This is Jacob Emerson with the Becker's Payer Issues podcast. Here's your biweekly industry news briefing for August 14th. The Medicare Advantage business is facing major challenges industry wide. Government scrutiny is rising. CMS regulations and payments are tightening. The cost of care is rising, and negative media coverage
abounds. In response, the health insurance industry is planning a 7 figure lobbying blitz in Washington to fight mounting headwinds and offer a more optimistic view of the benefits MA plans can provide to older adults.
AHIP and its CEO, Mike Tufin, told Politico on August 13th that they're going to be doing everything they can to make sure that policymakers across the political spectrum can be introduced to these seniors and hear their stories and learn firsthand how passionately MA beneficiaries feel about their coverage.
Through digital and social media ads, along with encouraging seniors to advocate for MA to lawmakers, insurers aren't looking to convey the message that MA plans provide better and cheaper health coverage than traditional Medicare.
Mister Tufin said that seniors have been promised by elected officials in both parties that their Medicare coverage and care would not be cut, And so our advertising is about reminding elected officials that this is a big constituency that really likes their Medicare Advantage coverage and expects that promise to be kept. The timing of the campaign comes ahead of the Medicare annual enrollment period, which begins October 15th.
The lobbying campaign is not a new strategy for the insurance industry, which most recently aired a Super Bowl ad in February with a simple message for lawmakers, don't cut Medicare Advantage. The 32nd ad references some of the major challenges in the MA markets that's faced its year, including reduced benchmark payments from CMS.
CVS, Humana, and Centene have all said they will exit some markets in 2025 and potentially reduce benefit offerings to accommodate the changing reimbursement environment and rising costs. On the media front, national outlets have been reporting for years that most MA carriers have faced allegations of billing fraud from the federal government and are being probed by lawmakers over their high claims or prior authorization denial rates.
Upcoding, though, reentered the spotlight in July when The Wall Street Journal began publishing new investigative reports on the issue. Back in October, the DOJ brought criminal charges against a former MA executive at Elavance owned HealthSun Health Plans, alleging that executive orchestrated a scheme to submit false and fraudulent coding information to CMS.
In the short term, MA payers such as CVS are warning that senior care costs could continue to rise in the second half of this year, with the company noting elevated inpatient dental and pharmacy claims in the second quarter. Well, both CVS and Humana contend with those rising inpatient costs in Medicare Advantage, but each is pointing to different causes for the increases.
Last year, insurers began warning that MA costs were climbing as older adults sought out services put off during the pandemic. UnitedHealth, the largest MA insurer, has reassured investors that medical costs are in line with expectations. Increasing medical costs in the Q2 of 2020 4 were mostly due to relaxed prior authorization requirements during the Change Healthcare cyber attack. Humana and CVS, the 2nd and lord 3rd largest MA insurers, also said costs are on the
rise, especially within inpatient care. On July 31st, Humana CEO Jim Recton said inpatient admissions among MA patients were higher than expected in the Q2. The company's earnings guidance for the rest of the year prudently assumes cost will stay elevated through the end of this year. Humana's CFO pointed to the 2 midnight rule as the most likely reason for rising inpatient admissions.
At the beginning of this year, new CMS regulations took effect requiring MA plans to provide coverage for inpatient admissions rather than observation when the admitting physician expects the patient to require hospital care for at least 2 midnights. CVS's CFO, Tom Cowhey, said inpatient cost rose in the Q2 of 2024, but the company does not believe it was because of the 2 midnight rule. He said they're just seeing broad based inpatient pressures overall.
CVS's earnings guidance for the rest of the year reflects those costs, and and the second half of the year could be higher in the first, he said. He also said that if current trend continues, CVS may have to dip into its reserves to cover the cost of claims. Well, a big question is looming around the 2024 presidential election. Is the Affordable Care Act a central issue
or not? With fewer than 90 days until voting day, the answer remains unclear as Democratic and Republican campaigns operate with ambiguity when it comes to their health care plans, and particularly in the use of actions repeal and replace. The Republican party's official platform presented at its convention in Milwaukee in July includes no mention of the ACA and limited references to other health care reforms and policies.
Former president Donald Trump can his campaign's policy plan, agenda 47, contains sparse health care policy proposals that are included in the chapter aimed at addressing affordability more broadly. The DNC is set to begin August 19th in Chicago, leading up to which vice president Kamala Harris has criticized the Republican's stance on the ACA, portraying the Republican candidate as a threat to the law's existence.
As her August 6th rally in Philadelphia to announce her pick for vice president, miss Harris said that mister Trump would end the Affordable Care Act and take us back to a time when insurance companies had the power to deny people with preexisting conditions if given the chance. A Trump campaign spokesperson told the New York Times that president Trump is not running to terminate the ACA. He is running to make health care actually affordable.
His Republican vice presidential nominee though, JD Vance, suggested in media that health care system reforms would be a priority in a Trump administration. The apparent lack of clarity regarding health care policy in a presidential election is unusual. The 2022 elections were the first in more than a decade in which the security of the ACA, enacted by president Barack Obama in 2010, was not a central issue, and the Republican party had moved away from its long standing
campaign to repeal it. Mister Trump made the first move against the ACA this election cycle. And in November, he took to Truth Social to identify health care as one agenda item for his 2024 campaign with to replace the landmark mall law if he won a second term. That prompted concerns among some senate Republicans.
President Joe Biden then recalled mister Trump's proposed actions to the ACA in his campaign messaging in March, but using the word terminate instead Mister Biden said, quote, now Trump keeps telling us he's going to terminate the ACA. Think about what that means. Mister Biden's remarks coincided with the 14th anniversary of the law and following the announcement by CMS, the 20,000,000 people enrolled in individual insurance plans on the ACA exchanges for 2024.
That's the highest enrollment in the Exchange's history. The ambiguity surrounding health care policy, though, might be intentional according to The New York Times. The most significant blow to the law could come from inaction. The Biden Harris administration passed the American Rescue Plan Act in 2021. That law enhanced subsidies for individuals purchasing health coverage on marketplaces, which are set to expire at the end of 2025.
Mister Trump and congressional Republicans are unlikely to support legislation extending these subsidies, which experts credit for the high enrollment numbers in recent years and those have buoyed many large commercial payers' book of businesses. The ACA remains one of the most contested statutes in American history facing 7 Supreme Court challenges within the last decade. As of April, 62% of Americans hold a favorable opinion of the ACA while 37% view it unfavorably.
And finally, Blue Cross Blue Shield of Michigan is the most efficient user of technology and the most innovative user of artificial intelligence within the Blue Cross Blue Shield system. That's according to a new report from Harvard Business Review. BCBSM went from being the least efficient user of technology in the Blue Cross system to the most efficient as measured on a technology cost per employee basis according to the Harvard Business
Review authors. Their journey underscores that prioritizing security, compliance, a sound architecture, and proactive governance, organizations can innovate with generative AI within regulatory bounds. The authors in interviewed management at BCBSM to explore the company's technology strategy. 7 years ago, the payer was facing policy and regulatory pressures stemming from the ACA and an aging population along with changing customer expectations
like most insurers today. Today, the company has launched new cloud capabilities, security protocols, mobile support, 3 generative AI applications, and more than 20 production AI solutions. In the article, BCBSM's management detailed 7 key principles that guided their strategy.
Get board support on the latest tech initiatives, involve departments and teams beyond just IT, ensure scalability and data security, create adaptable solutions to an evolving environment, continuous employee education, mitigate biases, and foster internal innovation. If you'd like the latest health insurance industry news delivered straight to your inbox every morning, subscribe to the Becker's payer issues e newsletter on our website at beckerspayer.com.