I came up with at least one way to tell the difference between making a fair profit and profiteering. If someone makes more money when the patients or members they serve are worse off, yeah, call that profiteering.
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For more on what is fair profit versus what is profiteering, I would recommend you go back and listen to the episodes on mission and margin with Ben Schwartz, MD, MBA (EP481) and then with Mick Connors, MD (EP495). But it's probably not an accident that I have started an episode about Medicare Advantage in this fashion.
To this end, I am very much looking forward to hearing what's up with Medicare Advantage from the one and only Betsy Seals, who is back for her third appearance on Relentless Health Value.
And her advice in a nutshell is this: Don't profiteer. There are ample ways to make a fair profit. Just go back to basics and do it the right way. I wanna kind of tick through the list of things that I think about when I think about Medicare Advantage and just how it is relevant to absolutely everybody.
The first thing I think about when I think about Medicare Advantage—and this is very obvious—is what Medicare Advantage plans do or don't do are our tax dollars at work or not at work, as the case may be.
Along these same lines, the second thing: How does this impact our elders, our family, our friends, our grandparents? These are our senior citizens, getting the care or not getting the care that they may need. Those two are obvious.
Now let's talk about a few less obvious things. Here's the third point that I think about as I listen to conversations about Medicare Advantage: cost shifting. Right?
It is a well-known fact how big, vertically integrated carriers—and when I say big, vertically integrated carriers, I mean ones that have a Medicare Advantage line of business—when negotiating with big, consolidated health systems, the release valve of those negotiations is commercial rates. These are the rates that the self-insured employers are paying.
So, the carrier says, "Look, gimme the best Medicare Advantage rates. I want the best Medicare Advantage rates because I, the carrier, am paying for those."
Savings from those lower rates accrues to the Medicare Advantage plan and its shareholders or investors or executives, right? So, the carrier with the Medicare Advantage plan is like, "Look, go as low as we can go on the Medicare Advantage rates, but it's okay, health system, if you make up the difference with the ASO commercial book of business."
Because right … ASO means administrative services only. It's not the carrier who's paying those commercial rates at the end of the day. So, the carrier uses its full book of business to negotiate lower rates for itself while, at the same time, cost shifting to commercial members.
In fact, there was some research that was cited. It was episode 436 with Elizabeth Mitchell, and I quoted Luke Prettol. But there was research that puts this markup at 4.7% above what employers would otherwise pay if they had an ASO that did not have a Medicare Advantage Plan.
So, yeah … number three big thing that I think about when listening to MA insights like the ones that Betsy drops today, I think about will this accelerate or ameliorate or really have anything to do with what is going on around those negotiating tables with ASOs and health systems? Because let's not forget, health systems account for about 50% of most self-insured employers' total health spend.
The fourth thing that I think about: Will MA carriers underpay independent practices, especially primary care practices? Will it pay indies less? And then if it pays 'em a lot less, would ultimately manage to put them out of business, ultimately raising the total cost of care for everybody.
But if we're thinking about this strictly from Medicare Advantage financial perspective, a really great move here, these are big, vertically integrated companies, don't forget. Many of them own provider organizations. This is why the FTC tends to frown on vertical integration.
So, will these Medicare Advantage organizations who own provider organizations pay the provider organizations they own more?
By the way, it's the same thing that's going on on the pharmacy side of the house when a PBM pays pharmacies that they own more. Here's a LinkedIn post by Stanley Warren about this topic.
And there are a lot of obvious, maybe less obvious reasons for why paying providers the carrier itself owns more is a great short-term move. One of them is intracompany eliminations. Listen to the episode with Preston Alexander (EP482).
But here's another reason: Rate increases paid by the government for Medicare Advantage plans are based on fee-for-service benchmarks. So, if fee-for-service rates go up, then the Medicare Advantage plans can negotiate more money for themselves. If the MA plans own the providers that are charging said FFS rates, then this is, I don't know, a great strategy, especially given the lobbying budget that some of these entities have.
So, look … on today's show, I get the distinct opportunity to speak with Betsy Seals, my guest today, as I mentioned earlier; and we go through her advice for MA plans and what they need to get busy with and ensure, make a fair profit, go back to basics, and do it the right way.
That's her bottom-line advice. Don't be putting your hands in the cookie jar. Sooner or later, you're gonna get caught. Focus on the members that you're really good at serving. And lastly, when it comes to STARS or other quality measures, lift them the right way—like, actually through better member health and actually better member experience, not some engineered mechanism by which one can check a box that honestly doesn't deserve to get checked.
Because now we're back to the beginning and you're gonna get caught with your hand in the cookie jar, and it's profiteering. Let's just get real about that. If somebody's checking boxes that they don't deserve to check, member health is not improving.
Betsy Seals, my guest today, as I have said at least three times, co-founded Rebellis Group, which is a Medicare Advantage consultancy. She became CEO of its parent company, Alerion Advisors. Now she is a board member, and also she works with start-ups in our industry.
This podcast is sponsored by Aventria Health Group with an assist today from Payerset to help us with the financial support that we need to stay on the air.
And with that, here is my conversation with Betsy Seals.
Also mentioned in this episode are Alerion Advisors; Rebellis Group; Benjamin Schwartz, MD, MBA; Mick Connors, MD; Elizabeth Mitchell; Luke Prettol; Luke Trocchio; LoVasco; Stanley Warren; Preston Alexander; Aventria Health Group; Payerset; Eric Bricker, MD; Scott Conard, MD; Bob Herman; and Vivian Ho, PhD.
For a list of healthcare industry acronyms and terms that may be unfamiliar to you, click here.
You can learn more by visiting the Rebellis Group blog and by connecting with Betsy on LinkedIn.
You can also email her at bseals@rebellisgroup.com.
Betsy Seals is the co-founder of Rebellis Group, former CEO of Rebellis Group and Alerion Advisors, and a current board member of the Alerion Advisors family of companies.
With over 25 years of experience across Medicare and Medicaid programs, Betsy is a nationally recognized leader known for her regulatory expertise, strategic vision, and ability to deliver measurable results.
Betsy's work spans mergers and acquisitions, compliance, enterprise strategy, sales and marketing, supplemental benefits, and innovative benefit design that optimizes health plan performance and improves health outcomes.
Betsy brings a strong blend of executive leadership, business acumen, and deep regulatory knowledge, with a focus on driving operational excellence and meaningful member impact.
00:00 Introduction to this episode.
00:43 Past episodes on profiteering: EP481 with Benjamin Schwartz, MD, MBA, and EP495 with Mick Connors, MD.
01:25 How Medicare Advantage is relevant to everyone.
06:15 A preview of today's conversation.
07:49 The "state of the state" of Medicare Advantage plans.
08:49 Video by Eric Bricker, MD, on the financial performance of the U.S. healthcare system.
09:32 Does Medicare Advantage's losses matter to the patients?
10:29 A recap of Betsy's insights so far.
11:19 The underlying strategic through line that needs to be considered.
13:04 The impact of Goodhart's Law.
14:12 What the players that are succeeding right now are doing.
14:22 The first pillar of a back-to-basics strategy: Don't get caught with your hand in the cookie jar.
16:50 Why short-term strategies don't work.
18:26 Stats report on prior authorizations serving the beneficiary.
19:32 EP482 with Preston Alexander.
19:38 Why prior authorization needs change.
21:28 The better strategy to use.
21:43 EP462 with Scott Conard, MD.
23:17 The second pillar of a back-to-basics strategy: Focus on the beneficiaries you actually serve well.
24:37 What it looks like to implement this focus on the beneficiaries you serve well.
25:29 How special needs plans play into this.
27:43 The third pillar of a back-to-basics strategy: Think about how STARS in clinical programs improve health.
30:04 The ethical component to implementing a Medicare Advantage program.
31:04 Betsy's advice for independent practices dealing with prior authorizations.
33:37 STAT article by Bob Herman about the effectiveness of Medicare Advantage lobbying on policy.
34:08 Betsy's final notes for all players impacted by what's currently happening.
@betsyseals discusses the impact of #medicareadvantage news on our #healthcarepodcast. #healthcare #podcast #financialhealth #commercialpayermarketplace #digitalhealth #healthcareleadership #healthcaretransformation #healthcareinnovation
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