Major Medicare Advantage carriers have been reporting an increase in inpatient care costs during the first half of 2024, influencing future pricing and plan design strategies.
Humana's CEO, James Rechtin, reported that Medicare Advantage exceeded growth expectations in the second quarter, but the company is seeing higher-than-expected inpatient costs, likely linked to the recently implemented two-midnight rule. Meanwhile, CVS Health CFO Tom Cowhey warned in August of rising costs within the inpatient care, dental, and pharmacy spaces, prompting CVS to lower its 2024 earnings guidance.
In contrast, Clever Care, a regional Medicare Advantage company, says its biggest challenge is not related to rising hospital utilization among its members. Karen Walker Johnson, interim CEO at Clever Care, joined the Becker's Payer Issues podcast to discuss how the company is navigating ongoing industry headwinds.
Clever Care was founded in 2018 and serves 28,000 members, primarily Asian American and Pacific Islander communities in Southern California. The company focuses on cultural customization and alternative benefit designs for its members.
Question: How is Clever Care navigating the industry wide headwinds we're currently seeing?
Karen Walker Johnson: It's no secret that CMS likes to keep us on our toes. We have a smaller and more nuanced membership compared to larger carriers. Our membership primarily consists of Asian Americans and Pacific Islanders, and their approach to healthcare tends to focus more on prevention. They prefer, if possible, to avoid hospitalizations, so increased utilization isn’t our biggest challenge. Instead, we focus heavily on quality, particularly in areas like HEDIS measures and medication adherence in Part D, ensuring our members are picking up their prescriptions.
We are also mindful of benefit design — ensuring it’s marketable but not too far ahead of the competition. Our approach is more focused on Eastern medicine and leveraging technology to streamline processes and address headwinds. Administratively, we’re thinking strategically about investments. While my team might want to implement several new initiatives next year, we are prioritizing investments that drive quality and administrative efficiency.
Engaging both our members and employees is also critical. We have an advisory board of members to help us stay relevant and test potential changes. On the employee side, we recognize that our greatest asset is human capital, so we focus on keeping employees engaged, reducing turnover, and minimizing anxiety about industry changes, especially in Medicare Advantage.