Aetna sued for breach

Article below, I’m still digesting it but decided to open a thread, whatever. I’d be curious to hear from folks who know more about MA as to what you think likely outcomes are.

We kind of get into this type of argument with annoying provider groups on a routine basis

They want part D claims excluded, but once we back out the associated part D premiums they cry foul and ask us to include part D again. Of course we have learned and have explicitly stated that part D is or is not included in performance related calcs now

Sounds like a similar situation with the supplemental benefits that Aetna are offering and how they are being handled in the MLR calc or whatever they are using to determine provider performance

As a person covered by Aetna MA, who uses the gym membership and OTC benefits, I would hate to see those disappear. Gym membership saves me $120 per year (assuming I would buy the membership if not provided, which is far from certain, but I do enjoy it and use it a fair amount) and OTC benefit saves me close to $240 per year (assuming I would spend that much on CVS OTC anyway, and I would think that it would be at least $150, maybe $240).

Those are pretty standard MA supp benefits and won’t disappear anytime soon

This is exactly my concern, since I live on the provider side. We’ve had instances where our MLR target is going from 85% to 84% or whatever, and then they go and juice the non-claim costs by 1%. Or they bid aggressively knowing the MLR is likely to come in around 88% but push out 85% targets to providers.

Or, you know, Q4 2023 costs just went up all at once. If there is a broad, secular cost trend, I don’t understand why that’s on the providers? We are massively writing down our MA book as I type this.

TL;DR I think MLR is a shit benchmark for VBC providers.

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It really depends on the provider group to pick a risk/performance arrangement that best suits them

If you don’t want any downside risk exposure the payer is going to cap your upside gains

If the provider group has little control over medical expense then they should not enter into a deal tied to MLR but rather one that rewards them for routinely checking in on diabetics/depressed folks/drug abusers/people with high blood pressure

MLR definitely is not optimal for rewarding every provider group, but I think the onus kinda falls on the provider group to manage their own contract as the payer is kind of obligated to lower expenses for their members and the government

My beef is that if the payer boosts non claim expenses, providers shouldn’t be affected. I guess put another way, I think a fair benchmark should be reasonably close to a counterfactual, and MLR has too many thumbs on the scale.

An argument can be made that the supplemental benefit expenses improve health outcomes (sneakers, gym membership, otc drugs)

As long as the premium dollars associated with these expenses are in the denominator I don’t see why they should be excluded from the numerator for the MLR calc

It is fine provider wants to remove supp benefits from the numerator but then we have to remove associated premium dollars from the denominator.

Anyways my take away from the article is that the provider group is pissed that they aren’t getting a risk share payment and thinks that Aetna and CVS have entered into some super non competitive behavior regarding otc card benefits. Which I doubt

I can see some value in the benefits lowering costs, I think it’s tricky. If a payer adds $20 PMPM in benefits though, I doubt that reduces total cost by $20 in the year. Could be wrong, I think the correlation isn’t super high.

Bigger problem is competitive bidding, if a payer submits bids expecting 88% MLR then no provider should have a 85% target. That’s just docs paying marketing expense.

And it seems like a small deal but there is leverage here. I’d say that most PCPs can generate 5-8% savings over time. Ballpark. So if I save 5% but the benchmark is 2% lower than a ‘fair’ benchmark (defining fair is the tricky part and I’m intentionally glossing over it here), that drags savings down to 3%, which is a 40% cut in shared savings.

We saw this in 2023 Q4 and into 2024. Broad cost trends cost my providers tens of millions, even though we didn’t drive the costs up.

Put another way, if a payer can get 100% of their MA benes into VBC deals with providers taking 100% upside and downside, who is the insurer in that deal? And why should providers take actuarial risk when they can’t even see the bids?

A pre post (with risk adjustment and historical control group for trend) is a much better benchmark. Or a concurrent study of regional efficiency.

I guess while I’m on my soapbox I’ll also call out specific stop loss. This is literally why insurance companies exist, random catastrophic claims. Payers should apply stop loss in these calcs to give more robust estimates of savings.

It’s a business decision

If the provider group doesn’t like the terms they can walk away

Provider groups get greedy and take on excess risk not realizing the risk between the population of two insurer can differ wildly. They usually learn pretty quickly and are ready for renegotiation once the initial contract expires

But yeah it is very ironic that insurance companies are paid to “manage care”, only to offload the work onto providers to manage care

I get that. I’m mostly interested in long term viability so that both parties can succeed. We are still in the middle hour where neither side has largely figured VBC out.

We had a group of providers join us recently. They are calculating shared savings on groups as small as 500. WTF.

And we signed with one payer who gave us an 85% target for a EGWP where actual came in at like 102%. And we signed up, so I guess shame on us, I told them not to do the deal.

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Agreed MLR is a bad benchmark because of non-claim factors. But having done lots of PMPM it’s so hard negotiating with the providers around trend, risk adjustment, and everything to get to that PMPM number and everything has to be agreed and adjusted every single year rather than having a constant number target that doesn’t have to be negotiated every single year. It’s just messy.

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I prefer retro trend, like what MSSP does. That obviates all of the projections, and I don’t care that it means settlement is June of the year following the performance period. We look at Q4 reports and advance savings to providers to kinda get around that.

It is messy, for sure. I’ve negotiated methodology for 15 years. I often think of the HL Mencken quote… I may butcher it a little. For every complex problem there is a solution that is clear, simple, and wrong.


I feel like it’s a mixed bag between provider groups that are actually able to consistently manage care/improve health outcomes while managing expenses and groups yoloing and hoping that they get to partake in shared savings

Effective manage care models are easily duplicated and key employees are always changing employers

The reality is that patients largely often dictate their outcome via their long ingrained lifestyle choices

Our shared savings usually wind up costing us once we net everything out. It feels like we try to get providers to sign these contracts for our members’ sake - continuity of care, especially in areas with few provider options

I guess you all on the payer side are maybe mostly working with provider groups who have little to no understanding of how the math works, is that a fair assessment? If so, then I appreciate how painful that would be.

Maybe we should chat. My group has a pretty solid track record, particularly in MSSP. We are about half of the top ten MSSP ACOs in terms of savings %.

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Yes guilty as charged

Send me your address and I’ll mail you a little padded square so you don’t get brain damage banging your head against the wall.

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I’d much rather prefer a 60x60 quilt