“There are hundreds and hundreds of benefits within a Medicare Advantage plan. The vast majority of them are what I call invisible benefits. The benefits a person may never use, the benefits a person may not even know they have. I like to focus on six core benefits to make a Medicare Advantage plan really stand out and again, benefit the consumer or the member. That's what this is all about.
Those six benefits are premium. Number one, what am I going to pay every month to be on this plan? I like to keep it at zero.
Number two, the PCP copay. How much are you going to charge me to go see my primary care doctor? I like to keep that at zero. Number three, specialist, if I need to go see a specialist for a pulmonary issue or orthopedic issue, cardiology, what have you. What are you going to charge me for each encounter with that specialist?
Okay, number four is inpatient. If I get admitted to the hospital, what is it going to cost me per day?
Number five, MOOP. You mentioned MOOP, maximum out of pocket. What's my maximum financial liability to be on this plan?
And number six, dental. Matt, dental is becoming the must have benefit in Medicare Advantage plans. Really the thing that makes these plans stand out and really gives the people the utility of these plans is something like dental. So again, premium, primary care copay, specialist, inpatient, maximum out of pocket and dental.”
- Gregg Kimmer, President and CEO of ATRIO Health Plans
My guest today is Gregg Kimmer, President and CEO of ATRIO Health Plans. Based in Oregon, ATRIO administers Medicare Advantage plans for customers in Oregon, Nevada, Tennessee and Louisiana.
This edition of The Matt Feret Show will give you an Insider’s Guide to Medicare Advantage, from the perspective of a Medicare Advantage plan president and CEO. Enjoy!
Listen to the episode on Apple Podcasts, Spotify, Deezer, Podcast Addict, Stitcher, Google Podcasts, Amazon Music, Alexa Flash Briefing, iHeart, Acast or on your favorite podcast platform. You can watch the interview on YouTube here.
Brought to you by Prepare for Medicare – The Insider’s Guide book series. Sign up for the Prepare for Medicare Newsletter, an exclusive subscription-only newsletter that delivers the inside scoop to help you stay up-to-date with your Medicare insurance coverage, highlight Medicare news you can use, and reminders for important dates throughout the year. When you sign up, you’ll immediately gain access to seven FREE Medicare checklists.
“Our members actually walk into the door of our headquarters to ask questions. And I think that's pretty cool, and this happens very frequently. And I think that creates a certain stickiness with these members, such that they can go talk to a human being in our headquarters, ask a question, get guidance, versus calling a generic 1-800 number in the back of their ID card. I think that's really how we stand out as being that local health plan where people can literally come into the door and ask us questions, and they do.”
- Gregg Kimmer, President and CEO of ATRIO Health Plans
“Value-based care is at the core of what we do, and the consumer may not realize that they're benefiting from it, but they are. We are taking unnecessary costs out of the system. So for instance, making the primary care physician copay $0 instead of $20, you're encouraging the person to go create a relationship with the primary care physician such that they won't go to the ER for a headache. Okay? You're removing all financial obstacles from that person, creating that relationship, with that primary care physician. That's one core example of value-based care. And again, I don't think the consumer may realize our motivation here, but it's actually to help them such that we don't put more and more waste into the American healthcare system.”
- Gregg Kimmer, President and CEO of ATRIO Health Plans
00:02:02 Gregg’s professional background
00:03:44 What health insurance CEOs do
00:04:45 Three Medicare options and what’s changed over the years
00:06:56 Increasing popularity of Medicare Advantage
00:09:24 Medicare Advantage criticisms: networks
00:11:12 Gregg’s view of managed care in Medicare
00:12:46 Value-based care and Medicare
00:15:51 Smaller vs. large, national Medicare insurance companies
00:20:03 Use local independent Medicare agents to shop for Medicare insurance
00:22:06 Medicare Advantage and Prescription Drugs
00:24:19 Designing plans and the annual Medicare Advantage bid process
00:29:11 The six most important Medicare Advantage benefits to pay attention to.
00:30:35 How can $0 Medicare Advantage plans be $0?
00:32:51 The future of Medicare Advantage
00:34:21 Gregg’s favorite color
00:37:43 Show wrap
00:00:00 / 00:37:43
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Matt Feret (00:03):
Hello everyone. This is Matt Feret, author of the Prepare for Medicare book series and welcome to another episode of The Matt Feret Show, where I interview insiders and experts to help light a path to a successful retirement.
Come say hello at www.themattferetshow.com for YouTube videos, show links, notes, websites referenced, quotable quotes, and the complete show transcript. You can also check out www.prepareformedicare.com, which is the website supporting my first book, Prepare for Medicare. Make sure to sign up for my newsletter. I send about one a month.
The intro to this episode will be brief, mostly because I had to type the script one handed due to some planned shoulder surgery, but also because the episode title really says it all. My guest today is Gregg Kimmer, President and CEO of ATRIO Health Plans. Based in Oregon, ATRIO administers Medicare Advantage plans for customers in Oregon, Nevada, Tennessee, and Louisiana. This edition of The Matt Feret Show will give you an insider's guide to Medicare Advantage from the perspective of a Medicare Advantage Plan president and CEO. Enjoy.
Gregg, welcome to the show.
Gregg Kimmer (01:19):
Thanks, Matt. Appreciate you having me.
Matt Feret (01:20):
Tell everybody what you do, how long you've been doing it, and how you help people.
Gregg Kimmer (01:25):
I am the president and CEO of ATRIO Health Plans. We're based in Oregon. We also have a location in Nevada. I've been doing this for almost 12 years, Medicare Advantage. 100% of my experience in healthcare has been in Medicare Advantage and I say that with a lot of pride. The way I think I help people as a non-clinician is I design plans that have outstanding benefits so that people can see the best doctors at the best costs possible. This is arguably the most deserving population in America that we serve and so I take a lot of pride in that notion.
Matt Feret (02:02):
It's not every day that people get to talk to or listen to a CEO of a health plan, so tell everybody a little bit about your journey and how you got here and how you found yourself in this, well, you didn't find yourself in this position, but how'd you get here?
Gregg Kimmer (02:16):
Yeah, good question. It's been fun. I can tell you that much. The majority of my background has been finance, financial planning and analysis. Then I frankly applied to a job many years ago at Humana. I live in Louisville, Kentucky where Humana's based and I suddenly found myself in an industry where I could actually help people and I just fell in love with it.
Within 19 months of starting at Humana, I was promoted to divisional CFO, one of the five divisional CFOs in the country. Then had responsibility for many, many bids. Bids in Medicare Advantage, as you know, is the process of us creating plans, filing them with the government, so I had responsibility for over 110 bids along with a lot of other people.
Then in 2017, Aetna knocked on my door, now CVS Health, and asked me to become Chief Medicare Officer for the Great Lakes market, which was Illinois, Michigan, Wisconsin, Indiana. I then went on the provider side for about a year, really got good perspective there, enjoyed it a lot, but one of the things I've always been told, especially by my father, who was one of my mentors, is that you can't run from your DNA. Matt, it's in my DNA to run a Medicare Advantage plan and so I went back on the plan side here at ATRIO about six weeks ago and I've been loving every single minute of it.
Matt Feret (03:44):
You're a brand new CEO. This is a big job, but you got a heck of a lot of experience. Talk to me about what the role is of a health plan CEO.
Gregg Kimmer (03:56):
Yeah, so good question. I think in our world, a lot of people want to focus on growth, and you have to focus on growth, i.e. Enrolling people in your plans, but my job as CEO is to focus on profitable growth. To balance those two things. Growing at a rapid pace while at the same time maintaining profitability. At the cornerstone of all I do is the member, it is the member. It is that person who needs to receive these plans, enroll in these plans, be educated about the plans, and we have to serve them while they're on the plan so that we keep them. My job is focusing on a thousand things with the foundational part of that focus being the member at all times. If we don't please them, nothing else works.
Matt Feret (04:45):
Very true, thank you. Let me just back into my question with a little bit of explanation. As I note in my book, there are essentially three ways for most people to consume their Medicare coverage. The first one is to use original Medicare A and B and then buy a prescription drug plan or a PDP for the prescription drug coverage at the retail pharmacy and mail order. Second way is to do that same thing and add a Medicare supplement on top of it to cover the gaps that Medicare A and B presents, also known as Medigap Insurance. This third option is to buy what I call a combo product which is a Medicare Advantage plan. They're related, but not exactly the same thing, even though it's called a Medicare Part C plan.
You're the CEO of a health plan of a Medicare Advantage plan. Talk to me about the growth you've seen over your career and experience and how things have changed and maybe even changed for the better today.
Gregg Kimmer (05:44):
Yeah, I like the way you laid that out, the three options available to people. Over 40% of all people who are eligible to be on a Medicare plan are on a Medicare Advantage plan. Depending on who you speak with, the leading thought is that that number will go to over 50% very soon. In other words, half of all people eligible for a Medicare plan are choosing Medicare Advantage. When I was at Aetna, we grew in, just in my market alone, from 20 to over 130,000 members organically in four years. This industry grows seven to eight percent a year. We grew over fivefold in four years. That's not because of me, that's because I was surrounded by a really smart and capable group of people, but it just speaks to the popularity of these plans, Matt.
Matt Feret (06:33):
You've been doing this a long time. You've seen an amazing amount of change and lots of people are selecting Medicare Advantage now when they turn 65 as that third option. Talk to everybody a little bit about why you think that change is happening from a coverage standpoint, a premium standpoint, or just the way healthcare is done in America standpoint. What's your view from the top here?
Gregg Kimmer (06:56):
Yeah, good question. In my opinion, I think the popularity of Medicare Advantage has been driven by the fact that it's really the only platform that provides coverage for these folks, that it is 360 degrees in nature. It includes basic healthcare, it includes hospitalization, it includes seeing your doctors, it includes prescriptions. It's the only form of the three forms of Medicare that by default includes Part D or prescription drug coverage. It also includes, in many cases, dental, vision, hearing, social determinants of health coverage, home health. I think the comprehensive nature of Medicare Advantage is one of the big reasons why a lot of people are being attracted to it.
Matt Feret (07:42):
I've described, and others have as well, Medicare Advantage being more of a pay as you go, rather than pay everything upfront. What I mean by that is when you buy Medicare Advantage Plan to cover your Medicare coverage, you've got copays just like you were maybe on your employer plan. You've got some out of pocket expenses. You have something called a MOOP, which is still the funniest acronym I've ever run across because it just sounds funny. MOOP, M-O-O-P, maximum out of pocket, which by the way has been creeping up every couple of years here. Talk about the differences between that pay as you go versus a Medicare supplement, which is really paying a lot of money up front for not a lot of exposure at the time of healthcare.
Gregg Kimmer (08:24):
Yeah, I mean, Matt, you described it correctly. What I tell people is, okay, the vast majority of Medicare Advantage plans have a $0 PCP copay. In other words, to see your primary care physician would cost you nothing to be on these plans. If you're on a $0 premium Medicare advantage plan that has a $0 PCP copay, if you never go see your doctor, you're never going to pay a thing. Put drugs aside for a second, prescriptions, but that's one key difference versus in a Medicare supplement plan, you pay no matter how much utilization you incur for your healthcare services. Medicare Advantage is truly pay as you go, pay as you need to use these services in kind of an ala carte fashion.
I think that's probably one of the reasons why many seniors are attracted to it. Over 40% of all people eligible for Medicare are on a Medicare Advantage plan. It's because they have the flexibility to pay as they use these services versus paying a fixed amount every month irrespective of seeing a doctor or not.
Matt Feret (09:24):
One of the criticisms that someone could make about Medicare Advantage plans is that it forces people into networks. HMO's, PPOs, HMO POS's, again, all the acronyms in healthcare that you and I smile at, but the normal Medicare consumer goes, wait, what? Talk to me about that because original Medicare, I mean the network, if you want to call it that, is vast. It's almost everyone. When you use a Medicare Advantage plan, there are some tradeoffs to that. Lower premium, perhaps more comprehensive benefits, but talk about the different types of networks and what people's experience in either of them may look like.
Gregg Kimmer (10:03):
Matt Feret (10:03):
... experience and either of them may look like.
Gregg Kimmer (10:03):
Yeah. So this has been one of the criticisms in the past of Medicare Advantage is it's a network product and you're going to limit the consumer's choices. I would argue that, at one point in time, that was the case. Today in 2022, that's largely not the case, and let me explain why. So as you know, the core difference between an HMO and a PPO is with an HMO, you have to pick a primary care provider when you sign up, and you have to have referrals to go see a specialist. With a PPO, those two things don't exist. So you get ultimate flexibility, no referrals required. You don't have to pick a primary care provider. You can generally go see anybody you want. It's a broader network product. But because of the flexibility that PPO offers, the PPO in recent years has become the most popular choice among consumers, and the most popular offering among payers. Can you still find HMOs that kind of narrow your choices and restrict you? Yes, but they're not gaining in popularity and people are gravitating towards more of the PPO, which offers broader network coverage and less restrictions when it comes to seeking healthcare.
Matt Feret (11:12):
And let's stay on that theme around restrictions. I hear the differences between networks. HMO, again, as you explained, a little bit more restrictive in terms of who you can see, when you can see them. You just can't open up a webpage and pick like you can maybe with different types of coverages. But that said, there is something to be said for what this essentially is. Managed care. I mean, this is not a free for all go where you want when you want. But there is a big degree of managed care, and this is what really Medicare Advantage is, correct?
Gregg Kimmer (11:42):
Correct. That's correct. It is managed care. It's a balancing act, Matt, as you know, between giving the consumer, the member, flexibility and latitude to see who they want to see for their healthcare, when they want to see them, and where they want to see them. A framework whereby we can provide the best quality of care to the consumer rather than quantity of care.
Matt Feret (12:07):
Makes sense. And you mentioned something in there called model of care, and that's something that not a lot of people know about, but it has everything to do with Medicare Advantage. And also managed care, which is also what you said earlier in our talk together, which is everything is patient centered, everything is about the members. So when people hear networks and managed care, sometimes people can think of those as negative things. Talk to us about, from where you sit, and in your experience, managed care is actually helpful or is the preferred way of being guided through the American healthcare system.
Gregg Kimmer (12:46):
So I'll tie it in with another term, as if we need another acronym or term in healthcare, and that is value-based care. This is a term that many, many people have heard for a few years now. But I'll tell you what it means to me. It ties in exactly to what you're talking about. Value-based care provides financial incentives for providers to focus on the quality of care versus the quantity of care. This is anecdotal, but imagine a scenario where a primary care physician, and that physician's company, could achieve the same profitability by seeing 18 patients a day versus seeing 32. In the case of seeing 18, if you focus more on the quality of the care, then the total cost of care for that consumer, the probability of that going down is much higher by the doctor focusing on the quality versus the quantity of care.
Value-based care is at the core of what we do, and the consumer may not realize that they're benefiting from it, but they are. We are taking unnecessary costs out of the system. So for instance, making the primary care physician copay $0 instead of $20, you're encouraging the person to go create a relationship with the primary care physician such that they won't go to the ER for a headache. Okay? You're removing all financial obstacles from that person, creating that relationship, with that primary care physician. That's one core example of value-based care. And again, I don't think the consumer may realize our motivation here, but it's actually to help them such that we don't put more and more waste into the American healthcare system.
Matt Feret (14:24):
Is there a profile of someone turning 65 that may want to consider a Medicare Advantage over, say, staying on original Medicare or buying a Medicare supplement? Is this for healthy people, sick people, halfway between those two labels, or anybody?
Gregg Kimmer (14:43):
All the above, and I'll explain why I say that. So in Medicare Advantage, on the individual side of Medicare Advantage, i.e., a person who is 65 or older who wants to go buy a plan on their own, the word underwriting does not exist. And underwriting, as you know, exists in all other forms of insurance, including auto insurance, home insurance, what have you. It simply is assessing the risk of a person or of an asset, and placing a price on that risk in the form of the premium. In Medicare Advantage for individuals, underwriting does not exist. So it does not matter what your acuity level is. It doesn't matter if you run marathons every day, or if you have a lot of chronic conditions. Okay? You are eligible to enroll in a Medicare Advantage plan as long as you're over 65, and there's basic criteria that we've talked about. This platform applies to anybody who is eligible for Medicare Advantage. It doesn't matter if you're healthy, unhealthy, what your lifestyle is. These plans offer a variety, again, 360 degrees of coverage, a variety of benefits for the consumer who wishes to sign up for them.
Matt Feret (15:51):
Gregg, so from where you sit, you're a relatively new CEO of a smaller health plan, I'd say. Not a bad thing. I think it's actually a really cool thing. So talk about the differences from that you've seen so far, the difference between small state based or regional health plans, such as yours, and some of the larger national household brand names. Are there any differences between a Medicare Advantage plan that's state based or local, compared to a large national company?
Gregg Kimmer (16:22):
Yeah, really good question, Matt. There are differences, but there are many similarities. I'll explain both. The similarities are that we all use the same Medicare Advantage plan that is federally administrated by the government, and we all have to play by the same rules in designing and offering those plans when it comes to marketing compliance, the plan designs themselves, things like that. Where ATRIO is different is we have a very localized, homegrown touch, if you will, and I'll explain what I mean.
Unlike prior stints in my career, our members actually walk into the door of our headquarters to ask questions. And I think that's pretty cool, and this happens very frequently. And I think that creates a certain stickiness with these members, such that they can go talk to a human being in our headquarters, ask a question, get guidance, versus calling a generic 1-800 number in the back of their ID card. I think that's really how we stand out as being that local at arms reach health plan where people can literally come into the door and ask us questions, and they do.
Matt Feret (17:28):
That's really cool. They walk in, they get service right there, and they walk out. It's almost like an office for a walkup service. You don't really hear about that much anymore.
Gregg Kimmer (17:40):
Especially in health insurance where many health insurers are considered the big bad companies, and they're not exactly, many health insurers, as you know, in our industry, are not exactly known for their delicate customer service skills. But I've seen this firsthand with my own eyes. Our members will walk into our headquarters to ask a question.
Matt Feret (18:01):
So what about those advantages, about the local health plan and the local health providers. From where you sit, what other capabilities can plans of your size do that sets you apart from some other larger company that may not be as localized as yours? What are you thinking about doing, even if you haven't done it yet? I know you just got there, so don't let me put too much pressure on you.
Gregg Kimmer (18:29):
Yeah, no pressure here, Matt. Thank you. I'm six weeks in, I don't even have my name badge yet. But I think we can be more nimble than the larger carriers. You and I have both worked at large carriers in the past, and as you know, sometimes it can take 17 people to approve buying a box of ink pens.
Matt Feret (18:52):
That's a low number. I was going to... I'd take the over on that number.
Gregg Kimmer (18:57):
I [inaudible 00:18:58] that one. But at ATRIO and companies our size, we can be much more nimble and make decisions much quicker than larger organizations, which helps the consumer. The quickness with which we can make decisions immediately flows downhill to the consumer's benefit, versus the consumer having to wait for a drawn out bureaucratic process, if you will, with a lot of people getting involved to make a decision. We can kind of be SWAT team in our decision making as a smaller plan, and I really love that.
Matt Feret (19:33):
There are a lot of options in the Medicare Advantage space available to people. I write in my book, and you can find it all over the country, when you type in your ZIP code, for example, on medicare.gov and search for a Medicare Advantage plan, if you're in a metro area, you've got 50 plus options, and that's probably being conservative at this point. Given your experience in your background. If I'm a consumer, it sounds so cold, if I'm thinking about my Medicare coverage or I'm trying to help mom or dad, how do I go about stack ranking...
Matt Feret (20:03):
...trying to help mom or dad, how do I go about stack ranking or prioritizing what's important to look at in a Medicare Advantage plan?
Gregg Kimmer (20:09):
Yeah, the first thing is don't do it on your own. Look, I've fed my kids for many, many years working in this industry. You have too. And I still struggle with certain nomenclature and just vocabulary that I hear in this industry. I couldn't imagine being a senior who's never worked in managed care insurance like I have and trying to understand all this stuff. It's very dense and it's very hard to grasp a lot of these concepts and really what they mean. So my first piece of advice to people is find a well regarded local agent or broker who specializes in the Medicare space, not Jane Doe down the street, who occasionally looks at health insurance. Somebody who really focuses in this space, understands all the options, understands what may be right for you.
Second, why do I say a broker or an agent? Because these people are independent. By law, as you know, the consumer's actually not allowed to pay them anything. The payers, the health insurance companies, pay them commissions for enrolling people in these plans. Go to that well regarded Medicare focused agent or broker, and they're everywhere as you know, and develop a relationship with them. Have them look out for your best interest, spend time with them and ask a ton of questions. That's what their job is, to educate you.
When I work with brokers, I tell them all the time, "Do not use the word sell. Please, if you're going to market ATRIO'S products, don't use the word sell. Use the word educate." Sit down across the kitchen table from the beneficiary and educate them about their options. It's incumbent upon a person to not shop on their own, Go through these agents or brokers. This is what they devote themselves to. Reach out to your friends and contacts. Ask them who they spoke to about their Medicare coverage, even if it's not Medicare advantage. Ask them who they spoke to and somebody in your personal circle is going to know somebody who maybe knows somebody down the road who can help you get educated about your options.
Matt Feret (22:06):
Part of that answer, you mentioned something we haven't really talked about, but that's the prescription drug aspect of Medicare Advantage. They're called Medicare Advantage Plans, but technically Medicare Advantage Prescription Drug Plans. And so we spend a lot of time talking about the healthcare aspect, the hospitalization, the doctors, but you bring up a really good point. Medicare Part D, the prescription drug component of this changes all the time. It's been in the news lately with what just got passed at the federal level. And if you think about it, maintenance medications are really how you interact with your health plan if you're relatively health almost every month. Talk to me about what we should be looking at or what people should be looking at on that side of the Medicare Advantage equation. What have you seen works well and what should people watch out for?
Gregg Kimmer (22:59):
Yeah, so it depends on your personal situation. Irrespective of age, if you're a person signing up for a Medicare Advantage prescription drug plan and you don't take any medications, then this is an irrelevant thing for you. But if you're on the other side of the spectrum and you have to take multiple medications a month, then it's incumbent upon a person to again, work with a local agent or broker and really scrutinize and evaluate their options within the Medicare Advantage Plan offerings such that they get the best drugs at the best cost possible. Because the federal government gives plans quite a bit of latitude in terms of where we can put drugs on what's called a formulary. The formulary is the lunch menu, if you will, of where drugs fit in the various cost tiers, of Part D of the Medicare Advantage Plan. Make sure that based upon your personal needs, that you're getting the best possible price on that formulary for the drugs you need to take. And again, it goes back to getting guidance and education from a local broker agent, because trying to figure out that on your own can be difficult.
Matt Feret (24:11):
This Medicare Advantage product and the prescription drug product change every year, don't they?
Gregg Kimmer (24:17):
Matt Feret (24:19):
Tell me a little bit about why that is and before you do, I know there's something called a bid process, which you mentioned earlier in the show, and it's part of your job and it's been part of your job for a long time to file those annual bids. And every year a Medicare Advantage plan can change their benefits. They can make them better, they can make them worse. When you design those plan changes or have in the past, what do you concentrate on, again with the member in mind, of what needs to change and why it needs to change, and how do you prioritize that?
Gregg Kimmer (24:52):
Yeah, this is quite literally my bread and butter, designing plans. I really enjoy it because I know down the road, someone else is going to benefit from this. And again, that person who's going to benefit from it is in the most deserving population in America, and that really gives me a lot of satisfaction. So there are hundreds and hundreds of benefits within a Medicare Advantage plan. The vast majority of them are what I call invisible benefits. The benefits a person may never use, the benefits a person may not even know they have. I like to focus on six core benefits to make a Medicare Advantage plan really stand out and again, benefit the consumer or the member. That's what this is all about. Those six benefits are premium. Number one, what am I going to pay every month to be on this plan? I like to keep it at zero.
Number two, the PCP copay. How much are you going to charge me to go see my primary care doctor? I like to keep that at zero. Number three, specialist, if I need to go see a specialist for a pulmonary issue or orthopedic issue, cardiology, what have you. What are you going to charge me for each encounter with that specialist? Okay, number four is inpatient. If I get admitted to the hospital, what is it going to cost me per day? Number five, MOOP. You mentioned MOOP, maximum out of pocket. What's my maximum financial liability to be on this plan? And number six, dental. Matt, dental is becoming the must have benefit in Medicare Advantage plans. Really the thing that makes these plans stand out and really gives the people the utility of these plans is something like dental. So again, premium, primary care copay, specialist, inpatient, maximum out of pocket and dental.
Matt Feret (26:45):
I'm going to keep that, blah, blah, blah in there by the way, Greg.
Gregg Kimmer (26:48):
Matt Feret (26:50):
If I'm on a Medicare Advantage plan and I know I'm supposed to shop or at least nose around every fall to make sure my plan doesn't change in ways I don't like it to change, those six things are really good guidance to pay attention to. And why would a company all of a sudden go in a different direction? If my premium is zero, which we can get about in the next, we're going to get to in the very next question, my premium zero and all of a sudden it's skyrockets to $40. What's going on here?
Gregg Kimmer (27:23):
So there's a concept in our world called adverse selection. And I'm not saying this is the reason that what you just described happens, but it's a big reason. So keep in mind, as I said, the word underwriting does not exist. Medicare Advantage plans, think of them as Statue of Liberty. Give us your poor, you're tired, you're hungry, you're sick. Okay? We have to take you if you're eligible for a Medicare plan. Sometimes plans can get adversely selected, meaning they get a disproportionate number of people in a plan that have high acuity levels. For instance, I'm making this up, if you were to have insulin free, completely free in a Medicare Advantage plan, well, logic would dictate that people who are diabetic are going to gravitate towards your plan. This could cause adverse selection.
One of my core tenants, if you will, of my career is designing stable plans that are attractive. So not designing a plan that is so attractive that I'm going to run into the situation you just described because I'm going to end up frustrating a lot of people going from a $0 plan to a $40 plan, for instance. So one of my core tenants, again, is to design attractive plans for people that are stable, that year after year after year, change very little, if any at all. And I think there are some companies that, some offerings that haven't focused on that as much, but that's one of my must haves, is designing a stable Medicare Advantage plans.
Matt Feret (28:54):
So if I'm looking at my annual notification of change in the fall...
Gregg Kimmer (28:58):
Matt Feret (29:01):
Are there any little hints I can see with where my premium is going or where my benefits are going that things might not be trending well for the plan or any little tips and tricks you can share?
Gregg Kimmer (29:11):
I would focus on those six benefits I mentioned. So premium, PCP copay, specialist copay, inpatient copay for hospitalizations, maximum out of pocket and dental. If a plan is struggling, they will have to degrade one of those or all of those six benefits. I promise you. For instance, they're not going to go to the chiropractic or acupuncture copay if they're struggling and just affect that. That's not as visible as those six that I've named that are really the most important ones in my view. Look at those six benefits, and as long as the plan is not putting a much higher cost on you, or in the case of dental, taking away your benefit value, then you're probably working with a pretty stable plan.
Matt Feret (29:57):
So your advice is look for stability.
Gregg Kimmer (30:01):
Matt Feret (30:03):
It seems to make...
Matt Feret (30:03):
Look for stability.
Gregg Kimmer (30:03):
Matt Feret (30:03):
Seems to make a lot of sense. When I buy something, I like to keep it the same. I don't want to necessarily see it yo-yo every year up and down, right?
Gregg Kimmer (30:12):
Yeah, that's right. I mean, it's a funny thing about human nature. We like things that are predictable and look, again, I've studied the consumer buying behavior of seniors for many, many years. That's how I make a living. I really enjoy it. And one thing I can tell you about seniors is they like predictable. They like predictable. They don't like to be surprised or blindsided, especially when it comes to their checkbook.
Matt Feret (30:35):
Makes a lot of sense. Let me get into one last question here before I ask you what I missed, because I'm sure I missed something. $0 premium. They're everywhere. They're not called free. They're called $0 premium because technically there is a premium behind it. So tell everybody in layman's terms if you can, and I know you can do this, how is a Medicare or how could a Medicare Advantage plan be $10 or $0 a month? How does that work? I mean, we've all heard the expression, there is no free lunch. How can it be $0 a month and be a legitimate plan?
Gregg Kimmer (31:15):
Yeah. This is a question I get a lot and it's understandable why I get this question a lot. So the federal government in 2003 with the passage of the Medicare Modernization Act, they created the privatized version of Medicare known as Medicare Advantage that we're talking about today. They created this, in my mind, for the same reason that UPS or FedEx was created, and that is the government was not really good or efficient at delivering packages on time. So the government recognized this original Medicare thing isn't working. Let's privatize this, and here we are 29 million members later and it's working pretty well. The government, given the magnitude of people who are on these plans, Matt, and these people vote.
Matt Feret (31:59):
Gregg Kimmer (32:00):
Congress has unanimously agreed every single year to fund Medicare Advantage. So they give us a monthly subsidy to enroll these people and provide healthcare for them. As long as we keep the cost below a certain threshold to take care of these people, then we can afford to offer a $0 plan. So some people will say, "Gosh, $0 per month. It costs me nothing to see my primary care provider and I've got $2,000 of dental." Yeah, it's because the government gives us money, and as long as we do our job, ie taking care of you and your health, then we can afford to make that premium zero while offering these outstanding benefits. So it's a balancing act, but we work on behalf of the government to take care of these seniors, and as long as we do our job, we can afford to keep it zero. And I speak holistically about our industry, not just at [inaudible 00:32:52].
Matt Feret (32:51):
And let's go there. You're a brand new CEO, but you've had really high positions in other health insurance companies and healthcare companies, even on the provider's side. Where do you see Medicare coverage and Medicare insurance going over the next five years? Give us a little view into your crystal ball.
Gregg Kimmer (33:10):
Yeah, this is going to be speculative on my part. Obviously I don't have all the answers, but-
Matt Feret (33:14):
You don't. Why not?
Gregg Kimmer (33:16):
I know. Why do they make me CEO? I'm supposed to have all the answers.
Matt Feret (33:19):
Gregg Kimmer (33:21):
Look, 10,000 people a day turn 65 in America, let that sink in. 10,000 people a day turn 65 in America. Point number one. Point number two, as I said earlier, there's roughly 29 million people on these Medicare Advantage plans in America. Point number three, these people vote. Okay? And that matters. Medicare Advantage in my mind is not only not going away, it's only going to be further enabled by the government for all these reasons. It would be logistically and ethically wrong for the rug to be pulled out from these people and say, "Okay, this Medicare Advantage thing was just an experiment." So in my mind, it's only going to get stronger and grow even more. Again, 10,000 people a day turn 65, Matt. This is a program that I see it only getting better, not worse over time.
Matt Feret (34:13):
Gregg, you've been very generous with your time today. What questions did I not ask that I should've?
Gregg Kimmer (34:21):
My favorite color? I'm a little bothered you didn't ask me about my favorite color.
Matt Feret (34:25):
Gregg, what's your favorite color?
Gregg Kimmer (34:28):
No, you didn't ask. So you don't-
Matt Feret (34:30):
No, I'm asking now. What's your favorite color? Everyone wants to know.
Gregg Kimmer (34:33):
Matt Feret (34:36):
Is that a hunter green or a forest green? What color green?
Gregg Kimmer (34:39):
More of Eddie Bauer green.
Matt Feret (34:42):
Gregg Kimmer (34:42):
1996ish. Eddie Bauer green.
Matt Feret (34:46):
Perfect. So I'm leaving all this in, so now everybody's going to look you up on LinkedIn and give you, suggest green things to you. It's going to be great. No, in all seriousness, what did we not cover? What did I not ask you that I should have?
Gregg Kimmer (35:05):
Nothing. You've been very comprehensive in your questions. One statement I'll make is that I have intentionally devoted my career to what I do. If you think about it, you and I, everybody we've worked with over the years, Matt, they could do other things with their careers. I choose to be in this business because again, the gratification of helping this population, it just wakes me up every day with a fire in my belly, frankly. And I take a lot of pride in saying that.
Matt Feret (35:33):
Gregg, thanks for being on. It's been a blast. Hope to have you on again.
Gregg Kimmer (35:36):
Matt, thank you again. I hope to be on soon. It's been a pleasure.
Matt Feret (35:39):
Thanks, Gregg. Be sure to check out The Matt Feret Show website at www.themattferetshow.com. Until next time, to your Wealth, Wisdom, and Wellness, I'm Matt Feret and thanks for tuning in.
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Matt Feret is the host of The Matt Feret Show, which focuses on the health, wealth and wellness of retirees, people over fifty-five and caregivers helping loved ones. He’s also the author of the book series, Prepare for Medicare – The Insider’s Guide to Buying Medicare Insurance.
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