CVS is willing to dump 10% of its Medicare Advantage members next year

Duaine

Guru
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CVS Health is preparing to make significant changes to its 2025 Medicare Advantage plans, which could potentially drive away 10% of its membership, the company’s chief financial officer said at an investment banking conference Tuesday.

“The goal for next year is margin over membership,” CVS CFO Tom Cowhey said at the conference, hosted by Bank of America. “Could we lose up to 10% of our existing Medicare members next year? That’s entirely possible. And that’s OK, because we need to get this business back on track.”

I just want to start by saying and acknowledge that we're very disappointed by our first quarter results. Frankly, just not an acceptable level of performance. Karen and I are both taking this very personally. And we're rallying the teams to deliver the results that you should expect from us. We continue to believe that Medicare Advantage can be a good and important business for our franchise. And unfortunately, it's just going to take us a couple of years to get it back on track. But we're going to start that process with our 2025 bids that go in just a few weeks.

But Medicare Advantage is only one of our businesses. And I just want to make sure that while we recognize that is a business that requires significant attention and focus to achieve expected performance, we are continuing to execute on other fronts, whether that's Cordavis, whether that's the strength that we saw in the pharmacy and consumer wellness business inside the first quarter, where scripts once again grew well in excess of the market, whether that's the innovative products that we're launching with CostVantage and TrueCost and the reception that we've seen from them out in the marketplace, whether that's Signify having one of its strongest quarters of IHE volumes in history or the strong growth that we saw in patients at Oak Street, which was one of the best years that they've had since the pandemic started. We do continue to execute in other places. But we are focused on ensuring that Medicare Advantage gets back on the right trajectory.

https://seekingalpha.com/article/46...rities-2024-health-care-conference-transcript
 
Exactly what i’ve been saying . Massive movement next yr . Anyone who doesn’t believe big commission cuts for agents and big big cuts in mapd overrides aren’t on the table is in fantasy land . Aetna’s already saying they could lose 10% of their members and margins are all that matters . That means cuts everywhere including agent comp and overrides .
 
Exactly what i’ve been saying . Massive movement next yr . Anyone who doesn’t believe big commission cuts for agents and big big cuts in mapd overrides aren’t on the table is in fantasy land . Aetna’s already saying they could lose 10% of their members and margins are all that matters . That means cuts everywhere including agent comp and overrides .

You seriously think they will be cutting commissions after announcing they are giving us 100 more? I am more worried about them changing renewals schedules more than anything.CMS should restrict advancements on commissions.This would keep out more of the riff raff in the industry and save financing cost to carriers that they could use for benefits.
 
Exactly what i’ve been saying . Massive movement next yr . Anyone who doesn’t believe big commission cuts for agents and big big cuts in mapd overrides aren’t on the table is in fantasy land . Aetna’s already saying they could lose 10% of their members and margins are all that matters . That means cuts everywhere including agent comp and overrides .

I definitely don't think they'll cut commissions, especially not after CMS announcing the huge raise in the industry. If they cut agent comps, it would be suicidal and idiotic. Less greedy companies would massively benefit, and they would lose WAY more than 10% of business. There would be way too much of a non-competitive angle/skew between them and other companies.

Me personally....they cut agent comps, then I'm moving my ENTIRE book. I know many other agents will do the same. I work way too hard to put up with this crap. They'll be losing way more than 10%. Brokers are a cheap benefit. There's so many easier ways to generate more money.

To be honest, I think this CFO's reaction is misguided and short-sighted. One of the main reasons they lost some money is because levels of hospital utilization got back to normal pre-pandemic levels. Read that again....things just got back to NORMAL. I'm definitely not happy with anything I heard from that CFO.

To me it just screamed "greed" and blowing shareholders. Not to borrow a line from the "Irishman" movie, but it sounded like he "might be demonstrating a failure to show appreciation" for what they have. This past year, the Medicare Advantage side of their business grew immensely and was IMMENSELY profitable.

These companies enjoyed a FEAST of insane profits from 2020 up until about 7 months ago, because people were avoiding hospitals. Keep in mind, the company still saw extreme growth in Medicare Advantage, and they were still very profitable for the year.

It just wasn't AS MUCH as some clearly misinformed and unknowledgeable bozo empty suit forecasted it would be. They got it wrong because they didn't understand what was going on in the industry. They should've understood that hospitals would eventually come back to normal.....DUH! So now that forecast created irrational investor panic, and the CEO and CFO think they need to make tons of moves.

My guess is this CFO probably will never see this, but if any of his people do, I would HIGHLY caution against getting too drastic in your approach. Once you piss the brokers off, believe me, they remember it indefinitely. And I feel a need to remind them that we do write ALL other lines of their business, too.

The problem with CFO's is they are strictly numbers people and have strictly numbers minds. They don't understand the psychology aspect of their misguided moves, and the negative domino-like fallout that may occur from such moves.

Overall, I've had no problems with Aetna as a broker, and none with my clients, but they need to make sure that stays that way.

Brokers are what generate the vast majority of your money, not the members. You only have most of your members because of the brokers. I've got over 350 clients with Aetna, and I could've (and could) easily have placed or place them with any other comparable company.

I mean, hey, if you guys don't want business, then I'll be happy to write other companies....and not just in the Medicare Advantage arena, either. There's PLENTY of companies out there. Capisce?
 
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It'll be fine.

Aetna will pull back. Humana will too. UHC will fight with 30 more hospitals. Med Supp will go up.

Nothing will look "Better" though some will stay the same.

It might be the best year ever to tell people: no changes are recommended due to volatility.

Then sit back and actually see our families in October and November?
 
Believe it or not brokers only generate 30% of all Medicare sales yearly .Im talking non captive brokers . The thing is you might be moving much of your books anyway . The $100 increase in 2025 is only for new to Medicare . On the cuts I’m thinking more the fmo to be honest .There’s so much fat in there . I think there’s a good possibility some carriers cut comp . If they have the best products you still must sell them or your plan will be replaced .But another question is carriers could freeze renewals like the old days . If no marketing money from carriers I’ll sure as hell be getting it some how from the fmo’s overrides . Everything still up in the air as no carrier has commented Jack on anything .We’ll see what 2025 brings . I didn’t write any devoted last yr but they kicked butt . There expanding again in 2025 so they could be the go to carrier in 25 . They had great products last yr but I was scared of there new to the mkt and buying business
 
It'll be fine.

Aetna will pull back. Humana will too. UHC will fight with 30 more hospitals. Med Supp will go up.

Nothing will look "Better" though some will stay the same.

It might be the best year ever to tell people: no changes are recommended due to volatility.

Then sit back and actually see our families in October and November?
Let’s save this post “ some will stay the same “ . If only because of the part D all will change . But I truely hope you’re right .
 
Believe it or not brokers only generate 30% of all Medicare sales yearly .Im talking non captive brokers . The thing is you might be moving much of your books anyway . The $100 increase in 2025 is only for new to Medicare . On the cuts I’m thinking more the fmo to be honest .There’s so much fat in there . I think there’s a good possibility some carriers cut comp . If they have the best products you still must sell them or your plan will be replaced .But another question is carriers could freeze renewals like the old days . If no marketing money from carriers I’ll sure as hell be getting it some how from the fmo’s overrides . Everything still up in the air as no carrier has commented Jack on anything .We’ll see what 2025 brings . I didn’t write any devoted last yr but they kicked butt . There expanding again in 2025 so they could be the go to carrier in 25 . They had great products last yr but I was scared of there new to the mkt and buying business

But it is still 50.00 more for replacements and renewals that already pay FMV unless there is new information i am not aware of.Carriers like Humana and Aetna are prepared to lose members because of the upcoming ANOC but they will still want to add new members in 2025 on plan designs that can be profitable so IMHO the last thing they will do is cut commissions.The investors in Devoted can/will only hold out so long before they sell or pull the plug so the more years that go by to more likely that the next year will be the year they sell and the carrier that buys them guts the benefits- putting to many egg rollments in that basket is getting riskier.
 
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