33 – Medicare Advantage Deep-Dive with Emily Evans from Hedgeye
Episode Notes
In this episode, join us for a comprehensive exploration of Medicare Advantage as we delve into its intricacies with special guest Emily Evans from Hedgeye. Gain valuable insights into the complexities of this vital healthcare program and discover the latest developments shaping its future.
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Episode Transcript
Marcus: [00:00:00] All right, welcoming back to health further. Emily Evans, who heads up all things, health policy at hedge. I Emily, welcome back. Hey, thanks guys. Glad to be here. So we had to call you because, uh, for the last month, Vic and I have been way down the AI rabbit hole. And, uh, we know that there’s been a lot of shifting and changing that’s been happening in the MA space.
It’s really been. Very, very slowly. And then, uh, all at once suddenly happening. And, uh, we’ve been talking about changes in demographics. We’ve been talking about the fact that the, the government can’t continue to pay for these programs at the rate that they’re paying for them. And we’ve seen a lot of shifting and movement over the last.
45 days, I would say, um, probably mostly represented by the shifts that Cigna has made, or maybe most significantly by the [00:01:00] shifts that Cigna has made with respect to HealthSpring. And, uh, and then a bid for Humana, which we now know has been called off. Um, but it feels like a lot of scrambling that’s going on, uh, in the MA world by the payers.
And so wanted to bring you on to sort of. Have you frame up for us and for the audience what you are seeing broadly from a policy perspective, from a demographic perspective, and from a CMS, uh, shifting perspective with the newest physician, uh, fee rules that were just recently passed. And then anything else that, that you want to walk us through?
Emily Evans: Okay, well, let’s start with the, the regulation and the, and the policy. CMS is kind of, well, they’re a little Best way to think about it, at least since 2010 ish, CMS has generally been, I’d say, biased towards the insurers. I mean, they need the insurers to be successful under the ACA and the [00:02:00] exchanges and so forth.
So, so there, there’s not a ton of interest in, in antagonizing that group. Um, at the same time, you have a very strong bias in favor of Uh, providers in Congress because they tend to, those are their constituents, you know, the employers in their, in their community. You have this. tension that, that persists and has persisted for over a decade, uh, between those two poles of influence.
Um, now, the, in Congress in particular, there’s a, a fairly extreme group that does not believe Medicare Advantage should exist at all. Uh, they believe that is privatization. It needs to end um, and they’ve been [00:03:00] somewhat successful you know tweaking the program but The fact of matter is a very popular program, you know, and how are you going to really, you know matter that much?
um, so so with the With the pot with the pressure from progressives. You have seen cms make some changes. For example You The direct contracting program, which began under the Trump administration was modified and kind of morphed into an accountable care organization. Um, you have the recent physician’s fee schedule with some improvements to the Medicare, uh, shared savings program specifically.
To, uh, encourage more uptake in rural communities, uh, in communities that are generally underserved, which, by the way, communities Medicare Advantage doesn’t have that much, you know, they really need urban or suburban environment, uh, to, to thrive. Um, so they’re, [00:04:00] they’re, they’re trying to, they’re trying to do that and they are doing that.
And there is an enormous amount of pressure coming from both left and right. To make sure this program is paying accurately for, uh, for care. There’s a lot of questions about coding, legitimate questions, um, whether the MA plans are coding, upcoding. Or is it because as fee for service patients or uninsured patients, nobody was really reporting the diagnosis codes.
Uh, we don’t know that research would be, it would be helpful research if we could get it. Um, but that’s the, that’s another kind of component. So those are, that’s, that’s the policy landscape for, but lack of a better term. That’s what it looks like.
Vic: That’s the high level, uh, maybe [00:05:00] balance of. Interest groups and how the different rule.
Policy and rulemakers think about things. Um, how do you see that impacting, um, Medicare Advantage or other, other Medicare players, uh, today and then over the next, uh, couple of years?
Emily Evans: Well, if you follow the history of regulation, usually it gets really onerous. After the fact when, when it doesn’t matter as much as it did when the problem was first identified.
That’s when you see the regulation kind of ramping up. So, and that, that has to do with the fact that the stakeholders that are involved tend to recede from the battlefield. You’ve seen this in the pharmaceutical industry with various companies [00:06:00] dropping out of pharma lobby group, dropping out of bio.
You know, they, they just don’t. They’re not engaged because it’s not worth it to them
Vic: in the, in the emerging of something that needs to be regulated. Um, big spending item like Medicare advantage, the, the business groups, the interested parties that have money at stake are very engaged. And there are other groups that are trying to protect citizens that are also engaged, but they’re sort of both Both helping to shape the regulation and then as the market peaks and begins to get to be less of a big issue for the for the state of financial stakeholders, the business entities, they sort of recede to the background and then the.
Public interest is very highly regulated, but now the horse has [00:07:00] left the barn a little bit and it’s sort of maybe not over, but it’s declining. Is that the fair, what you’re saying? Yeah,
Emily Evans: that that’s, that’s generally how it works and that’s probably how it’ll work here.
Vic: Yeah. And so, uh, we’re going to get to the demographics.
In a couple minutes, but I think the Foreshadowing of that is we we probably have hit peak peak medicare medicaid Um enrollment or we will soon And so there now is we’re now beginning to see regulation come in. Is that fair?
Emily Evans: Uh, yeah that that’s fair. Um, you know, and and let’s just take the signa humana thing As an example, um, you know, Cigna’s decided they’re not going to acquire Humana because, because buying back stock is much better for, for their, you know, their stock price, which should tell you a lot, right?[00:08:00]
Vic: Well, it either tells me that they are very near term focused. It’ll really help in the next 90 days. I don’t know if it’ll help in the next nine years. Um, it might tell us that, It even long term owning the second largest MA company is not something that shareholders want to do. I couldn’t tell if it was, they’re really focused on near term results.
Which most public companies are. It wouldn’t be a, wouldn’t be a crime. Just is sort of how some things are decided. Um, but I think it’s worth it to talk through. Does it, do you think it is not a long term successful strategy to have a significant portion of your business in MA?
Emily Evans: I think that there is, it is a part of your strategy, because what you would always want to do is have a robust commercial book, and then as people age, because they’re not.[00:09:00]
They’re not going home like they used to at 65. Uh, they’re they’re staying employed and you would migrate your commercial book into a um medicare advantage plan that that would be a great strategy Especially since commercial is now growing again after you know years of doing mostly nothing. Um, so But on the, as you, as you become, as, as seniors get scarcer, which is what’s gonna happen, you are gonna see some consolidation.
Uh, you know, every blue plan’s got a Medicare advantage plan. Mm-hmm. , uh, you know, all the majors have Medicare Advantage plan, and the victory will go to the highly capitalized. Efficiently run organizations. So you, I would say that you want that business. You should have that [00:10:00] business going forward. Um, and, and you should take advantage of whatever consolidation there is, but it’s gotta be part of a balanced book.
Not just a standalone, uh, project, which I think in my view, my view, Cigna, I probably made a mis, is probably making a mistake here, but the, the street hated what it was doing. So they abandoned it.
Vic: Yeah, I mean my, that’s why I wanted to draw a distinction between timeframes. I think Wall Street hated it in a 90 ’cause they only think in 90 days increments.
Or even less than that. Yeah, it was
Emily Evans: it was gonna give you some two years worth of dilution that You know that that wall street was not interested.
Vic: Yeah. Yeah, but humana is One of the biggest players they should benefit from consolidation Over the next several years now, we’re we’ll get to the demographics It’s not going to be a big growth market in the next multiple years, but [00:11:00] humana should do well in that space Although they don’t really have a they don’t have the next Card to play.
They’re not strong enough in commercial really. So I think for humana, it’s much better to join Cigna with Cigna. It’s sort of, you have to take a longer term view. Let’s let’s, let’s shift demographics,
Emily Evans: not in Cigna’s DNA, at least historically.
Marcus: Yeah.
Emily Evans: Yeah, I think the, um, I think what you’re gonna see is, you know, now that this mergers off the table, I think what you’re gonna see is, is acquisition of MA plans, particularly from the blues guys.
Marcus: You’re, you’re, you’re, you’re saying you think we’re gonna see the blues acquiring, uh, different MA plans,
Emily Evans: uh, only if they’re in, in a good ca capital position. I mean, some of these blues are not in great shape and it’ll be the same with the commercial book and the blues, the strongest will survive like North Carolina, but Tennessee is probably going to get acquired.
Vic: Yeah. [00:12:00] So I think that makes sense. So Elevance is probably the biggest blue acquirer, but yes, uh, North Carolina. Maybe Highmark. There’s several, Minnesota, that are more traditionally strong. Uh, but Elephant seems like the 800 pound gorilla in the blue market. That you agree with that? No.
Emily Evans: Yeah, Elevance for sure.
You know, it’s hard to buy a non profit, right? It’s a big headache. Um, but, uh, but Elevance has already made a run for, um, Blue Cross Blue Shield Louisiana. We should see more of that, I would think. Um, but also, if you’re a pretty strong plan sponsor, you can get members by just courting them. paying brokers, you know, and, uh, Humana has been in a great position because they retained their star ratings, which [00:13:00] brokers love.
Brokers don’t want to sell a product. You know, and I have an unhappy customer.
Vic: Yeah. So I want to get to the star ratings in a minute, but let’s talk through the demographics. So that’s kind of a key point. that we have not discussed it at enough length.
Emily Evans: Yeah, so against the backdrop, that regulatory backdrop, I brought a couple of charts, uh, Marcus.
The first is, you know, from the Census Bureau, it shows you that the, the population over 65 has, is, is, Is not sustainable and it’s not growing like it was just a few, a few years ago. Uh, and on the other side of this, and I circled on the, on the, um, chart, I circled it, this, this group of people, you know, from the 2020 [00:14:00] census who are aging into, uh, Medicare, behind that is It’s a pretty nasty little trough that goes on for 25 years, and, and that will accelerate consolidation as well because it’s a nice fight for memory.
You’ve got to be really good at running an M. A. plan, uh, if you’re gonna, um, if you’re gonna be successful. And if you look at the next slide I brought, this is a map of penetration, um, your M. A. plans are heavily penetrated in urban areas. You know, in some to the tune of 90%, which by the way, just a few years ago, 75 percent South Florida was 75 percent in 2019.
Vic: Can you, let’s go back to that last slide. Can you just orient me and maybe the listeners on the, the heart, the horizontal axis is age. The vertical axis is.
Emily Evans: The number
Vic: of,
Emily Evans: that’s number in millions, [00:15:00] number of people in millions. Okay.
Vic: Yeah. I couldn’t, okay. Number of people. And then I’d like to have you guess.
I know it’s in the future, but you have 2010 and 2020 circled in 2030. That circle will be much lower. Is that right? There’s not going to be that many. Yeah.
Emily Evans: The in 20, 2030, it’ll follow the trajectory there. It’s already evident. And that, that, that bulge will flatten out and it will drop.
Vic: Yeah. So just at a high level, we will not have 5 million people, but we’ll lose 40 percent of that.
It’d be a 3 million people, something like that. I mean, that’s a rough number, but the market’s going to contract in patient volume significantly. And patient volume is an important aspect in how much money is spent. It’s not the only aspect. Acuity and other things are also in there.
Emily Evans: [00:16:00] That’s right. Uh, and, and the kind of the, the sort of unexpected result of this is that Congress gets less Concerned,
Marcus: right?
Emily Evans: You know, it isn’t the budget buster that it once was.
Vic: Yeah. And someone will play out. Okay. Over the next 20 years, the total cost of CMS is X. And let’s just finance that and then move on to the real issues at hand. There’ll be some date 2030, 2028, 2032, where that argument starts to make sense. Let’s take care of our seniors.
But that’s a declining total dollar amount and we owe it to them. We should just finance that. And now let’s focus on commercial or the younger demographics.
Emily Evans: Yeah, it’s, it’s, it’s possible. I actually think the most likely outcome here is probably going [00:17:00] to be, you know, just deregulating the system. Um, Cause it’s what it badly needs.
But, uh, but yeah, you’re right. You know, let’s maintain this commitment to Medicare because it isn’t even that big a commitment anymore. It’s not like this is 2010. Uh, and, and you have, um, you have more flexibility on other things.
Vic: Yeah. Okay. So then with that. It’s certainly clear that it’s more population dense in urban areas.
What does that mean for the development of the market over the next 10 years?
Emily Evans: So in the, you know, the, in these urban areas, your demographics are going to do just what the previous chart suggested they should do. And those populations are, are going to decline. Um, although the penetration of MA will probably still stay [00:18:00] quite high.
Um, but the ability for MA to penetrate into these, those light blue sections of the U. S. map Is highly compromised by the lack of providers. So if you go to a county in Utah, for example, and say, Hey, join a Medicare advantage plan as a network provider, we’ll pay you 82 percent of the Medicare fee for service rate.
It’s the only hospital within 50 miles. What do you think they’re going to say? And, and in fact, they’ve been saying that,
Marcus: yeah, yeah, that that’s happening right now.
Vic: Yeah. So over the last 10 or the last 10 years or so, there’s been two engines of growth. The, the eligible population has been growing and [00:19:00] the market share of Medicaid advantage has been increasing.
And I think what you’re showing us is that both of those engines of growth are slowing down or turning off. It’s, you can’t get much more penetration in these urban areas. And then the, the, the available populace is, is going down.
Emily Evans: Right. And one of the thing. It’s accelerating this penetration, you know, why South Florida has gone from 75 to almost 90.
Right now is this change in law, which has, you know, and I brought slide 7 to show this, this is changes to the Medicare Part D, uh, benefit. By 2025, planned sponsors are going to assume 60 percent of the liability for drug costs in the catastrophic phase. And you’re in the catastrophic phase because you have high cost [00:20:00] drug needs you have a chronic condition You have um, you know, you you need specialty drugs, you know, whatever the the the answer cancer for example and with that additional liability comes additional need for for um visibility into the patient’s needs And if you look on the slide six that I brought the medicare advantage pd is is growing medicare advantage growing standalone pdp is is dropping so what you could see in those rural areas Most people won’t have a standalone pdp plan available to them Because nobody wants to offer it without, you know, people being in Medicare Advantage plan and nobody wants to be in network.
So what happens?
Vic: There’s no coverage. Well, they’ll be back on fee for service Medicare. [00:21:00]
Emily Evans: They, they, they, but they don’t have a drug plan. Because, you know, you do fee for service and you pair that with drug plan, that’s the answer right now. But what if there’s no drug plan to offer? Because it’s not worth it to the splints plan sponsors because they can’t have visibility into your total health care.
Vic: Okay. So go, go to that. This dynamic
Emily Evans: is, is pushing the penetration and the enrollment up fairly substantially right now. So go back to
Vic: this. So here the, uh, PD PDP plan sponsor is responsible for a lot more of the cost. It’s that, um, 60 percent over the 2, 000, is that right? And if they don’t Yes, 60 percent
Emily Evans: over the 2, 000 threshold.
Vic: And what you’re saying is if they don’t also have the [00:22:00] sponsor in a Medicare Advantage plan, they can’t really see the medical side, they only see the drug side, and that makes it very difficult to underwrite that risk. Okay.
Emily Evans: Exactly. And I’ll add Medicare Advantage plans. That’s higher margin business than a PDP plan.
And the difference is something like eight, nine versus one, two percent.
Vic: Okay. So that’s going to make it more. People will go into Medicare Advantage as long as there is the potential for that in their provider network. If they’re not in rural America, if they’re in rural America, there may not be that optionality.
Emily Evans: Correct.
Vic: But the overall kind of macro dynamics are still. Declining, although it will push more of people into Medicare Advantage.
Emily Evans: Uh, that is correct. So you’ve got lots of [00:23:00] puts and takes. You’ve got the demographics. So it’s a knife fight for members. You’ve got, you know, people wanting to switch into Medicare Advantage.
So you have this short term advantage tailwind there for new members. And Humana is, is definitely, uh, demonstrating that. And then the game that will be played here in the short end is growing that membership as much as you possibly can. Then moving on to consolidation and becoming, you know, a significant market player, which is of course going to irritate Congress, as I mentioned earlier, but, but that, that, that’s gotta be your strategy here.
Vic: Okay. So in that environment, um, They all, CMS is also changing the star rating system and it’s pretty complicated, but it is, it seems to me like they’re bringing [00:24:00] more, um, more. Carrots and sticks to get edicare advantage plans, to be more consumed, engaged with consumers, driving better behaviors, and they’re sort of tying reimbursement to performance.
Is that close to right? So, um, do you, I think you might’ve brought something about stars rating. Is that right? Or no.
Emily Evans: Yeah. If it’s slide 12 on the most recent deck I sent and, and what you can see is that the, um, and, and, but in just by way of context, you want your plan to be three and a half stars or higher, because then you get the bonus.
You really want it to be four stars or higher But but if you’re if you’re not if you’re three and a half or below below three and a half You’re not [00:25:00] a very good plan. You don’t get it’s it’s like why are you even in this business? but if you look at slide 12, you can see that the Because of these changes to the star ratings You have seen a significant decline since two thousand and twenty two, so twenty two years, in five star plans.
So that’s, you know, where you get your best bonuses, highest customer satisfaction, uh, etc. Uh, in your four and a half star plans, You, you’ve seen some seem in some four and four and a half. You’ve seen some declines there And your three star two and a half Those have increased as well in the last couple of years as a result of these policy changes.
Vic: Yeah. So we have a bunch of people that are listening and not watching. So just to describe it, there’s, it’s pretty flat [00:26:00] in the store ratings from 2017 to 2021 or so. There’s a little bit of growth. You don’t,
Emily Evans: you don’t see much shifting around.
Vic: There’s growth in the new plans, which you’d expect as the program came online.
And as we said, these two growth engines were there. Uh, but then after that, the rating system, I think, I mean, they haven’t decreased their performance. The rating system has gotten progressively more challenging. And then the, the scores, as represented by star rating, have declined. It’s very difficult to be a five star.
That’s been declining since 2022. But, but all the, all the star ratings, you’ve been moving lower. It’s like if the, I don’t know, I mean, I have kids in school. The, the school started applying a much harder grading scale. Then it was previously. [00:27:00]
Emily Evans: Yeah. And, and they do, they have a variety of mechanisms for doing that, but that’s exactly the way to describe it.
Marcus: Well, but there’s, there’s also, I mean, somewhat similar, although off by a year to some of the swings we saw in the market, I mean, 2022, it’s kind of retrospective, right? Looking at what happened in, in 2021, the 2022 is actually a, a huge jump in the number of five star. Plans, um, and actually a decrease in the number of three and two and a half star plans.
And then, you know, you kind of have the pendulum swinging pretty aggressively in 2023, um, where it’s, it’s about half the plans are below three and a half or three and a half stars or below.
Emily Evans: Yeah. And what happened there, Marcus, is you had some pandemic Uh, related relaxation.
Marcus: Yep.
Emily Evans: Uh, that, that informed the 22 numbers.
Marcus: Yep. That’s what I would have figured. Yeah. So now we have the pendulum swinging to the other [00:28:00] side kind of cleaning up the pandemic, uh, hangover and yeah, I mean, significant growth. I mean, you know, the decrease in the five stars to me is not as Um, apparent in this graph as the growth of two and a half and three star plans.
Um, which as you said, that’s just not viable, right?
Emily Evans: No, you know, brokers, brokers might give you a year, um, or two, cause these plans are very sticky, but customer satisfaction hits the broker first.
Marcus: Yeah. Are there, are there any names in particular out there that really kind of Uh, the, the decrease in, in stars, um, that, that we can,
Emily Evans: Well, uh, Elevance had some, some real scrutiny because they did not perform well at all in their star ratings and they [00:29:00] fell out of significant, I don’t have the numbers here, but a significant number of their plan membership fell out of, you know, three and a half stars and, and above.
So they were, they, they were a weak performer. Humana is Knocking the cover off the ball though. Um, UNH also lost some of its, um, dominance, although nothing like, like Elevance and I’ve not examined, you know, all the blues plans and some of the smaller players.
Vic: Yeah. Um, I think that’s right. And so the, there’s a lot of pressures on the Medicare Advantage market over the next couple of years.
I think it will drive consolidation. As you said, I’m seeing in my portfolio. Um, you know, we have small, often innovative products in our startup companies and they’re starting to get, um, outbound. Kind of, or inbound [00:30:00] requests from payers to, because they want to engage with customers. They want their customers, the subscribers to be happier.
Uh, there’s a bunch of things in the star ratings that kind of aligns with making the subscriber satisfied or delivering better, better care. However, CMS wants to measure that. And I think there’s an opportunity for innovative companies to partner with large plans. If you can deliver better star ratings.
Emily Evans: Right. And, and, and let’s also acknowledge that the changes to the, the Medicare shared savings program and an effort to expand Or encourage development of the, uh, accountable care organizations Also represents an opportunity. Uh, I did not bring this chart because the data work. Um, Was was ridiculous, you know from a government data set but but the um, [00:31:00] The the growth of the acos or participation in the acos and the mssp Program has plateaued, you know, it it took off pretty big You know, post ACA, grew nicely, um, and then kind of flatlined, especially over the confusion in the direct, um, contracting program.
And really what, what CMS wants to see is renewed growth in that because it’s the, probably the most viable approach in a rural, ex urban, Indian health service. You know, those types of whereas Medicare again,
Marcus: yeah. And are we, are we seeing just to kind of go downstream a little bit from the, from the payers as you were talking about some of the You know, the dynamics that make Medicare Advantage just not viable for providers to accept, you know, are, are we seeing more providers sort of shifting their [00:32:00] focus to MSSP, um, and ACO models proactively just because they believe it’s, it’s more viable for them.
Emily Evans: You know, I haven’t seen too much data on it, but what I can tell you. is that providers willingness to accept risk, um, in the M. A. program has flatlined. Now, one of the advantages of, you know, ACOs is you can choose, you know, one side, one sided risk, you know, uh, that is less dangerous than what the MA plans might ask for.
Um, they might ask for, you know, two sided risk, and, and, and that’s not viable. So, uh, slide 11, which I brought is enrollment of, uh, Medicare Advantage PPOs versus HMOs. HMO, of course, would be where the provider takes the risk. PPO is, is more based on the prevailing, uh, rate. [00:33:00] And you can see the PPO enrollment has grown.
And I’ve been using that as a proxy for provider interest. Uh, and you can, you can see, for example, Marcus, uh, uh, Vanderbilt dropped, uh, Medicare Advantage HMO in April of this year. Uh, and I, and I think that’s the first order effect. of any rate, um, disputes. Okay, I don’t, I don’t like your rate, and I’m not going to take any risks, so I’m dropping the HMO.
It’s a, kind of a first order and fairly easy response. And I’m using enrollment, uh, in those different groups as a proxy for provider interest, since it’s hard to really gauge provider interest otherwise. Yeah,
Marcus: I mean, we definitely have been seeing, uh, providers dropping off of M. A. as a, as sort of a first tactic in rate negotiations, and it does seem like the payers are coming back to the table, uh, as that’s, as that’s happening, [00:34:00] but definitely a lot of pressure there.
Emily Evans: Yeah, and I think it’s gonna, um, it’s gonna kind of continue throughout 2024. I brought on slide nine, um, which shows the cost index. Versus labor demand. Labor demand in health care is still pretty high. Looking at the jobs data from last week, and it’s still inducing people into the health care industry, you know, cost more money now.
Or the only cause that matter in health care is labor, uh, and so it’s staying Elevated and I think you’re going to see either you’re going to either see premium changes, which we know we’re going to see Uh, or you’re going to see more pressure on the providers And they’re going to behave accordingly.
I’m not going to do that. You know, I’m not going to take your HMO. I’m not going to take risks, you know, those kinds of things.
Vic: Yeah. So again, for people that [00:35:00] are, that are just listening, the, uh, two lines on here, the gray line is the year over year change of employment costs. How much it costs to hire workers for providers that, right.
Emily Evans: Right.
Vic: Um, and the blue line is the demand for labor. And the demand swings around based on the ACA and then. Post during the pandemic, they needed to hire lots of people, I guess. Is that right? And then, uh, the cost, although it has come down from the peak is still higher than is probably healthy for the industry, um, without different changes to, to reimbursement, which is sort of what you’re suggesting.
Is that right?
Emily Evans: Yeah. And, and what I’m suggesting with this chart is those changes are coming. We’re seeing Medicare updates. You know improve response to the labor cost [00:36:00] models, which is slower than anybody would And at the same time you have no medicare advantage plans Trying to resist those additional costs and, and having this, you know, these difficult discussions, you know, between providers, which are, are in many cases, ending up with people leaving at least the HMO, but it also leaving, you know, plans altogether.
Marcus: So Emily, just to kind of put a bow on this, because thank you, this has been a great Review of sort of how we got to where we are today. Um, any general guiding thoughts around what you expect to see in Medicare advantage throughout 2024, and maybe next time we sit down and convene and sort of take a review of the year next year, this time, obviously the, you know, there’s not going to be a ton of shifting in the demographics.
So that trend will, will continue. Um, but anything else that, that you expect to sort of be a [00:37:00] factor by the time. The, the, the next physician fee rule gets dropped, uh, next year.
Emily Evans: I would say that 2024 will be marked by increased tension between the jurors and the, um, and the providers. And one of the dynamics here, as we mentioned, the consolidation piece of this, uh, if consolidation is inevitable.
You know, and let’s say you’re going to consolidate simply by acquiring members. Your job one is to keep your premiums as low as possible. And remember the environment for Medicare advantage is frequently zero premium, which is not what it was meant to do, you know? Um, but it’s, it’s zero premium. So when you go from zero to 30 bucks, does that matter?
I bet it does. Um, and that, and that’s what [00:38:00] you’re, that’s your pressure point. You’re, can you get more members and steal them from the blues plans or, or a weaker three, you know, three star plan? Well, you’re going to have to keep those premiums down. Can you do that? Or you’re going to have to get customer satisfaction up, or maybe you do a combination of, of both of those things.
Marcus: Yeah, so we can’t get shaken out. Larger players that are more, you know, in a better capital position can probably play offense and grow the book pretty aggressively over the next couple of years and then continued pressure between pairs and providers. I mean, I think those themes are all themes. We Yeah,
Vic: that’s what I was seeing around innovation.
I mean, You have to keep your cost to deliver care, which flows into the premiums low, but you also need people to give you good ratings because that feeds into the star rating. So doing something that is lower cost to you and makes the subscribers happy is really good. Now, whether, [00:39:00] whether an innovative company can deliver that or not is a question, but that’s a real, we should see that grow, which probably is healthy.
I mean, if CMS can get that to occur. That’s a good thing, I think, for everyone in general.
Emily Evans: Yeah, well, the setup here is a scarcity of resources, right? And a scarcity of resources is a prerequisite for innovation. And we haven’t had a scarcity of resources for 20 years.
Marcus: Awesome. All right, Emily, we will, uh, we’ll probably be talking to you in about a month.
I mean, we’re going to start doing quarterly, uh, stuff with you. So, so we, we will circle back, but until then, thank you for everything you do for us all the time and, uh, have very happy holiday.
Emily Evans: Okay. You too. Great being here.