not always done from a standing start. It’s often templated year after year.

These new plans can read the tea leaves and create a benefit design that strikes a chord with those that are shopping this year.

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