Clover Health reposted this
I’m getting a lot of pings about where we stand regarding the CMS rate notice that came out. In short, I think the CMS rate makes sense, is appropriate, and I feel good about what it means for Clover. As a quick summary, CMS set the rate at the same amount as the previous (advanced) rate notice, which is a relatively rare departure from the norm. Normally CMS is conservative in its initial notice then revises its rate upwards after that - they chose not to do this in this case. A few thoughts : Firstly, CMS noted that one of the reasons they did not increase the rate was because they did not see Fee-for-service trending in Q4 that was elevated. That was consistent with what we saw in our Q4 Clover results, though deviated from what Humana, United and others saw, where they said they saw elevated utilization in their MA plans. My view is that this corroborates our Clover view that other managed care orgs are seeing a challenge in managing care and cost on their PPO plans - an area they have pushed hard into in the last few years as they chased growth. For Clover - where we have always been PPO first - we have Clover Assistant and our Home-Care practice, which serve as the basis of our platform and we’ve demonstrated a differentiated ability to manage that PPO cost. Secondly, if you look at what this means for the future, you can see that starting in 2025 there will be an impedance mismatch between CMS’ rate setting (based on the secular trend in FFS) and the MA plans PPO-performance (which is loosely managed and trends upwards). This rate notice means CMS does not intend to adjust for this lack of PPO care management via its rates. That is fine for Clover but challenging for other plans, who will have to pull back on benefits even more if they’re not given grace via the rate. This impedance mismatch gives us a durable advantage in designing plan products that can lead to better growth. Ultimately, Clover’s advantage sits around believing the future of Medicare is hybridizing the benefits (Vision, dental, grocery etc) of MA with the wide network of Original Medicare. This rate notice emphasizes why we feel we’re in a good place to achieve that.
Andrew Parker
3mo
This is great. Impressive as always Andrew Toy
Arun Khanna
3mo
Thanks for communicating this .
John Criswell
3mo
Always insightful Andrew Toy
Do you care to explain dumping more of your shares if you have so much faith in the company? Inquiring investors want to know when YOU start showing faith, Andrew. https://investors.cloverhealth.com/node/9946/html
Albert Alan
3mo
I typically refrain from posting analyses like this on my LinkedIn, but I'm making an exception to highlight Andrew Toy's exceptional, resilient, and laser-focused approach to revolutionizing our healthcare system. My analysis, strictly from a financial perspective, is outlined below: - Humana's Market Capitalization: - Highest Before CMS Changes: $78.9 billion - After CMS Changes: $37.426 billion - Total Loss: $41.47 billion - UnitedHealthcare's Market Capitalization: - Highest Before CMS Changes:$559.2 billion - After CMS Changes: $424.6 billion - Total Loss: $134.6 billion - Overall Impact on Medicare Advantage Incumbents: - While other Medicare Advantage incumbents also experienced significant losses, the combined net market capitalization loss for the above two incumbents totals $176.07 billion. - This significant outflow suggests that institutions have divested a total of $176.07 billion, which is likely being reallocated, potentially signaling readiness for the next disruptive phase in healthcare. Historical Disruptions as Analogies: - The shifts remind me of Blockbuster to Netflix and Intel to AMD, hinting that Clover Health could similarly revolutionize the healthcare industry.
Jason L.
3mo
Andrew Toy Thank you for your enlightening analysis of the recent CMS rate notice. Your insights explain the challenges and opportunities this development presents for the healthcare industry. Your strategic approach, which diverges from the traditional paths followed by industry giants like Humana and United, underscores the importance of innovation and adaptability in today's dynamic healthcare landscape. We are in complete alignment with your emphasis on effective care management. We firmly believe in the transformative power of data analytics to revolutionize Medicare, facilitating the seamless integration of MA benefits with the extensive network of Original Medicare. #HealthcareInnovation #DataAnalytics #MedicareEvolution #CareManagement #IndustryLeadership #DataGeeks
Thanks for the timely update and the tune looks bullish but Clover badly need a proper marketing and more press releases. The stock is down 22% YTD.
Steve DeWeese
3mo
Part 2 By eliminating separate payments for administrative services, CMS stated that this proposal would eliminate a significant method that some plans may have used to circumvent the regulatory limits on enrollment compensation. Furthermore, CMS explained that they believed ensuring a fixed payment rate for agents would result in compensation greater than what is currently provided through typical contractual arrangements with FMOs, as there would no longer be a range of compensation rates at which the MA organizations could pay for agents and brokers’ services. So the agent gets a $100 raise. (Good thing) The NMO and FMO lose the framework of receiving override/administrative payments from the carrier. (Bad thing) How can the Carrier still compensate the NMO and FMO and remain compliant? The industry has asked CMS for further clarification.
Great thoughts as usual Andrew , though can you shed some light on clover profitability expectations
okay you got my attention with grocery. But I’m still curious about v28 impacts - sending a DM