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Risk Adjustment Data Validation (RADV) bombshell should worry Medicare Advantage (MA) plans In a bombshell announcement, beginning immediately the Centers for Medicare and Medicaid Services (CMS) will audit all eligible Medicare Advantage (MA) plans for each payment year in all newly initiated audits and invest additional resources to expedite the completion of audits for payment years (PYs) 2018 through 2024. MA opponents and a bipartisan group of lawmakers have raised issues with what they view as immense overpayments, some of which are tied directly to risk adjustment scoring. CMS says risk adjustment overpayments are about $17 billion a year. CMS’ completed audits for PYs 2011–2013 found between 5% and 8% in overpayments. Richard Kronick and his colleagues at the University of San Diego find that risk scores are 18.5% greater in MA in 2021, amounting to $33 billion. The Medicare Payment Advisory Commission (MedPAC) estimates the risk scoring overpayment figure could

A number of chapters in my book, The Healthcare Labyrinth (available at this site and through leading booksellers), tell the story of American healthcare’s conversion from a fee-for-service system to managed care. The truth is that the conversion has not yet fully matured. We still have an over-reliance on traditional transaction payments, which promotes a cost spiral as well as hurts quality attainment. So, the conversion is still in flight and so far I see four so-called conversion cycles of managed care, with the latest hitting just recently. With each cycle, we seem to make some progress toward a better system, but find major barriers still exist. Let’s take a look at the four conversion cycles and where we are headed. I have put together a quick reference table to help illustrate managed care’s maturation over time. Birth of Managed Care – 1970s to 1990s Description/Challenges – The traditional, fee-for-service

I wanted to give you two quick mini blogs today on recent topics after a number of inquiries from my blog readers and podcast listeners. They revolve around President Donald Trump’s proposal for most-favored-nation drug pricing and what is the GOP’s vision on healthcare. So, let’s get to the questions: 1 – One reader/listener asked: “How can Donald Trump really implement his most-favored-nation (MFN) drug policies?” As I have alluded to in a number of blogs and podcasts, it is unknown whether the president alone really has the ability to radically change drug prices in Medicare, and it is even more of a question for the commercial and employer world. We have a national rebate program with a state supplemental rebate program in Medicaid. The posture of courts, especially in light of the Chevron decision last year, would seem to point to the likelihood that the Supreme Court might find

Changes in prior authorization, the Star program, and risk adjustment will force MA plans to pivot to aggressive data analysis and intervention to reduce costs and improve quality. Investor news is crazy with various news about major health plans and the struggles they are seeing. The biggest light has been focused on the sad financial news of Medicare Advantage (MA). There are 340 million people in the country, and there are now almost 70 million seniors and disabled on Medicare. While some major health players, such as The Cigna Group, have divested Medicare plan assets, most others see MA as critical to insurer success overall. After all, MA has huge premiums (let’s say about 2.5 to 3 times other lines of business) and should have margins that are among the best (perhaps 4 to 6% in good years like commercial, compared with 2% at best in Medicaid and the Exchanges).

The House GOP has threaded the needle – so far – on budget reconciliation The House threaded the needle and passed the budget reconciliation bill on a tight 215 to 214 vote Thursday morning, meeting a self-imposed objective by the House GOP leadership of before the Memorial Day weekend. But based on what has occurred and the major fissures that have erupted, quick passage of a final congressional bill is some time off. This week’s developments — Trump intervenes After conservatives initially tanked the bill in the Budget Committee on Friday and voted present on Sunday to advance the bill, President Trump visited the House GOP caucus on Tuesday to urge holdouts to support the package. Trump pushed moderate Republicans from blue states to give up their fight over additional SALT deduction concessions, while warning conservative members not to “f‑‑‑ with Medicaid” as some lawmakers eyed further changes to the

Medicare Advantage (MA) growth continues but with continuing softness in Big MA A quick blog to tell you about enrollment growth in Medicare Advantage (MA) from April 2025 to May 2025. MA growth slowed down from 2024 to 2025 because of the financial woes of the MA industry. But the rolls are still growing due to aging and the popularity and value of MA compared with the archaic traditional Medicare (fee-for-service) program. What do the latest statistics show? Growth from January 2024 to February 2025 was 4.39% or 1.468 million. (I used February 2025 because of issues with the January 2025 statistics). Enrollment in MA reached 34.941M in February 2025. In May 2025, it reached 35.242M. MA enrollment grew about 80K from April to May and about 301K from February to May. How did Big MA do? From January 2024 to February 2025, Big MA (big national plans) enrollment performed

I often disagree with Donald Trump on policy, but not on his drug price reform proposals I am a Republican, but Donald Trump and I seemingly agree on very few things these days. But I am here to tell you that Donald Trump is exactly right on drug prices and his recent executive orders could be seminal events for drug price reform and healthcare reform more broadly in America. Over the past many months, I have been writing about what I think are Trump’s populist credentials to be a leading reformer on drug pricing. I predicted that he would be bold. And by any measure, he has been. In my April 21 blog, I praised Trump for his initial executive order on drug price reform. It was clearly well thought out and comprehensive. It showed a sophisticated and nuanced understanding of how drug markets work — or don’t work if

Risk adjustment reform in Medicare Advantage could be put on the budget reconciliation table As I told you recently, the budget reconciliation process is mired down. There are a number of contentious points, including state and local taxation deductions and Medicaid spending cuts. At least on the Medicaid issues, moderates are lining up against conservatives and the prospects of a quick and successful bill passage are becoming more and more remote. Conservatives in each chamber, but more so in the House, want two core things on the spending front. They want enough spending reductions to pay for the extension of the 2017 Trump tax cuts. In addition, they think Medicaid is growing far too much and want to rein it in with deep structural reforms. Conservatives may lose on their Medicaid reform point if a bill is to pass, but the GOP may be looking for more spending reductions outside

Things do not look good for quick passage of a budget reconciliation bill. President Donald Trump congratulated Republicans in the House when they bowed to a Senate reconciliation framework that endorsed lower spending reductions. This was not because he didn’t favor reductions – he does – but he wanted the process to continue. But since the vote, it has become very clear that the GOP is struggling to come up with enough votes to pass a package that a majority in each chamber can support. Senate moderates and pragmatic conservatives insisted that reductions in the healthcare world should be minimal. The same holds true for about two dozen House GOP moderates. Conservatives and budget hawks in the House only agreed to the Senate framework after Trump and Speaker Mike Johnson committed to robust spending reductions. Disparate interests So how do you reconcile the two agendas, especially in the few short

Tariffs could have an ugly impact on healthcare costs and access I have gotten a number of inquiries from readers on the impact of new or potential tariffs on the healthcare system. To be honest, the picture is not terribly clear, but certainly new and future tariffs could demonstrably impact costs in healthcare. America’s healthcare imports reliance America is heavily reliant on imports for medical equipment, supplies, devices, finished pharmaceuticals, and active pharmaceutical ingredients (APIs) used to manufacture pharmaceuticals. Here are some quick facts: What is in force now and what is proposed? While a baseline tariff is in effect for most countries, the Trump administration did forestall for 90 days imposition of reciprocal tariffs. If those are eventually put in place, much greater tariffs would be in force. Heightened tariffs are in force for China and a few other countries. So far, the tariffs from the Trump administration clearly