Latest / Becker’s Healthcare Podcast / Jakob Emerson on Medicare Advantage Shifts and Payer Market Disruption

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Jakob Emerson on Medicare Advantage Shifts and Payer Market Disruption · Becker’s Healthcare Podcast

• 0:02
  This is where health insurance leadership comes together.
• 0:05
  Becker's fourth annual spring payer issues roundtable brings
• 0:08
  together over 400
• 0:10
  payer and health plan executives and more than
• 0:13
  100 speakers to Chicago April.
• 0:16
  This year's event includes keynote conversations with the
• 0:19
  industry's top leaders and former president George w
• 0:23
  Bush. For the full agenda and event details,
• 0:25
  visit beckershospitalreview.com
• 0:27
  and click on the events tab in the
• 0:29
  upper right. We're looking forward to hosting you
• 0:31
  here in Chicago.
• 0:34
  This is Scott Becker with the Becker's Health
• 0:37
  Care podcast.
• 0:38
  We're thrilled to be joined by the go
• 0:40
  to person for getting updates on what's going
• 0:42
  on in the payer world.
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  We're joined today by Jacob Emerson.
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  Jacob joins us regularly to talk to us
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  about the biggest issues in the payer universe
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  and and that are affecting health care and
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  then involve the payer arena.
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  Jacob, want to tee us up, and you
• 0:58
  tell us what are the big issues that
• 1:00
  you're facing currently or watching currently.
• 1:03
  Yeah. Hey, Scott. It's great to talk with
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  you. So I thought the the first thing
• 1:07
  we could talk about right off the bat
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  is just everything we're seeing right now with
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  Medicare Advantage enrollment across the country.
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  We just finished up the annual enrollment period
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  this last fall, and and now we're starting
• 1:19
  to get the data back. Well, we have
• 1:20
  the data back from CMS
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  on on who won, who didn't,
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  and some wider trends about ultimately where seniors
• 1:27
  are deciding to go for their for their
• 1:29
  health coverage,
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  which
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  is looking a lot different than I think
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  it ever has in the past for this
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  program,
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  where the big guys lost a lot somewhat
• 1:39
  purposefully.
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  And then,
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  the the smaller plans, the start up plans,
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  nonprofits,
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  the hospital system plans,
• 1:46
  all did very well or at least better
• 1:49
  than they have in the past. And so
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  just interesting, I I think, reversal,
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  and then also some declines in in some
• 1:57
  states for the first time ever for Medicare
• 1:59
  Advantage. So just a lot of different
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  patterns and, I think, messages that came out
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  for us here on, you know, the analysis
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  side
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  of of what's going on with,
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  is a very quickly evolving program.
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  And talk to us a little bit. Is
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  overall enrollment in Medicare Advantage up or even,
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  or where does that stand? And then tell
• 2:19
  us a little bit. Give us some more
• 2:20
  details on the winners, the losers.
• 2:23
  And I and you're right. To call them
• 2:25
  winners and losers might be wrong because some
• 2:27
  of the payers, the largest payers, purposely
• 2:30
  decrease their exposure to Medicare Advantage. But but
• 2:33
  talk about who's gone up, who's down, and
• 2:34
  what do you see?
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  Yeah. It is it is growing still. Medicare
• 2:38
  Advantage overall,
• 2:40
  but it's slowing, especially compared to years past
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  where
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  you used to see anywhere
• 2:55
  3.6%
• 2:56
  growth rate last year, and then
• 2:59
  so far, we've just seen two and a
• 3:00
  half percent for this last enrollment period,
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  which is just over 35,000,000
• 3:05
  people. So
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  not slowing down,
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  but
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  slowing down in a way where
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  the the blockbuster
• 3:13
  growth at all costs that we saw from
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  some of the major insurers,
• 3:17
  United, Aetna, Ellevance,
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  that that is reversing, and now it's going
• 3:22
  back towards
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  some of these other plans that in the
• 3:25
  past were still pretty small. Let's say, SCAN
• 3:28
  Group over mostly in California,
• 3:30
  Alignment Healthcare, which is in a few different
• 3:32
  states,
• 3:33
  and some of the other system plans,
• 3:36
  those are all growing. And and now I
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  I talked with SCAN just, this this past
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  week, and they they just shot up. They're
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  now in the top 10,
• 3:44
  largest Medicare Advantage companies in the country from
• 3:47
  from number 14. So so so to answer
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  your question, Scott, it is still growing, but
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  it's but it's not growing as fast as
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  it once was.
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  Traditional Medicare enrollment actually grew by 600,000
• 3:57
  people,
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  which was a reversal after years of decline.
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  And then we're also seeing I think we
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  briefly talked about this previously, but we're just
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  seeing major growth or or a reason for
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  that the MA program is still growing is
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  with the special needs plans. So for people
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  who need more chronic care, for people who
• 4:15
  are dually eligible for Medicaid and Medicare at
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  the same time,
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  those plans are also driving a ton of
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  growth.
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  And so
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  yeah, I think it's just it's a reversal
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  of of some of the the big publicly
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  traded growth we saw in years past. I
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  will say Asterisk with the exception of Humana,
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  which added over a million members,
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  just this past AEP alone, which is honestly
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  really insane,
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  given just the wider context of what's going
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  on,
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  with with the other guys. And then, you
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  know, we we know from CMS,
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  they are they're as of right now, they're
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  proposing almost flat funding for MA plans going
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  into next year, which, obviously, none of them
• 4:57
  are are happy about. And they're they're, you
• 4:59
  know, going pretty crazy with the lobbying right
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  now to try to get that, reversed or
• 5:03
  increased.
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  So we'll see what happens there, but the
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  federal government is does not seem to be
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  playing ball with giving them more money.
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  And then
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  one last thing, Scott, in terms of updates.
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  We saw earlier this week that the federal
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  government is threatening Elavance, formerly Anthem,
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  with sanctions on its Medicare Advantage program,
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  basically saying that they didn't they didn't follow
• 5:25
  the right procedures for risk adjustment
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  and how they reported certain things to the
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  federal government,
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  even despite warnings according to to the government.
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  And so
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  if they don't fix basically what CMS has
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  laid out as issues by the end of
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  this month, the federal government is going to
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  stop el Elevance entirely as a company, from
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  enrolling any new, seniors into its Medicare Advantage
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  Plans for the rest of the year, which
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  is which is huge. That's I mean, that's
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  a that is a very bold shot for
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  the government to take at at one of
• 5:57
  the largest, health care companies overall in the
• 5:59
  country. And that, of course, comes after the
• 6:01
  Kaiser settlement
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  from just a few of earlier this year,
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  the largest MA,
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  alleged fraud settlement ever in history. So just
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  so much going on right now in this
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  in this industry. It's hard to even,
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  I at least for me, get get your
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  thoughts around it.
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  Yeah. No. It sure seems like it. And
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  it seems like there's it was a growth.
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  There's traditional growth in Medicare and Medicare Advantage.
• 6:23
  There's I mean, some of these rules on
• 6:26
  the big payers, the elevator story that you
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  mentioned, can it really happen where they block
• 6:30
  them from selling to Medicare Advantage? Is that
• 6:32
  is that a real can that really happen?
• 6:34
  Oh, yeah. I mean, at the end of
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  the day, the Medicare Advantage is just the
• 6:38
  government's,
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  you know, essentially outsourcing Medicare contracts to private
• 6:43
  insurance companies. They are they're the boss at
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  the end of the day. They decide whether
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  these contracts are live or not, whether these
• 6:50
  plans can enroll people in them. And if
• 6:53
  CMS says you are acting fraudulently, you're not
• 6:56
  following the rules,
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  whatever it is,
• 7:00
  you you cannot there's nothing you can do.
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  You are not allowed to enroll,
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  people in your health plans even if you
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  are the biggest, one of the biggest guys,
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  even if you have the strongest lobbyists and
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  you throw around the most money,
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  it it the buck stops with CMS. And
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  I think that's why it's just gotten a
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  lot of attention in the industry this past
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  week, because
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  I cannot think of a a plan in
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  recent memory that this large,
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  that has been blocked from potential,
• 7:27
  new enrollment for this year. So it's gonna
• 7:30
  be really interesting to see how that plays
• 7:32
  out. Again, this is just a threat of
• 7:34
  a sanction if they don't fix the issues
• 7:36
  within the next month.
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  But, like, I mean, it's it's a huge
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  message that CMS is sending alongside
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  the DOJ settlement with Kaiser for over $500,000,000.
• 7:47
  Yeah. That's amazing. So that the $500,000,000
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  settlement, what drove that? Talk about that for
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  a sec if you don't mind. Yeah. It's
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  it's the it's the issues we've all read
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  about for over a decade now. It's what
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  has had a lot of plans settling with
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  the DOJ
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  for for tens of millions in the past.
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  And it's the the alleged
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  fraudulent risk adjustment where basically
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  the health plan is,
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  adding on diagnoses to member health records that
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  either don't exist or are exaggerated,
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  or are added on from past medical records
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  that didn't from care that didn't happen at
• 8:23
  that health plan, but it happened to that
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  patient in the past.
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  And now the that health plan wants to
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  get it wants to bolt it onto their
• 8:31
  current
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  medical record and then get increased reimbursement from
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  the government. So,
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  all alleged, but Kaiser and, you know, Kaiser
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  has admitted no wrongdoing. The settlement is not
• 8:41
  in the middle of any wrongdoing,
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  but they are gonna be paying over $500,000,000
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  to the government,
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  to settle allegations that they were basically pressuring
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  their doctors to add on diagnoses that were
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  not supported
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  by medical records from from Kaiser specifically.
• 9:01
  No. Fantastic.
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  Fantastic.
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  In in other stores you're following currently, any
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  anything else you're following closely currently, Jacob, that's
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  top of mind? Well, Scott, you know, just
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  because we we've gotten all this data back
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  and we've we're we're seeing who grew the
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  most over with Medicare over the last,
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  since since since last October,
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  the health systems, specifically, the ones that own
• 9:22
  Medicare Advantage Plans. I know we just talked
• 9:24
  about Kaiser, but the they're they're the big
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  guy. But the a lot of these plans,
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  especially regional ones, you know, they only have,
• 9:30
  let's say, 80 to a 100,000 members overall.
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  It's a really small business when you think
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  about it just as a health plan, but
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  then also as part of wider health systems.
• 9:39
  They're not not not all of them. They're
• 9:42
  not necessarily ditching these plans, but
• 9:44
  we saw
• 9:45
  really amazing growth for some of them.
• 9:48
  Right here actually in the Midwest up in
• 9:50
  up in Wisconsin,
• 9:52
  Network Health, which is part of freighter ThetaCare,
• 9:56
  insane growth, I think, close to 60%,
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  and that was at a growth, and that
• 10:00
  was after a record year last year. And
• 10:03
  I heard the same from CoreWell's health plan,
• 10:06
  Priority Health over in Michigan.
• 10:09
  I heard this from like I said, I
• 10:12
  heard it from SCAN, and then I heard
• 10:14
  it from Alignment Health. We heard it all
• 10:16
  over the country. And, basically, what and then
• 10:18
  we heard it from, Henry Ford Health System
• 10:21
  as well in in Detroit,
• 10:22
  from their health plan,
• 10:24
  all of them recording amazing growth. And when
• 10:27
  I asked, you know, what's what's behind this?
• 10:29
  And they just said stability.
• 10:31
  Even when the margins tightened for us, even
• 10:33
  when we did have losses, and I'm not
• 10:35
  saying any of them necessarily did, they stayed
• 10:38
  put. They didn't cut,
• 10:40
  broker compensation, which most big plans did to
• 10:43
  save money. They didn't necessarily pull back on
• 10:45
  a lot of benefits, or they didn't pull
• 10:47
  back on markets where the big insurers did.
• 10:50
  And because of that, seniors went to them.
• 10:52
  Even though they're smaller companies,
• 10:54
  even though they're not as well known,
• 10:57
  they all drove Blockbuster growth because they stayed.
• 11:00
  They didn't,
• 11:01
  they didn't exit markets when the margins got
• 11:03
  tough. And so now they're all doing, at
• 11:06
  least membership wise, they're all doing fantastic. We'll
• 11:08
  see what happens growing pains wise. And I
• 11:10
  one company, Alignment, told me, you know, that's
• 11:12
  great that they got all the, you know,
• 11:14
  tens of thousands of new members this year.
• 11:16
  Let's see what happens going into next year
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  because there's gonna be a lot of digestion
• 11:20
  growth with that, because they're just not infrastructure
• 11:22
  wise set up for that much. Yeah. And
• 11:24
  not only not only the, digestion growth, they're
• 11:27
  also picking up a ton of business that
• 11:29
  some of the biggest payers have walked away
• 11:31
  from a little bit. Exactly. So so the
• 11:33
  great question is not only are they picking
• 11:35
  up senses and bodies,
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  but will it be profitable, and can they
• 11:39
  manage it profitably, or is it gonna be
• 11:40
  an economic disaster? And we've seen that with
• 11:42
  our systems over the years, jump heavily into
• 11:45
  insurance and ended up, you know, almost like
• 11:47
  the dog who got the car.
• 11:49
  You know? And they they win the business,
• 11:51
  but then serving the business well is really
• 11:54
  hard. And and so we'll see how how
• 11:56
  that goes too. And and for us, it
• 11:58
  it can be difficult to track that kind
• 12:00
  of thing just because it is so fragmented
• 12:02
  fragmented. And at the end of the day,
• 12:04
  these are private companies that don't have to
• 12:06
  publicly report their earnings, and especially sometimes they
• 12:09
  don't even if they do, they don't segment
• 12:10
  it out into how did Medicare Advantage do
• 12:13
  specifically financially for them. So
• 12:16
  a lot of the times, you know, let's
• 12:17
  say, next year, two years from now,
• 12:20
  it it it is very difficult to go
• 12:21
  back and then see, well, how did these
• 12:23
  x amount of health systems do, when they
• 12:26
  gained all this growth compared to a United,
• 12:28
  for example, which
• 12:30
  generally and I and I put a huge
• 12:32
  asterisk, but generally lays it all out there
• 12:34
  on how their Medicare Advantage business is performing.
• 12:38
  So that's another, you know, piece of all
• 12:40
  this is we can see the enrollment data
• 12:42
  overall, but the finances
• 12:44
  gets a lot tougher to track when it
• 12:46
  comes to the health system specifically.
• 12:48
  No. I think that's exactly right. It it'll
• 12:51
  be fascinating to see how it plays out.
• 12:53
  It it seems like so much. We
• 12:55
  we've seen this story before,
• 12:57
  and some of these huge payers are
• 13:00
  they're massive, but they're also really smart, and
• 13:03
  they get out of markets that don't work
• 13:04
  for them. And then the health systems need
• 13:06
  to be able to win in those markets,
• 13:08
  both getting bodies enrolled,
• 13:10
  which is the easy part. The hard part
• 13:13
  is then managing that profitably,
• 13:15
  and maybe the health systems have a little
• 13:16
  bit of an advantage because they've got their
• 13:18
  own health systems to help service those patients.
• 13:21
  But, also, they don't have the technological
• 13:24
  and and the strengths that some of the
• 13:26
  massive payers have just in terms of just
• 13:28
  ultimate computing power and ability to sort of
• 13:31
  analyze everything
• 13:32
  in a way that that might leave them
• 13:34
  a little bit playing mom and pop versus
• 13:35
  the big payers. And let's hope they could
• 13:37
  do it profitably.
• 13:39
  Yeah. So, I mean, like I said, we
• 13:40
  saw seven states for the first time go
• 13:42
  down in terms of MA enrollment. They are
• 13:45
  very small states. Some of I mean, like,
• 13:47
  Wyoming and Vermont, for example. But overall, Scott,
• 13:50
  with with surveys of health plan leaders,
• 13:52
  all over the country that we've seen the
• 13:54
  results from now, nobody's predicting a negative five
• 13:56
  year outlook for Medicare Advantage.
• 13:59
  Medicare Advantage is not going anywhere. We you
• 14:01
  know, we've we I think we've talked about
• 14:03
  it too that 10,000 people or more agent
• 14:05
  to Medicare every day in this country, and
• 14:06
  that's not stopping.
• 14:08
  So this is gonna be big business to
• 14:10
  continue. It's just going through
• 14:13
  growing pains right now, and it's switching from
• 14:15
  the big publicly traded guys to now what
• 14:17
  we're seeing. The the small guys, the nonprofits,
• 14:19
  the very regional and population specific plans, they
• 14:22
  had their moment. They took it. They succeeded.
• 14:25
  We'll see what happens in the years to
• 14:26
  come, but the the landscape has completely shifted.
• 14:29
  And, yeah, the small guys,
• 14:32
  they they they have a chance to to
• 14:34
  run a lot of the game right now.
• 14:36
  Fascinating to watch, and let's see how it
• 14:38
  plays through. But, can I mean, it it's
• 14:40
  good news for these
• 14:42
  system plans and some of the smaller guys'
• 14:44
  plans, and I saw Oscar Health is up
• 14:46
  10% today? So different people filling these different
• 14:48
  niches are winning, and then we'll see if
• 14:50
  they could do it profitably. It's a fascinating,
• 14:52
  fascinating discussion, Jacob.
• 14:54
  Yeah. I I agree. We're gonna be tracking
• 14:56
  all of it. Yeah. No. Thank you for
• 14:58
  joining us, visiting with us today on on
• 15:00
  the Becker's Healthcare podcast. I was wondering something.
• 15:02
  Thank you so much for joining us. Thank
• 15:04
  you, Scott.