Sweeping changes to Medicare Advantage: How payers could respond
TL;DR
Article Summary
- The Medicare ecosystem is facing challenges, disruptions, and opportunities that will result in a significantly different market in the future.
- Medicare Advantage (MA) is projected to be the line of business that drives the most profit for payers in 2026, even while headwinds are emerging in the Medicare program.
- Market penetration of MA remains hugely variable nationwide.
- Disruptive trends such as demographic shifts, regulatory changes, and shifts in member preferences are shaking up the Medicare landscape.
- Payers can respond to these changes by expanding their reach to areas with low MA enrollment, partnering with more insurance brokers, bolstering traditional outreach methods, prioritizing improving or maintaining high stars ratings, and expanding digital engagements
My Takeaways
- CMS reducing Medicare Advantage rates may lead insurers to face a $150 annual reduction per member.
- An aging population also demands sustainable healthcare solutions. There's a noticeable disparity in MA enrollment rates across states. The end of RAF arbitrage hints at future margin issues.
- I’m concerned about McKinsey's past unethical advice, which contributed to the opioid crisis, costing many lives. I advocate for integrity and ethical values over business success. Any PI friends want to look into this with me> Gary?-----
It prompts a critical reevaluation of our perceptions, urging us to prioritize integrity and ethical values above superficial achievements.
Insights on the recent CMS decision to reduce MA rates.
According to McKinsey, here are three critical things you need to know:
1. Regulatory Headwinds: 👩⚖️
1) Medicare Advantage rate (MA) will decrease 1.12% (meaning that insurers face a $150 annual reduction per member).
2) Additionally, refreshed risk adjustment models are bringing MA rates down by an average of 2.16%
Apart from the noteworthy MA rate decrease of 1.12% and the influence of refreshed risk adjustment models, it's crucial to consider additional factors that may contribute to the overall picture.
· These could encompass various cost drivers within the healthcare system, such as escalating medical expenses, evolving regulatory requirements, or shifts in. reimbursement methodologies.
o By taking these factors into account, we can obtain a more comprehensive understanding of the multifaceted dynamics affecting MA rates and their potential ramifications.
….Oh really, McKinsey? Please explain this comprehensive understanding that you now have. That was not helpful. Without access to insider information, it’s impossible to assume. It’s one big black box.
2. Demographic shifts:
1) Prepare yourself for the impending rise in healthcare costs! Shocker. 😐
2) It's noteworthy that individuals aged 85 and older incur healthcare expenses that are more than double those of individuals aged 65 to 69. We could cull the 85+ population.
3) This demographic shift brings its own set of challenges, especially considering that the proportion of seniors aged 75 and beyond is projected to increase. Cull them too. 👋
4) It's crucial to address these trends and find sustainable solutions to ensure accessible and affordable healthcare for all age groups. It’s an opportunity! Maybe we can finally address universal healthcare, again.🌎 I see you Hillary <3
3. Market Saturation:
1) As urban markets experience a slowdown in MA growth, it raises questions about what factorscontribute to the differential enrollment rates across states.
2) The intriguing contrast of some states with only 12% of beneficiaries enrolled in MA plans, while others proudly boast a 60% enrollment rate, leaves us wondering:
i. What are they not telling us?
ii. What underlying factors are causing such disparities in MA plan adoption?
iii. Delving deeper into this complex landscape could reveal valuable insights
iv. (That’s because we live in the matrix and information is intentionally withheld to keep us stoopid).
4. Risk Adjustment Factor: This article hints at the imminent end of RAF arbitrage, with Star ratings taking center stage. Brace for potential margin compression and question the sustainability of the $100 PMPM administrative cost.
(RAF = Risk Adjustment Factor)
‘
Discover more details here: The future of Medicare Advantage | McKinsey
I have more thoughts…
- When you hear McKinsey in conversation, it commands a level of respect. They are the best. Top of the game.''
- Yet, it’s disheartening to observe how McKinsey continues to be revered as the epitome of excellence, the pinnacle of achievement, and the coveted dream job for many. This was once my dream job.
Let me give you some context:
1) Over a 15-year client relationship, McKinsey advised drugmaker Purdue Pharma on how to boost sales of OxyContin.
2) Their proposed tactics included
i. targeting high-volume opioid prescribers and patients,
ii. as well as offering distributors a rebate for every OxyContin overdose
Hey, FUCK YOU, McKinsey, and fuck that elitist shit.
- McKinsey's unethical guidance has led to tragic loss of life...Yet we still allow them to operate???
- Want to know how much death, we a nation choose to overlook?
o Total loss of life due to opioid crisis = 450,000 people (# of deaths)
o Total settlement paid by McKinsey, a rare instance of it being held publicly accountable for its work with clients = $600,000,000.00 (#$ paid)
o The cost per human = $600,000,00.00/450,000 = $1,333 (cost per death)
It prompts a critical reevaluation of our perceptions, urging us to prioritize integrity and ethical values above superficial achievements.
