October 31, 2024

Medicare Advantage Penetration Saves Medicare Dollars

A new study from Elevance Health says that growth in Medicare Advantage (MA) leads to lower overall Medicare spending. This in part counters the shouts of MA opponents who cry about overpayments in the program.

The study found that Medicare spending was $431 billion less from 2010 to 2020 than the Congressional Budget Office (CBO) predicted. The difference was per enrollee spending during the timeframe.

The lower spending trend due to MA growth is most noticeable in midwestern and southern counties, but weaker in northwest and western counties. Researchers found that a 10% percent higher MA penetration in a county points to a 1.9% decrease in Medicare spending, correlating to a $204 decrease in per person spending. This resulted in up to $144 billion cumulative savings from 2012 to 2021.

One theory is that higher penetration of MA introduces a change in provider behavior in both MA and FFS. There is a halo effect over the traditional fee-for-service (FFS) program as providers concentrate on outcomes and lower costs for all their patients.

Even with risk-adjustment payments factored in, $116 billion in savings remained. And the magnitude of such overpayments are certainly debatable.

Changes in some reimbursement and risk adjustment reform may be needed, but the study counters the gross exaggeration of MA opponents that somehow the MA program is simply a play for companies to make money with no concomitant benefits to enrollees or the program. This as well as key Better Medicare Alliance studies showing better outcomes should be the playbook to defend MA.

#medicareadvantage

https://www.fiercehealthcare.com/payers/higher-ma-enrollment-linked-lower-medicare-spending-report

Cigna Beat The Street in Q3

Cigna beat the street in Q3 and reported $739 million in profit for the third quarter, including a $1 billion after-tax investment loss tied to VillageMD. Revenue for the third quarter was $63.7 billion. Cigna posted $49 billion in revenue and $1.4 billion in profit in the prior year quarter. Cigna will use its free cash flow to buy back stock, which leads to the conclusion that the acquisition of Humana is not going to happen. While CEO David Cordani did not mention Humana, he mentioned the issues in Medicare Advantage (MA) right now. A majority of margin came from Cigna’s growing services unit, Evernorth.

Additional articles: https://www.modernhealthcare.com/insurance/cigna-group-earnings-call-humana-evernorth-health-services-david-cordani and https://www.beckerspayer.com/payer/cigna-posts-739m-profit-despite-1b-villagemd-loss.html and https://www.healthcaredive.com/news/cigna-ceo-tamps-down-humana-deal-speculation/731582/ and https://www.beckerspayer.com/m-and-a/cigna-ceo-throws-cold-water-on-humana-merger-rumors.html

(Some articles may require a subscription.)

#cigna #healthcare #healthplans #margins

https://www.fiercehealthcare.com/payers/cigna-posts-739m-q3-profit-despite-taking-1b-hit-villagemd-investment

Scrutiny of Cross-Market Hospital Mergers

The Federal Trade Commission (FTC) and state regulators are scrutinizing hospital mergers in general. This includes both those within market areas but also cross-market mergers. Such cross-market mergers also tend to have the same outcomes as in-market ones – prices tend to go up and outcomes do not improve.

(Article may require a subscription.)

#hospital #ftc #mergers #acquisitions #manda

https://www.modernhealthcare.com/mergers-acquisitions/cross-market-hospital-mergers-ftc-data

Risk Will Change The Healthcare Paradigm

Interesting opinion piece from a Highmark executive who argues that moving to risk funds with providers is the best way to change the current healthcare paradigm and lower costs and drive quality. Such risk deals have been around for decades in certain areas, such as south Florida, and now spreading across the country. As the author notes, there are various models that allow you to adapt and grow in the model.

(Article may require a subscription.)

#healthcare #healthcarereform #healthplans #providers

https://www.modernhealthcare.com/opinion/commercial-contracts-medicare-risk-sharing-models

— Marc S. Ryan

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