From Tom's Desk
Think of risk codes as one more form of digital currency---kinda like Bitcoin.
In fact, you can call them “Riskcoin.”
Bitcoin and “Riskcoin” have a lot in common:
Both exist only in the virtual world.
To "mine" on a large scale, both require the use of computers.
Mining for either has created a specialized class of data wizards dedicated to their efficient creation (I should know, I'm one of them).
As their perceived value increases, an enormous amount of resources are being dedicated to their recovery.
The numbers of both are limited:
- The number of Bitcoin is limited by design to 23 million. And the value of bitcoin infinite--- limited only by what someone is willing to pay.
- The number of Riskcoin is also limited---in it's case by the number of risk diagnosis in the population of patients covered by Medicare Advantage.
However, there are some important differences---and herein lies the lesson.
CMS adjusts the value of risk codes every year, compensating for the efforts of "mass mining." In addition, the amount of money associated with each risk code draws from a fixed pool of dollars as determined by CMS.
The more RiskCoins are created, the less each one is worth.
So the mad rush to "mine" so many Riskcoin is making each one less valuable.
But the differences are even more profound:
- Once a Bitcoin is "mined", it stays in existence---nothing more needs to be done.
- Once a Riskcoin is “mined," it disappears after a year and resources have to be consumed to conjure it into existence again---requiring an extensive permanent infrastructure to maintain it's value.
And worst of all:
- Once you have a Bitcoin, you don't have to spend it on anything unless you wish.
- Once you have a Riskcoin, your going to have to spend a certain number every year purchasing healthcare---a further "tax" on their value.
The "mass mining" strategy in the Medicare Advantage space is getting pretty crowded
Set up a Medicare Advantage plan, generate as many Riskcoin as you can, encourage enrollment by sharing some of the revenue with beneficiaries in the form of extra benefits.
And leave cost control to the failed strategies of the past.
Your strategy is clear.
Be a contrarian
Find the sweet spot of getting the most Riskcoin for the least cost. And then invest most of your effort in making sure they're spent efficiently.
Don't pay for a "mining" infrastructure---build an "efficient spending" one.
When the Riskcoin bubble pops, your's will be one of the last plans standing
That's how you win at the Riskcoin game