Sachin H. Jain: The great disruption: Broad Evidence of retraction in Medicare Advantage

Sachin H. Jain shared on LinkedIn:

“With changes in the Medicare Advantage risk model, slowed increase in Medicare Advantage county base rates, and downward pressure on Medicare star ratings—we are seeing broad evidence of retraction.

Altogether, these changes amount to a significant cut to industry revenue.

National carriers are announcing major cost cutting initiatives, withdrawals from unprofitable markets, and markedly slashing member benefits in an attempt to stay profitable.

And some health systems are taking the unprecedented step of exiting Medicare Advantage (many of them non-profit) altogether despite the fact that 50+% seniors now use the program to access healthcare services.

Taken together, some are calling these cuts ‘the great disruption.’

Some observations:

1) Benefit ‘innovation’ had gotten out of hand. To stay competitive and grab share, plans (including ours) were introducing unsustainable benefits that caught attention of members only to pull them back. This is going to stop. At least for now. (Traditionally unsexy) Benefit stability will win the hearts and minds of beneficiaries who will be tired of the yo-yo benefits they have experienced in our previously inflationary environment. If it’s too good to be true, it usually is and startups that funded growth through investment capital can’t do it forever.

2) Organizations that succeeded in Medicare Advantage risk through maximizing revenue capture will actually have to learn how to effectively manage care for older adults. This means providing rapid access to patients to help them avoid emergency rooms and hospital admissions. This means more proactive management of chronic conditions. This means managing their own utilization of low-value services. It’s a worthy challenge and time for put so-called high value healthcare organizations to the test.

3) As benefits come down to earth and there’s more parity, competition will be increasingly focused on effectiveness and service. Do you actually do what you say will do? Does your rhetoric match action? And this is a good thing. Service excellence along the value chain is what matters most to beneficiaries. It just hasn’t been what they valued most at point of purchase. Organizations that commit to radical consumer focus will win.

4) Brokers will be more important than ever to guide people to make good decisions about their plans. In an increasingly complicated marketplace (made more complicated by the IRA and changes to drug benefits), people who can help seniors truly understand their options and true out of pocket exposure will be critical.

5) Everyone partnering with everyone (brokers, plans, provider partners) is not a winning strategy. Deeper, narrowing partnerships will win the day.

The ‘great disruption’ will begin to play out this Annual Enrollment Period.

Let’s just not forget that at the other end of everything we do is an older adult who relies on our service and care.”

Source: Sachin H. Jain/LinkedIn