Thomas Graf

Medicare Advantage unrest, Change Healthcare fallout and more big takeaways from insurers’ Q1 https://lnkd.in/eyg48k7e via Healthcare Dive #MedicareAdvantage #ChangeHealthcare #Cybersecurity #CMS #Medicaid

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Basic “explainer” on Risk Adjustment and a RAF conundrum. This article from The Commonwealth Fund does a good job of providing the basics of risk adjustment. It also calls out one of the major contributors to patient outcomes that isn’t captured in traditional risk models, the Social Determinants of Health (SDoH). They do a great job on this, so I won’t summarize it here. However, I think there is another factor that isn’t captured that I wanted to discuss and would appreciate some different perspectives. I’d love to get some thoughts on the following. Maybe I am simply being pedantic. The issue not mentioned in the article that I think current methodologies of risk adjustment miss is duration and management of disease. A patient with a new diagnosis of diabetes, for example, now has an elevated risk of numerous complications over their lifetime. However, that risk in year 1 after the initial diagnosis is much lower than the risk at year 10. Current risk models don’t take that escalating risk into consideration, keeping the risk adjustment fixed regardless of duration of underlying diagnosis. In addition, there are few scenarios that will impact me differently as the provider: 1) Management of this patient’s diabetes has been poor for the prior 9 years and now my group “inherits” this patient at year 10. 2) My team has helped this patient manage their diabetes very well for the past 9 years. 3) For the past 9 years, this patient’s prior group had managed their diabetes well but they have now switched into my group. As noted above, in scenario 1, that “new” diagnosis of diabetes severely underestimates this patient’s risk of needing expensive resources this upcoming year. I will be adversely impacted from something that is clinically obvious (duration of a disease increases risks) but which is not captured in the current data. To go one step farther, in frameworks 2 and 3, there is a gap between what the patient’s risk would have been without 9 years of great care and what it likely is now. However, there is no recognition of this work. That is to say, if the patient switched to a group that did a terrible job of managing diabetes, they’d receive the same risk adjustment in year 10 as my group would receive after all of our time, effort and resources had been dedicated to keeping this patient healthy. If the patient’s healthcare needs in year 10 are low because of our efforts, shouldn’t we receive more credit than a group that simply gets attribution? And, what about the prior group? How are (were?) their efforts recognized? Please share your thoughts in the comments.

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CMS Releases 2023-2032 National Health Expenditure (NHE) Projections. The Office of the Actuary projects that over 2023-2032, average annual growth in NHE (5.6%) will outpace average annual growth in gross domestic product (GDP) (4.3%), resulting in an increase in the health spending share of GDP from 17.3% in 2022 to 19.7% in 2032. Average annual expenditure growth overview: Medicare 7.4% Retail Prescription Drug 6.0% Hospital 5.7% Private Health Insurance 5.6% Physician and Clinical Services 5.6% Medicaid 5.2% Out Of Pocket 4.7% https://lnkd.in/eH2R7nWe #MedicalBilling #MedicalInsurance #PracticeManagement #RevenueCycleManagement #ERA #EMR #EHR #MedicalDenials #MedicalReporting #Healthcare

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🙌🏻 Good. Also if you need help renegotiating these types of agreements 👋🏻 We have over 1.5 million benchmarks (and growing), I would love to show you exactly how to save money on joint contracts.

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OIG ALERT: Diagnoses reported only on enrollees’ HRAs and HRA-linked chart reviews, and not on any other 2022 service records, resulted in an estimated $7.5 billion in MA risk-adjusted payments for 2023. Before we dive in here I want to say that I have seen HRAs used appropriately and inappropriately during my time in this space. There can be great value for patients, particularly those with limited access to care and or those reluctant to visit their primary care provider. However there is tremendous risk to the system if these visits are a fragmented approach to care and or not aligned with care planning. What the OIG has identified represents the risks and shows care continuity breakdowns. Ultimately organizations and payers must know their vendor partners because there are some really good ones in this space. Earlier this week the OIG released a really interesting look into Health Risk Assessment, or HRAs. These HRAs are often performed in the home by payers or vendor partners. These should be in depth reviews of the patient and include a host of assessments that often are hard to complete in a condensed visit to a provider office. What the OIG found was that 7.5B or about 2% of all Medicare revenue was tied to conditions captured only during these visits. Is that bad? I don’t know. If these are new conditions and then ultimately incorporated into a broader care plan that improves outcomes then they are a great thing. If they are captured, never shared with the care team, and ultimately used to solely drive revenue with little focus on outcomes then it is bad. I suspect there is a mix of both. If I was at the OIG I would want to take a multi-year look at what was captured year over year only in a HRA as a next step. The report recommends CMS take the following actions. CMS subsequently agreed with recommendation number three but not numbers one and two. 1) Impose additional restrictions on the use of diagnoses reported only on in-home HRAs or chart reviews that are linked to in-home HRAs for risk-adjusted payments. 2) Conduct audits to validate diagnoses reported only on in-home HRAs and HRA-linked chart reviews. 3) Determine whether select health conditions that drove payments from in-home HRAs and HRA-linked chart reviews may be more susceptible to misuse among MA companies. I am doing some advanced analytics on information in the report for future posts but this is a nice easy read for folks. https://lnkd.in/ehNzzSWu

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📉 Elevance Health 3Q Earnings Recap: What Went Wrong? On October 17, Elevance Health reported its Q3 earnings, and the market reaction was swift—a 15% drop. The major culprit? A soaring Medical Loss Ratio (MLR) of 89.5%, up by 270 basis points from Q3 2023. The primary driver: Medicaid reimbursement misalignment, which has burdened payors across the board. The mismanagement of Medicaid redeterminations led to a per-member cost spike, which wasn’t matched by state reimbursement increases, pushing Wall Street into a broad sell-off of the “Big Six Payors.” 📉 Despite these challenges, Elevance’s revenue still grew by 5%, reaching $44.7B. Their membership remains steady at 45.8 million, with ACA and commercial gains offsetting Medicaid losses. Key Takeaways from the Earnings Call and 10-Q: • Medicare Advantage: Conservative bids for open enrollment amid CMS rate cuts. While Elevance improved Medicare Star ratings on 60% of measures, one of their 4-star plans narrowly missed CMS’s cut-off, costing them. • Medicaid: CFO Mark Kaye noted cost-per-member increases as high as 3-5x in some states, driven by a shift to sicker populations post-redeterminations. With half of the state rate adjustments set for January, there’s hope that reimbursement alignment will improve. • Carelon’s Growth: Low 20% growth anticipated as Carelon expands its specialty drug offerings, with recent acquisitions of BioPlus, Paragon, and Kroger Specialty. Their latest acquisition of Carebridge further solidifies Carelon’s role in Elevance’s growth strategy. The specialty drug assets will be driving new value for larger employers they seem to attract. • AI Investments: Elevance is pursuing AI to streamline internal operations and enhance member experiences. This investment is set to mature through 2025, aiming to improve productivity and personalization. While Wall Street’s reaction may seem like an overreaction, the strategic groundwork Elevance has laid—especially in Carelon and specialty pharmacy—positions them for a potential rebound. Expect Carelon to become a key revenue driver as Elevance navigates the current Medicaid headwinds. For a deeper dive into the Elevance Health earnings for Q3 feel free to read and subscribe to my substack! #Healthcare

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"Rarely have the pathologies of the Medicare Physician Fee Schedule portended such poor outcomes for the future of U.S. healthcare as they do now." In a new Healthcare Financial Management Association (HFMA) blog, APG President and CEO Susan Dentzer describes the four main flaws in the Medicare Physician Fee Schedule. "Those of us hoping for a better system for paying physicians should keep pushing for alternative payment models." #valuebasedcare #Medicare #healthcarecosts Read the blog: https://lnkd.in/dGVE8dfM

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This ProPublica article on EviCore by Evernorth—a healthcare utilization management company making the yes/no care decisions for many health plans—highlights two glaring issues: 1️⃣ The Dial: Automated claim denials are illegal, but the workaround is adjusting thresholds for automated approvals (e.g., 95% or 75% likelihood of approval). #Claims falling below these thresholds face manual reviews, leading to delays and increased denials. 2️⃣ Risk Contracts: While provider risk contracts aim to incentivize better health outcomes, for utilization management (UM) companies, the financial incentive skews toward limiting claim payouts—not improving care. These practices don't exist in isolation. They involve multiple players—UM companies, health plans, employers, consultants, and more. I believe most people in these organizations genuinely want to improve healthcare, so where’s the cognitive dissonance? My thoughts: ☕ Drinking the Company Kool-Aid: We justify the system with phrases like “bending the cost curve” or “right care at the right time.” But let’s keep it simple: would I want my mother to experience this? Would I want to be the doctor on the other side? 💡 Fatalism and Incrementalism: We accept the system as unchangeable and focus on small improvements—like removing 15% of prior authorization requirements that never should have existed—rather than challenging the ethics of the system itself. So, what can we do? A few years ago, I recall a conversation with my friend, Bukata Hayes, MBA, where we discussed why we do this work. It’s not just about helping our companies better serve people—it’s also about being internal activists. Yes, change in healthcare requires some bold macro-policy shifts, but I think meaningful progress can start with us. How can we consistently use our influence to challenge the status quo and push for ethical, patient-centered change - be that internal health activist? What do you think?

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What does health insurance do? The conversation in the attached screenshot sums it up. We have a distorted market in healthcare. For drugs, there is a middleman called PBM between the insurance and the drug companies. The PBM negotiates a higher rate than the cash price - usually 2x or 3x and then receives an under the table rebate from the drug company. It passes of portion of this rebate to the insurer. The end effect is that the bottom price for the consumer is increased. The consumer believes that their insurance saved them a lot of money. #healthcare

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Agreed Leah. As physicians, we must recognize the significance of self-advocacy—not just for our own careers but for the integrity and future of the entire profession. This CPT coding example highlights a broader issue in healthcare: physicians are often excluded from critical decision-making processes that directly affect our work and patient care. Could say the same for mandated maintenance of certification. It’s essential that we collectively push for transparency and reform. Only by advocating for a fairer, more inclusive system can we protect our profession from being solely dictated by third-party interests. Let’s raise our voices not just for ourselves but for future generations of physicians and the patients who trust us with their care. #physicianautonomy #NBPAS #advocacy

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The Political Risk Vector: Money, Influence, and Ideology in Healthcare Policy Part 1 The political risk vector in healthcare's three-body problem merits closer examination, particularly regarding the outsized influence of money and special interests in shaping policy outcomes. While financial risk management and patient risk mitigation operate within relatively defined parameters, political risk is uniquely susceptible to external pressures that can distort evidence-based policymaking. Industry lobbying represents a powerful force in healthcare politics. Professional organizations, pharmaceutical companies, insurance providers, and healthcare systems collectively spend billions annually to influence policy decisions. These entities often frame their positions in terms of patient benefit or system efficiency, but their primary motivation frequently aligns with preserving or expanding market share and profit margins. This creates a fundamental tension between evidence-based healthcare delivery and profit-driven policy outcomes. The role of science denial in healthcare policy presents another critical dimension. Despite robust evidence supporting certain healthcare interventions or delivery models, ideologically-motivated opposition can impede implementation of evidence-based policies. This science skepticism often intertwines with political identity, creating barriers to reform that transcend purely technical or economic considerations. The COVID-19 pandemic starkly illustrated how political ideology can override scientific consensus, with devastating public health consequences. Campaign finance further complicates the political risk landscape. The unfettered flow of money into political campaigns creates implicit and explicit obligations that can supersede both scientific evidence and patient needs. Politicians must constantly balance constituent interests against donor priorities, often leading to policy compromises that prioritize political sustainability over optimal healthcare outcomes. This dynamic helps explain why policies with broad public support but industry opposition often fail to advance.

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Market dynamics aside, it will be interesting to see how these cost cutting measures (I.e., benefit carve-outs, community/county exits) will play out during an election year when CMS releases data on bids in October. Get your popcorn ready!! #healthcarenerd, #valuebasedcare, #pophealth, #pricetransparency

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A brief thread on how MLR is often a stat that is juked (h/t to The Wire) in the “value-based” care world. The medical loss ratio (MLR) is a financial metric used in health insurance and managed health care to measure how much of a premium dollar an insurer uses to pay medical claims and quality improvement activities. The MLR is also known as the medical care ratio, medical cost ratio, or medical benefit ratio (cite: Healthcare.Gov). Many so-called value-based care models cite their impact in the form of medical loss ratio improvement. Most innocently assume that such improvement is generated by better medical management (I did when I first started working in the field). While this may be the case in some models—it is importantly to note that another way to improve a medical loss ratio is be increasing revenue capture in the form of coding. Said another way, to improve MLR, one can reduce the numerator or increase the denominator. Therefore, when someone cites a major medical loss ratio improvement—the key question to ask is: did the MLR improve because of true medical utilization reduction or because of better revenue capture? Most will glibly (and sometimes dishonestly) say “both.” At which point it’s important to ask, what fraction of Medical Loss Ratio improvement arose from better medical management and what fraction from better revenue capture. Usually, what we will find is that most dramatic improvements in MLR are a function of improvements in revenue capture—and only marginal improvements in medical cost-management. In that way, the so-called “value” produced by many value-based care models isn’t true value. It’s better revenue capture. And many “value-based” care models have been granted undue recognition for medical cost management—citing filthy MLR improvements—that are associated with minimal true improvement in medical expense. This kind of short-cut taking sets back the whole value-based care movement which (while appropriate revenue capture is necessary) should be about overall better cost management and reducing total cost of care—not better revenue capture alone.

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With over 2 million members displaced by major healthcare players exiting underperforming Medicare Advantage markets, regional insurers face both a challenge and an opportunity. This influx of high-cost members demands innovative solutions to manage chronic conditions like diabetes and heart failure effectively. At Circadian Health, we’re helping regional insurers navigate this disruption with virtual-first specialty care, reducing costs and improving outcomes for the most complex members. This market shake-up isn’t just a challenge—it’s a chance to redefine care delivery. Discover how regional insurers can transform disruption into opportunity—read more on our blog. #MedicareAdvantage #HealthcareInnovation #VirtualCare #CircadianHealth #ValueBasedCare #HealthEquity

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On point and so true for our market. 

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