Mutual of Omaha plans to sell Medicare Advantage health plans in 2019

By Steve Jordon / World-Herald staff writer Jan 18, 2018 Updated Jan 18, 2018


Mutual of Omaha will begin selling its first Medicare Advantage health plans in 2019 in cooperation with Lumeris Inc., a St. Louis company that will arrange health provider networks and manage the plans.

It’s a big step for the Omaha-based insurer, which got out of the individual and small-group health insurance business more than a decade ago, although it has sold Medicare Supplement plans since 1966 and is the second-largest source of those plans.

But Medicare Supplement enrollment is declining and Medicare Advantage sales are increasing, said Brad Buechler, a Mutual executive vice president.

Medicare Supplement insurance, also known as Medigap, is sold by private companies to help pay some costs not covered by government Medicare.

Medicare Advantage plans also are sold by private companies but are an alternative to government-run Medicare, providing the traditional coverage plus other benefits.

About one-fifth of Medicare recipients use Medicare Supplement coverage to augment their Medicare plans. About one-third use Medicare Advantage plans, and Kaiser Family Foundation predicts that share to pass 40 percent by 2027.

“The goal here is to ensure that we’ve got all of the interests of all parties aligned through the whole health care delivery value system,” Buechler said.

Between 2001 and 2007 Mutual got out of small-group, individual major and group health insurance, dismantling its health care provider networks.

Lumeris has the expertise to set up new networks of providers that want to practice “value-based” care that depends on good medical outcomes rather than traditional fees for each medical service, Buechler said. Lumeris also will help identify metropolitan statistical areas — yet to be selected — where the new plans can compete for significant market share, he said.

Mutual, which is likely to count more than $8 billion in revenue this year, will own the plans under the Mutual Medicare Advantage name and will provide brand, marketing and distribution expertise and capital. Mutual declined to reveal its financial goals for the Medicare Advantage business.

Buechler said the plans will have “narrow” networks, meaning clients will choose from limited numbers of physicians, hospitals and other care providers. Such managed care networks are designed to reduce costs while improving efficiency and medical outcomes.

The two companies expect the first plans to be ready for the Medicare open enrollment period that starts Oct. 15, with advertising leading up to that and plans taking effect Jan. 1, 2019.

Lumeris was created about 10 years ago by a group of doctors seeking better ways to provide health care. The group also started its own Medicare Advantage drug plan, now known as Essence Healthcare, with about 65,000 members in the St. Louis area.

Lumeris President Art Glasgow said Lumeris developed technology for its value-based care model, which it sells to other medical providers who want to practice value-based care, and operates Medicare Advantage plans for other companies.

The venture with Mutual will be “the broadest and most impactful” project for Lumeris, he said. Growth will depend on how well it is executed, how receptive markets are to new competition and the value-based model, and meeting requirements of federal and state regulators.

Executives from the two companies will form a steering committee to oversee the operation under a multiyear agreement. James Blackledge, chairman and chief executive of Mutual, has joined Lumeris’ board of directors., 402-444-1080,