In the past few years, there have been frequent headlines about investors spending huge sums of money to acquire providers that focus on Medicare Advantage and investing cash in start-up insurance companies that promise to disrupt the $350 billion market. At the same time, the number of new companies seeking to gain a foothold in the growing patient population is jaw-dropping.

All this raises a question: Is there a bubble in the moving average market? If this is the case, then some companies that are rapidly growing today may risk a decline in their valuations if they violate future regulations or suffer huge fines after government audits. This fate has come to some start-ups that have entered the public market at high valuations but their stock prices have cooled.

Ari Gottlieb, head of A2 Strategy Group, said: “If you think that valuations are at a peak, our country has gone bankrupt.” “Because the amount we spend on healthcare is absurd to justify these valuations. “

Alignment Healthcare CEO John Kao said that no matter what happens, capitalism will bring winners and losers, and not all companies are destined to succeed in this crowded market. Although Alignment’s stock price has fallen nearly 21% since the MA-insurtech IPO in March, the startup has retained the most value among all other young insurance companies and many value-based healthcare providers that went public this year .

“We do expect a reorganization, and this has already begun. It can be said that wheat is separating from the chaff,” Gao said, adding: “It’s kind of like, if the bubble will burst more next year, then I don’t Know how much these things can drop.”

Take Miami-based Cano Health as an example. This is a primary care provider focused on MA and Medicaid, which was valued at $4.4 billion when it went public this summer through a special purpose acquisition company. The company declined to comment, and its share price has fallen 37% from its debut to December 10. Despite this, Cano has been buying heavily in South Florida, acquiring University Health Care for $600 million, and then Doctors Medical Center for $300 million.

Another example is Clover Health, an insurtech company focused on MA. Since going public at the beginning of this year through a special purpose acquisition company worth US$3.7 billion, its share price has fallen by nearly 72% as of December 10th. The memestock startup, backed by social media investor Chamath Palihapitiya, aims to differentiate itself through its extensive network methods, claiming that its Clover AI Assistant technology platform can guarantee the high quality and low cost of any doctor that a patient visits. President Andrew Toy declined to comment on the number of doctors in the Clover network. The company provides clinicians with this technology for free—even those who have not contracted with it—and pays an average of $200 for each doctor visit using the technology.

“We want doctors to focus on accuracy; we don’t motivate them to code up or down,” Toy said.

At the same time, the company relies on the Medicare and Medicaid Service Center’s direct contract plan, which invites private insurance companies to manage the care of traditional medical insurance enrollees. More than half of Clover’s revenue comes from the program. Toy said this is the future of MA. CMS banned new entrants from participating earlier this year.

Critics say that Clover’s ultimate strategy is to use the plan to transform traditional health insurance registrants into members of their preferred privatization provider organization, claiming that its technology will automatically encode each patient’s condition and recommend doctors to do so. Unnecessary testing.

“We really see ourselves as a medical insurance company, not an MA,” Toy said. “We help people who are eligible for medical insurance. We use Clover Assistant, and we use the same method. Many other MA companies don’t do this because when you adopt a narrow network strategy, it is difficult to turn it into a primitive medical service that is charged for service. Insurance. Because we have adopted a broad network strategy, it works for us. It’s not exactly the same, but there is more organic growth shifting to fee-for-service.”

More enforcement is coming

A major question in this debate is whether these companies really provide better care for the elderly for less money. For this reason, there are signs of frustration.

A recent report by the Office of the Inspector General of the Department of Health and Human Services noted that 20 MA insurance companies accounted for more than half of the $9.2 billion in federal medical expenses that beneficiaries may not need or receive in 2016. UnitedHealthcare’s 22% of federal investigators who participated in the MA stated that by listing conditions that were not verified in the medical claim, registrants generated 40% of the payments that year.

The US Department of Justice has been intervening in whistleblower lawsuits related to the MA project, including projects run by Independent Health and Kaiser Permanente. OIG’s audit accused Anthem and Humana of misrepresenting the health of their members in order to defraud the government of billions of dollars.

Greg Hagood, senior managing director of Solic Capital Advisors, said: “It looks like people are already very good at playing with the system.”

According to data from the Medical Insurance Payment Advisory Committee, by 2021, medical insurance will pay 104% more to the MA plan than traditional medical insurance.

Some MA providers believe that this is because their patients are more severely ill, have lower incomes, and are more likely to be members of minority groups compared to service-based health insurance. A recent Federal Fund report refuted this claim, finding that there were no significant differences between MA insured persons and traditional medical insurance insured persons in terms of race, income, or chronic disease. The same report found that although MA members received more care management services, members of the two programs visited hospitals and emergency rooms at the same frequency.

Gretchen Jacobson, the vice president of the Federal Fund for Medicare and the author of the report, told Modern Healthcare in October that the similarity of patient outcomes and profiles raises the question of why the MA program makes the government more expensive Medical insurance charged by service.

“If the results are the same, how valuable are these additional services?” Jacobson said. “It is very important for governments and policy makers to evaluate this because the current Medicare Advantage plan pays more than the cost of providing the same care to people with traditional Medicare.”

Other MA providers argue that if the MA does not provide attractive offers to patients, the number of seniors participating in the program will not increase.

One thing is certain: the popularity of MA, coupled with pressure from insurance companies, may prevent lawmakers from making major changes to the plan. More than a dozen U.S. senators from both parties wrote to CMS in October, and they were “always ready” to protect Medicare Advantage from salary cuts.

“Change to Medicare Advantage is probably one of the hardest things to do, because it involves very large funds and very large businesses,” said Hagood, “and they use the retired population as a bargaining chip.”

Eric Klein, partner of Sheppard Mullin, stated that there is not enough political will to oversee MA’s national healthcare practices through the “front door”-large-scale legislative changes.

“We will see more law enforcement activities,” he said. “We will also see more regulatory changes. This will be gradual. They will accept it bit by bit.”

As far as Klein is concerned, he disagrees that the market segment is in a bubble. On the contrary, he believes that this is just catching up with the supply bottleneck that has existed for many years, especially since the Affordable Care Act and the subsequent presidential administration shifted its focus to value-based healthcare. In any case, he expects some new entrants to fail.

Mike Pykosz, chief executive officer of Oak Street Health, said he thinks the influx of new MA players is “very exciting.” His company’s approximately 100 clinics cannot actually handle more than 60 million medical insurance patients.

“Some will succeed—I am very confident that Oak Street will succeed—some may not,” Pykosz said. “But we need that. We need that level of innovation. This is great for the country. Ten years from now, our situation will be much better for the elderly and the care they receive, so we are in this country. The situation will be much better.”