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Tag: Medicare Advantage

Medicare Advantage Has Saved Medicare

By GEORGE HALVORSON

The Program has also Helped Millions of Low-Income Retirees with Better Retirement Benefits and Needed Support Services

Medicare Advantage (MA) has saved Medicare. Half of those in Medicare are in MA and their care costs less on average. This means the Medicare Trust Fund is protected against future deterioration because MA’s cost increases continuously run below the average increase in Medicare Trust Fund revenue each year.

The capitation paid to MA plans for each member is based each year on the actual average cost of fee-for-service Medicare in every county. Payments to the plans are now running about 11% below that average cost.

The plans bid capitation levels that are below the average cost of fee-for-service Medicare every year because the plans deliver much better care. The functional truth that most policy people do not know or understand is that better care costs less money, when you design the system and the processes to achieve that result.

Fee-for-service Medicare is expensive and too often is poorly delivered. The fee-based payment model pays more for bad and failed care because when the caregivers are paid only by the piece, they have more pieces to deliver when care fails. They deliver and bill for even more pieces when the health of a member deteriorates. When inferior care creates complications and mishaps more pieces of care are needed for that patient.

Diabetic Blindness Reduced By 60% With Blood Sugar Control

MA plans bid capitation levels every year based on the financial opportunity created by that bad care in FFS. The plans know that diabetic blindness can be reduced by 60% or more if the patients have their blood sugar controlled. The plans set their capitation levels knowing that the average cost of care in every county includes the high level of blindness that happens when FFS providers do not help their patients achieve their blood sugar control goals and thus incur extra expenses for those patients.

The Medicare Advantage program has blood sugar control as a key focus point. That is important and relevant, because the plans can collect the capitation money that was created by no blood sugar controls, and then can and do reduce blindness significantly by achieving that goal. They spend significantly less money on those patients.

The MA payment program is set up to have the plans create financial surpluses from better care and then to have the plans use those surpluses to improve the benefits of their members. The plans create those surpluses and use them to pay for additional benefits–so the Medicare Advantage members have vision benefits, dental benefits, hearing benefits, and various social support benefits that do not exist in the traditional Medicare benefit package.

Those expanded benefits do not increase the cost of Medicare because they are created by the capitation cash flow that runs about 11%–17% below the actual average cost for fee-for-service Medicare in each county. That is a far better use of the Medicare dollar and it is not an additional expense for the program.

The plans identify which patients have congestive heart failure or asthma and then they work with those patients to significantly reduce their crisis levels and improve care for those patients. The MA members with those conditions have much better lives and they have less physical pain, stress, anxiety and damage because they avoid those crises. The better care results in 40% fewer days in the hospital for both of those conditions. Plans save money by having significantly better care for those patients.

Amputation Five-Year Mortality Rate is Over 40%

A major expense for the Medicare program is amputations. We have some of the highest amputation rates in the world for our lower income patients.

MA plans know that 90% of amputations are caused by foot ulcers. You can reduce foot ulcers by more than 60% just by having dry feet and clean socks. So the plans save billions of dollars that create surpluses in their capitation cash flow and they significantly improve the life expectancy of those patients just by providing those services consistently and intentionally to their diabetic members.

The five-year mortality rate for the people who have amputations ranges from 40%–80%. In their attacks on the program MA’s critics never mention those amputation numbers and those important and real death rates .

Special Needs Plans Now Serve Over 6 Million People

MA Special Needs Plans (SNP) just had their enrollment grow to 6.5 million members in January of this year. SNP enrollees are eligible for both Medicare coverage and Medicaid coverage. They have some of the highest health care needs in the country and too often have some of the lowest levels of resources to deal with basic aspects of their lives and their care.

The critics also don’t mention that the SNPs do life changing and extremely beneficial work for the lowest-income and highest-need people in the Medicare program.

Millions of people enrolled in SMP plans have been badly impacted by various social determinants of health issues, as well as by care delivery failures for their entire lives. SNPs are often the first organized care related support that millions of those patients have had for their personal care.

People With Weak Retirement Plans Need the Additional Benefits

Those who look at the Medicare program need to understand and appreciate the fact that the expanded benefit package from the plans is often extremely important and directly relevant to the daily lives of millions of people. They are retired but have few assets and low levels of financial support for their retirement years.

We are no longer at the point where retirees in America can rely on a pension plan and basic retirement benefits after they retire. Fewer than half of retirees today have a pension payment or a deferred compensation plan of any kind. Most retirees have a low cash reserves to use to purchase needed services and benefits in their retirement years.

There is a solid set of reasons why almost 90% of our lowest income Medicare beneficiaries are now enrolled in MA plans. There are also obvious reasons why those numbers include more than 70% of African-Americans and more than 80% of Hispanics. Additionally, MA has language competency requirements for Hispanic enrollees that do not exist for fee-for-service Medicare.

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What Walmart said & What Walmart Did: Not the same thing

Walmart surprised us all and changed its mind about primary care yesterday. It’s out.

Because so few people have seen it I want to show what Walmart‘s head of health care said just 18 months ago (Nov 2022). Today they are finally killing off the 6th different strategy they’ve had (maybe it was 4). I guess (unlike CVS & Walgreens) they don’t have to write down investment in Oak Street or VillageCare, but they never worked out that primary care is only profitable if it’s 1) very low overhead 2) a loss leader for more expensive services (as most hospitals run it) or 3) getting a cut of the $$ for stopping more expensive services (Oak Street, Chenmed, Kaiser).

At HLTH 18 months ago I interviewed Cheryl Pegus who was then running Walmart and I asked why anyone should trust them, given how often they changed. Sachin H. Jain, MD, MBA Jain answered for her and said, “because they have Cheryl!” — Cheryl then said, “at Walmart the commitment to delivering health care is bigger than anywhere I have ever worked”. “Right now I have 35 centers in 3 years I’ll have 100s”  see 11.00 onwards in the video below, although the whole thing is worth a look

Cheryl though left Walmart THE NEXT WEEK!

Medicare Is Now Profitable as a Total Program Because of Medicare Advantage

By GEORGE HALVORSON

Medicare made $83.4 billion very real dollars in 2022. The 17% discounts below the average cost of fee-for-service Medicare, that happen in every county for Medicare Advantage, have been very real and extremely successful in paying for Medicare coverage — in a way that now makes the program a profit center for the US Government.

You can see the actual financial report page from the 2023 Medicare trustee report below. It shows that the Medicare trust fund grew in 2022 for the first time in decades. More than half of the Medicare members are now enrolled in Medicare Advantage plans. Those members cost significantly less than their equivalent fee-for-service Medicare patients.

These are the actual numbers from the trustee report.

The Medicare trustee report says that the total Medicare program grows per member by 6.7% every year. They project in that report that they expect that rate of increase to be consistent over the next decade. The enrollees in the Medicare Part A and Part B programs have expenses that increase slightly above that number every year. That’s been true for a couple of decades.

Medicare loses money on every Part A and Part B member when expenses for those programs are higher than the 6.7% average.

Medicare Advantage costs for Medicare Part C are increasing at a lower rate than that number. That means that Medicare makes money and creates a surplus with the Medicare Advantage patients.

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Too much fawning over Len Schaeffer?

By MATTHEW HOLT

There’s a lot of strum & dangst about the uptick in system utilization that has boosted hospital profits and hit Humana and United’s bottom line (But not so much Elevance’s). Kevin O’ Leary over at Health Tech Nerds brought this up today and I was reminded of this piece I wrote in 2006. And a big issue was, how much understanding and control do insurers have over the utilization in (and out of) their networks. So take a look at this piece and particularly, given the issues at the BUCAHs and at smaller players like Agilon, consider how much insurers actually know about spending? And remember that Wellpoint was the 1990s name for what is now Elevance, via being called Anthem!–Matthew Holt

No one is arguing that Len Schaeffer isn’t a very bright guy, nor that he hasn’t done very well in America’s health care system. He’s also done very well out of America’s health care system. So when McKinsey publishes a fawning interview with the man who saved Blue Cross of California, and turned it into one of the most profitable for-profit health insurance companies, and then merged it with the other for-profit Blues, it’s perhaps appropriate to ask a few more questions.

Full disclosure here; in the distant past I’ve worked for several companies that are now part of the Anthem/Wellpoint collosus; and I currently do work for the California Health Care Foundation, which wouldn’t exist were it not for the fact that, when Wellpoint converted to for-profit status, it (and the California Endowment) were endowed with a huge chunk of stock. So you can take my comments in what ever light you like. In addition I’ve only done limited research here and a couple of things are retelling of tales I’ve heard, so if anyone knows more gossip, please email me.

Schaeffer is coming towards the end of his business career, but he started young and fast. He was head of HCFA (the artist now known as CMS) at age 33 in the Carter Administration. Now I call Mark McClellan the boy wonder, but he was 41 when he got the job! After leaving HCFA (before it got really exciting in the early years of the Reagan administration when DRGs were introduced, but being the first to introduce a type of DRG for kidney dialysis), and going via Group Health for a couple of years, he ended up at Blue Cross of California. He got there in the middle of an incredible screw-up.

Blue Cross had set up an HMO to compete with Kaiser called HealthNet. Incredibly enough somehow or other Blue Cross didn’t manage to enforce their formal corporate control over its board members on the board of HealthNet. So the board of HealthNet looked around the room one day, noticed that they might do alright if they were running a for-profit company, and declared independence. More on that story in this court documents. And apparently despite several years in court there was nothing Blue Cross could do. Retroactively Healthnet had to agree to endow a foundation with the state (the California Wellness Foundation) but the amount put into that foundation was a tiny, tiny proportion of HealthNet’s market value.

Schaeffer turned up to steady the ship at Blue Cross in the wake of the Healthnet screwup. In part he did this by turning Blue Cross from a warm and fuzzy non-profit into a pretty avaricious underwriter and a health plan that played very hardball with its providers (and members). More on that in the first section of this document, but it’s a reminder of a tack taken years later by Jack Rowe at Aetna.

But he clearly learned something from the experience.  The first thing he did was to set up a for-profit subsidiary called Wellpoint which started buying health plans and offering services (primarily outside California). Then he tried to put all of Blue Cross’ assets into Wellpoint. It looked like he’d away with this for a while, but then started  negotiations to take the whole thing for-profit. Apparently when the state first asked him the amount with which he would fund the foundation, his first offer was “nothing”.  This eventually got anted-up to $100m. Eventually the state (pressured by consumers’ groups) pointed out that it had quite a bit of control over the Blue Cross plans, and in the end the two Foundations were set up with lots of money and the majority of the stock, which gets spent doing good works in California (and funding some great research!) — not that everyone’s happy with it!

However, what amuses and dismays me is that Schaeffer is lauded for a couple of things, specifically the creation of new insurance plans and the shift to consumer care, and a commitment to IT. I really don’t understand what is so amazing about the new consumer plans, other than the Tonik brand has a lame web sites which look exactly like what a 50 year old thinks a 23yr old thinks is cool.  THCB readers already know that, while selling high deductible plans to youngsters may help a 23 yr old who needs catastrophic insurance, you’re not going to fix the problem of uninsurance by replacing it with under-insurance. But underwritten properly, these plans are very profitable for Wellpoint. And Wellpoint is damn good at underwriting.

So much so that you’d be surprised at what Schaeffer says is the main problem with American health care. Practice variation and lack of information:

The level of variation in our health care system is unbelievable. You could be hospitalized for nine days in New York and for three days in California with the same diagnosis—and those differences would have no impact on outcomes. There is no other industry in the world that uses so many different approaches to the same thing and in which these differences don’t relate to better results

So can’t health plans fix that? Apparently not:

As a health insurer, if you start by telling doctors, “We know what’s best; we’ll pay you for it,” you violate the fundamental principle that doctors want to exercise their own discretion. That’s what killed HMOs—telling the doctors what to do. Doctors don’t like to follow cookbooks, but, clearly, evidence-based medicine would work better for patients.

So because health plans failed at getting doctors to practice better medicine, instead they’re going to give them the information systems that show the doctors all about this variation, and it’ll magically self-correct. Except there’s the odd problem there too, including more cluelessness by health plans.

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Patients are Not “Consumers”: My Cancer Story 

By JEFF GOLDSMITH

On Christmas Eve 2014, I received a present of some profoundly unwelcome news: a 64 slice CT scan confirming not only the presence of a malignant tumor in my neck, but also a fluid filled mass the size of a man’s finger in my chest cavity outside the lungs. Two days earlier, my ENT surgeon in Charlottesville, Paige Powers, had performed a fine needle aspiration of a suspicious almond-shaped enlarged lymph node, and the lab returned a verdict of “metastatic squamous cell carcinoma of the head and neck with an occult primary tumor”. 

I had worked in healthcare for nearly forty years when cancer struck, and considered myself an “expert” in how the health system worked. My experience fundamentally changed my view of how health care is delivered, from the patient’s point of view. Many have compared their fight against cancer as a “battle”. Mine didn’t feel like a battle so much as a chess match where the deadly opponent had begun playing many months before I was aware that he was my adversary. The remarkable image from Ingmar Bergman’s Seventh Seal sums up how this felt to me.

The CT scan was the second step in determining how many moves he had made, and in narrowing the uncertainty about my possible counter moves. The scan’s results were the darkest moment: if the mysterious fluid filled mass was the primary tumor, my options had already dangerously narrowed. Owing to holiday imaging schedules, it was not until New Years’ Eve, seven interminable days later, that a PET/CT scan dismissed the chest mass as a benign fluid-filled cyst. I would require an endoscopy to locate the still hidden primary tumor somewhere in my throat.  

I decided to seek a second opinion at my alma mater, the University of Chicago, where I did my doctoral work and subsequently worked in medical center administration.

The University of Chicago had a superb head and neck cancer team headed by Dr. Everett Vokes, Chair of Medicine, whose aggressive chemotherapy saved the life and career of Chicago’s brilliant young chef, Grant Achatz of Alinea, in 2007.

If surgery was not possible, Chicago’s cancer team had a rich and powerful repertoire of non-surgical therapies. I was very impressed both with their young team, and how collaborative their approach was to my problem. Vokes’ initial instinct that mine was a surgical case proved accurate.

The young ENT surgeon I saw there in an initial consultation, Dr. Alex Langerman performed a quick endoscopy and thought he spotted a potential primary tumor nestled up against my larynx. Alex asked me to come back for a full-blown exploration under general anaesthesia, which I did a week later. The possible threat to my voice, which could have ended my career, convinced me to return to Chicago for therapy. Alex’s endoscopy found a tumor the size of a chickpea at the base of my tongue. Surgery was scheduled a week later in the U of Chicago’s beautiful new hospital, the Center for Care and Discovery.

This surgery was performed on Feb 2, 2015, by a team of clinicians none of whom was over the age of forty. It was not minor surgery, requiring nearly six hours:  resections of both sides of my neck, including the dark almond and a host of neighboring lymph nodes. And then, there was robotic surgery that removed a nearly golf ball-sized piece of the base of my tongue and throat. The closure of this wound remodeled my throat.

I arrived in my hospital room late that day with the remarkable ability to converse in my normal voice.

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Jean-Claude Saghbini, Lumeris

Jean-Claude Saghbini is the CTO of Lumeris and also the President, Lumeris Value-Based Care Enablement. Lumeris has been in business quite a while now, providing the technology which (in general) hospitals and medical groups use to manage to their workflows predominantly for Medicare Advantage. It also owns a big medical group (Essence in St Louis) and has close connections with John Doerr of Kleiner Perkins fame, whose brother was involved in its formation. Kleiner also funded Healtheon (the precursor to WebMD) of which current Lumeris CEO Mike Long was the founding CEO. I interviewed Jean-Claude at HLTH to get the update on Lumeris. How are they helping those providers manage their patients at risk? How are those providers actually getting paid? And how that makes them behave. Plus his views on how CMS is adjusting the way Medicare scores and pays his clients! Matthew Holt

THCB 20th Birthday Classic: Value-based care – no progress since 1997?

As the 20th Birthday rolls on I thought I’d bring out a more recent piece first published in October 2020, albeit one that relies heavily on 25 year old data to make a point. This is some evidence to back up Jeff Goldsmith’s comment on the original that for all the talk “ ‘Value based” payment is a religious movement, not a business trend’ ” By the way, Humana updated these numbers last year and there’s been basically no change — Matthew Holt

By MATTHEW HOLT

Humana is out with a report saying that its Medicare Advantage members who are covered by value-based care (VBC) arrangements do better and cost less than either their Medicare Advantage members who aren’t or people in regular Medicare FFS. To us wonks this is motherhood, apple pie, etc, particularly as proportionately Humana is the insurer that relies the most on Medicare Advantage for its business and has one of the larger publicity machines behind its innovation group. Not to mention Humana has decent slugs of ownership of at-home doctors group Heal and the now publicly-traded capitated medical group Oak Street Health.

Humana has 4m Medicare advantage members with ~2/3rds of those in value-based care arrangements. The report has lots of data about how Humana makes everything better for those Medicare Advantage members and how VBC shows slightly better outcomes at a lower cost. But that wasn’t really what caught my eye. What did was their chart about how they pay their physicians/medical group

What it says on the surface is that of their Medicare Advantage members, 67% are in VBC arrangements. But that covers a wide range of different payment schemes. The 67% VBC schemes include:

  • Global capitation for everything 19%
  • Global cap for everything but not drugs 5%
  • FFS + care coordination payment + some shared savings 7%
  • FFS + some share savings 36%
  • FFS + some bonus 19%
  • FFS only 14%

What Humana doesn’t say is how much risk the middle group is at. Those are the 7% of PCP groups being paid “FFS + care coordination payment + some shared savings” and the 36% getting “FFS + some share savings.” My guess is not much. So they could have been put in the non-VBC group. But the interesting thing is the results.

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Medicare Advantage Plans Can Leverage Virtual Cardiometabolic Care

By RICHARD FRANK

By relying on virtual cardiometabolic solutions for continuous care, Medicare Advantage can produce better outcomes, curb costs, enhance member satisfaction — and improve Star ratings in the process.

Medicare Advantage is a hot market. Enrollment is steadily climbing and Medicare Advantage (MA) members now make up half the Medicare population. Though members keep rolling in, competition among MA plans is tight and turnover remains high. Nearly 16% of MA members switch plans at least once during their first year, while over a third end up switching by year three. Higher-need Medicare members tend to disenroll altogether, impacting Stars ratings.

On top of fierce competition for members, MA plans struggle with ballooning costs as rates of cardiometabolic conditions like diabetes, obesity, and hypertension persistently rise. It’s hard to overstate what a toll cardiometabolic conditions take on our nation’s seniors — especially since those conditions tend to co-occur and compound with age. We’re long overdue for more innovative solutions.

Poorly managed cardiometabolic conditions are significant drivers of MA medical expense trend and spend, member dissatisfaction, and, by extension, poor Star performance. But increasingly, virtual care companies are starting to turn some of those trends around. MA plans should take note. 

Virtual care provides value-based pricing and cost-saving interventions

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The Truth About Medicare Advantage Saving Medicare

BY GEORGE HALVORSON

We know from the current annual report from the Medicare trustees that Medicare Advantage is saving Medicare, and that Medicare will be a much stronger program as Medicare Advantage continues to grow.

When we look at actual numbers from that report, we see that Medicare Advantage cost Medicare $403.3bn last year.

The report shows that Medicare is growing 6.7% each year in total revenue. We see that Medicare Parts A and B have expense growth that slightly exceeds 8%, and that Medicare Advantage is projected to have expense growth of 4.2% for the year.

That means we’re losing money from the fee-for-service part of the Medicaid program — and that is eating into the Medicare trust fund. We also can see that Medicare Advantage is making a surplus for Medicare, and is increasing the size of the fund.

We know that Medicare Advantage bids against the average cost of Medicare in every county to create the capitation levels for each year. Those bids are typically discounted by 15% (or more) from the average Medicare cost.

Those discounted bids cost Medicare less in actual dollars each month. The Medicare Advantage critics speculate about coding levels for the plans, but the Medicare trust fund doesn’t care about codes.

They only care about actual dollars. When you look at actual dollars, we see that Medicare spent $403.3bn to pay for the coverage with Medicare Advantage plans.

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MA for Tomorrow: Moving Beyond the Status Quo to Advance Concrete Policy Changes for the Future of Medicare Advantage

BY CECI CONNOLLY AND MICHAEL BAGEL

Medicare Advantage (MA) has passed the tipping point, delivering coverage and care to more than half of the senior population in the US. The Congressional Budget Office projects more than 60 percent of people 65 years and older will be in the program by 2030. As enrollment soars and interest in value-based health care grows, it is imperative policymakers modernize the program that is expected to cost $7.5 trillion over the next decade.

Rather than taking the standard Washington posture of declaring victory or defending the status quo, our provider-aligned, nonprofit member plans spent nearly two years developing a detailed vision for MA for Tomorrow. The policy proposals being released at a Capitol Hill briefing on June 12 are concrete reforms from executives with decades of experience and a track record of achieving the highest quality ratings in the program.

MA for Tomorrow is built on five pillars: (1) Raising the Bar on Quality; (2) Improving Consumer Navigation; (3) Achieving Risk Adjustment for Care, not Codes; (4) Modernizing Network Composition; and (5) Transforming Benchmarks. Taken together, the policies foster greater competition, reduce provider burden, push quality standards higher, enhance the shopping experience and curb improper payments.

With consistently high-quality ratings, expanded benefits and a proven ability to reach minority populations, the MA public-private partnership is an undeniable success. More than 31 million seniors are enrolled in MA, a growth of over 107 percent since 2014. In the past five years, as seniors voted with their feet, MA grew by 9.1 million enrollees while fee-for-service Medicare shrunk by 5.1 million. 

But even the most successful programs must evolve. To serve current and future retirees, MA must keep pace with medical and technological advances; it must improve the shopping experience to match other retail sectors; it must address loopholes and bad behaviors that dampen competition and choice. While fundamentals of the program remain strong, change is necessary to ensure the MA program of the future is equitable, affordable and focused on health outcomes.

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