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Becker’s Healthcare Podcast
Major Investigations and Legislative Shifts in the Payer Landscape with Jakob Emerson
00:16:30
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- [00:00]
A
This is Scott Becker with the Becker's Healthcare Podcast. I'm joined today by Jacob Emerson, who leads the payer coverage at Becker's Healthcare. Brilliant journalist, talks to us, Reggie, about what issues and stories he's watching in the payer world. It's been a very busy year in that world. Jacob, why don't you give us a sense, what are a couple of the key stories that you're following currently?
- [00:21]
B
Yeah. Hey, Scott, it's great to talk with you. So two stories I thought we could touch on, the first being some pretty big news, exclusive news from the Wall street journal today. It's July 9th this morning, reporting that the Justice Department has been interviewing former employees with UnitedHealth Group, former physicians with the company about Medicare Advantage billing fraud. And you know, that's a story we've been talking about for a long time and it's a story that goes back a long time. But this really indicates to us that the government is that case involving United is heating up and we're finally getting some more about exactly what that might entail, who they're talking to and how the company's responding. So that's a really interesting update there. And then I also thought we could touch on a few key points around the one big beautiful bill. I know we talked about it last week in terms of what it's going to mean for Medicaid, for aca, for the hospitals and insurance companies in terms of patient and member volumes. But it also, you know, it was a massive budget bill, so it included some interesting changes around employee benefits and HSA changes and things like that, basically growing those, those types of benefits. And then we're also starting to see, you know, more executives across the industry, CEOs, especially in insurance, start to comment publicly on the bill in terms of whether it's good for their company, whether it's bad for their company. Just giving their analysis of what this might bill, what this bill might look like over the next few years.
- [01:58]
A
Thank you. And certainly. And let's touch first on the United story and then let's talk about the bill.
- [02:04]
B
Sure.
- [02:04]
A
What are you seeing there? What are people saying there about the investigation?
- [02:09]
B
Yeah. So like I said, this is the Wall Street Journal's exclusive report this morning, basically saying that the, the, the, the Justice Department's health care fraud unit has been questioning former employees with UnitedHealth as part of their wider investigation into the company's MA billing practices. And we've talked about that investigation. We knew, I believe it was back in May, reported that the company is under criminal investigation for alleged Medicare Advantage fraud. That investigation reportedly started last year. And this, you know, this is the, it's the upcoding issue that we've heard about for more than a decade, basically, that allegedly insurers are putting down false or inflated diagnoses on, on member records so that they get higher, higher payments from, from the government. And so according to the Journal, the, the DOJ asking former physicians how this all allegedly might have taken place, how they received special training software that flagged profitable conditions, asking about bonuses for physicians who recoded patient files. And one of the former doctors that the Journal talked to said that prosecutors were inquiring about pressure from the company to use certain diagnoses codes and bonus pay for certain healthcare conditions that then financially favored United. And this all, of course, comes on top of two other DOJ probes into the company's billing practices and then potential antitrust violations, all alleged between United Healthcare and Optum, the two main units of the company. And so the Journal is reporting that United in 2021 alone received over $8 billion for diagnoses that were not supported by claims from their members. But United, you know, they've, as, as always, they've completely denied this. They stand by the integrity of their program. They say the Journal is, has a, has a campaign and a predetermined narrative against them and they're relying on incomplete data. So a complete denial by United. But it's, it's some insight into where the government is going. And, and, you know, these doctors aren't making up what they're telling the Journal. So it's a really interesting revelation to this week.
- [04:39]
A
No, it's fascinating. In United also, didn't they sue a different newspaper reporting on something related to this, or is that a different story?
- [04:48]
B
They did. It's, you know, another part of this Medicare Advantage conversation that there was that they were allegedly either denying post acute care discharges in nursing homes or they were allegedly paying nursing homes to steer their members to their Medicare Advantage plans. That was reported on by the Guardian based off a lot of document reviews, according to them, and a lot of interviews. And that's, you know, the British newspaper and then United has called that defamation and is currently suing the Guardian over that report, which is completely separate from, from what we're talking about today with the Wall Street Journal. So just a lot to keep up with this company with this topic, no fasting.
- [05:35]
A
And United, of course, is the third or fourth largest company in the United States by revenue. So it's a big big company, $8 billion out of 100 billion or so, 60 billion, a serious number. Particularly it's 8 billion in codes that are, is, is it, is that per year or is that in total, 8 billion in codes?
- [05:54]
B
Yeah. According to the journal, they're saying they received $8 billion in overpayments in 2021 alone.
- [06:02]
A
Got it.
- [06:02]
B
That's one.
- [06:03]
A
Got it. Yeah. Yeah. So, so not insignificant. Well, very, very, very interesting. And so that's what's going on with United and, and too early to really understand or speculate with what this means economically to the company and what it means, their caution going forward and how they built the Medicare Advantage program because presumably this will lead to a different level of caution in terms of how things are coded and so forth. Just fascinating.
- [06:29]
B
And then, and what I think, what I think is really interesting too, Scott, is, you know, this is, it's obviously it's a Republican administration that is investigating this company. And on the flip side, we're seeing in Minnesota with a Democratic governor, there was a bill passed recently that bans for profit insurers from participating in the state's Medicaid program. Well, Minnesota is UnitedHealth's backyard and they are no longer allowed to administer Medicaid in the state of Minnesota run by a Democratic governor. So what's this? You know, the national context is telling us is that both sides of the aisle are going after this company either legislatively or, you know, with these investigations, which I just think is, you know, fascinating. Fascinating context given everything we've heard and read about United over the last year or two.
- [07:20]
A
Well, it sure is fascinating. But it also, there's also another piece of it that even though the administrators going after them to the Department of Justice, there's also this other side of it where they're increasing rates for Medicare Advantage, which of course the Medicare Advantage houses find that to be a very positive thing. So you've got a couple different pieces here as well. So that just is absolutely fascinating. And so we'll see how it plays out. But it, but it does speak to the fact that you've got Democratic politicians, Republican politicians taking shots at the big insurance companies. It does speak to the populist mood of anti insurance companies at the moment. And so, you know, there certainly is that mood and the both parties tap into that mood, even though on one hand Republicans tap into it, but then are giving the Medicare Advantage companies raises on the other hand too. So really, really fascinating.
- [08:12]
B
Yeah. Nuanced conversation for sure, very much so. But I, yeah, the other thing I want to talk with you about, in terms of nuanced conversations, is is the one big beautiful bill act which as everyone listening, I'm sure knows, passed on on July 4, signed by President Trump. And you know, you and I talked about, like I mentioned at the start, we talked about what the hospitals have been saying, what the insurers have been saying. You know, they're very concerned about loss of patient volumes, loss reimbursements and what that's going to mean for their very tight margins. But I came across, you know, today this interesting post on LinkedIn from a staff vice president at Elevance, which, you know, one of the largest health insurance companies in the world, and staff vice president is very high up position at that company, basically talking about how he does not see this bill as reckless. Certainly an uncomfortable conversation in terms of what it's leading to. But to quote him, he basically said Medicaid has been scaling and growing larger for years without stabilizing, that it's, you know, there's a trillion dollars a year in this system. And yet even before the big beautiful bill, there was still rural health care closures, provider shortages, behavioral health network issues, basically pointing to the fact that there's he's saying that there's not a funding issue, that this is a wider system issue and that the legislation, it doesn't repeal the aca, it doesn't dismantle Medicaid. According to him, what it does is it forces a harder conversation around who qualifies under what terms and whether it's the dollars flow into the actual care or whether it's maintaining the architecture that no longer works. And he also argues that work requirements that they're not new. We've seen them talked about federally before. We've seen a few states try them or implement them, not to much success, but we have seen it before. So it's just interesting that we are starting to see some insurance executives publicly having not pro conversations about this legislation, but just different compared to even last week what we talked about, which is other insurance CEOs talking about the loss of Medicaid members and, you know, the difficulties that that's going to present for them over the next couple years. So it just seems that there's people, these executives are a little bit all over the map right now in terms of how they think this, this legislation is going to shake out. And then I had a few other things in terms of the HSA changes, Scott, but I'll, in terms, I'll pass it back to you.
- [10:39]
A
Yeah, no, it's incredibly complicated because the reality is there is so much money floating through the system that people have a very hard time understanding what's real, what's needed, what's wasted, what's not. And at the same time, the flip side is if you're a fiscal conservative, you sort of feel like, well, if you're going to cut cost, then we ought to also cut deficits. And I think one of the most frustrating things to fiscal conservatives is the concept that we're cutting costs in certain places, but the deficits continue to rise. So it's very, I think the insurance executive's thoughts from elevance. There's a lot that's right there that people are just very concerned about overall, the spend in the government. At the same time, there's also tremendous concern that the government just keeps on lighting up and increasing the deficits. So and then there's also this concern too, that this is one of the things that politicians do all the time, but it's so unpleasant is the positives, meaning the tax cuts happen immediately, but the benefits cuts happen over time. And so in the immediate future, a lot of people might not feel those negatives to the benefits, but you end up in a situation where even though they don't feel the benefits, they don't see the negatives, they're coming over time. And that's quite confusing to people too.
- [12:07]
B
Definitely. Definitely. Especially, yeah, when it comes to Medicaid, that's definitely true. You know, this is going to be a long term issue and it won't necessarily be tied to the Republicans, but I guess we'll see. But one thing I think too, you know, this bill did not extend the ACA premium tax credits and there's still time to do that. But it's, you know, the, the wins pointing that that probably will not occur, at least that's what we're hearing. And you know, but this is a, those rates.
- [12:32]
A
But that's a very interesting point because what happens is in, in the prior Trump administration, he at one point tried to gut the ACA directly. And I think notwithstanding what the elephants executive says, I think many people feel like this is an indirect gutting of the ACA here because of those subsidies, because those rates, because of those kinds of issues, that those are going to go away. So even though you didn't directly abolish the ACA or get rid of the aca, you for all practical purposes have taken very, very strong strides at reducing it very, very significantly.
- [13:13]
B
Yeah, definitely. I mean, and I think the core of the issue there is that the subsidies are around because the ACA coverage is just so expensive. So that's, you know, a core problem there. But in terms of, you know, very short term effects, insurers have to lock in their, their ACA rates for, for next year, this summer, very soon. And you know, they're currently, from what we're hearing, they're developing two sets of rates. One, you know, if the aca, if the premium subsidies are extended or not, so two different rates there. But if the, if it's not extended and we'll know pretty soon and those late rates are locked in, well, those go into effect next year. So people, you know, buying ACA coverage, a good chunk, especially low and middle income people, they'll, they'll feel that effect pretty quickly because these rates, from what we're seeing, they're double digit requests all over the country in every state. So that'll be pretty quick in terms of what's being more tied federally versus this bill specifically. But one thing I did want to mention, Scott, in terms of, you know, what concretely has been passed because of this, it was included in this bill is that Congress has, and it's been called a unicorn piece by some executives speaking to us is that Congress has permanently extended a rule that allows people with high deductible plans linked to their HSAs to access telehealth services without having to meet their deductible first. So that was, you know, that was existed back in Covid, but now it's permanently extended so that you can have covered telehealth and digital services at little to no out of pocket costs while still being able to contribute to your hsa. So that's a big change that we've heard people are, you know, definitely talking about a lot. Next year people enrolled in the bronze and catastrophic ACA plans can, are eligible to contribute to HSAs direct primary care arrangements are now HSA eligible. So there were some interesting employee benefits changes included in this bill that we've also heard a lot of conversations about among our audience too.
- [15:11]
A
It is fascinating. And what is fascinating behind all of this stuff is, is to understand a little bit all the lobbying that goes into these different, very specific provisions and who drives them, who's behind them, who pushes for them. Because I don't imagine that too many Congress men or women or senators are sitting at night thinking about the very specific details. Some of this stuff, I assume that a lot of it is fed to them by people that have a vested interest in one position or another.
- [15:41]
B
Yeah, no, it's, I, I totally agree. And it's fascinating that you could probably trace single lines of these bills back to certain trade groups or stakeholders. And I guess in that vein, we didn't see some, some codification of ichra. Those, those alternative health insurance arrangements with employers, those were removed from the bill and that would have codified the tax credit nationally versus where it's currently on a state by state basis. So clearly the ICHRA industry didn't have enough voice in this. But, you know, HSAs did. So it's, it's just very interesting as you go through this line by line and figure out what made it and what didn't.
- [16:15]
A
That really is Jacob, always a pleasure to visit with you. I always learned so much. I hope our audience does, too. Thank you so much for joining us today on the Becker's Healthcare Podcast. Thank you very, very much.
- [16:27]
B
Thank you, Scott.