RADAR on Medicare Advantage

Just a month shy of the bid deadline for the 2023 plan year, CMS on April 29 finalized most provisions of a sweeping Medicare Advantage and Part D rule that was proposed in January. Those provisions included restoring detailed medical loss ratio (MLR) reporting requirements, requiring MA Special Needs Plans to incorporate certain questions on social risk factors into health risk assessments, and finalizing a pathway to allow for star ratings to reflect a Dual Eligible SNP’s local performance. But one Part D provision regarding pharmacy direct and indirect remuneration (DIR) was notably delayed, allowing plans, pharmacies and pharmacy benefit managers time to renegotiate pharmacy pacts. 

“Generally speaking, the rule wasn’t surprising. CMS largely did what they proposed. I think the major concession that plans and PBMs were concerned about was the start date of the pharmacy DIR change, and they had that addressed. But by and large this rule was consistent with CMS’s goals of raising the bar for what it means to be a SNP and for reducing costs at point of sale for seniors” starting in 2024, says Tom Kornfield, senior consultant with Avalere.

As Medicare Advantage insurers face increasing scrutiny from lawmakers over coding practices and a pending pay boost of 8.5% next year, a new HHS Office of Inspector General report on rates of prior authorization and payment denials in MA doesn’t do much to help their case. Although it was based on just a weeklong sample of denial cases, the report adds to a growing body of evidence that the prior authorization process in MA is ripe for improvement and in need of either more guidance from CMS and/or stronger oversight.

Receiving widespread coverage at press time, starting with a New York Times article summarizing it as “saying that insurers deny tens of thousands of authorization requests annually,” OIG on April 28 released a report titled, “Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care.” The report immediately drew praise from providers, such as the American Medical Association (AMA), which issued a statement agreeing with federal investigators’ recommendations on reining in inappropriate denials. But AMA argued that more needs to be done, such as passing a bipartisan bill that aims to establish new electronic prior authorization (PA) requirements on MA insurers.

Better-than-expected first-quarter 2022 earnings aided by Medicare open enrollment successes and the extension of the public health emergency (PHE) drove several insurers at press time to raise their earnings guidance for the year. Some, however, approached their projections with caution as variant-driven surges in the COVID-19 pandemic continue to create uncertainty around utilization.

Reporting first-quarter earnings on April 27, Humana Inc. said its results from the latest Medicare Annual Election Period (AEP) were slightly better than projected and it is making progress on a $1 billion value creation plan unveiled last quarter that will allow the company to further enhance its Medicare offerings. For the AEP that ended Dec. 7, improvements were “driven by higher sales and improved voluntary termination rates,” explained President and CEO Bruce Broussard during an April 27 conference call to discuss recent quarterly earnings. Broussard also provided a detailed update on Humana’s efforts to improve the sales experience through its various distribution channels.