Radar on Medicare Advantage

Citing “substantial and unmitigable costs” that were driven partly by increased risk scores, CMS on Dec. 16 said it was shutting down the Medicare Advantage Value-Based Insurance Design (VBID) model at the end of 2025. The surprise move takes away MA plans’ primary method of offering reduced Part D cost sharing and raises questions about the stability of benefits for dual eligibles, since half of participating plans are Dual Eligible Special Needs Plans (D-SNPs).

CMS first tested the model on a limited basis in 2017, allowing sponsors to offer reduced cost sharing for medications and offer high-value services to beneficiaries with select chronic conditions. Phase II of the model, launched in 2020, extended it to all states and territories and allowed all types of Special Needs Plans to participate. Model enhancements included permitting insurers to condition benefits on socioeconomic status (SES) and offering additional supplemental benefits, including non-primarily health-related benefits such as non-medical transportation and food and produce.

For the Medicare Advantage industry, 2024 may go down in history as a year of unprecedented and sudden change, from a series of lawsuits sparking Star Ratings recalculations and delaying planned changes to broker compensation, to insurers’ inability to manage medical costs in the face of increasing utilization. And in a dark moment that will have a lasting impact on MA and the broader industry, the fatal shooting of UnitedHealthcare CEO Brian Thompson elevated the continued unrest over insurers’ use of prior authorization to deny care.

And those were just a few of the curveballs thrown at the MA industry. In a special look back at 2024, industry experts who spoke to AIS Health, a division of MMIT, identify the most critical market shifts this year and the lessons learned by insurers.

Amid a shaky year for the public sector, managed Medicaid contract wins are crucial for payers looking to secure revenue streams. The managed Medicaid population has shrunk to 65.7 million beneficiaries following months of post-COVID eligibility redeterminations, down from more than 75 million before disenrollment began, according to AIS’s Directory of Health Plans (DHP). This could be one reason why the latest requests for proposals (RFPs) have been ultracompetitive, sparking contentious legal challenges from payers that are not selected. 

Georgia is the latest state to unveil a round of contract awards, selecting four MCOs that will begin service in 2026 if finalized. The awards represent a significant shake-up for the state, and include just one incumbent, CareSource. Elevance Health, Inc.’s Amerigroup Georgia and Centene Corp.’s Peach State Health Plan currently serve 75% of Georgia’s managed Medicaid population combined, according to DHP. Slated to join the program in their place are Molina Healthcare, Inc., Humana Inc. and UnitedHealthcare. Whether Elevance or Centene plan to contest the awards remains to be seen — the state continued to extend the deadline to file protests as of AIS Health press time. 

In the face of multiple challenges that led to hard lessons learned for Medicare Advantage insurers, industry experts agree that 2024 was the year MA insurers made meaningful progress on the health equity front — delivering on a major policy goal of President Joe Biden.

“While health equity has been a talking point for years, the Biden administration implemented tangible steps that required plans to take action,” observes Jessica Assefa, president and senior consultant with Ameropia Advisors, LLC. A prime example of that is the removal of the reward factor from the Star Ratings program and its replacement with the Health Equity Index (HEI). Starting in 2027, qualifying Parts C and D sponsors will be rewarded if they perform well on the HEI. “This shift rewards plans for actively reducing disparities among disadvantaged populations, creating a real incentive for plans and vendors to focus on underserved communities,” says Assefa.

CMS paid more than $1.3 billion to Medicare Advantage plans for veteran members who did not use any Medicare services in 2020, observes a new study published in Health Affairs. The latest findings add to a growing body of research on duplicative spending that raises important questions around program integrity, which is likely to be a focus of HHS under President-elect Donald Trump.  

Researchers from Deloitte, Harvard University and Boston University found that from 2016 to 2022, the number of veterans enrolling in MA grew steadily alongside the rest of the senior population, and there was a notable increase in plans that specifically targeted veteran enrollees. These high-veteran MA plans (defined by researchers as having veteran membership greater than 20%) now enroll a substantial portion of the veteran MA population. By 2022, high-veteran plans accounted for 6.1% of all MA plans but enrolled 18.3% of the veteran MA population.