Walmart Health COO outlines health insurance business: 5 things to know

https://www.beckershospitalreview.com/payer-issues/walmart-health-coo-outlines-health-insurance-business-5-things-to-know.html?utm_medium=email

NCDHHS on Twitter: "A few years ago, Durham's David Tedrow couldn't drive a  car. He'd forgotten how to answer a telephone. Now, he's started Senior  Health Insurance Brokers, LLC, and was honored

Lori Flees, senior vice president and COO of Walmart Health, officially launched Walmart Insurance Services Oct. 6. The insurance agency will “assist people with enrolling in insurance plans and simplify what’s historically been a cumbersome, confusing process,” Ms. Flees said.

Five things to know:

1. Ms. Flees outlined the operations of Walmart Insurance Services in a Oct. 6 blog post. Walmart will begin selling Medicare insurance plans during this year’s open enrollment period, from Oct. 15 through Dec. 7. 

2. Walmart Insurance Services will provide Medicare products, including Part D, Medicare Advantage and Medicare Supplement plans. The products will be offered by Humana, UnitedHealthcare, Anthem Blue Cross Blue Shield, Amerigroup, Simply Health, WellCare, Clover Health and Arkansas Blue Cross and Blue Shield. More insurers will be added, Ms. Flees said.

3. In July, the Arkansas Democrat Gazette broke news that Walmart had started seeking Medicare sales managers and insurance agents for a new entity called Walmart Insurance Services.

4. In early October, Walmart announced its partnership with Medicare Advantage insurer Clover Health on its first health insurance plans, which will be open to half a million people in eight counties in Georgia.

5. Walmart’s insurance business is licensed in all 50 states and Washington, D.C. Ms. Flees said the company has hired insurance agents to help people find insurance plans.

Medicare Advantage should not ‘game the system’ but prioritize patient care, honest billing

https://www.healthcaredive.com/news/medicare-advantage-should-not-game-the-system-but-prioritize-patient-care/585613/

We all agree healthcare providers should prioritize patient well-being and bill honestly. Most do. But, if not, my office, the Office of Inspector General for the HHS, and other government agencies, are watching. 

We are especially monitoring an area of concern: abuse of risk adjustment in Medicare Advantage, the managed care program serving 23 million beneficiaries, 37% of the Medicare population, at a cost of about $264 billion annually. We have good reason to pay attention. Our recent report found that Medicare Advantage paid $2.6 billion a year for diagnoses unrelated to any clinical services.

Plans used a tool called “health risk assessments” to collect these diagnoses. Ideally, health risk assessments might be part of a Medicare beneficiary’s annual wellness visit and help care teams identify health issues. However, some Medicare Advantage plans use risk assessments without involving the patients’ regular care providers. 

Some plans partner with businesses whose primary livelihood entails identifying diagnoses by conducting risk assessments. Some organizations send professional risk assessors, perhaps practitioners with some medical credentials but not physicians or other clinicians involved in the person’s care, to the beneficiaries’ homes.  Our study found that 80% of that extra $2.6 billion payment resulted from in-home health risk assessments. 

Medicare’s capitated payments vary by beneficiary for good reason. If Medicare paid the same for every beneficiary, plans might favor younger and healthier enrollees. It may not hold true every month, but, on average, it will cost a plan less to serve a healthy 65-year-old than an older person with diabetes or cancer.

Risk adjustment tailors the capitated rate to each beneficiary’s expected costs, so plans should enroll any interested beneficiary and not discriminate. But the risk adjustment is just a projection. Beneficiaries need not actually incur higher costs for the plan to receive higher payments. Some beneficiaries with a seemingly low risk will incur high costs in a given year and some beneficiaries with a high risk will incur low or even no costs.

In fact, one Medicare Advantage plan received about $7 million for beneficiaries who did not appear to receive any clinical care that year — other than the risk assessment, which was the only reason for the higher Medicare payment. Finding beneficiaries with high risk scores but low care utilization can prove a profitable business strategy. 

Without gaming, on the aggregate, risk-based payments and utilization should even out over time.  But what if plans do game the system? Perhaps making their beneficiaries look sicker? Or not providing care for beneficiaries’ health conditions?

We identified two main concerns:

  • bad data — risk of incorrect diagnoses identified in the health risk assessment resulting in incorrect payments to plans.
  • suboptimal care — risk that diagnoses are correct, but patients are not getting the care they need.

The question of whether beneficiaries are experiencing quality and safety problems requires more study. For example, it is possible that beneficiaries are receiving care, but plans are not submitting this data as required. Regardless, plans that use risk assessments to gather diagnoses, but then take no further action, are clearly missing an opportunity for meaningful care coordination. We urge Medicare Advantage plans to:

  • Ensure practices drive better care and not just higher profits.  
  • Enact policies and procedures to ensure the integrity and usefulness of the data.

This could include measures like educating patients about the identified diagnoses and sharing them with caregivers. These steps are consistent with the best practices identified by CMS and provided to Medicare Advantage Plans in 2015.

It is not necessarily bad that Medicare allows risk assessments to influence payment, trusting that plans use risk assessments to identify missed diagnoses and not to fabricate nonexistent diagnoses. 

However, this practice only helps patients if there is some additional intervention to improve care. If risk assessments are performed by third parties, at minimum, the beneficiary and the beneficiary’s care team should learn the results. Risk assessments should trigger meaningful care coordination, patient engagement and help ensure the care team takes appropriate action. Risk assessments that generate diagnoses for payment purposes, but result in no follow-up care raise serious concerns.

Ensuring beneficiaries receive the care they need should be front of mind for executives as they design risk assessment programs with an eye to quality of care and better care coordination. Failing that, executives should know that government agencies will scrutinize risk adjustment for abuse. 

In response to our report, CMS promised to provide additional oversight and target plans that reap the greatest payments from in-home health risk assessments and conditions generated solely by risk assessments for which the beneficiaries appeared to receive no other clinical services. My office has identified red flags in some industry patterns and recommends plans adopt best practices. Executives should champion best practices and make sure their plans are driving correct diagnoses and quality care.

Ensuring that beneficiaries are properly diagnosed is important, not just for the integrity of taxpayer-funded federal healthcare programs, but also for the welfare of the beneficiaries served. Coordinating care and providing appropriate follow up is critical.

My office and other government agencies are targeting oversight to make sure plans do not pad risk adjustments with unsupported diagnoses. When plans find new real diagnoses, the plans deserve the extra payment, but only if patients get appropriate care.

 

 

 

 

Walmart confirms a new avatar — it’s also a health insurance agency

https://medcitynews.com/2020/07/walmart-confirms-a-new-avatar-its-also-a-health-insurance-broker/?utm_campaign=MCN%20Daily%20Top%20Stories&utm_medium=email&_hsmi=90973681&_hsenc=p2ANqtz-81Jwk3CVNhJLTDzB0d_5dxRASKqJQULhnQYEg1uxEGxr-l_EbrHhNlSq7UcPZ103ku0wBylrpCk8Y0i1vrK7rRE5rJuA&utm_content=90973681&utm_source=hs_email

Should I buy health insurance from Walmart? - Castaline Insurance ...

Walmart quietly launched a new health insurance business. The company, called Walmart Insurance, was filed with the Arkansas Secretary of State last month.

Walmart is making clear what an executive declared in a virtual conference: that it is firmly in the healthcare business, not just in retail healthcare.

News emerged today that the company is planning to throw its weight around in another healthcare segment in need of an overhaul: insurance. A spokeswoman from the Bentonville, Arkansas retail behemoth confirmed that the company has created “Walmart Insurance Services LLC” to sell insurance policies. The business entity’s name was first filed with the Arkansas Secretary of State in late June.

“We currently offer access to insurance information in our Walmart Health locations, and we have a long-standing education program called Healthcare Begins Here to help people find the right insurance plan for them,” spokeswoman Marilee McInnis wrote in an email. “We’re expanding our current insurance services to now include the sale of insurance policies to our customers.”

A handful of job postings at a call center in the Dallas metro also match up with Walmart Insurance Services, as first pointed out by Talk Business & Politics. Walmart has listings for licensed insurance agents and Medicare sales supervisors.

“Yes, you read that right, Walmart now has an insurance agency,” the listings read.

It looks like the new subsidiary will be focused on selling Medicare Advantage plans, though the company was mum when asked for additional details. The spokeswoman’s statement about the “sale of insurance policies to our customers” also leaves open the possibility of Walmart expanding its services beyond senior shoppers in the future.

Medicare Advantage plans have been experiencing rapid growth in the past decade, with more than a third of all beneficiaries enrolled in a plan managed by a private insurer. That figure is expected to increase in the future.

 

Deeper into the pharmacy space

Separately, on Tuesday, Walmart announced that it had struck a partnership with  PBM startup Capital Rx, which provides health plans real-time information on prescription drug prices.

Walmart has been a big player in the pharmacy space for several years, and the company appears to be deepening that through this partnership

“‘Everyday low price’ has been a guiding principle at Walmart. We take pride in providing affordable prices to more than 160 million customers who shop Walmart each week,” Walmart Health and Wellness Vice President Luke Kleyn said in a news release. “Working with Capital Rx will allow us to do the same for prescription drugs,”

Capital Rx was founded just over two years ago by AJ Loiacono, a former insurance auditor, with the idea of providing drug prices as part of pharmacy benefit plans.

Loiacono started his career in the pharmaceutical manufacturing industry, where “everything that comes out of that plant has a price.”

When he moved over to the auditing and procurement side, working with payers and self-insured companies, he was shocked to find out that none of their contracts included drug prices. To solve this, the company uses Medicaid’s National Average Drug Acquisition Cost, rather than the average wholesale price, to calculate costs.

As a standalone company, Capital Rx was able to provide price information for retail drugs, but they weren’t able to do the same for mail and specialty drugs. The partnership with Walmart will “complete the model,” with Walmart providing mail and specialty drug fulfillment.

With the partnership, Capital Rx was able to quickly sign on some payers, though it hasn’t yet disclosed which ones.

“Walmart is a diversified company. We liked the fact that they were independent. They’re not part of a PBM or a health system today,” Loiacono said. “The other part of it is, they have scale.”

Loiacono also pointed to similar goals in price transparency — something Walmart emphasized when it shared the cash pay prices for its new health clinics.

“This is what we’re seeing a little bit more of as the future in the roadmap,” Loiacono said. “They’re making a serious investment in healthcare.”

 

 

 

 

Health insurance marketplace GoHealth files to go public

https://www.fiercehealthcare.com/tech/health-insurance-marketplace-gohealth-files-to-go-public?utm_medium=nl&utm_source=internal&mrkid=959610&mkt_tok=eyJpIjoiWmpjeVlXVTRZV0l5T1RndyIsInQiOiJLWWxjamNKK2lkZmNjcXV4dm0rdjZNS2lOanZtYTFoenViQjMzWnF0RGNlY1pkcjVGcFwvZFY4VjFaUUlZaFRBT1NRMGE5eWhGK1ZmR01ZSWVZWGMxOHRzTkptZVZXZmc5UnNvM3pVM2VIWDh6VllldFc3OGNZTTMxTDJrXC8wbzN1In0%3D

GoHealth files for $100M IPO

GoHealth, an online health insurance marketplace, is looking to raise up to $100 million in an initial public offering, according to a filing with the U.S. Securities and Exchange Commission (SEC) Friday.

The Chicago company, launched in 2001, said its stock will trade on the Nasdaq Global Market under the symbol “GHTH,” according to an S-1 filing.

The company didn’t list specific share price or the number of shares it’s selling in the filing.

GoHealth operates a health insurance portal offering a variety of plans that allows customers to compare numerous insurance plans such as family health plans and self-employed insurance.

The company works with more than 300 health insurance carriers and has enrolled more than 5 million people into health plans.

Goldman Sachs, BofA Securities and Morgan Stanley are acting as the managing book runners for the proposed offering. Barclays, Credit Suisse, Evercore ISI, RBC Capital Markets and William Blair are acting as book runners for the proposed offering. Cantor and SunTrust Robinson Humphrey are acting as co-managers for the proposed offering, according to a GoHealth press release.

GoHealth will join a growing list of technology-enabled healthcare companies that are testing the public markets, including One Medical, Livongo, Phreesia, Health Catalyst, Change Healthcare and Progyny.

The company has shifted its focus toward Medicare products over the past four years, positioning itself to capitalize on strong demographic trends and an aging population.

Medicare enrollment is expected to grow from approximately 61 million individuals in 2019 to approximately 77 million individuals by 2028, the company said in its SEC filing.

At the same time, an increasing proportion of the Medicare-eligible population is choosing commercial insurance solutions, with 38% of Medicare beneficiaries, or approximately 23 million people, enrolled in Medicare Advantage plans in 2019, an increase of approximately 1.5 million people from 2018 to 2019, the company said.

The market is “ripe for disruption” by digitally enabled and technology-driven marketplaces like the GoHealth platform, according to the company.

GoHealth estimates a total addressable market of $28 billion for Medicare Advantage and Medicare Supplement products.

“We believe that these trends will drive a larger market in the coming years that, when taken together with our other product and plan offerings, will result in an even larger addressable market. We also believe that we are poised to benefit from market share gains in what has traditionally been a highly fragmented market,” the company said in the S-1 filing.

The company uses machine-learning algorithms and insurance behavioral data to match customers with the health insurance plan that meets their specific needs.

In 2019, the company generated over 42.2 million consumer interactions.

In September 2019, Centerbridge acquired a majority stake of GoHealth in a deal that reportedly valued the company at $1.5 billion, the Chicago Tribune reported.

Net revenues grew to $141 million for the first quarter of this year, compared to $69.1 million last year. The company reported 2019 pro forma net revenues of $540 million, up 139% from 2018’s revenue of $226 million, the company reported in its SEC filing.

The company reported a net loss of $937,000 for the first quarter of 2020 compared to a net income of $5 million for the same period in 2019, according to its IPO.

Demographic, consumer preference and regulatory factors are driving growth in the individual health insurance market, according to the company. Medicare enrollment is expected to grow significantly over the next 10 years as 10,000-plus individuals turn 65 each day and become Medicare-eligible.

At the same time, the growth in plan choices makes education and assistance with plan selection more important for consumers, GoHealth said.

“Marketplaces such as ours help educate consumers, and assist them in making informed plan choices,” the company said.

The company also faces significant risks that may impede its growth. Currently, a large portion of GoHealth’s revenue is derived from a limited number of carriers. Carriers owned by Humana and Anthem accounted for approximately 42% and 32%, respectively, of the company’s net revenues for the first three months of 2020, the company said in its IPO paperwork.

The COVID-19 pandemic also creates uncertainty in the healthcare market, and future developments in the outbreak could impact the company’s financial performance, GoHealth said.

 

 

 

A 70-year-old man was hospitalized with COVID-19 for 62 days. Then he received a $1.1 million hospital bill, including over $80,000 for using a ventilator.

https://www.yahoo.com/news/70-old-man-hospitalized-covid-170112895.html

Man, 70, hospitalized with COVID-19 for 62 days gets $1.1 million ...

  • A man in Washington state who spent more than two months in the hospital and more than a month in the Intensive Care Unit with COVID-19 received a 181-page itemized bill that totals more than $1.1 million, The Seattle Times reported.
  • Michael Flor, 70, will likely foot little of the bill due to his being insured through Medicare, according to the report.
  • “I feel guilty about surviving,” Flor told The Seattle Times. “There’s a sense of ‘why me?’ Why did I deserve all this? Looking at the incredible cost of it all definitely adds to that survivor’s guilt.”

A 70-year-old man in Seattle, Washington, was hit with a $1.1 million 181-page long hospital bill following his more than two-month stay in a local hospital while he was treated for — and nearly died from — COVID-19. 

“I opened it and said ‘holy (expletive)!’ ” the patient, Michael Flor, who received the $1,122,501.04 bill told The Seattle Times.

He added: “I feel guilty about surviving. There’s a sense of ‘why me?’ Why did I deserve all this? Looking at the incredible cost of it all definitely adds to that survivor’s guilt.”

According to the report, Flor will not have to pay for the majority of the charges because he has Medicare, which will foot the cost of most if not all of his COVID-19 treatment. The 70-year-old spent 62 days in the Swedish Medical Center in Issaquah, Washington, 42 days of which he spent isolated in the Intensive Care Unit (ICU). 

Of the more than one month he spent in a sealed-off room in the ICU, Flor spent 29 days on a ventilator. According to the Seattle Times, a nurse on one occasion even helped him call his loved ones to say his final goodbyes, as he believed he was close to death from the virus.

While in the ICU, Flor was billed $9,736 each day; more than $80,000 of the bill is made up of charges incurred from his use of a ventilator, which cost $2,835 per day, according to the report. A two-day span of his stay in the hospital when his organs, including his kidneys, lungs, and heart began to fail, cost $100,000, according to the report.  

In total, there are approximately 3,000 itemized charges on Flor’s bill — about 50 charges for each day of his hospital stay, according to The Seattle Times. Flor will have to pay for little of the charges — including his Medicare Advantage policy’s $6,000 out-of-pocket charges — due to $100 billion set aside by Congress to help hospitals and insurance companies offset the costs of COVID-19.

Flor is recovering in his home in West Seattle, according to the report.

 

 

 

 

The Value of Home Health Care

The Value of Home Health Care

5 Truths About Home Health Care

For the first time in our modern history, staying at home has become a “new” normal. And with more than 1.5 million Americans now infected with COVID-19, never before in our lifetime has accessing care in a person’s home been so important.

Smartly, our federal and state policymakers quickly expanded reimbursement for telehealth and removed barriers that have now allowed more providers to care for patients virtually via video and phone, eliminating the risk of COVID-19 exposure during provider visits. But not all care can be provided through telehealth – and we would be shortsighted to not also address the growing need for home-based care.

Long before the COVID-19 emergency, health care policy experts have increasingly recognized the value of home-based health care. A recent AARP survey found that three in four adults 50 years and older would prefer to age in their homes and communities. And a growing body of evidence suggests it is less expensive to deliver care in the home. Indeed, for years we’ve seen hospitalized patients more quickly returning to their homes and communities to heal and recover safely, reducing costs for themselves and the health care system.

Home-based care addresses some of the negative health effects of social isolation and loneliness, which drive poorer health outcomes that annually cost billions of excess health care dollars. According to one study, those experiencing loneliness and social isolation had a more than 60 percent higher risk of developing dementia and a fourfold increase in hospital readmission rates within a year of discharge.

Despite its demonstrated value, our country has yet to fully integrate the support needed for home-based care. Instead, we have a collage of different reimbursement frameworks across state, federal, and private payers.

Traditionally, Medicare has paid only for home caregivers in very limited circumstances. But we’re now seeing small and promising changes. The Medicare Advantage program, for example, now allows plans to offer non-medical care services in the home as supplemental benefits. These benefits can include day care services, in-home support services including meals and support for caregivers.

We have also seen a surge of technologies to enable home-based care. From those receiving home infusion therapies, to home dialysis, to remote patient monitoring, the private sector has stepped up to meet the needs of those wanting to or needing to receive care at home.

Now is the time to expand on these promising changes with a more comprehensive approach to paying for home-based care delivery. With more thoughtful integration of caregiving services and improved care coordination across care settings, including the home, such models can drive down health care costs for patients and the system overall.

Whether caring for those impacted by our current public health crisis, or those who are medically homebound, or those who simply choose to age in place, policymakers should think beyond essential medical services and consider the non-medical drivers of health that are often as essential to good health outcomes. For example, many individuals needing to stay at home are ill-equipped to carry out their own basic needs. Daily tasks — such as getting in and out of a chair or bed, moving about the house, shopping and preparing meals, taking medications properly, bathing and dressing, and cleaning and laundry — can be a struggle for the elderly and those with serious health conditions.

Fortunately, we have millions of home health nurses and caregivers working on the front lines to care for vulnerable adults who should safely remain in their homes during this pandemic and beyond.

These workers are the foot soldiers who perform tasks such as shopping, meal preparation and assisting with mobility and personal care. Well-trained caregivers and nurses, sensitive to the time and place where patients actually live, can more readily identify and address issues that can exacerbate a person’s chronic, complex illness that may not otherwise be visible in a single visit to a traditional health care setting.

As we face record unemployment, federal, state and local policymakers should consider how best to utilize this untapped resource both now and in the future. With the appropriate testing, training, and reimbursement, individuals can have a choice in where they age and receive care.

While keeping people safe and healthy in their homes has always been appealing, now it is imperative. For our most vulnerable individuals — the elderly and those with chronic health conditions – home-based care can save their lives.

 

 

 

Justice Department sues Anthem, alleging Medicare fraud

https://www.axios.com/doj-anthem-lawsuit-medicare-advantage-fraud-11cdba13-eacd-4847-9bb0-20aa993235f9.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

Justice Department sues Anthem alleging Medicare Advantage fraud ...

The Department of Justice has sued Anthem, alleging that the health insurance company knowingly submitted inaccurate medical codes to the federal government from 2014 to 2018 as a way to get higher payments for its Medicare Advantage plans and turned “a blind eye” to coding problems.

Why it matters: This is one of the largest Medicare Advantage fraud lawsuits to date, and federal prosecutors believe they have more than enough to evidence to claim that Anthem bilked millions of dollars from taxpayers.

Background: DOJ has been probing the “risk adjustment” practices of all the major Medicare Advantage insurers for years, but hadn’t pulled the trigger on a lawsuit against a major player.

  • Risk adjustment is the process by which Medicare Advantage companies assign scores to their members based on the health conditions they have. Patients who have higher risk scores lead to higher payments from the federal government to the companies that insure them.
  • Insurers are required to review patients’ medical charts to verify the health conditions, and if insurers find any inaccurate diagnoses, they have to be deleted — which also would require the companies to pay back money to the federal government.

The Department of Justice is alleging that Anthem reviewed medical records, but only focused on finding “all possible new revenue-generating codes” while purposefully ignoring all erroneous diagnoses.

  • For example, according to the DOJ’s lawsuit, Anthem coded one member in 2015 as having active lung cancer.
  • “Anthem’s chart review program did not substantiate the active lung cancer diagnosis,” the DOJ alleges. Instead of deleting that diagnosis, Anthem allegedly added another three codes — leading to a $7,000 overpayment just for that member that year.

The other side: Anthem said in a statement that it intends “to vigorously defend our Medicare risk adjustment practices” and that “the government is trying to hold Anthem and other Medicare Advantage plans to payment standards that CMS does not apply to original Medicare.”

The big picture: Medicare Advantage continues to enroll seniors and people with disabilities at high rates, even as more allegations of fraud come out against the insurers that run the program.

Read the lawsuit.

 

 

 

 

Health plans ramp up physician practice acquisitions

https://mailchi.mp/9e118141a707/the-weekly-gist-march-6-2020?e=d1e747d2d8

 

Health systems and private equity firms aren’t the only ones aggregating physician practices—many large insurers are rapidly acquiring or affiliating with physician groups, especially to support their Medicare Advantage (MA) strategies.

As the map below shows, most insurers are focusing this vertical integration in states like Florida, Texas, and California—places where they also have large populations of MA beneficiaries. Astonishingly, UnitedHealth Group—through its Optum division—is likely the largest employer of physicians in the US, employing or affiliating with 50,000 physicians—roughly 5,000 more than HCA Healthcare and nearly double the number of Kaiser Permanente. The number of Optum-controlled physicians has increased rapidly in recent years, the result of many large-scale deals, including the $4.3B acquisition of DaVita Medical Group.

When it comes to leveraging this growing physician network, United is setting its sights well beyond Medicare Advantage, as demonstrated by its recent introduction of Harmony, a commercial narrow network health plan in Southern California based almost exclusively on a network of Optum physicians.

Meanwhile, Humana’s physician strategy has focused more on affiliations with non-traditional groups serving MA patients, including Iora Health and Oak Street Health—though Humana also has two large primary care groups, Conviva and Partners in Primary Care, the latter of which just secured a $600M private equity investment to expand.

Notably absent from this map is Aetna, which has been pursuing a different strategy, focused around steering its MA population to its advanced practice provider-run HealthHUBs in CVS pharmacies.

This trend of insurer acquisition of physicians is obviously worrisome for health systems, as the health plans they negotiate with for payment are now directly competing with them at the front end of the delivery system.  

 

 

Financial updates from UnitedHealth, Anthem + 5 other for-profit payers

https://www.beckershospitalreview.com/payer-issues/financial-updates-from-unitedhealth-anthem-5-other-for-profit-payers.html?utm_medium=email

The following seven health insurers recently released their financial statements for the fourth quarter of fiscal year 2019:

1. Anthem saw its revenues and profits grow in the fourth quarter, but the insurer missed analysts’ earnings expectations.

2. Cigna continued to realize higher revenues and profits in the fourth quarter, thanks to its subsidiary Express Scripts.

3. Molina Healthcare ended the fourth quarter with lower net income than a year prior as premium revenues declined.

4. Humana saw total revenue and net income grow in the fourth quarter, thanks in part to growth in its Medicare Advantage business and health services segment.

5. Centene Corp. saw its revenues grow in the fourth quarter, but experienced higher-than-expected flu costs.

6. UnitedHealth Group saw its revenues just miss analysts’ expectations in the fourth quarter, but the health insurance giant’s Optum unit boosted profits.

7. Aetna‘s parent company, CVS Health, exceeded Wall Street’s expectations with its fourth-quarter results, boosted largely by its pharmacy benefit management business.

 

The attractive economics of Medicare Advantage

https://mailchi.mp/0ee433170414/the-weekly-gist-february-14-2020?e=d1e747d2d8

 

 

After years of subsidizing Medicare Advantage (MA) plans in an effort to attract more insurers and beneficiaries to the market, the government has succeeded in its goal: the average beneficiary can now choose from 28 plans in 2020, and recent studies have shown MA plans are outperforming fee-for-service (FFS) Medicare on several key quality measures.

As shown above, this subsidy has decreased in recent years—as mandated by the Affordable Care Act—and per-beneficiary MA payments are roughly equal to those of FFS Medicare. (These numbers may be underreported, however, due to aggressive risk adjustment measures on the part of MA plans.) However, risk-adjusted average Medicare cost per MA beneficiary is actually 13 percent lower than per Medicare FFS beneficiary, due mainly to lower utilization of high-cost services and other efficiencies.

Insurers offering MA plans are profiting from this lucrative “spread.” 

Growth in MA plans in recent years ensures that private insurers will continue to play an important role in the future of Medicare—the most recent projections estimate that 47 percent of Medicare beneficiaries will be in MA plans within a decade.

But inefficiencies in traditional Medicare may not make it the best standard on which to base MA payments. And ultimately, relative MA payment rates will have to continue to drop for the program to sustainably manage the healthcare costs of the gigantic Baby Boom generation.