WEBVTT 1 00:00:02.159 --> 00:00:06.160 - GLP ones, Medicare Advantage Headwinds, a Medicaid landscape 2 00:00:06.160 --> 00:00:07.299 - that looks different 3 00:00:07.599 --> 00:00:08.580 - every quarter. 4 00:00:09.119 --> 00:00:11.679 - Their leadership right now means making durable decisions 5 00:00:11.679 --> 00:00:13.884 - in an environment that keeps moving, and the 6 00:00:13.884 --> 00:00:16.765 - organizations pulling ahead are the ones that stopped 7 00:00:16.765 --> 00:00:17.904 - waiting for stability 8 00:00:18.285 --> 00:00:19.184 - before acting. 9 00:00:19.484 --> 00:00:22.605 - Becker's fifth annual fall payer issues roundtable convenes 10 00:00:22.605 --> 00:00:24.064 - more than 500 11 00:00:24.204 --> 00:00:25.585 - executive level attendees 12 00:00:25.940 --> 00:00:28.500 - and 70 plus speakers November second and third 13 00:00:28.500 --> 00:00:29.960 - at the Swiss Hotel Chicago. 14 00:00:30.420 --> 00:00:33.000 - Two days of senior level dialogue on affordability, 15 00:00:33.619 --> 00:00:36.520 - benefit design, value based care, and the strategies 16 00:00:36.979 --> 00:00:38.920 - shaping how care gets financed 17 00:00:39.299 --> 00:00:43.284 - and delivered, featuring a celebrity keynote from pro 18 00:00:43.284 --> 00:00:46.004 - football hall of famer, Emmitt Smith. Agenda and 19 00:00:46.004 --> 00:00:48.085 - registration at beckerspayer.com. 20 00:00:48.085 --> 00:00:50.024 - Click events in the upper right. 21 00:00:51.045 --> 00:00:53.844 - This is Scott Becker with the Becker's Health 22 00:00:53.844 --> 00:00:54.585 - Care podcast. 23 00:00:55.230 --> 00:00:58.350 - We're joined today by Jacob Emerson. Jacob comes 24 00:00:58.350 --> 00:01:00.109 - to us regularly to talk to us about 25 00:01:00.109 --> 00:01:02.429 - the payer trends, payer stories that he's watched 26 00:01:02.429 --> 00:01:03.250 - in the markets. 27 00:01:04.030 --> 00:01:05.950 - Jacob, let me tee you up and have 28 00:01:05.950 --> 00:01:06.930 - you take it away. 29 00:01:07.390 --> 00:01:09.490 - What what's what are you watching currently? 30 00:01:10.255 --> 00:01:12.194 - Sure thing, Scott. Good to talk with you. 31 00:01:12.734 --> 00:01:13.474 - So I got 32 00:01:13.775 --> 00:01:16.174 - two broad topics we could talk about today 33 00:01:16.174 --> 00:01:18.974 - are some themes we're seeing from the second 34 00:01:18.974 --> 00:01:21.715 - quarter earnings calls that are now mostly out 35 00:01:21.935 --> 00:01:23.954 - for the large hospital operators, 36 00:01:24.880 --> 00:01:27.439 - and then the largest health insurers. There there's, 37 00:01:27.840 --> 00:01:30.079 - I think CVS is the only one left 38 00:01:30.079 --> 00:01:31.600 - at this point in terms of q two 39 00:01:31.600 --> 00:01:34.000 - earnings, so so they're the outlier there. We've 40 00:01:34.000 --> 00:01:36.740 - got earnings out now from from HCA, 41 00:01:37.275 --> 00:01:39.215 - tenants, CHS, UHS, 42 00:01:39.515 --> 00:01:41.135 - and then across the big payers. 43 00:01:41.755 --> 00:01:43.515 - And I think, you know, two big topics 44 00:01:43.515 --> 00:01:45.115 - that I spotted right away, 45 00:01:45.435 --> 00:01:46.734 - after looking through everybody's 46 00:01:47.115 --> 00:01:49.959 - calls and financial results for the quarter is 47 00:01:49.959 --> 00:01:52.619 - that the, the expiration of the ACA subsidies, 48 00:01:52.680 --> 00:01:54.119 - the enhanced subsidies at the end of last 49 00:01:54.119 --> 00:01:54.619 - year, 50 00:01:54.920 --> 00:01:57.640 - it seems like it's really favoring insurers or 51 00:01:57.640 --> 00:01:59.799 - at least they've they've better managed some of 52 00:01:59.799 --> 00:02:01.560 - the some of the fallout there. And then 53 00:02:01.560 --> 00:02:02.859 - the hospitals themselves 54 00:02:03.424 --> 00:02:06.545 - really seen, a big financial impact from from 55 00:02:06.545 --> 00:02:09.105 - the fallout there. And then the other story 56 00:02:09.105 --> 00:02:10.705 - is, on the on the payer side is 57 00:02:10.705 --> 00:02:12.645 - the Medicare Advantage margin recovery. 58 00:02:13.264 --> 00:02:15.745 - After the last eighteen to twenty four months 59 00:02:15.745 --> 00:02:18.209 - of pretty tough a pretty tough business to 60 00:02:18.209 --> 00:02:19.349 - navigate for the insurers. 61 00:02:19.650 --> 00:02:22.129 - They're on the upswing again, and, that's likely 62 00:02:22.129 --> 00:02:23.489 - because of a lot of the moves we've 63 00:02:23.489 --> 00:02:26.129 - saw them be making over the last couple 64 00:02:26.129 --> 00:02:27.569 - years. So I can dive into that as 65 00:02:27.569 --> 00:02:28.069 - well. 66 00:02:28.769 --> 00:02:30.289 - Thank you so much. And talk about like, 67 00:02:30.289 --> 00:02:32.549 - I saw Centene's earnings not Centene's. 68 00:02:32.905 --> 00:02:35.064 - Oscar Health's earnings were way up, and they're 69 00:02:35.064 --> 00:02:36.525 - a Medicare Advantage provider, 70 00:02:37.465 --> 00:02:39.324 - you you know, or or ACA, 71 00:02:39.705 --> 00:02:41.625 - you know, it it they trim their ACA 72 00:02:41.625 --> 00:02:43.485 - business and their profits went way up. 73 00:02:44.264 --> 00:02:46.284 - And then so a tenant also 74 00:02:46.800 --> 00:02:48.340 - recorded a really good quarter, 75 00:02:48.719 --> 00:02:50.719 - you know, notwithstanding all the discussion of the 76 00:02:50.719 --> 00:02:53.300 - ACA and everything else. And I saw HCA 77 00:02:54.159 --> 00:02:57.120 - had talked somewhat negatively about their earnings, but 78 00:02:57.120 --> 00:02:58.879 - at the end of the day, even though 79 00:02:58.879 --> 00:03:00.900 - they took a hit on the ACA business, 80 00:03:01.025 --> 00:03:03.444 - their overall business seems to be going fantastically 81 00:03:03.585 --> 00:03:04.085 - well. 82 00:03:04.784 --> 00:03:05.985 - Give us some of the takes that you 83 00:03:05.985 --> 00:03:07.745 - have in watching this. What what are you 84 00:03:07.745 --> 00:03:08.564 - seeing out there? 85 00:03:09.025 --> 00:03:11.504 - For sure. And, I think Scott Oscar's gonna 86 00:03:11.504 --> 00:03:13.425 - come out later next month in August, but 87 00:03:13.425 --> 00:03:13.925 - Centene, 88 00:03:14.580 --> 00:03:17.159 - the big ACA operator, did have their earnings 89 00:03:17.459 --> 00:03:18.979 - this week. So I can dive into that 90 00:03:18.979 --> 00:03:20.199 - in just a sec, but, 91 00:03:20.500 --> 00:03:21.879 - or actually right now because 92 00:03:22.180 --> 00:03:23.620 - I can talk about some of the ACA 93 00:03:23.620 --> 00:03:25.879 - subsidy fallout. I think what's interesting 94 00:03:26.180 --> 00:03:26.900 - is that, 95 00:03:27.459 --> 00:03:30.645 - the the the large health systems, they're they're 96 00:03:30.645 --> 00:03:31.145 - absorbing 97 00:03:31.685 --> 00:03:32.824 - a bigger wave 98 00:03:33.205 --> 00:03:34.905 - of newly uninsured patients 99 00:03:35.284 --> 00:03:37.844 - than they than they originally expected earlier this 100 00:03:37.844 --> 00:03:39.224 - year. And so, 101 00:03:39.764 --> 00:03:40.745 - you know, everybody 102 00:03:41.205 --> 00:03:42.104 - knew that, 103 00:03:42.805 --> 00:03:43.544 - the enhanced 104 00:03:44.199 --> 00:03:47.159 - credits that lowered the exchange premiums for millions 105 00:03:47.159 --> 00:03:47.819 - of enrollees, 106 00:03:48.280 --> 00:03:50.360 - and they lapsed at the end of, last 107 00:03:50.360 --> 00:03:53.000 - year after congress failed to extend them. And 108 00:03:53.000 --> 00:03:55.159 - I think it's interesting that, you know, insurers 109 00:03:55.159 --> 00:03:57.479 - had anticipated the expiration or at least they 110 00:03:57.479 --> 00:03:57.824 - had 111 00:03:58.305 --> 00:04:00.485 - planned around it. So a lot of them 112 00:04:00.544 --> 00:04:03.685 - filed two different sets of rates with states 113 00:04:03.745 --> 00:04:05.205 - going into this year. 114 00:04:05.745 --> 00:04:08.224 - And so the insurers were able to raise 115 00:04:08.224 --> 00:04:09.044 - their premiums, 116 00:04:09.584 --> 00:04:11.444 - in part around the assumption that 117 00:04:11.810 --> 00:04:14.310 - when or if the the subsidies expired 118 00:04:14.689 --> 00:04:16.689 - and and premiums went up for millions of 119 00:04:16.689 --> 00:04:19.189 - people that people who are healthier who, 120 00:04:19.649 --> 00:04:21.750 - you know, in theory don't need health insurance. 121 00:04:21.810 --> 00:04:24.050 - I'm not saying that people don't, but people 122 00:04:24.050 --> 00:04:26.024 - who felt that they could go without it, 123 00:04:26.024 --> 00:04:27.704 - that they would face sticker shock on the 124 00:04:27.704 --> 00:04:29.324 - premiums and they would drop coverage. 125 00:04:29.625 --> 00:04:30.845 - And so originally, 126 00:04:31.225 --> 00:04:33.544 - a health system like HCA, they had thought 127 00:04:33.544 --> 00:04:35.384 - that around eighty to eighty five percent of 128 00:04:35.384 --> 00:04:36.845 - those types of individuals, 129 00:04:37.225 --> 00:04:39.384 - they they would just become uninsured and that 130 00:04:39.384 --> 00:04:41.884 - the other fifteen percent would find coverage elsewhere. 131 00:04:42.480 --> 00:04:44.800 - But it ended up being those assumptions were 132 00:04:44.800 --> 00:04:46.639 - wrong, and it ended up being that almost 133 00:04:46.639 --> 00:04:48.959 - a 100% of those people ended up not 134 00:04:48.959 --> 00:04:51.680 - getting coverage elsewhere either through Medicaid or through 135 00:04:51.680 --> 00:04:52.579 - an an employer. 136 00:04:53.759 --> 00:04:55.860 - And and that theme was consistent across, 137 00:04:56.160 --> 00:04:57.379 - CHS, Tenet, 138 00:04:57.704 --> 00:05:01.064 - Universal, UHS, which is more behavioral hospitals. So, 139 00:05:01.064 --> 00:05:01.564 - basically, 140 00:05:02.264 --> 00:05:04.185 - more in So how do you, though, how 141 00:05:04.185 --> 00:05:06.504 - do you filter this out? Because you're absolutely 142 00:05:06.504 --> 00:05:08.665 - right. I'm I'm looking at the things that 143 00:05:08.665 --> 00:05:11.384 - you're looking at and seeing that they essentially 144 00:05:11.384 --> 00:05:13.084 - said people lost coverage. 145 00:05:14.009 --> 00:05:16.970 - They're still getting hospital care and and health 146 00:05:16.970 --> 00:05:19.210 - care, but we're just not getting paid for 147 00:05:19.210 --> 00:05:20.810 - it as we were getting paid at least 148 00:05:20.810 --> 00:05:22.589 - somewhat under the ACA plans. 149 00:05:22.970 --> 00:05:24.970 - Yep. So this is a drag on their 150 00:05:24.970 --> 00:05:27.550 - margins and outlook. But at the same time, 151 00:05:27.689 --> 00:05:28.189 - overall, 152 00:05:29.425 --> 00:05:31.685 - the earnings for a lot of these 153 00:05:32.064 --> 00:05:34.085 - big health systems seem to be pretty solid, 154 00:05:34.625 --> 00:05:36.245 - at least the for profit ones. 155 00:05:36.785 --> 00:05:38.645 - Sure. And, I mean, I think that's reflects 156 00:05:39.025 --> 00:05:40.564 - their their ability to, 157 00:05:41.425 --> 00:05:43.824 - absorb or pad margins elsewhere. I mean, I 158 00:05:43.824 --> 00:05:46.680 - know Tennant mentioned their ambulatory surgery mix, 159 00:05:47.079 --> 00:05:49.180 - that was able to help absorb the hit, 160 00:05:49.800 --> 00:05:51.800 - for them based off of planning that they 161 00:05:51.800 --> 00:05:54.199 - did, in the middle of of last year. 162 00:05:54.199 --> 00:05:55.720 - So I think, you know, for a lot 163 00:05:55.720 --> 00:05:58.274 - of these systems overall, they're able to either 164 00:05:58.354 --> 00:06:00.274 - make it up elsewhere, but also I think 165 00:06:00.274 --> 00:06:01.574 - you have to remember that 166 00:06:01.875 --> 00:06:03.654 - just in the wide market context, 167 00:06:04.354 --> 00:06:07.495 - this year, there's only 19,000,000 ACA exchange enrollees. 168 00:06:07.875 --> 00:06:10.675 - That's that's pretty minuscule compared to, you know, 169 00:06:10.675 --> 00:06:12.879 - the the over a 100,000,000 people that are 170 00:06:12.879 --> 00:06:14.500 - enrolled in employer based plans, 171 00:06:14.800 --> 00:06:15.620 - you know, the 172 00:06:16.080 --> 00:06:17.839 - tens of millions that are enrolled in Medicare 173 00:06:17.839 --> 00:06:19.460 - Advantage Plans. So 174 00:06:19.839 --> 00:06:22.080 - just we're just talking about tenant alone. I 175 00:06:22.080 --> 00:06:24.399 - think exchange patients made up only about five 176 00:06:24.399 --> 00:06:25.779 - and a half percent of the system's 177 00:06:26.144 --> 00:06:27.045 - overall revenue. 178 00:06:27.745 --> 00:06:29.524 - So I think that's also why 179 00:06:29.904 --> 00:06:31.504 - this is it didn't hit the systems as 180 00:06:31.504 --> 00:06:33.185 - as as hard as, you know, it it 181 00:06:33.185 --> 00:06:35.185 - could have. But let me ask you this 182 00:06:35.185 --> 00:06:37.024 - question. This is what I'm trying to understand 183 00:06:37.024 --> 00:06:39.264 - a little bit. Yeah. You said it really 184 00:06:39.264 --> 00:06:41.850 - well right there that out of hundreds of 185 00:06:41.850 --> 00:06:44.029 - millions of patients, it's only 19,000,000 186 00:06:44.089 --> 00:06:45.930 - that were in these types of exchanges or 187 00:06:45.930 --> 00:06:46.990 - something like that. 188 00:06:47.370 --> 00:06:49.689 - Mhmm. Tenants got a lot of outpatient and 189 00:06:49.689 --> 00:06:51.149 - so not nearly as affected, 190 00:06:51.850 --> 00:06:53.770 - and, ultimately, you had a really good quarter. 191 00:06:53.770 --> 00:06:55.389 - Their stock was way up yesterday. 192 00:06:56.305 --> 00:06:58.064 - HCA is down about 11% 193 00:06:58.064 --> 00:06:58.964 - year to date, 194 00:06:59.425 --> 00:07:01.204 - but HCA sort of, 195 00:07:01.584 --> 00:07:03.345 - you know, went pretty hard in the press 196 00:07:03.345 --> 00:07:04.564 - conference earnings release 197 00:07:04.944 --> 00:07:08.165 - about how struggling and difficult this ACA headwinds 198 00:07:08.225 --> 00:07:08.725 - are. 199 00:07:09.220 --> 00:07:11.319 - And is that political positioning 200 00:07:12.500 --> 00:07:14.980 - given that it's ultimately a relatively small percent 201 00:07:14.980 --> 00:07:16.279 - of their entire business? 202 00:07:16.660 --> 00:07:19.139 - Or or is that, you know, is that 203 00:07:19.139 --> 00:07:20.819 - real or is that political positioning? How do 204 00:07:20.819 --> 00:07:23.160 - you sort of guide through that? And and, 205 00:07:23.634 --> 00:07:24.675 - you know, and I don't know if you 206 00:07:24.675 --> 00:07:26.295 - have if you have an opinion on that. 207 00:07:26.675 --> 00:07:29.074 - Maybe it's both. I mean, I think what 208 00:07:29.074 --> 00:07:31.175 - what, you know, what's, 209 00:07:32.355 --> 00:07:35.475 - for profit business is going to willingly not 210 00:07:35.475 --> 00:07:37.814 - advocate for more insured 211 00:07:38.595 --> 00:07:39.095 - patients 212 00:07:39.689 --> 00:07:40.189 - overall, 213 00:07:40.650 --> 00:07:42.830 - and and whatever policy supports that. 214 00:07:43.449 --> 00:07:45.210 - But I also think if you look at 215 00:07:45.210 --> 00:07:47.930 - HCA's numbers specifically, I mean, they they think 216 00:07:47.930 --> 00:07:49.850 - that the the ACA hit to their payer 217 00:07:49.850 --> 00:07:51.770 - mix is gonna hit somewhere between a billion 218 00:07:51.770 --> 00:07:52.910 - and 1,200,000,000, 219 00:07:53.394 --> 00:07:54.834 - over the course of this entire year, Scott, 220 00:07:54.834 --> 00:07:57.654 - and that's up from around 600 to 900,000,000 221 00:07:58.115 --> 00:08:01.074 - just earlier this this this year. So, you 222 00:08:01.074 --> 00:08:03.175 - know, just doing the math there, that's roughly 223 00:08:03.394 --> 00:08:04.514 - $400,000,000 224 00:08:04.514 --> 00:08:05.014 - difference 225 00:08:05.394 --> 00:08:07.714 - if if the on the higher end of 226 00:08:07.714 --> 00:08:09.939 - those projections. I mean, $400,000,000 227 00:08:09.939 --> 00:08:11.860 - for for any organization, it's a lot of 228 00:08:11.860 --> 00:08:12.839 - money. So, 229 00:08:13.620 --> 00:08:15.540 - I think it's a mixture. I mean, they're 230 00:08:15.699 --> 00:08:17.879 - overall, they're gonna they're gonna want, 231 00:08:18.980 --> 00:08:21.300 - these these subs these enhanced subsidy policies in 232 00:08:21.300 --> 00:08:21.800 - place, 233 00:08:22.634 --> 00:08:26.175 - or just more policies that support ACA enrollment 234 00:08:26.235 --> 00:08:28.574 - because that means more commercially insured 235 00:08:28.955 --> 00:08:29.455 - patients. 236 00:08:30.395 --> 00:08:32.475 - But on the flip side, in the grand 237 00:08:32.475 --> 00:08:33.934 - scheme of their entire organizations, 238 00:08:34.720 --> 00:08:37.440 - it is on in the singular percentage of 239 00:08:37.440 --> 00:08:39.279 - of making up the entire revenue for sure. 240 00:08:39.279 --> 00:08:41.440 - So I think Right. When when when I 241 00:08:41.440 --> 00:08:44.000 - look at this online, it it essentially says, 242 00:08:44.000 --> 00:08:44.820 - you know, that 243 00:08:45.759 --> 00:08:46.259 - adjusted 244 00:08:46.799 --> 00:08:48.740 - EBIT outlook for the year for HCA. 245 00:08:49.524 --> 00:08:51.205 - And I'm not saying that these companies are 246 00:08:51.205 --> 00:08:52.184 - crying wolf, 247 00:08:52.804 --> 00:08:54.424 - but their adjusted EBITDA 248 00:08:54.965 --> 00:08:58.565 - projection for the year is $15,500,000,000, 249 00:08:58.565 --> 00:08:59.764 - 15,400,000,000 250 00:08:59.764 --> 00:09:01.225 - to 16,100,000,000. 251 00:09:01.605 --> 00:09:03.465 - I mean, they do say, yes, more uninsured 252 00:09:03.684 --> 00:09:04.184 - patients, 253 00:09:04.950 --> 00:09:06.250 - fewer elective surgeries, 254 00:09:06.790 --> 00:09:09.129 - pressure from changes in the Affordable Care Act. 255 00:09:09.509 --> 00:09:11.210 - You know? But at the same time, 256 00:09:11.750 --> 00:09:13.990 - that 400,000,000, you're absolutely right. It's a lot 257 00:09:13.990 --> 00:09:14.649 - of money, 258 00:09:15.110 --> 00:09:16.790 - but this is a a company with net 259 00:09:16.790 --> 00:09:19.290 - profit of 6 to $7,000,000,000, 260 00:09:19.350 --> 00:09:22.404 - adjusted EBITDA when you add back interest depreciation 261 00:09:22.465 --> 00:09:23.745 - of 15,500,000,000 262 00:09:23.745 --> 00:09:25.745 - or so. Is that I so I do 263 00:09:25.745 --> 00:09:27.904 - like I I hear you and I hear 264 00:09:27.904 --> 00:09:29.904 - them in saying this is gonna negatively impact 265 00:09:29.904 --> 00:09:30.644 - their profits, 266 00:09:31.184 --> 00:09:32.804 - but it is also hard 267 00:09:33.264 --> 00:09:34.485 - to be too empathetic 268 00:09:35.559 --> 00:09:36.379 - when essentially 269 00:09:37.160 --> 00:09:39.000 - they still got able to have 15,000,000,000 plus 270 00:09:39.000 --> 00:09:39.580 - a year. 271 00:09:40.040 --> 00:09:41.160 - And so I do look at this little 272 00:09:41.160 --> 00:09:42.139 - bit great compliment. 273 00:09:42.840 --> 00:09:44.059 - As as a fear 274 00:09:44.680 --> 00:09:46.600 - point that the profits are down a little 275 00:09:46.600 --> 00:09:49.164 - bit, but it it it it does seem 276 00:09:49.164 --> 00:09:50.684 - like a little bit of political advocacy, a 277 00:09:50.684 --> 00:09:52.684 - little bit of everything else when they're still 278 00:09:52.684 --> 00:09:55.084 - so incredibly profitable, which is not bad. It 279 00:09:55.084 --> 00:09:56.304 - just is what it is. 280 00:09:56.764 --> 00:09:58.524 - Yeah. No. I I completely agree with you. 281 00:09:58.924 --> 00:10:00.524 - And I I have seen some also some 282 00:10:00.524 --> 00:10:03.184 - interesting commentary out there from analysts saying that 283 00:10:03.509 --> 00:10:05.610 - one effect though that this could have overall 284 00:10:05.830 --> 00:10:07.750 - on on the market is, you know, you've 285 00:10:07.750 --> 00:10:10.149 - got these uninsured patients, more of them coming 286 00:10:10.149 --> 00:10:12.710 - into these systems seeking care. They can't turn 287 00:10:12.710 --> 00:10:15.050 - them away in an in an emergency setting. 288 00:10:16.245 --> 00:10:18.404 - Right now, in the past, it's been that, 289 00:10:18.404 --> 00:10:20.565 - you know, if you do cash pay, you're 290 00:10:20.565 --> 00:10:22.745 - you're probably paying less than, 291 00:10:23.125 --> 00:10:24.664 - what you what you might pay, 292 00:10:25.284 --> 00:10:27.125 - under on a under a commercial plan or 293 00:10:27.125 --> 00:10:28.565 - what the or what the payer pays in 294 00:10:28.565 --> 00:10:29.144 - the hospital. 295 00:10:29.769 --> 00:10:32.330 - But that might change as these hospitals do 296 00:10:32.330 --> 00:10:34.909 - still wanna make up those those lost margins. 297 00:10:35.289 --> 00:10:37.529 - With the with this ACA hit, the cash 298 00:10:37.529 --> 00:10:38.990 - pay prices might rise, 299 00:10:40.409 --> 00:10:43.304 - to to equal, commercial payments. I'm not saying 300 00:10:43.304 --> 00:10:44.985 - that's gonna happen, but I've seen some analysts 301 00:10:44.985 --> 00:10:45.725 - talk about, 302 00:10:46.105 --> 00:10:48.365 - that the that the cash pay discounts 303 00:10:48.985 --> 00:10:51.325 - of of of current of of the past 304 00:10:51.465 --> 00:10:52.985 - might be something that that could be on 305 00:10:52.985 --> 00:10:54.665 - the chopping block moving forward for a lot 306 00:10:54.665 --> 00:10:55.565 - of health systems. 307 00:10:56.740 --> 00:10:59.059 - No. Fascinating. Fascinating. So tell us on the 308 00:10:59.059 --> 00:11:00.980 - payers side. I must have misread the Oscar 309 00:11:00.980 --> 00:11:02.839 - health stuff. Maybe the Oscar health 310 00:11:03.539 --> 00:11:04.039 - rose 311 00:11:04.500 --> 00:11:06.899 - based on the Centene earnings announcement. Yeah. Tell 312 00:11:06.899 --> 00:11:07.940 - me what's going on with some of the 313 00:11:07.940 --> 00:11:09.704 - payers there. You know, and I think you 314 00:11:09.825 --> 00:11:12.304 - you're probably correct there because Centene did have 315 00:11:12.304 --> 00:11:13.105 - a good quarter, 316 00:11:13.664 --> 00:11:15.904 - and they've, I mean, they've completely turned things 317 00:11:15.904 --> 00:11:18.464 - around, especially compared to last year that had 318 00:11:18.464 --> 00:11:20.065 - over $250,000,000 319 00:11:20.065 --> 00:11:22.000 - loss in the same quarter last year, and 320 00:11:22.000 --> 00:11:22.820 - then they recorded, 321 00:11:23.279 --> 00:11:24.480 - over $1,000,000,000 322 00:11:24.480 --> 00:11:27.120 - in profit this year. And I think that's 323 00:11:27.120 --> 00:11:28.500 - all really coming from, 324 00:11:29.040 --> 00:11:31.059 - targeted reductions in, 325 00:11:31.519 --> 00:11:33.759 - partially in that in that ACA business. And 326 00:11:33.759 --> 00:11:35.264 - their CEO talked about it, 327 00:11:35.904 --> 00:11:38.644 - yesterday on the earnings call, basically saying that 328 00:11:38.785 --> 00:11:41.345 - their their internal actuaries saw what could be 329 00:11:41.345 --> 00:11:43.504 - coming down the pipeline with just the expired 330 00:11:43.504 --> 00:11:46.465 - subsidies alone, and so they prepared different sets 331 00:11:46.465 --> 00:11:49.365 - of rates. They refiled quickly with the states, 332 00:11:49.949 --> 00:11:51.870 - to make sure that the basically, their plans 333 00:11:51.870 --> 00:11:53.649 - were priced correctly on the ACA. 334 00:11:54.750 --> 00:11:57.169 - The basically, the premiums were were higher 335 00:11:57.629 --> 00:12:00.029 - to make up for the loss of I 336 00:12:00.029 --> 00:12:02.429 - think it's close to 2,000,000 people or around 337 00:12:02.429 --> 00:12:02.929 - that, 338 00:12:03.355 --> 00:12:05.455 - that that they've lost just in the marketplace. 339 00:12:06.394 --> 00:12:08.335 - But that all being said, their their margin, 340 00:12:09.115 --> 00:12:11.855 - they she boosted the margin, for the marketplace 341 00:12:12.154 --> 00:12:14.154 - business, for 2026. 342 00:12:14.154 --> 00:12:16.554 - So even though they've lost millions of of 343 00:12:16.554 --> 00:12:20.049 - exchange members, it's actually helped their their profit 344 00:12:20.049 --> 00:12:21.269 - margin in that business, 345 00:12:21.809 --> 00:12:23.509 - because they were able to raise premiums, 346 00:12:23.889 --> 00:12:25.669 - ahead of time last year. 347 00:12:26.049 --> 00:12:27.730 - So so that's kind of why they They're 348 00:12:27.730 --> 00:12:29.809 - they're losing some of that business, but they're 349 00:12:29.809 --> 00:12:32.024 - doing better business. And this is part of 350 00:12:32.024 --> 00:12:34.284 - how a lot of these different, plans 351 00:12:35.065 --> 00:12:36.985 - moved away from Medicare Advantage, moved away some 352 00:12:36.985 --> 00:12:38.605 - of the things where they weren't as profitable. 353 00:12:39.625 --> 00:12:41.245 - So it's a loss to the consumer, 354 00:12:41.945 --> 00:12:44.044 - but the insurers seem to do okay. 355 00:12:44.559 --> 00:12:47.059 - Yeah. Exactly. And it's a it's a similar 356 00:12:47.120 --> 00:12:48.720 - story playing out. I mean, obviously, a completely 357 00:12:48.720 --> 00:12:50.879 - different market, but it's a similar story playing 358 00:12:50.879 --> 00:12:53.759 - out with Medicare Advantage. They're really all focused 359 00:12:53.759 --> 00:12:56.000 - on margin recovery right now, and it it 360 00:12:56.000 --> 00:12:58.975 - is a multiyear rebuild everywhere across across the 361 00:12:58.975 --> 00:13:01.715 - biggest companies. We had Humana come out today, 362 00:13:02.174 --> 00:13:03.394 - saying that their individual 363 00:13:03.934 --> 00:13:07.054 - Medicare Advantage pretax margin should double this year 364 00:13:07.054 --> 00:13:09.134 - excluding STARS headwinds, which is a bit of 365 00:13:09.134 --> 00:13:10.735 - a wild card right now across the entire 366 00:13:10.735 --> 00:13:11.235 - industry 367 00:13:11.740 --> 00:13:13.980 - given the the mess that that is between 368 00:13:13.980 --> 00:13:15.200 - the insurers and the government. 369 00:13:15.660 --> 00:13:17.820 - But it's the same same story arc with 370 00:13:17.820 --> 00:13:19.360 - with UnitedHealth, with Ellevance, 371 00:13:19.740 --> 00:13:22.399 - all trying to rebuild margins in that business 372 00:13:23.180 --> 00:13:24.879 - mostly going into next year. 373 00:13:25.605 --> 00:13:28.585 - And and, we're seeing a lot of targeted 374 00:13:28.804 --> 00:13:32.165 - exits. So that's either leaving markets entirely or 375 00:13:32.165 --> 00:13:34.725 - it's dropping, you know, like PPPO ends and 376 00:13:34.725 --> 00:13:35.544 - hoping to 377 00:13:35.845 --> 00:13:38.644 - shuttle members into HMO or or, 378 00:13:39.365 --> 00:13:40.504 - narrower networks. 379 00:13:40.850 --> 00:13:43.509 - So, basically, overall, Elavance, United, 380 00:13:43.970 --> 00:13:46.850 - Elavance did it last year. United is, dropping 381 00:13:46.850 --> 00:13:49.090 - millions of members this year. Humana just announced 382 00:13:49.090 --> 00:13:51.170 - today they're gonna drop 600,000 383 00:13:51.170 --> 00:13:54.955 - members through targeted exits. So similar story. They're 384 00:13:54.955 --> 00:13:56.815 - trying to basically shed 385 00:13:57.195 --> 00:13:58.414 - more expensive membership, 386 00:13:59.274 --> 00:14:01.835 - to preserve the margin overall, which really contrasts 387 00:14:01.835 --> 00:14:02.335 - with 388 00:14:02.714 --> 00:14:04.794 - the decade before this, which was growth, I 389 00:14:04.794 --> 00:14:07.210 - think, at all costs, Scott. So that's the 390 00:14:07.210 --> 00:14:10.169 - story. His his margin recovery continues for Medicare 391 00:14:10.169 --> 00:14:10.669 - Advantage. 392 00:14:11.690 --> 00:14:13.529 - Best thing to watch. So in terms of 393 00:14:13.529 --> 00:14:15.149 - the big hospitals and health systems, 394 00:14:15.529 --> 00:14:17.370 - some of them taking a bigger hit than 395 00:14:17.370 --> 00:14:19.549 - others based on some of the ACA subsidies 396 00:14:19.610 --> 00:14:20.669 - not being in place 397 00:14:21.049 --> 00:14:23.915 - and and people leaving ACA subsidies and being 398 00:14:23.915 --> 00:14:24.415 - uninsured. 399 00:14:25.115 --> 00:14:26.315 - But in the big scheme of things, at 400 00:14:26.315 --> 00:14:27.935 - least the for profit health systems 401 00:14:28.315 --> 00:14:29.455 - doing pretty well. 402 00:14:29.995 --> 00:14:30.975 - Yeah. The payers 403 00:14:31.595 --> 00:14:33.595 - being much more targeted in their approach to 404 00:14:33.595 --> 00:14:36.129 - what markets they're in and also notwithstanding 405 00:14:36.750 --> 00:14:38.990 - the changes in the ACA, the changes in 406 00:14:38.990 --> 00:14:40.129 - some of the Medicare Advantage, 407 00:14:40.590 --> 00:14:41.889 - also doing pretty well. 408 00:14:42.350 --> 00:14:44.269 - Yeah. And that all ties back to, with 409 00:14:44.269 --> 00:14:46.190 - Medicare Advantage, that all ties back to affecting 410 00:14:46.190 --> 00:14:49.574 - the hospitals, Scott, with much tougher contract renegotiation 411 00:14:50.194 --> 00:14:53.095 - cycles with MA plans, you know, tougher 412 00:14:53.475 --> 00:14:55.894 - utilization policies in terms of 413 00:14:56.274 --> 00:14:57.574 - prior auth, clawbacks, 414 00:14:58.115 --> 00:14:58.615 - audits, 415 00:14:59.315 --> 00:15:00.855 - tougher reimbursement policies, 416 00:15:01.379 --> 00:15:03.399 - and really stretching the limits of what CMS 417 00:15:03.460 --> 00:15:06.259 - allows between traditional Medicare and MA. We've seen 418 00:15:06.259 --> 00:15:08.500 - a lot of big lawsuits filed recently by 419 00:15:08.500 --> 00:15:11.940 - big health systems over MA reimbursement policies. So 420 00:15:11.940 --> 00:15:13.620 - the the health systems, I think, are really 421 00:15:13.620 --> 00:15:16.875 - feeling this margin recovery from the payers and 422 00:15:16.875 --> 00:15:18.654 - and trying to get paid, 423 00:15:19.035 --> 00:15:21.035 - for for the MA patients that they serve. 424 00:15:21.035 --> 00:15:22.174 - And then, of course, 425 00:15:22.475 --> 00:15:24.554 - we we've we've certainly covered that trend that's 426 00:15:24.554 --> 00:15:26.235 - been going on across the country as well 427 00:15:26.235 --> 00:15:28.415 - and some of those contract tensions. 428 00:15:29.610 --> 00:15:30.910 - Truly fascinating. 429 00:15:31.370 --> 00:15:34.250 - Jacob, as always, I learn more when I 430 00:15:34.250 --> 00:15:35.690 - talk to you than when I talk to 431 00:15:35.690 --> 00:15:38.410 - almost anybody. I greatly appreciate it. I hope 432 00:15:38.410 --> 00:15:40.170 - our audience feels the same and learns a 433 00:15:40.170 --> 00:15:41.550 - lot too. Again, 434 00:15:42.215 --> 00:15:45.495 - lots of ACA subsidy overhangs as people move 435 00:15:45.495 --> 00:15:46.955 - out of the ACA market, 436 00:15:47.495 --> 00:15:48.795 - and become uninsured. 437 00:15:49.894 --> 00:15:52.295 - The big for profit seem to manage this 438 00:15:52.295 --> 00:15:54.215 - really well even though they may whine about 439 00:15:54.215 --> 00:15:56.134 - it a lot. This is my perspective, my 440 00:15:56.134 --> 00:15:57.195 - talking, not Jacob. 441 00:15:57.629 --> 00:15:59.470 - The not for profits have a harder time 442 00:15:59.470 --> 00:16:01.710 - because often their payer mixes are tougher than 443 00:16:01.710 --> 00:16:03.389 - some of the for profits that really position 444 00:16:03.389 --> 00:16:04.049 - the markets. 445 00:16:04.670 --> 00:16:06.210 - The insurance companies also 446 00:16:06.670 --> 00:16:07.170 - seemingly, 447 00:16:07.790 --> 00:16:09.870 - for all the complaining, just step away from 448 00:16:09.870 --> 00:16:11.549 - that line of business, which wasn't that profitable 449 00:16:11.549 --> 00:16:13.514 - for them and seemed to be doing okay 450 00:16:13.514 --> 00:16:14.575 - with some of these changes. 451 00:16:15.274 --> 00:16:16.955 - Yeah. Definitely. I think a good way to 452 00:16:16.955 --> 00:16:17.934 - summarize it, Scott. 453 00:16:18.475 --> 00:16:21.115 - Jacob, absolutely fascinating. Thank you for joining us 454 00:16:21.115 --> 00:16:23.274 - today on the Becker's Healthcare podcast. Thank you 455 00:16:23.274 --> 00:16:24.174 - very, very much. 456 00:16:24.475 --> 00:16:26.254 - Always good to talk with you. Thank you.