With the election results now in, consensus thinking is that the new administration will be supportive of Medicare Advantage. But, don’t think for a second that CMS and Congress will deviate from their demands for more accountability and continuous improvement.
The industry broadly has failed to deliver on these two dimensions. That’s not my opinion — rather it’s embedded in the more stringent measures imposed by the industry’s regulators. Just look at the increased Star cutpoints and the v28 payment and reimbursement methodology. Oh and by the way, the stocks of companies exposed to MA.
There’s no question that the storm clouds around Medicare Advantage have darkened. Humana’s stock plummeted after issuing a warning that many of their MA members will be on a lower Star rated contract. A slew of plans have even sued CMS to contest their Star score drop, including United Healthcare, Centene, and Elevance. Still, there’s plenty of evidence that MA offers big market opportunities, and the plans that drop off will leave an opening for the best-run plans to win.
In fact, not only is it possible for MA to be a profitable business line, it’s still one of the most lucrative markets in health insurance.
It is mission critical for the well-being of our nation that the payer industry makes MA successful. Plans that actually manage care, delivering higher quality, lower cost care with better member satisfaction will win. This is what CMS is demanding and what members (and doctors) are demanding.
Shouldn’t the private sector be able to meaningfully beat FFS in delivering the triple aim?
It takes a truly well-run plan to rise to the occasion and meet these increasingly higher standards — and only those that can harness market forces to power innovation will be able to succeed and deliver better care at lower cost.
The good news is that the last 5-10 years have seen an explosion in the types of new analytical tools and creative modes of care needed to make MA profitable. The question is whether enough health plans will be agile, creative, and bold enough to adopt these new solutions and deliver for America’s growing 65+ population.
The challenges facing Medicare Advantage plans
Certainly MA’s road ahead is not without its challenges. Plans are facing increased pressure from several fronts. Reporting requirements for Supplemental Benefits, which plans had leaned into with services such as transportation and home-based care, have become more stringent, demanding more transparency and evidence of benefits utilization.
The push toward adopting Electronic Clinical Data Systems (ECDS) introduces the need for seamless data collection and management, raising concerns about cost and implementation. At the same time, interoperability mandates require health plans to ensure that their systems can communicate effectively with providers, patients, and other payers — a technical and administrative hurdle that many plans are still struggling to overcome.
In addition to these operational challenges, there’s greater scrutiny on risk adjustment scores, with regulatory bodies closely watching for inflated coding practices that overstate patient severity. A move to more automated prior authorization, which was already a contentious issue for providers and patients, is now under the microscope, with expectations for clearer, faster, and more transparent approvals.
Finally, health plans must navigate tighter controls around member acquisition practices via third-party marketing entities, an area that now has much greater oversight.
Solutions to overcome these challenges
To rise above these challenges, MA plans must embrace a strategy centered around technological and operational innovation. Advanced analytics and machine learning can streamline the reporting of Supplemental Benefits, allowing plans to track utilization and outcomes more efficiently.
Moving to ECDS and ensuring interoperability should be seen, not as regulatory burdens, but as opportunities to leverage real-time clinical data for more personalized and effective care management.
To address risk adjustment and prior authorization scrutiny, health plans can deploy predictive modeling and automated workflows that ensure accuracy while minimizing administrative friction. Furthermore, adopting ethical marketing and member acquisition practices will not only safeguard against regulatory penalties, but also foster trust and loyalty among beneficiaries.
A call to action for Medicare Advantage plans
The market opportunities for Medicare Advantage remain vast, but only for those willing to evolve. Now is the time for health plans to step up and embrace the tools and strategies that will not only meet regulatory demands, but also drive innovation in care delivery.
The aging population depends on us to provide quality, affordable care — and by meeting these challenges head-on, MA plans can deliver on their promise to improve the lives of millions of Americans.
The time for agility, creativity, and boldness is now. The health of our nation depends on it.
Photo: zimmytws, Getty Images
Bill Georges is a Partner and Executive-in-Residence at AlleyCorp, a New York-based venture capital firm that incubates and invests in companies across a range of technology focus areas, including healthcare.
Previously, Bill served as Senior Vice President and Chief Strategy Officer at Horizon Blue Cross Blue Shield of New Jersey, where he led the company’s corporate strategy, expanding its business development and leading the Strategic Initiatives Group, which develops and implements key business programs. He also oversaw the company’s Enterprise Project Management Office and Business Process Improvement functions, and managed the company’s venture fund investments. Prior to his nearly 15 years at Horizon BCBS, Bill was Vice President and Senior Analyst at J.P. Morgan Securities, where he covered the managed care industry as a sell-side analyst.
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