CEO of For-Profit MA Plan Tells CMS “Pay Us Less”

It’s a journalist’s dream to interview articulate, sincere, no-holds-barred CEOs. When they actually create headlines, it’s like manna from heaven.

And that’s precisely what happened last week at the annual Medicarians conference in Las Vegas, where I was invited to interview Ed Park, CEO of Devoted Health, a for-profit, venture backed Medicare Advantage company serving 500,000 people in 29 states. Medicarians is aimed toward brokers, insurance agents and larger organizations that sell healthcare and financial products to seniors. A big chunk of the conference agenda is dedicated to discussions of the Affordable Care Act, Medicare, Medicaid and Medicare Advantage. For instance, before I got to interview Park, other prominent MA plan CEOs such as Alignment Health Plan CEO Dawn Maroney, SCAN Health Plan CEO Sachin Jain, Oscar Health CEO Mark Bertolini and leaders from the Centers for Medicare and Medicaid Services also addressed the audience.

Park, like most MA plan CEOs I have interviewed, believes fundamentally in the promise of the program, which was built around providing more choice to seniors and offering greater preventive services. That dual focus would eliminate more expensive care downstream as people got older and older.

2003 was the year when Medicare Advantage was officially born, and today, more than half of all Medicare beneficiaries are enrolled in MA plans. Twenty-three years have passed, but MA has not delivered the cost savings it was touted to be capable of when envisioned. In fact, according to the annual report that the Medicare Payment Advisory Commission (MedPAC) provides to Congress, MA costs are sky-high, and the health outcomes are mixed. MedPAC is a non-partisan, independent congressional agency that analyzes and provides advice to the U.S. Congress on issues affecting the Medicare program. This includes CMS payment, healthcare access, and quality of care.

In its March report, MedPAC reported that MA plan enrollees cost CMS $76 billion more — in other words, if those seniors were enrolled in a traditional, fee-for-service Medicare plan, it would have cost the government $76 billion less.

Of course, I asked Park about that. He said that he has “methodological quibbles with actuarial answers” about the MedPAC report — a fairly common response about MedPAC reports in general that I have heard. But then he launched into something unexpected. I quote him in full below:

Park: The truth of it is, I wish the government would just start paying MA plans less. I think there’s way more than enough money in the system to do both things at the same time (I am guessing he means properly take care of seniors’ healthcare needs and not break the bank).

We’ve been consistent about this since the beginning. The U.S government is $39 trillion in debt. We can’t afford more. I want the US government to be solvent when I get taken care of by Medicare, and I want my children to inherit the greatest country on Earth. And so, what we’ve seen over the last two decades, is increasing payments to MA plans. I think that we may be the only MA plan that, when — I don’t know if you remember — the V28 risk adjustment model came out, we were like, “Great. You (CMS) should totally do it.”

Every year since the inception, we have been encouraging CMS to pay plans less. The only thing that is not good is if you basically go up 10% in one year and 0% in another year. That’s not good. But they should index the cost of Medicare to less than inflation and guarantee that it’s actually less than traditional Medicare.

Here’s actually a stat for you: In the year 2021, the average total value of benefits of all the plans that you sell, the per member per month costs of the vision, the dental, the cost shares, all the rest of that stuff, part D, was about $120 PMPM. Last year, it was $211.

We went up by over $100 per member per month in extra benefits, (Park’s math is a little off here, assuming he is quoting correct numbers — it’s actually a $91 increase) and Medicare Advantage was a pretty good deal back in 2020, 2021.

I think that our perspective on it is that we would much rather — I have a bunch of friends at MedPAC, and I have a bunch of friends at CMS, and what we’ve been consistently asking people is, “Please pay us less.”

There’s enough innovation and there’s enough work that we can do to make the whole thing work, so just stop paying us a lot and then complaining about it. Just pay us less and then we’ll just get the job done.

Arundhati: I can see the headlines. MA plan CEO tells CMS, “Pay us less.”

Park: Please put the headline out there. We’re in for it.

One industry consultant told me dryly after the on-stage interview, “I doubt AHIP will be happy about this.”

Perhaps the bigger question is not about how lobbyists react to his comments but about whether Park’s thesis works. Devoted is growing rapidly and raising capital. Investors are likely happy with the growth trajectory. But at some point, a return on that investment will come due. I don’t think I have ever heard the CEO of a for-profit company tell people publicly that they would be OK with lower payments because they are being paid too much anyway. It’s refreshing, though it can also be interpreted as either foolhardy or supremely confident. Both for his sake and that of America’s budgetary situation, I ardently hope it’s the latter.

All of us should be watching how this plays out.

You can watch the full video below:

Photo: Medicarians video