Latest / Becker’s Healthcare Podcast / Jakob Emerson on Medicare Advantage Pullbacks and SCAN’s Costco Partnership

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Jakob Emerson on Medicare Advantage Pullbacks and SCAN’s Costco Partnership · Becker’s Healthcare Podcast

• 0:02
  - GLP ones, Medicare Advantage Headwinds, a Medicaid landscape
• 0:06
  - that looks different
• 0:07
  - every quarter.
• 0:09
  - Their leadership right now means making durable decisions
• 0:11
  - in an environment that keeps moving, and the
• 0:13
  - organizations pulling ahead are the ones that stopped
• 0:16
  - waiting for stability
• 0:18
  - before acting. Becker's fifth annual fall payer issues
• 0:21
  - roundtable convenes more than 500
• 0:24
  - executive level attendees
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  - and 70 plus speakers November second and third
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  - at the Swiss Hotel Chicago.
• 0:30
  - Two days of senior level dialogue on affordability,
• 0:33
  - benefit design, value based care, and the strategies
• 0:36
  - shaping how care gets financed
• 0:39
  - and delivered. Featuring a celebrity keynote from pro
• 0:40
  - football hall of famer, Emmitt Smith. The
• 0:53
  - Becker Healthcare Podcast.
• 0:55
  - I'm visiting today with Jacob Emerson.
• 0:58
  - Jacob is widely thought of as the guru
• 1:00
  - of the payer area. He follows the payer
• 1:03
  - area
• 1:04
  - better than anybody that I know
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  - and has insights and watches it closely. Jacob,
• 1:09
  - I'm gonna turn it to you and ask
• 1:11
  - you to tell us a couple of things
• 1:12
  - you're watching in the payer area currently.
• 1:15
  - What are you seeing out there? For sure.
• 1:17
  - Good to talk with you, Scott. So,
• 1:19
  - you know, we're starting to round out the
• 1:21
  - summer, and I thought that we could just,
• 1:24
  - lightly touch on what we're starting to see,
• 1:27
  - happen among the major carriers in regards to
• 1:29
  - Medicare Advantage going into this fall when, of
• 1:32
  - course,
• 1:33
  - tens of millions of seniors around the country
• 1:34
  - are gonna be enrolling in those private Medicare
• 1:37
  - plans. And, you know, it seems like facing
• 1:40
  - less options from certain carriers all around the
• 1:43
  - country. So just kinda going over what we're
• 1:45
  - what we're starting to see develop there. And
• 1:47
  - then staying on the Medicare Advantage theme, a
• 1:49
  - really big,
• 1:51
  - piece of news dropping at the start of
• 1:52
  - this week. I think probably
• 1:54
  - the biggest news we're gonna see this week
• 1:56
  - with Scan Group led by doctor Sachin Jain
• 1:59
  - partnering with Costco to go into jointly branded
• 2:02
  - Medicare Advantage
• 2:04
  - policies. And so I just think that's really
• 2:06
  - interesting because it is Costco. They've never dabbled
• 2:09
  - in this space before. Obviously, have incredible supply
• 2:13
  - chain, business, pharmacy network.
• 2:16
  - So interesting strategy there coming from one of
• 2:19
  - the now one of the largest MA plans
• 2:21
  - in the country, SCAN, but also a nonprofit.
• 2:23
  - So I think that really says a lot
• 2:25
  - about where doctor Jane is trying to steer
• 2:27
  - this part of the industry.
• 2:29
  - And talk about that because doctor Jane is
• 2:31
  - one of the most principled,
• 2:33
  - thoughtful,
• 2:35
  - intelligent people to visit with ever. This is
• 2:37
  - obviously a big potential partnership with Costco, one
• 2:40
  - of the biggest retail footprints.
• 2:42
  - You know? And I guess it's early to
• 2:44
  - tell how it goes.
• 2:45
  - The one thing I do know is to
• 2:47
  - make it work, they'll have to put serious,
• 2:48
  - serious commitment into it at a time when
• 2:51
  - others are pulling back from the Medicare Advantage
• 2:53
  - market. What are some of the things they're
• 2:55
  - saying about it? What are you hearing so
• 2:56
  - far?
• 2:57
  - Yeah. And and to your your initial point
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  - there, Scott, he is one of the most
• 3:01
  - respected
• 3:02
  - executives in in the health care industry, certainly
• 3:04
  - within the health insurance industry. And I think
• 3:06
  - that's purely because he he says it like
• 3:09
  - it is. He's willing to call the industry,
• 3:13
  - broken, which I think a lot of Americans
• 3:15
  - feel and experience.
• 3:17
  - And leading a a large Medicare Advantage company,
• 3:20
  - I think he's
• 3:22
  - formed a a path within the industry that
• 3:24
  - doesn't have to
• 3:25
  - doesn't have to negate
• 3:27
  - that that real experience on behalf of a
• 3:29
  - lot of the public. So I think,
• 3:31
  - just in this last AEP, his company broke
• 3:34
  - into the top 10 of the largest MA
• 3:35
  - plans in the country. They added over a
• 3:37
  - 120,000
• 3:38
  - members,
• 3:39
  - which is amazing given, you know, the current
• 3:42
  - time period,
• 3:43
  - and we'll detail in a little bit of
• 3:45
  - just how we're seeing the large carriers
• 3:48
  - really focus on margin
• 3:49
  - versus
• 3:50
  - growth. And they've been doing a lot of
• 3:52
  - different things. I mean, there's, you know, health
• 3:54
  - system partnerships in terms of, co branded plans
• 3:57
  - with health systems specifically,
• 4:00
  - very population specific m a plans, and then
• 4:03
  - now this, this Costco plan. And so I
• 4:06
  - think,
• 4:07
  - you know, important to mention that Costco is
• 4:09
  - not gonna be underwriting anything here. It's not
• 4:11
  - collecting the premiums.
• 4:12
  - Scan is ultimately the the insurance company, but
• 4:16
  - these new plans are gonna tie into Costco's
• 4:19
  - existing pharmacy, optical, hearing, over the counter offerings.
• 4:24
  - So
• 4:25
  - so, yeah, I think it's it's just a
• 4:26
  - really interesting partnership to watch. We'll see how
• 4:29
  - it goes. Obviously, Costco has really high brand
• 4:31
  - loyalty,
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  - and and actually, I saw doctor Jane talking
• 4:34
  - about that on on LinkedIn this week as
• 4:36
  - well that he really likes Costco just as
• 4:38
  - a as an individual, as a shopper. And
• 4:40
  - I think that probably,
• 4:42
  - that probably went into the decision making here.
• 4:45
  - He's he's talked to me. Actually, I talked
• 4:47
  - to him last week about,
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  - he's talking a lot about the moral erosion
• 4:52
  - that he he sees going on across the
• 4:54
  - health care industry and kind of
• 4:56
  - a a fake niceness
• 4:57
  - that a lot of, I think, executives put
• 4:59
  - on, of of an ear of,
• 5:02
  - what's really going on among what patients are
• 5:04
  - experiencing on the ground. And so
• 5:07
  - I think that it it says a lot
• 5:09
  - that this is the
• 5:11
  - this is the the the partner that they
• 5:13
  - decided to launch this this, this Medicare Advantage
• 5:16
  - Plan with.
• 5:18
  - And and and talk about that. Does it
• 5:20
  - feel more like a co printing than a
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  - partnership?
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  - It almost feels like one of those credit
• 5:25
  - card licensing agreements.
• 5:27
  - What what is your take on what this
• 5:29
  - really sort of looks like and and is?
• 5:31
  - Because it's Yeah. As you said, Costco is
• 5:33
  - not taking financial risks, so it seems more
• 5:35
  - like almost a licensing
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  - partnership agreement.
• 5:39
  - Yeah. Exactly. And and then, you know, there
• 5:41
  - there's still sparse details on this. They're not
• 5:44
  - even we they're not selling these plans,
• 5:46
  - next year, at least not that we are
• 5:48
  - aware of. I think they said in the
• 5:49
  - coming years is when these will start to
• 5:51
  - roll out,
• 5:52
  - because I I believe they're still trying to
• 5:55
  - get Medicare or CMS approval
• 5:57
  - for these specific products. So
• 6:00
  - from from what we've seen other outlets reports,
• 6:05
  - it's gonna be jointly branded MA products in
• 6:07
  - two states and then a Medicare supplement plan
• 6:10
  - in a third state. So that's not even
• 6:12
  - that doesn't even cover scans full footprint. They
• 6:14
  - have a few more states than that.
• 6:17
  - But yeah. So we don't know the states
• 6:19
  - exactly. The the leadership said the market would
• 6:21
  - cover roughly 5,000,000
• 6:23
  - potential Medicare enrollees.
• 6:26
  - Obviously, they would not get all of those.
• 6:28
  - They only have about half a not even,
• 6:30
  - about 460,000
• 6:31
  - members
• 6:32
  - right now, and they're almost predominantly entirely on
• 6:34
  - the West Coast with the exception of Texas,
• 6:36
  - and SCANIS.
• 6:37
  - So,
• 6:38
  - so we'll see. You know, it's,
• 6:40
  - still early days on us and
• 6:42
  - not coming out next year,
• 6:45
  - but obviously, very, high profile
• 6:47
  - partnership.
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  - Often, I don't find that,
• 6:50
  - a lot of industry health insurance news doesn't
• 6:53
  - break through to the mainstream,
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  - but I did see this, on a lot
• 6:57
  - of this news with and probably because of
• 6:59
  - the Costco name. It was on morning talk
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  - shows. It was on all the main the
• 7:03
  - mainstream
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  - news channels,
• 7:05
  - that night.
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  - So I think that's also another interesting piece
• 7:09
  - of this is that scan, a relatively small
• 7:12
  - MA player,
• 7:13
  - broke through that typical ceiling,
• 7:16
  - that I think even the larger carriers wish
• 7:18
  - sometimes they could they could get through.
• 7:21
  - Sure. And and largely fascinating. So a lot
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  - of it, right, has to do with the
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  - Costco brand, the Costco name, which is really
• 7:26
  - a highly respected brand.
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  - And where people are trying to figure out
• 7:30
  - their I mean, there's more and more people
• 7:32
  - becoming Medicare eligible every day, and people very
• 7:35
  - much trying to figure out, should they be
• 7:36
  - Medicare Advantage? Should they be a different plan?
• 7:38
  - How should they approach it? No. I think
• 7:39
  - that's fascinating. Yeah. And so it sounds like,
• 7:41
  - basically, Costco is gonna be the storefront
• 7:44
  - for for these for these scan insurance plans.
• 7:47
  - So they'll be sold in the stores. They'll
• 7:49
  - be sold online through insurance
• 7:51
  - agents, but then, you know, the plans themselves
• 7:53
  - will not include a Costco membership.
• 7:56
  - But I imagine there will be a lot
• 7:57
  - of, you know, pharmacy benefits,
• 7:59
  - shopping benefits. Obviously, MA plans can be pretty
• 8:01
  - flexible with the types of,
• 8:04
  - supplemental benefits that they offer.
• 8:06
  - So I'm I'm sure just knowing scan, having
• 8:08
  - talked to doctor Jane a lot, that's gonna
• 8:11
  - be pretty creative,
• 8:12
  - and, you know, a pretty standout plan, I
• 8:14
  - would imagine, within the industry for sure.
• 8:16
  - No. Fantastic. So we're watching that. Anything else
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  - that you're watching closely?
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  - Yep. So I think just overall, as we
• 8:23
  - go into,
• 8:24
  - '27 and and this fall, the enrollment period,
• 8:27
  - Scott,
• 8:28
  - I'll preface by saying, you know, plans, they
• 8:30
  - they legally cannot talk about the benefits they're
• 8:33
  - gonna be offering until,
• 8:35
  - for for a little bit more than a
• 8:37
  - month from now.
• 8:38
  - They've they're still getting everything buttoned up with
• 8:41
  - CMS, the approvals underway, and all that good
• 8:43
  - stuff. So it's been pretty,
• 8:46
  - mum from from the insurers directly in terms
• 8:48
  - of what states they're gonna be in, where
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  - they're gonna be exiting, things like that. A
• 8:53
  - lot of the news,
• 8:54
  - or or confirmations of of exits of pullbacks
• 8:57
  - on benefits, a lot of it right now
• 8:59
  - is coming,
• 9:00
  - from broker materials that are getting leaked to
• 9:04
  - to different out, to different outlets.
• 9:06
  - Humana's really been the only forthcoming one on
• 9:09
  - earnings calls saying that they're gonna be pulling
• 9:10
  - out of markets and dropping products that currently
• 9:13
  - cover about 600,000
• 9:15
  - of their members.
• 9:16
  - And so, you know, they're hoping to recapture,
• 9:18
  - I think they said, about 40% of those
• 9:20
  - members, but, you know, that's it's another straight
• 9:22
  - year of pullbacks. And I think overall,
• 9:25
  - you know, if we're looking at the entire
• 9:26
  - industry,
• 9:27
  - it's it's margin over growth.
• 9:30
  - Years past, Medicare Advantage has been all about
• 9:33
  - growth, getting as many members as possible. Now
• 9:35
  - it's about preserving those margins. And and Humana
• 9:38
  - said itself that they're trying to get back
• 9:39
  - to 3% by 2028, a a profit margin.
• 9:42
  - So, obviously, very slim margins just trying to
• 9:44
  - get back to 3%.
• 9:45
  - And so, yeah, the financial
• 9:47
  - crunch, very real.
• 9:49
  - The the insurance industry, you know, did not
• 9:51
  - get the the rate increase from from CMS
• 9:53
  - that it wanted this year. So still operating
• 9:56
  - under pretty,
• 9:57
  - tight financial constraints
• 9:59
  - according to the insurers. And then in terms
• 10:01
  - of what we're hearing other outlets within the
• 10:03
  - industry reports is that UnitedHealthcare
• 10:06
  - is also eyeing,
• 10:07
  - more market exits this year. Aetna is,
• 10:11
  - cutting broker commissions, trying to, you know, par
• 10:13
  - back some of the,
• 10:15
  - enrollment into its plans. And then just, another
• 10:18
  - outlet this morning was reporting that Centene,
• 10:21
  - is gonna do another year of of market
• 10:23
  - exits. They are they met they exited six
• 10:25
  - states last year from Medicare Advantage, pulling back,
• 10:28
  - apparently to another three for next year. So,
• 10:31
  - you know, we'll see what happens. But, but,
• 10:33
  - you know, last year, seniors had less options.
• 10:36
  - There were some states where there was only
• 10:37
  - one Medicare Advantage plan left,
• 10:39
  - mostly in New England.
• 10:41
  - It seems like it's shaping up to be
• 10:43
  - in another similar tumultuous year,
• 10:46
  - where there's just gonna be less options,
• 10:48
  - certainly less,
• 10:50
  - large network options. So less PPO plans and
• 10:53
  - more of the the HMOs where you've gotta
• 10:55
  - get the referrals to specific,
• 10:57
  - specialties trying to keep keep the keep the
• 11:00
  - costs under control,
• 11:01
  - for for where seniors are going.
• 11:04
  - No. They are saying to see what's evolving
• 11:06
  - there.
• 11:07
  - Right? And what you see in overall, I
• 11:09
  - know kinda it's about 54% people in Medicare
• 11:12
  - Advantage programs last year or plans last year.
• 11:15
  - Is that number likely to be a little
• 11:16
  - bit lower this year, or what are people
• 11:18
  - projecting currently?
• 11:20
  - Yeah. I think it's it's it's hard to
• 11:21
  - say, and I will say it seems to
• 11:23
  - change. That number changes throughout the year, Scott,
• 11:25
  - as,
• 11:26
  - as as people go in and out of
• 11:28
  - certain plans. So it's like when it's when
• 11:31
  - when the annual enrollment period ends in,
• 11:34
  - in,
• 11:36
  - at the end of this year, it'll change
• 11:38
  - before, you know, the the open enrollment period
• 11:41
  - starts in in the early part of twenty
• 11:43
  - seven. So it it changes throughout the year,
• 11:45
  - but it seems like overall, the growth rate
• 11:47
  - is slowing. So, you know, there could be
• 11:50
  - growth. There could be a, you know, a
• 11:51
  - few percentage points upward in terms of people
• 11:53
  - going from traditional Medicare to Medicare Advantage.
• 11:56
  - But I think the bigger story is that
• 11:58
  - the blockbuster growth of the last decade has
• 12:01
  - completely ended,
• 12:02
  - and now we're seeing the plans pull back
• 12:04
  - and really get tight on on, I think,
• 12:06
  - the benefits that attracted a lot of seniors
• 12:08
  - to Medicare Advantage, which was all the little
• 12:10
  - extras stuff. And I also saw one analyst
• 12:13
  - talking about an interesting,
• 12:16
  - phenomenon that could happen,
• 12:18
  - because
• 12:19
  - CMS has discontinued,
• 12:21
  - subsidies
• 12:22
  - for part d premiums. So those those add
• 12:25
  - on,
• 12:26
  - prescription drug plans. So sometimes a senior will
• 12:29
  - have traditional Medicare, but then they'll add on
• 12:31
  - a a part d plan to just cover
• 12:33
  - prescription drugs.
• 12:35
  - And CMS is no longer gonna be, subsidizing
• 12:38
  - those plans. And so we could then see,
• 12:42
  - we could see more seniors go into Medicare
• 12:44
  - Advantage because they want those those drug benefits
• 12:46
  - that are part of the more comprehensive MA
• 12:48
  - plans and moving away from traditional Medicare even
• 12:51
  - if that's not what they they might have
• 12:53
  - done in years past, all stemming from that
• 12:55
  - federal policy change. So I think there's just
• 12:57
  - a lot of little moving parts here to
• 12:59
  - watch that are gonna affect that, to be
• 13:01
  - honest with you.
• 13:03
  - It no. It sure seems like it. Just
• 13:04
  - fascinating. Jacob, as always, thank you for giving
• 13:07
  - us insight of what's going on. Fascinating what
• 13:09
  - such and Jane is doing, doctor Jane is
• 13:11
  - doing, with Costco.
• 13:13
  - Fascinating.
• 13:14
  - And, yes, the moving parts within this sort
• 13:16
  - of Medicare Advantage market
• 13:19
  - continue to evolve. So thank you so much
• 13:21
  - for sharing with us and a and a
• 13:23
  - total pleasure,
• 13:24
  - to visit with you as always. Jacob Emerson,
• 13:26
  - just fantastic
• 13:27
  - guru of payers. Thank you so much. Yeah.
• 13:30
  - You as well, Scott. Thanks.