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Medicare Will Recalculate Quality Ratings of Medicare Advantage Plans

Plans with high ratings can get lucrative bonus payments. A redo would mean hundreds of millions of dollars in additional payments.

The federal government plans to redo this year’s quality ratings of private Medicare plans, according to people familiar with the matter, a move that would deliver hundreds of millions in additional bonus payments to insurers next year.

The decision by the Centers for Medicare and Medicaid Services could be announced as soon as Thursday. It comes in the wake of two court rulings that faulted the agency’s ratings, in cases filed by insurers SCAN Health Plan and Elevance Health.

By paving the way for higher payments, the CMS move would provide a win for Medicare insurers at a time when their business is under pressure from rising healthcare costs and rates for next year that came in lower than investors had expected.

At issue are quality ratings of privately run Medicare Advantage health plans, which CMS ranks on a scale of one to five stars. Higher quality by CMS measures equals more stars.

Plans with high ratings get bonus payments that can have a major impact on their financial success. The star bonuses are important to the Medicare Advantage plans’ competitive positioning, because the money can be used to bolster benefits that entice seniors to enroll.

Industry officials said the impact of the recalculation would vary by plan, but they expected the overall effect would be to raise bonus payments.

“Plans are going to go to market this fall with more generous benefits and field products that will be more attractive to seniors because they will have access to higher-quality bonus payments,” said SCAN Chief Executive Sachin Jain.

SCAN, a nonprofit, and Elevance, one of the biggest Medicare insurers, won their challenges of CMS’s ratings calculations last week.

A federal judge first ruled in the SCAN case that the Medicare agency had erred in implementing certain technical changes for this year’s quality ratings, which affect payments in 2025. The judge ordered the agency to recalculate SCAN’s ratings, a move the company said would raise its 2025 Medicare payments by about $250 million.

A different federal judge made a similar finding a few days later in a case brought by Elevance, though the judge limited its impact to one particular Elevance plan. The company has said the decline in its 2024 Medicare quality ratings would reduce its bonus payments by about $310 million.

Under the new decision, the Medicare agency would be expected to do a similar recalculation across the entire industry. Betsy Seals, chief executive of Rebellis Group, a Medicare Advantage consulting firm, said that when she analyzed the impact of a redo for clients, she found all of their bonuses increased.

SCAN executives estimated that such a move could result in more than $1 billion in additional payments to insurers, affecting about 60 Medicare contracts covering more than a million members. The executives said the impact will vary by insurer, but the changes shouldn’t decrease any plan’s bonus payments.

Raymond James analysts estimated the current star ratings cost Humana about $150 million in bonus payments and UnitedHealth Group $70 million in bonuses.

However, the timing of the CMS decision would probably create headaches for both the insurers and the agency. Insurers have already submitted their Medicare plan bids for 2025, and they would have to be tweaked and resubmitted to account for the new quality ratings.

Lawsuit claims the company’s hiring and performance-review practices routinely slant toward men

Two female Apple AAPL -0.18%decrease; red down pointing triangle employees filed a proposed class-action lawsuit Thursday alleging the company pays women lower salaries than men for similar work.

The suit, filed in a San Francisco state court, targets Apple’s hiring practices used to set compensation, as well as the company’s performance-review policies. It is the latest in a series of pay equity lawsuits against major corporations, including large tech giants, that allege they underpay women and minorities.

The lawsuit seeks to represent a class of 12,000 women employed at Apple across several departments who have worked there since 2020. The plaintiffs allege that the company is violating the California equal pay, employment, and unfair business practice laws. The business practice law limits claims to a four-year period.

Apple didn’t immediately return a request for comment.

Google and Oracle settled similar claims in California in recent years, pushing similar arguments about pay policies for new hires. Google agreed to pay 15,500 women $118 million to settle its case in 2022 and Oracle agreed to pay $25 million for 4,000 female workers earlier this year. The companies didn’t admit wrongdoing.

One of the lead attorneys on those cases is also representing the plaintiffs against Apple.

Central to the new lawsuit is how Apple sets a new hire’s compensation. Prior to 2018, Apple asked applicants to provide their previous salaries to determine pay, the suit says.

When California passed a 2018 law that banned employers from considering prior pay to set compensation, Apple asked applicants about pay expectations instead, the suit says. The plaintiffs’ lawyers argue that the practice of asking about pay expectations perpetuates gender discrimination because women have historically been paid less than men.

“If you do pay women less, you can’t defend it by saying they were willing to take less money,” said James Finberg, one of the plaintiffs’ attorneys.

One of the plaintiffs, Justina Jong, said she discovered a male co-worker’s W2 left behind on a printer in Apple’s Sunnyvale, Calif., branch. Though she had the same responsibilities as her male co-worker, she saw his base salary in the tax filing was $10,000 more than what she made, she said. She discovered the discrepancy several years ago, about midway through her decade-plus career at Apple, where she held several roles in sales, training, and marketing.

“I felt terrible and was shocked as well. I saw myself as a hardworking person, and collaborative, providing a lot of solutions for the team,” Jong said in an interview. “I thought to myself, ‘Maybe if I work harder, they will see that I’m worth just as much or more.’”

The lawsuit alleges that when Apple hired Jong in 2013, it paid her the same base salary she earned at her previous job. In the years following, the company never gave her the kind of raise that put her on equal footing with her male peers, the suit says.

Jong said it took her years to decide to challenge the discrepancy and sign onto the lawsuit. She said she was spurred by stories about unequal pay from other women at the company.

During the Covid-19 pandemic, Apple faced a rise in employee activism. Apple workers organized to form a group called Apple Too to mirror the #MeToo movement, which gathered stories of discrimination and pushed the company to change its pay practices. The movement led to some retail stores forming unions.

The other named plaintiff, Amina Salgado, has worked at Apple since 2012 in various roles, including as a manager in the AppleCare division in the company’s office near Sacramento. She discovered she was paid less than men in similar roles, and she complained several times about the discrepancy, according to the lawsuit. Apple hired a third party to investigate, and after the report concluded she was right, the company increased her pay. She didn’t get back pay, the lawsuit says.

The suit also claims that Apple uses biased criteria in its performance-review system. Men routinely receive higher ratings for the discretionary categories of leadership and teamwork, leading to better reviews for men, the plaintiffs’ lawyers argue.

Here’s how VC Nikhil Basu Trivedi beat out hoards of other VCs to win the deal

Among all the young AI startups being ruthlessly pursued by VCs these days, GPTZero has already grown into profitability in its first year and a half of life, generating millions in revenue. Founded by 24-year-old Edward Tian and 26-year-old Alex Cui, who’ve been friends since high school, GPTZero offers a detection tool that helps identify whether a piece of content was AI generated.

The founders have chosen to take a $10 million “preemptive” Series A led by Footwork co-founder Nikhil Basu Trivedi, the team has exclusively told TechCrunch. (“Preemptive” is VC-speak for when an investor nabs a deal before the founders were trying to raise.)

This is quite the coup for Basu Trivedi. GPTZero has been watched by top VC firms practically since Tian launched an initial version as a web app in December 2022, and 30,000 people instantly swarmed it, crashing its Streamlit-hosted website. (Adrien Treuille, Streamlit’s co-founder, who sold to Snowflake for $800 million, later became an angel investor, Tian says.) The company formally launched in January 2023.

Throughout 2024, as its customer base grew, the young founders fielded four to five calls from VCs per week, they said.

GPTZero grew 500% in ARR in the last six months, the founders told TechCrunch, adding that its user base has grown from 1 million to 4 million in the last 12 months. This makes it one of the fast-growing consumer apps of the year, by some measures.

The company has been profitable for the last several months, they said, adding that they have more money in the bank than the total raised in the lifetime of the company. To put a number to that: more than $13 million between its $3.5 million seed and the new $10 million.

And the growth continues. Users and revenue have “more than doubled, maybe even tripled, since January,” Basu Trivedi said. While they didn’t comment on valuation, based on a typical 20% Series A round, the deal has valued the company somewhere around the $50 million mark pre-money. Other investors in the round include education-focused (and women-led) Reach Capital; Jack Altman’s Alt Capital; Uncork Capital (Jeff Clavier’s fund); and Neo (Ali Partovi’s fund).

How the VC won the deal

Basu Trivedi, a Princeton alumni, won the lead on this deal by playing the long game. He met Tian in 2022, before GPTZero craziness, during an annual event where a small group of Princeton students visit Silicon Valley companies. Basu Trivedi always takes the group on a hike of the Stanford Dish.

Tian developed GPTZero while he was studying computer science, natural language processing and journalism at the Ivy League school. During internships for the BBC, and later at The New York Times, he wrote code that helped journalists identify AI-generated content.

After the wild response his initial web app got, Tian reached out to his buddy, Cui, for help. Cui has a master’s in machine learning from the University of Toronto and dropped out of his doctorate program to become a co-founder.

The two rewrote the app into its current standalone platform and raised the $3.5 million in seed after reaching about 1.5 million users in its first five months. This came mostly from angel investors like Tom Glocer, former CEO of Reuters; Russ Salakhutdinov, Carnegie Mellon University professor and ex-director of AI research at Apple (after he sold his startup, Perceptual Machines, to Apple in 2016); and Mark Thompson, CNN’s CEO and former New York Times CEO.

Basu Trivedi saw how GPTZero was gaining press and impressive angels — and heard the rumblings about it among the VC scuttlebutt. As a seed investor who backed companies like Canva, ClassDojo and Frame.io, he knew a hot company when he saw one.

He texted Tian in January 2023 to check in. He wooed the founders with his network and product know-how from his fast-growth companies like Canva, and with the background of his fund’s co-founder, Mike Smith, former COO of Stitch Fix and Walmart.

Investors with both product and operations experience were what the two 20-something founders were “craving, especially as Alex and I are learning how to build a big company,” Tian said.

To prove the point, shortly after they closed the round, Footwork organized a networking event with AI leaders, including Basu Trivedi’s college classmate Jack Altman, who joined the A round and is brother to OpenAI’s Sam Altman, and Nvidia founder CEO Jensen Huang

“A big data advantage“

GPTZero is far from the only company working to identify AI-generated content. Others include AI Writing Check, Copyleaks, GPT Radar, CatchGPT and Originality.ai.

But many in the AI-detection industry have abysmal accuracy, researchers find. So much so that OpenAI, which was pressured by AI-industry paranoia into launching its own AI detector at the start of 2023, shut the tool down about seven months later in July, after it was widely criticized for how poorly it worked.

Interestingly, when TechCrunch’s Kyle Wiggers did his own experiment with these tools, all of them flunked except GPTZero.

Naturally, GPTZero has its own benchmarks, particularly through a partnership with Penn State researchers, that help it make its case that its tech works well, despite the industry’s general reputation.

Cui says GPTZero is more accurate because it has access to more data and has built its own LLM models using the most advanced open source tools, which it won’t disclose.

“We have a big data advantage. We have millions of examples of text that is human versus AI,” Cui said. “We’ve also combined this with some of the best-in-class models and deep learning. We’re actually using language models to detect language models.”

While the startup may be best known for helping teachers detect AI-generated student work (in October, GPTZero landed an agreement with the American Federation of Teachers), its customer base has expanded. It now includes government procurement agencies, grant-writing organizations, hiring managers, and — especially interesting — AI training data labelers.

It turns out, using AI-generated data for AI training “causes model collapse,” Tian says, because teaching a model using fabricated examples isn’t the best way to get it to function in the real world.

Naturally, the young founders have a more grandiose long-term vision. They want to create a new, independent layer of the internet that performs accountability, ensuring that human and AI content is properly attributed.

To that end, the team is currently working on AI hallucination detection. Hallucinations, where the AI presents AI-generated fiction as if it were fact, are the bane of the GenAI industry. The company’s first step toward addressing this is a newly available free AI text copyright check for LLM training datasets. This will help them generate the training data for broader hallucination detection.

“We’re just trying to avoid a world where the entire internet is AI-generated content,” Tian said. “An internet where everybody uses AI doesn’t preserve the opportunity for people to continue contributing creative and original content.”

The luxury giant has teamed with French hotel operator Accor to accelerate the development of ultra-luxury experiences.

Pushing deeper into luxury hospitality and experiences, LVMH Moët Hennessy Louis Vuitton is investing in the Orient Express brand, with ambitious plans to add more trains, sailing ships and hotels.

LVMH revealed a “strategic partnership” with publicly traded French hotel giant Accor SA, which acquired Orient Express in 2022.

Financial terms — including the size of LVMH’s stake — were not disclosed.

Its investment extends to “the company that will operate the future hotels and trains, and in the entity that will own the two sailing ships.”

“The first ship is currently under construction at Chantiers de l’Atlantique, France, and the two groups will continue to search together for a third partner for this new venture,” LVMH and Accor said in a joint statement after the close of trading on the Paris Bourse.

Initially founded by a Belgian rail company, the Orient Express train embarked on its first journey, from Paris to Vienna, in 1883 and eventually extended services across continental Europe through to Istanbul.

“Orient Express has embodied adventure and elegance since its origins,” Bernard Arnault, group chairman and chief executive officer of LVMH, said in a statement. “Its name has become part of our cultural heritage and remains a source of inspiration for the greatest artists.”

He added that the mythic train “epitomizes the art of refined living and the audacity that drives each of our houses. We are delighted to be partnering with Accor to accelerate the renewal of this travel icon. Each of our groups will bring the best of its expertise to take Orient Express to the pinnacle of the art of hospitality.”

(Foreshadowing the deal, in 2016 Dior rebranded an Orient Express train for its 2017 cruise show at Blenheim Palace in England, decking it out with crystal stemware and fine linens embroidered with Blenheim Dior Express logos.)

On Wednesday, LVMH said it would “add its unique expertise in high-quality products and services, illustrated in particular in the world of travel, by the Venice Simplon-Orient-Express train and the five other trains also operated by Belmond around the world.”

LVMH significantly widened its footprint in the hospitality sector with its 2018 acquisition of luxury travel operator Belmond Ltd., owner of the Venice Simplon-Orient-Express train and hotels including the Copacabana Palace in Rio de Janeiro and the Hotel Cipriani in Venice, for $2.6 billion in cash.

Belmond’s other luxury trains are the British Pullman — which boasts a carriage designed by filmmaker Wes Anderson — the Royal Scotsman, the Eastern & Oriental Express in Singapore and Malaysia, and, in South America, the Andean Explorer and the ’20s-style Hiram Bingham.

Wednesday’s announcement thrusts Accor, whose 45 hotel brands operate across more than 110 countries and encompass some 5,600 properties, further into the luxury sphere.

Its luxury and lifestyle division encompasses the Raffles, Fairmont and Potel & Chabot brands, and has “enabled Accor to rejuvenate the experience for clients in search of excellence and distinctiveness,” the statement said.

Sébastien Bazin, chairman and CEO of Accor Group, said Accor is “reinventing the art of travel, discovery and great odysseys” via the Orient Express brand.

“With LVMH today, we are opening a new chapter in this exciting journey, with the ambition of exploring new horizons and embodying the audacity and creative passion that drive our groups,” Bazin said. “We’re delighted to enlist LVMH’s rare expertise to continue pushing the frontiers of this legend and bringing its embodiment to life in an ever more singular way.”

The partnership is expected to yield new ventures for trains, hotels and sailing ships “whose exacting standards will reflect an extraordinary positioning within the travel world,” the statement said. “The renaissance of an historic train and the launch of the first Orient Express sailing ship in 2026 will be the next steps in this renewed impetus.”

In addition, Orient Express plans to open its first hotels in Rome and Venice “while continuing the selective development of its global destinations,” it added.

FRANKFURT, June 12 (Reuters) - German technology group Robert Bosch (ROBG.UL) is open to public listings of certain divisions as it explores financing options for acquisitions, although not as a group or in its core business as an auto supplier, the company chief executive said.

Bosch already has a great deal of expertise on the capital market as an issuer of bonds worth billions, CEO Stefan Hartung said at an event of the ICFW association for business reporters in Frankfurt on Tuesday evening.

But as a group with revenues of over 90 billion euros ($97 billion), the company needs all capital market skills, he added.

"We ourselves are not going to the capital market as Bosch," Hartung said, adding that the legal structure of the group also ruled this out for its business as an auto parts supplier.

This echoed recent comments he made to Manager Magazin, whom he told it was "necessary to have sub-companies listed on the stock exchange" in appropriate areas.

Hartung mapped out Bosch's ambitions to grow in the United States, an underrepresented market in the company's portfolio.

"It is a huge market, and Bosch has to deliver," the CEO said.

Bosch is among the industrial firms competing to acquire heating and ventilation assets worth over $6 billion from Johnson Controls International (JCI.N), opens new tab in the US, sources told Reuters in March.