Medicare Advantage plans continue to gain traction among skilled nursing residents and other long-term care patients, and one of the world’s biggest companies is poised to throw its hat into the ring.
The New York City-based insurer Oscar Health announced last week that Google’s parent company, Alphabet Inc., plans to invest $375 million into the technology-driven health care business.
Eventually, Oscar Health hopes to use the funding to propel it into the MA market, CEO Mario Schlosser said in a statement provided to Skilled Nursing News.
“Oscar will accelerate the pursuit of its mission: to make our health care system work for consumers,” Schlosser, who co-founded Oscar Health in 2012, said. “We will continue to build a member experience that lowers costs and improves care, and to bring Oscar to more people — deepening our expansion into the individual and small-business markets while entering a new business segment, Medicare Advantage, in 2020.”
Since the Affordable Care Act was passed in 2010, MA enrollment has grown by more than 70%, according to the Kaiser Family Foundation. As of last year, about one in three Medicare beneficiaries — about 19 million beneficiaries in total — were enrolled in MA plans, with some markets seeing even higher levels of penetration.
The rise of MA has represented something of a challenge for skilled nursing operators, as the private insurers that operate the plans tend to offer lower reimbursements and demand shorter lengths of stay than traditional Medicare. For instance, according to the most recent set of data from the National Investment Centers for Seniors Housing & Care (NIC), managed Medicare revenue per patient day sat at $431 nationwide during the first quarter of 2018, as compared to $522 for regular Medicare reimbursements.
To date, the company has raised at least $1.3 billion in funding, according to investment tracker Crunchbase. Beyond the newly announced investment, Oscar Health and Alphabet do not have any deeper ties at this point, Schlosser told the magazine Wired.
Oscar Health may have its sights set on MA, but statistics suggest that’s a tough market to enter — and one dominated by just a handful of key players. In 17 states, one company accounts for more than half of all MA enrollment, according to Kaiser Family Foundation. The move also represents a shift away from Oscar Health’s core business: The company has been more widely known for its expansion into the individual insurance business under Obamacare.
Additionally, Oscar Health’s future competitors in the market include UnitedHealthcare and Humana, which combined to account for about 40% of MA enrollment in 2017. Competitors also include insurance giants Aetna and Cigna, with several other prominent companies eyeing MA expansions.
Written by Robert Holly