Barack Obama reiterated his views on Medicare HMOs in last night’s debate: “We spend $15 billion a year in subsidies to insurance companies under the Medicare plan. It doesn’t help seniors get any better. It’s not improving our healthcare system. It’s just a give away.” The Obama platform on Medicare HMOs (here) states that these “excessive subsidies…create an incentive structure that has led to fraudulent abuses of seniors” and calls for their elimination.
Couple this statement with Obama’s universal healthcare proposal to offer a public plan similar to what’s offered to federal employees, and you’ve got the makings of a big political battle with the health insurance industry.
But assuming Obama wins (and I think he will) and assuming the Democrats expand their majority in Congress (and I think they will), this is a battle the health insurance industry just might lose. And that’s going to affect the profitability of Medicare Advantage plans. How much? Not as much as you might thing, say some observers. We will, however, be keeping our eyes on whether we see the type of large-scale pullbacks by Medicare HMOs that we saw about a decade ago.
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Agreed that health plans have a big challenge ahead in Medicare…not just in reimbursement but also in “re-regulation”. I think it’s a foregone conclusion that rates will be cut down to a “level playing field” at 100% FFS over time — regardless of who’s in the White House, the budgetary pressures are just too great in the wake of the rescue package, the wars and the national debt. Such reductions will result in some consolidation in the industry, but not an exodus as we saw post-BBA 97…100% FFS is still way ahead of the 95% Medicare plan rates were pegged at in the 90s under the AAPCC. But it will sting…we modeled what rates would look like if phased down to 100% FFS between 2010 and 2014, and the plans would receive on average about $144 per member per month less in 08 adjusted dollars. Ouch. Either get busy tightening up the ship, or get busy losing money! J.
Ironically — and I would be intersted if John agrees this this — about half the health plans in the country could make that $144 up simply by coding better, prospectively and retrospectively. (Of cousre, if everyone coded better no one would benefit.) In this half od hte universe no one seems to care about that $144, and yet everyone is quite concerned about teh $144 they stand to lose. My database comparing MEdicaer RAFs to actual objective measures of severity shows this opportunity about half the time and yet no one — no one — in this half seems to want to look into this opportuinity.
It is also interesting that a number of the health plans could save a tremendous amount in the area of operational efficiencies and accountability. This is so true for the management of post acoute care utilization and evidence-based protocols for preventing SNF admission yet to the home. Over and over again members are admitted to SNF that don’t need to be in the setting or are not managed by the appropriate benchmarks. Practice variation is tremendous as well as LOS. Who wouldn’t want a 300+ ROI today. Just a thought
Agreed Al…though i think we are seeing the industry awaken to the critical importance of getting risk adjustment right…just 3 years too late to save some of them.