On a July 31 call with Humana executives, John Ransom, an analyst at Raymond James, said it looks like the Medicare Advantage industry is “losing the argument in Washington.”
CMS is phasing in risk adjustment changes over three years, which payers have said amount to a cut in funding for the program. Medicare Advantage spending will outpace fee-for-service Medicare by $83 billion in 2024, according to estimates from the Medicare Payment and Advisory Commission, which advises the U.S. government on the program.
AHIP, the trade association representing the industry, said MedPAC’s estimates are based on “speculative assumptions.”
The government is also implementing tougher auditing standards on plans, which Humana is challenging in court.
The entire industry needs to do a better job building the case that Medicare Advantage creates value for members, and a better understanding of what value the program creates goes back to taxpayers, Mr. Rechtin said.
“How do we actually collaborate with CMS to make sure that the regulatory environment allows that value to accrue back, or some of that value to accrue back? None of that should be harmful to the MA sector.”
Mr. Rechtin said the value and outcomes of Medicare Advantage for members are well-documented. The system delivers “like for like” benefits at a lower cost than fee-for-service Medicare, he said.
Insurers need to focus on creating “a long-term value proposition for taxpayers that creates real stability” for Medicare and Medicaid.
“That’s good for everybody. It’s good for the MA sector, it’s good for the member, it’s good for taxpayers, and that’s what we’ve got to focus on getting back to,” he said.
