The mission and function of the Medicare program have evolved over time, and the agency that runs it also may need to adapt to the new ways that health care organizations are doing business, according to SCAN Group CEO Dr. Sachin Jain.
Jain currently leads a $4.3 billion nonprofit Medicare Advantage (MA) organization that covers more than 285,000 members across California, Arizona, Nevada and Texas.
This year, the company announced plans to combine with Care Oregon, a Medicaid-focused payer organization, and earlier this year it began participating in the hospice component of the value-based insurance design model demo in early 2023.
In 2010 and 2011, he was a special advisor to then U.S. Centers for Medicare & Medicaid Services (CMS) Administrator Don Berwick. There, Jain helped establish the Center for Medicare & Medicaid Innovation (CMMI), which is charged with the development and testing of new payment models.
Hospice News recently sat down with Jain in Chicago to discuss the challenges currently facing payers, SCAN’s progress on its CareOregon transaction and the changing competitive playing fields within Medicare Advantage.
Scan GroupTo start, are there any updates you’re able to share on the CareOregon combination?
We’ve retired over $110 million in medical debt. We partnered to do that. I think it’s an early demonstration of what’s possible when two mission-driven nonprofits come together to try to address the needs of frail and vulnerable people.
We’re still in the midst of the regulatory review process. We’re providing responses to the regulatory inquiries that are both on the California side as well as the Oregon side.
Right now we’re seeing these large for-profit insurance companies with a big Medicare Advantage presence making huge acquisitions, then there are nonprofits joining forces like SCAN and CareOregon and then Kaiser Permanente and Geisinger. Is there a relationship between these two trends?
We’re in the middle of a David-versus-Goliath story in American health care, wherein the larger for-profit entities that are beholden to shareholders are getting bigger. And not-for-profit organizations have to be creative, have to be strategic and ultimately do what they can to preserve their ability to execute on their missions.
I’m not someone who is firmly not-for-profit versus for-profit. I think at the end of the day, the thing that matters most is that leadership is oriented around doing the right thing for patients and for people. But I do think it’s easier, in some ways, to be pro-patient when you are a not-for-profit organization.
Having lived and worked inside of both not-for-profit and for-profit organizations for much of my career, there is always the quarterly earnings shuffle. One of the liberating things about not-for-profit organizations — while we are still results-oriented on the margins — we’re always going to try to do the right thing for the patient.
This is because we are able to wake up in the morning and not think about shareholders, but actually think about the community, think about the people that we serve, think about our boards and be able to defend and stand by the decisions that we’re making to those constituents and stakeholders.
In for-profit organizations, the most important stakeholder, despite the words on the wall, is usually the shareholder. There are examples of for-profit organizations that actually do an exquisite job of balancing that, but I would say most struggle with that.
I sometimes wonder whether health care providers should be excluded from some of the fiduciary laws that require them to prioritize the shareholder.
I actually have written on this topic. I think that there should be in the same way that we’ve seen kind of governance reform around [environment, sustainability and governance (ESG)] and cybersecurity, wherein boards take very specific responsibility for that.
There should be similar alignments around defending and respecting patient care. Any clinical organization that touches patients should probably have a requirement that the chief medical officer should report both to the CEO as well as to the quality committee of the board, in the same way that a chief regulatory officer reports to the audit and compliance committee.
There are opportunities for governance reform that would enable the voice of patients and the voice of the profession to have opportunities to be better.
To continue with your David-versus-Goliath metaphor, what are the best tools that “David” has in his sling?
In some ways being smaller than the national behemoths is actually a feature, not a bug.
We have the ability to be flexible, to be nimble, to be community-centered, to be patient-centered and to be innovative. We need to lean into that — big enough to matter, but small enough to actually get things done.
The ways you’re using the relative stability of the workforce is another piece of it too. Not-for-profit organizations tend to have more stable workforces than for-profit organizations.
I think there’s an opportunity to build longer-term, trust-based relationships with provider networks. And so I think one of the opportunities for the smaller not-for-profits is to think about five-year contracts, 10-year contracts that enable real stability in the execution of the delivery for patients.
Do you expect more combinations or mergers among the nonprofits? Do you think more will follow suit?
I hope so. We’re in the middle of some serious soul-searching that’s going on in both for-profit and not-for-profit organizations, for different reasons — for-profits, because of the changes in the capital markets and the cost of capital, and not-for-profits because we’re realizing that we may be stronger together than individually.
Many of us face a similar set of market challenges, procurement challenges, and our ability to execute, our ability to compete, our ability to continue to innovate is enhanced when we’re kind of spreading risk and spreading costs over a larger population of patients.
Even though our revenues measure in the billions, most of those billions are medical costs. Our true [general and administrative] spend, and our ability to continue to innovate our platforms, is really limited just based on the amount of discretionary dollars that we have to work with and play with every year.
If we can kind of create a syndicate organization that pulls together organizations that have similar missions, similar intent, similar purpose, I think you’re gonna see the ability to execute to serve patients only grow and get better.
What are some of the other major Medicare Advantage trends that you’re seeing right now?
Changes in the risk model and then changes in the star rating systems are going to pretty dramatically change the landscape from an MA perspective.
Many plans are projecting declines in the stars because of the increased focus on patient experience and the move away from the re-weighting of measures. And then I think the risk model essentially represents a haircut to the industry. You’re going to see a lot of changes in benefits strategy across the industry.
I think it’s going to be a pretty dynamic annual enrollment period, where a lot of people’s plans are going to change. There’ll probably be more shoppers this year than any year previously, and the big question is: How many plans are going to be holding benefits firm and how many are going to be cutting them?
The other big issue that I think CMS has to contend with is the fact that, for the first time, more beneficiaries are in the MA program than not. That materially impacts some of the formulas that are used to calculate MA rates.
Before, most beneficiaries were in Medicare fee-for-service. So we’re able to use fee-for-service benchmarks to inform Medicare Advantage rates. Now we’re going to have to see CMS think about new methodologies to ensure accurate payment.
That’s an interesting concept, that CMS might have to reboot for value-based care along with everybody else.
My personal view is that Medicare is 58-years-old now, and it’s time for a facelift. It’s time for some major surgery, frankly.
This program was intended originally to be a payments program. It was designed to just reimburse medical care. It wasn’t designed to necessarily shape the contours of how that medical care was delivered. With a lot of the value-based care programs, you’ve seen CMS edging in that direction.
At this point, we should be thinking much more about what it would look like if we were designing this program from first principles.
Particularly now that we are enabled by technology, enabled by the opportunities for asynchronous care, enabled by new capabilities around chronic disease management and prevention, and if you were to do that you’d be building a very different Medicare program.
One of the things I’ve been increasingly focused on these days is getting rid of annual enrollment in MA. Because we talk a lot about value-based care in this industry, but it’s impossible to actually change the value of care in one-year increments.
There’s so much competition, and MA is based on small differences and benefits annually, whether it’s a Part B rebate, or a dental plan allowance, or some new tech gimmick that they’re attaching to a plan. Whereas competition should really be on outcomes on clinical performance, and long-term health outcomes.
But if I don’t have you as a member for long enough to actually influence your long-term health outcomes, it’s impossible for me to say that I’m actually doing anything to move your health outcomes. And that’s been the failure of the MA industry.
We’ve gotten into the zero-sum conversations about fee-for-service Medicare versus MA. And the truth is we should be really thinking about how MA can be rocket fuel for the Medicare program for the future. But there just hasn’t been enough of that kind of energy or thinking around the industry.
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