According to the latest Medicare Shopping and Switching Study from Deft Research, MA switching during the 2024 AEP reached a “multiyear high” of 16%, compared with 15% in the 2023 AEP and 12% in the prior two periods. While previous Deft studies identified increasing levels of frustration with supplemental benefits as a top driver of switching, this year’s changes were “more so due to reductions in benefits and added cost,” says George Dippel, president of Deft Research.
]]>According to the latest Medicare Shopping and Switching Study from Deft Research, MA switching during the 2024 AEP reached a “multiyear high” of 16%, compared with 15% in the 2023 AEP and 12% in the prior two periods. While previous Deft studies identified increasing levels of frustration with supplemental benefits as a top driver of switching, this year’s changes were “more so due to reductions in benefits and added cost,” says George Dippel, president of Deft Research.
Although CMS for 2024 predicted that MA risk scores would improve by an average of 4.4% for an “all-in” projected rate increase of 3.32%, many carriers estimated that changes to the risk adjustment model would lead to a slight reduction in reimbursement that will continue in 2025. For consumers who had a premium-based plan, “that meant they paid a little bit more in premium, they paid a little bit more in max out of pocket, [or] they paid a little bit more in drug deductible,” Dippel tells AIS Health, a division of MMIT. “Consumers don’t like it when they’re asked to pay more. And when you have 43 different plan options in the average county, if your carrier’s asking for more money from you or they reduce benefits, you’ve got choices of where else to go. So that was a big component” of higher switching.
CVS Health Corp.’s Aetna was the obvious winner in the AEP, having added 631,000 lives for growth of 18.9% between October 2023 and February 2024. By sheer volume, Humana Inc. and UnitedHealthcare — which didn’t pursue aggressive geographic expansions or product enhancements — trailed behind Aetna with 182,000 and 150,000 new members, respectively. But by percentage, those additions represented respective AEP increases of just 3.1% and 1.6%.
Aetna’s growth was not surprising, given the breadth of its new MA footprint — which included 255 additional counties — expanded offerings for duals and other product enhancements. According to Dippel, Aetna gained 96% of all net new enrollment, not counting Employer Group Waiver Plans and Dual Eligible Special Needs Plans (D-SNPs). “Whereas other carriers passed on the costs from CMS to consumers, Aetna really strengthened their benefit,” which was supported by a solid network, he says.
While Aetna credits “the combination of compelling core benefits” with attracting new members, Dippel highlights one innovative new offering: a fitness reimbursement benefit. While the allowance amount and frequency of allowance varies by plan, members in select plans can seek reimbursement for things like “new tennis shoes, fishing pole, costs to go golfing, aerobic activity fees.…When you think about that, a lot of seniors are already going to go fishing, golfing, things of that nature…[so] that was a popular bet,” he observes. “It wasn’t the only reason why people moved — they had a very, very strong overall plan — but that I would say was a newer bell and whistle, if you will, that caught a lot of seniors’ attention.”
While Centene Corp. and Elevance Health, Inc. demonstrated the greatest (and expected) enrollment losses among the publicly traded MCOs, New York insurer EmblemHealth, Inc. continued to bleed membership, losing nearly 38,000 members after a 30,000-member decline during the 2023 AEP. The insurer last year told AIS Health it was intentionally reducing its “product suite to focus on high-quality performance and value-based clinical partnerships.” Not counting Vantage Health Plan, Inc. — which sold its Louisiana MA assets to Blue Cross Blue Shield of Louisiana — Blue Shield of California and Long Beach, California-based SCAN Health Plan rounded out the top five AEP losers, serving 16,500 and 8,900 fewer members, respectively.
In the “insurtechs” and startup group, Alignment Health demonstrated above-average growth with the addition of 40,000 lives, including more than 34,000 enrollees in California, according to AIS Health’s analysis.
As of February, Alignment enrolled more than 155,000 MA members; by the end of the year, the company expects to serve between 162,000 and 164,000 members, for 37% growth year over year at the midpoint, according to its Feb. 27 earnings release.
During a call to discuss fourth-quarter and full-year 2023 earnings, Alignment Founder and CEO John Kao said the AEP performance and full-year membership outlook were driven by “focused investments across Stars, member experience, AVA technology enhancements, and sales operations in 2023.” The proprietary predictive care model AVA, he said, “drives an average 800-basis-point improvement in at-risk” medical loss ratio between the first and fifth years of a member’s tenure with the plan. And an improvement in member retention will contribute to “strong returning member” MLR that may be partially offset by new members, which tend to have higher MLRs, he observed.
Kao added that 82% of the insurer’s AEP sales came from plan switchers and that the plan continued to deploy a “disciplined process which balances growth and profitability.” Alignment for 2024 also earned 4 out of 5 stars from CMS, which the company leveraged relative to its competitors. The insurer also has cobranding relationships with Rite Aid Corp. and more recently, Walgreens and Instacart, but Kao did not say to what extent those partnerships drove enrollment.
Fellow MA-focused insurtech Clover Health, meanwhile, saw its membership fall 2.6% to just under 78,000 individuals. Meanwhile, Bright Health Group sold its MA assets to Molina Healthcare, Inc., which contributed to much of the larger insurer’s AEP growth. And despite Oscar Health, Inc. CEO Mark Bertolini’s recent remarks on growing MA, a member notice posted by Holy Cross Health indicates its cobranded plan with Oscar is closed. Oscar as of last year partnered with Holy Cross Health and Memorial Healthcare System in Broward County, Florida, to offer three MA plans serving just under 1,800 members, according to AIS's Directory of Health Plans.
A handful of localized startups also performed at above-industry levels. In Southern California, Clever Care Health Plan grew its MA enrollment by 66% to serve 22,250 enrollees as of February. The Huntington Beach, California-based insurer launched during the 2021 AEP and boasts a “culturally inclusive” and “East meets West” approach to care. According to Clever Care’s website, benefits include a “flexible allowance to pay for 800+ herbal supplements and OTC items such as red ginseng, or bird’s nest, gym memberships, Tai chi, yoga, and many other Eastern wellness therapies,” and “extensive” acupuncture coverage without referrals.
Astiva Health, which began offering MA plans in Orange and San Diego counties in 2021 and recently expanded to Los Angeles, San Bernardino and Riverside to cover the same service area as Clever Care, saw its geographic expansion pay off. Founded in 2020 by cardiologist Tri Nguyen, M.D., Astiva also markets a “culturally responsive approach” to health care that includes multilingual communications. The startup more than doubled its MA enrollment in the AEP, reaching nearly 10,000 members and landing in the top 30 AEP winners, per AIS’s analysis. During a sponsored Bell2Bell podcast, Nguyen said the insurer has a “focus on providing very rich supplemental benefits” and getting enrollees actively involved in a healthy lifestyle.
Devoted Health, one of the only regional startups that didn’t go public in the last couple years, grew its MA membership by nearly 50% with the help of a geographic expansion. Devoted in 2023 grew from five to 13 states, and in October said it was moving from “initial metro areas to bring our all-in-one healthcare to more Medicare beneficiaries” in those states, covering 99 counties in total.
In Ohio, Devoted Health was one of three insurers that significantly increased their market share. The others were Aetna and Medical Mutual of Ohio, which according to DHP, added more than 6,600 lives for an AEP increase of 18%. Meanwhile, provider-sponsored plan AultCare Insurance Co. lost membership — dropping 6% to 13,000 — while other local insurers were relatively stable, like SummaCare, which hovered around 23,000 members, and Paramount Insurance Co., which has plans to merge its 14,000 MA lives with Medical Mutual.
“Reinforcing the adage that ‘all health care is local,’” there’s often more to the story when analyzing enrollment shifts in a given state or metropolitan statistical area, points out Peter Rodes, chief strategy officer with HealthWorksAI. And about half of a plan’s “explainable growth” can be attributed to the competitiveness of their products and provider networks, he tells AIS Health.
HealthWorksAI currently supplies 25 payers with analytical tools to support market research, network optimization and product planning. Relying on five years of historical AEP data, one such solution allows plans to benchmark against their competitors based on various components and uses predictive modeling to estimate what kind of enrollment gains they could achieve by making certain changes. That solution has identified four categories — product, network, marketing and brand — as key drivers of growth.
Using the tool to drill down into Ohio’s shifts, Rodes points out that the winners varied by plan type and that members were attracted to the “true plan value,” or TPV (the firm’s proprietary assessment of a plan’s value). For instance, Medical Mutual and Devoted were the biggest AEP gainers in terms of HMO enrollment, but Aetna won in the HMO-POS category, he observes. There was also a correlation at the state level between growth and the increase in total benefit value offered to beneficiaries, he says. For example, Medical Mutual increased the TPV of its HMO by more than $100 between 2023 and 2024. “A deeper dive could then be done at each of the 88 counties that would demonstrate how the preferences for benefits and plan types were to vary,” he continues. “Adding value and putting it into the ‘right benefits’ to stimulate growth is the name of the game.”
Using its proprietary measure of plan value based on benefit offerings and premiums, Milliman recently estimated that for 2024, MA plans on average enriched their “general enrollment” (i.e., non-Special Needs Plans) by $2.69. That’s compared with an added benefit value of $22.76 from 2022 to 2023.
“Those plans that added value to their benefits package grew enrollment,” remarks Rodes of the Ohio example. The benefits that appeared to drive growth there were monthly premium, inpatient care and urgently needed care, he says. Of the supplemental benefits that were growth drivers, standouts were dental, vision, outpatient hospital services and over-the-counter (OTC) coverage, he adds.
By contrast, Rodes performed the same analysis for Massachusetts, where Aetna, Blue Cross Blue Shield of Massachusetts and Commonwealth Care Alliance (CCA) emerged as the big AEP winners. The benefits that drove growth there were “PCP and specialist, generic drug and gap coverage, as well as inpatient care,” he says. “For supplemental benefits, the typical growth drivers of dental, hearing and vision were present, as well as outpatient services.”
Stable or enhanced dental benefits were a major factor for enrollees who stayed with their same plan between 2023 and 2024, according to Deft. “A third of consumers who have a preventative and comprehensive dental allowance saw that dental allowance improve for 2024, so carriers were loath to really reduce dental,” says Dippel. “That said, they cut other supplemental benefits,” such as OTC, transportation and physical fitness benefits. “Generally speaking, most of the supplemental benefits that were not dental either barely held or saw slight reductions. Carriers preserved dental because it’s so important, and with the government [paying] less money to carriers, some of the things I would call secondary supplemental benefits” were more commonly on the chopping block.
The recent Deft study did not include responses from dual eligible enrollees, whose perspectives will be included in a separate Deft report slated for release this month.
Contact Dippel at gdippel@deftresearch.com and Rodes at peter.rodes@healthworksai.com.
]]>Of the 1.27 million new MA members, 59% chose a plan from a large national carrier. CVS Health Corp.’s Aetna led the pack by a wide margin, adding 631,000 lives and vastly outperforming industry leaders Humana Inc. and UnitedHealthcare, which netted 182,000 and 150,000 new members, respectively. Aetna was aggressive with its 2024 expansion, adding 255 new counties to its footprint and offering new $0 premium plans and expanded products for dual eligibles, among other enhancements. UnitedHealthcare’s and Humana’s growth trailed significantly from the 2023 AEP, when they gained 530,000 and 425,000 members, compared with Aetna’s gain of 115,000.
As anticipated, Centene Corp. saw the biggest losses of any payer during the AEP — more than 167,000 lives — as its Star Ratings woes continued. Elevance Health, Inc. came in at No. 2, losing 42,000 members, though this represents just a 2.1% drop, backing up recent comments from CEO Gail Boudreaux about “roughly flat” MA growth in 2024 as the payer works to address “product sustainability” after experiencing “greater-than-expected attrition in certain markets.” Cigna Healthcare, meanwhile, lost 4,200 members. The insurer in recent weeks inked a deal to sell off its MA business to Health Care Service Corp. (HCSC), which operates five Blue Cross and Blue Shield affiliates in Illinois, Montana, New Mexico, Oklahoma and Texas.
Among the best performing regional insurers were Puerto Rico-based Medical Card System, Inc., Blue Cross Blue Shield of Michigan, Highmark Health and Blue Cross Blue Shield of Louisiana, which picked up roughly 17,000 lives from its acquisition of Vantage Health Plan. HCSC’s five Blues plans netted 41,000 lives combined. Molina Healthcare, Inc. picked up defunct insurtech Bright Health Group’s California MA assets at the end of 2023, which fueled much of its growth. And while Bright and Oscar Health, Inc. dropped out of the MA market completely for 2024, fellow startups Devoted Health and Alignment Health Plan were among the most successful insurers in the entire AEP, both making the top 10 in overall membership gains.
On the state level, some states with historically lower MA penetration rates such as Kansas, Maryland, Montana and Wyoming saw faster growth than others, which has been something of a trend in recent years. Most states had enrollment growth below 5%, which was in line with the national figure. Wyoming is one notable outlier, seeing nearly 30% growth. Actual enrollment numbers in the state are still low, however, hovering under 20,000 lives. Wyoming’s outsize growth could signal payers’ interest in expanding to rural markets as urban areas become more saturated.
]]>From October 2023 to February 2024 — which reflects the full capture of lives enrolled during the AEP, which ran from Oct. 15 through Dec. 7 — CVS Health Corp.’s Aetna increased its MA enrollment by 18.9% and grabbed roughly half of all new enrollment in individual plans, including Dual Eligible Special Needs Plans (D-SNPs). Aetna significantly grew its geographic footprint in both segments, maintained stable provider networks, and on average, featured lower premiums, maximum out-of-pocket costs and drug deductibles in its non-SNP plans.
]]>From October 2023 to February 2024 — which reflects the full capture of lives enrolled during the AEP, which ran from Oct. 15 through Dec. 7 — CVS Health Corp.’s Aetna increased its MA enrollment by 18.9% and grabbed roughly half of all new enrollment in individual plans, including Dual Eligible Special Needs Plans (D-SNPs). Aetna significantly grew its geographic footprint in both segments, maintained stable provider networks, and on average, featured lower premiums, maximum out-of-pocket costs and drug deductibles in its non-SNP plans.
Aetna’s president of Medicare, Terri Swanson, says the insurer believes the “combination of compelling core benefits, stable or reduced out-of-pocket costs and the power of CVS Health assets created differentiated value for Aetna and really resonated with members.” She adds that Aetna designed its 2024 plans with an emphasis on choice, flexibility and the “benefits that matter most” to members.
Every county where Aetna offered MA plans had options that include: $0 monthly premium, $0 primary care copay, and $0 copays for Tier 1 drugs. And every plan included dental, vision and hearing benefits, “which we know are essential to members’ overall health,” Swanson tells AIS Health. Additionally, the insurer leveraged CVS Health’s “unique set of assets,” allowing members to access “a coordinated care ecosystem with choices that are most convenient to them.” These include:
When asked whether Aetna will continue to invest in widely used benefits such as dental and vision, despite unexpected increases in utilization that ate into insurers’ 2023 earnings, Swanson responds: “Every year Aetna has to re-evaluate its products to balance health care costs and utilization along with many other considerations. It’s too soon to comment more specifically on 2025 benefits. However, Aetna will continue to offer compelling, integrated products that deliver value for our Medicare beneficiaries.”
Additionally, its strong “2024 Star Ratings reflect the dedication of the entire Aetna Medicare team to provide exceptional service to our members every day, and that’s something we plan to continue making a priority for years to come,” says Swanson. An estimated 87% of Aetna’s membership is in a 4-star or higher contract this year, resulting in quality bonus revenue in 2025.
Select Health, the managed care arm of Utah-based nonprofit health system Intermountain Health, grew its overall MA enrollment by 12.6%, adding more than 6,300 lives to serve a total of 56,566 as of February, according to AIS’s Directory of Health Plans. For 2024, the insurer substantially increased its plan benefit packages from 15 to 27, expanded into Colorado and added counties in existing states, like Utah and Idaho. In addition, it teamed up with Kroger Health to launch cobranded MA plans in select counties of Colorado, Idaho, Nevada and Utah. According to Jordan Gaddis, Medicare marketing director with Select Health, that collaboration “played a vital role in driving enrollment growth.”
She continues, “We knew this would be a fantastic option for Medicare enrollees and Kroger shoppers in the communities we serve. The inclusion of a grocery benefit for those with qualifying chronic conditions was appealing and well-received.” Those plans feature a flexible spending card that members can use to access their monthly grocery benefit, as well as a prescription drug benefit designed to improve access to affordable prescriptions and qualifying OTC items at Kroger stores.
“Consumers and agents are enthusiastic about these plans, and we anticipate expanding our relationship with Kroger in innovative ways to create additional value for Select Health Medicare + Kroger members,” says Gaddis. “We believe regional health plans like Select Health are well-positioned to maximize payer-retailer collaborations, expanding access to food, managing costs, and better supporting consumers in the health care space.”
Gaddis points out that Select Health’s HMO plans achieved a 5-star rating for 2024, which “primarily impacts growth outside of AEP rather than during it,” since enrollees have the flexibility to switch to a 5-star plan anytime during the year through a Special Enrollment Period.
Moreover, the insurer “embarked on an exhaustive rebranding initiative to differentiate Select Health from the competitive set across our four state markets,” adds Gaddis. That involved leveraging “deep research” that “established an ownable and differentiating value proposition, which we brought to life in a unifying creative platform for all lines of business. We capitalized on an aspirational message derived from our value proposition of ‘Insurance Made Simple,’ which cut through the traditional advertising clutter to connect with our target audience.”
From a distribution standpoint, the insurer also transitioned from working with an external third party to relying on its own newly formed marketing analytics team to improve the quantity and quality of leads, she says.
Achieving above-average AEP growth of 14.6%, Boston-based Commonwealth Care Alliance (CCA) continued to grow its footprint across its four states of California, Massachusetts, Michigan and Rhode Island. While enrollment increased in all four markets, Chief Revenue and Growth Officer Don Stiffler says CCA’s growth was most notable in its California and Massachusetts.
In California, the Medicare HMO offered under the CCA Health California brand benefited from a new provider partnership and an expansion of its service area into Merced and Stanislaus counties, according to Stiffler.
In Massachusetts, growth was attributable to the “well-known CCA brand further establishing itself in the [Medicare Advantage Prescription Drug] market, competitive benefit offerings, as well as growing independent agent and broker partnerships,” he adds. “We consistently led with a service and partnership mentality when working with our local community brokers.” CCA offers an HMO D-SNP and two PPOs in Massachusetts and looks forward to growing both portfolios.
“As we welcome new members to CCA, we are focused on providing a seamless and supportive on-boarding experience. We have intentionally developed a process that is experiential versus transactional — one that is less about data gathering and more focused on learning how we can best support each member. This is at the core of our model of person-focused, individualized care, and I believe it is why our members join CCA and choose to continue their health journey with us.”
Contact Gaddis via Daniel.nelson2@selecthealth.org, Stiffler via Sarah Magazine at smagazine@commonwealthcare.org, Swanson via Dylan Russo at drusso@theblissgrp.com.
]]>Supplemental benefits have been on the rise since plan year 2019, when CMS’s reinterpreted definition of “primarily health-related” enabled MAOs to include benefits like adult day health services, support for caregivers of enrollees and therapeutic massage in their plan benefit packages. In 2020, MAOs began offering Special Supplemental Benefits for the Chronically Ill (SSBCI), a category of “non-primarily health related” items and services that can be made available to certain beneficiaries. According to health care research and advisory services firm ATI Advisory, the number of plans offering expanded primarily health-related supplemental benefits and/or non-primarily health-related SSBCI grew from 628 plans in 2020 to 2,334 plans in 2024.
]]>Supplemental benefits have been on the rise since plan year 2019, when CMS’s reinterpreted definition of “primarily health-related” enabled MAOs to include benefits like adult day health services, support for caregivers of enrollees and therapeutic massage in their plan benefit packages. In 2020, MAOs began offering Special Supplemental Benefits for the Chronically Ill (SSBCI), a category of “non-primarily health related” items and services that can be made available to certain beneficiaries. According to health care research and advisory services firm ATI Advisory, the number of plans offering expanded primarily health-related supplemental benefits and/or non-primarily health-related SSBCI grew from 628 plans in 2020 to 2,334 plans in 2024.
The enhanced benefits, which are largely financed by rebates MAOs receive for bidding below the benchmark, have become crucial in plans’ efforts to stay competitive and attract new enrollees during the Medicare Annual Election Period and to address the health-related social needs of dual eligible members. The Government Accountability Office, among others, has pointed out that little is known about their use or impact, and in January 2023 the GAO urged CMS to issue clarification on their inclusion in EDS reporting. CMS has since taken some steps to gather additional information, such as including the cost of supplemental benefits in medical loss ratio calculations and finalizing a plan to include “all unique supplemental benefits categories” in annual Part C reporting requirements.
The latest announcement, which came through the Health Plan Management System, “indicates an emphasis by CMS to better understand the usage and cost of supplemental benefits offered under the MA program,” observes Julia Friedman, principal and consulting actuary with Milliman. “By collecting these data elements, CMS is signaling their intent to better understand the supplemental benefits offered by MA organizations (and how they are spending rebates), as well as how members are utilizing these benefits.”
Since the agency began collecting encounter data with the 2014 dates of service, plans have “always been able to submit some supplemental benefits to the EDS,” but not all MAOs “have regularly submitted the supplemental benefits that could be submitted,” according to the Feb. 21 memo from CMS. That’s partly because the EDS was not structured to capture certain data elements (e.g., fitness benefit usage) and because CMS had “in some situations…not provided specific instructions for the submission of supplemental benefits,” the agency explained.
Through technical assistance calls with multiple MAOs, CMS has identified “two overarching challenges” related to submitting electronic data records (EDRs) for supplemental dental benefits and non-medical items and services, the agency continued. For one, MAOs did not receive information from providers in such a way that it allowed them to populate and successfully submit in the standard industry format. Specifically, MAOs lacked the information needed to “populate required EDR fields, such as National Provider Identifiers (NPIs), procedure codes, diagnosis codes, and/or revenue codes.”
In addition, some benefits are not provided in a way that “allows for standard reporting procedures without additional instructions from CMS.” Further, the standard format did not allow for some patterns of utilization observed for non-medical benefits or recognize that benefits such as annual gym memberships and pre-funded allowance cards may be paid on a “capitated or periodic basis.”
CMS said it has updated the EDS to allow plans to more easily submit this information and has created new “technical instructions” designed to address those challenges. Moreover, CMS said it will provide a “dental-specific format” for submitting encounters related to supplemental dental benefits that are offered beyond Medicare-covered dental services. The agency said it expects that format to be available “around June 2024,” at which time MAOs should begin submitting utilization dating back to Jan. 1. CMS expects these and all supplemental benefits to be recorded for calendar year (CY) 2024 dates of service and will reach out to and assist MAOs that “may not be submitting many supplemental benefits of the types expected based on their bids.”
“While it is likely the process will bring to light additional questions about the submission of data for specific situations, the main question CMS stays silent on is how this information will be used, including in the actuarial bid submission,” points out Friedman, referring to MA bids that are always submitted in June prior to the plan year. “The bid submission requires the use of encounter data for all data elements, and the actuaries must explain the circumstances and how this deficiency can be remedied if encounter data is not used. It remains unclear if CMS will use this information to compare or question plan reporting starting with the CY 2026 bids (for CY 2024 dates of service).”
Moreover, with the reporting period starting on Jan. 1, it’s possible that vendors have not been tracking the required items and “may want to re-negotiate contracts given the additional scrutiny and work necessary to provide this information at the level of detail requested,” adds Friedman. And that places “additional pressure on the MA organizations to spend their rebate dollars wisely.”
“Non-reporting is not an option,” pointed out industry consultant Melissa Newton Smith in a LinkedIn post about the memo. She advised that MAOs get their supplemental benefit vendors up to speed on the new requirements as quickly as possible and be ready to help them “compliantly adapt” to the new guidance.
At the same time, plans should recognize that vendors are already supporting multiple other MA plans and may not be ready to provide the data at the level of granularity that CMS is seeking. “Prepare to work collaboratively with your vendors and their other MA plan customers,” wrote Smith, founder and senior advisor of the Newton Smith Group. “The collaboration among MA plans will help your vendors survive this high-impact change.”
Among other complications, some supplemental benefit suppliers do not have NPIs and are not enrolled in Medicare, Smith added. What’s more, many nonmedical benefits (e.g., groceries, OTC, transportation) are nuanced, and reporting will be complex and unique to each.
Contact Friedman at julia.friedman@milliman.com and Smith at msmith@newtonsmithgroup.com.]]>During a recent panel moderated by AIS Health, a division of MMIT, speakers at the 7th Annual Medicare Advantage Leadership Innovations forum discussed best practices for assessing members’ social needs and how plans can use data to address them and move the needle forward on health equity.
]]>During a recent panel moderated by AIS Health, a division of MMIT, speakers at the 7th Annual Medicare Advantage Leadership Innovations forum discussed best practices for assessing members’ social needs and how plans can use data to address them and move the needle forward on health equity.
Speakers agreed that addressing one issue, such as reaching out to a member who is isolated, can open a floodgate of other issues and act as a gateway to addressing multiple social determinants of health (SDOH) for vulnerable members.
Navigating the complexities of programs such as Medicare and Medicaid is already an overwhelming process, which can be exacerbated by experiencing new challenges such as hearing loss, memory loss and mobility issues that come with aging, said Karin VanZant, vice president of SDOH and health equity at managed care consultancy Clearlink Partners, and a former CareSource executive. “Those are the things that all of us need to be thinking about, and those of us who are navigating the systems with our parents…need to be speaking up about where we see the breaks in the system, and I think SDOH becomes a great way for us to fill those breaks or gaps.”
While MA plans frequently communicate with members via phone, text or email, VanZant suggested there’s tremendous value in meeting members face to face.
“Whether that’s at the senior center, whether that’s at the YMCA…or inside the provider’s office, wherever we can get that face time…is the best place to really capture that information. And without that information, we’re kind of going blind into what care coordination can look like,” VanZant said.
“We know that there is always going to be a percentage of the membership that we can’t find telephonically or electronically,” she continued. “But I think that the way in which data has come together, whether you’re using vendor data or you’re using other platforms or the Health Equity Index…I think we can start to hotspot where the engagement zones can be. And if you can deploy in a more face-to-face — and yes, probably more costly — way, I think the return on investment for gathering that data and that information about your patients is going to have a much higher return” than repeated outgoing calls or emails, “because there’s a lot of anxiety and fear about what’s real, what’s a scam” with the Medicare population.
“Face time” isn’t always feasible or scalable, so it’s critical to ensure “that people on the other end of the phone” are compassionate and asking the right questions, suggested Rachael Swan, executive vice president of business development with Pyx Health. “We can’t pick up the phone and say to the member, ‘Hey, did you eat yesterday?’ The first questions out of our mouths [should be], ‘How are you doing? Is there anything that I can help you with? How was your morning?’ It takes time to build that transformational relationship and not a transactional one, and when you take the time to do that, the member begins to open up and you start to learn” the reasons why they’re not showing up for a doctor’s appointment or seeing family over the holidays. “And that’s really important across everybody that touches your members, from your provider all the way to your vendors.”
“I also think it comes back to how your vendors are partnering with you from a contract standpoint; it is actually driving the outcomes you want to see and not just from a rate of interaction” or another metric, added Swan. To help insurers address loneliness and disengagement among Medicare and Medicaid members, Pyx offers “virtual companionship with a mobile application,” she explained.
Keslie Crichton, chief sales officer with social care company Benelynk, agreed that asking the right questions is important. But she also pointed out that “the writing is on the wall from CMS and NCQA” that the collection of such data must be done in a standardized way to enable comparisons.
Moreover, “what we do to help that member needs to be pretty swift, either during that same call, or shortly thereafter so that we’re not just collecting data…and not doing anything with it. If you know that that member has a transportation issue, [you should be] looking for a solution right there and then. Because that’s what’s going to really move the needle — it’s solving their problem that day, not 30 days from now. So I agree that we need empathy, opening it up, building trust, but also documentation, and solutioning all on one call.”
In addition to offering a solution in real time, Crichton emphasized the importance of retaining existing duals and low-income populations. Working on behalf of a large national insurer, Benelynk several years ago conducted “social care outreach” with a large group of members who had lost their Medicaid status and helped them regain it by directing them to the right resources. Through those interactions, Benelynk identified other challenges the members were facing and surfaced other solutions. In that instance, the firm helped about 10% of the members regain their Medicaid eligibility and improved the insurer’s retention of duals by nearly 10%. When those services are easily used and positively received, “we create stickier members, and then those members are more likely to call back and ask for additional help.”
Member assessment is also something that can be done continually, argued Robbins Schrader, CEO of SafeRide Health, which provides transportation services to MA members, including many duals. “Yes, we go through a very rigorous member intake survey, but we gather millions of data points every single year on our members,” such as what rides they take and why, and which ones they liked. Through those interactions, vendors can learn more about barriers like food insecurity, isolation or access to medicine that are driving members to use the benefit. “And so we take all those…data points and run them back through our predictive analytics and run them back to our AI to get smarter and smarter about the member.”
“The health equity index is [going] to be a leveling tool,” added VanZant. “We know that minority populations [or] folks who may not qualify for dual [status] but are in that lower income spectrum of the Medicare continuum have access issues. We know that there are additional barriers that are in our systems that keep people from getting the care they need at the right time, so I think really uncovering and looking at the subpopulations within your population in a category of a HEDIS measure is really a driving factor for this. And if we truly want to move the needle, then we are going to have to figure out other ways to engage those populations that have historically been disenfranchised from the health care system.”
To that end, plans should be “really digging into all of those data points that they have access to [and] may not be utilizing and be very strategic and almost surgical about the types of innovations or the types of programs that we’re putting in place [for] those populations that have much worse health outcomes…instead of the broad-brush approach,” added VanZant.
Providing an example of focusing on the most vulnerable members, Schrader said SafeRide and Alignment Health Plan set a goal of improving the member experience and used metrics such as grievance rates and ride cancellations. They looked at the various “engagement points” along the member’s journey, identified where the experience could be improved, and inserted a care navigator into the cancellation process that resulted in “creating new pathways to better serve” those members and a significant reduction in rides canceled.
]]>The U.S. Dept. of Justice (DOJ) has reportedly launched an antitrust investigation into UnitedHealth Group that includes an examination of its Medicare Advantage risk coding practices. According to a Wall Street Journal report citing unnamed people familiar with the matter, the DOJ has been seeking information such as how UnitedHealthcare interacts with provider groups acquired by its Optum division in recent years. Regulators are also looking into MA billing issues, “including the company’s practices around documenting patients’ illnesses.” UnitedHealthcare and other MA insurers were the subject of two whistleblower lawsuits in which the DOJ intervened in 2017 and alleged that insurers’ failures to conduct two-way chart reviews inappropriately inflated payments. Those suits were ultimately abandoned, however, after the government failed to adequately prove that CMS would not have made the payments to the defendants had it known about the alleged regulatory violations. UnitedHealth has not publicly commented on the latest investigation.
Point32Health, Inc. plans to acquire fellow Massachusetts Medicare insurer Health New England from its not-for-profit owner, Baystate Health. Point32Health was formed in 2021 through the merger of major Massachusetts insurers Tufts Health Plan and Harvard Pilgrim Health Care. While nearly 70% of its enrollees are in commercial plans, its membership of roughly 1.6 million lives includes more than 133,000 Medicare Advantage enrollees. Health New England has about 180,000 members in the commercial, managed Medicaid and Medicare segments combined. According to an AIS Health analysis of the latest Medicare Annual Election Period, Health New England saw a 6.6% boost in MA enrollment between October 2023 and February of this year. The deal is subject to regulatory approvals.
]]>CVS Health Corp. on Feb. 7 reported fourth-quarter adjusted EPS of $2.12 and full-year adjusted EPS of $8.74. Consolidated revenue grew 11.9% year over year to $93.8 billion, while revenue for the Health Care Benefits segment, which includes Aetna’s MA business, increased 16% to nearly $27 billion. CVS Health said it added 1.3 million members in 2023, which reflected growth across multiple product lines.
]]>CVS Health Corp. on Feb. 7 reported fourth-quarter adjusted EPS of $2.12 and full-year adjusted EPS of $8.74. Consolidated revenue grew 11.9% year over year to $93.8 billion, while revenue for the Health Care Benefits segment, which includes Aetna’s MA business, increased 16% to nearly $27 billion. CVS Health said it added 1.3 million members in 2023, which reflected growth across multiple product lines.
And after “a very successful” Medicare Annual Election Period (AEP), the insurer expects to add at least 800,000 new MA lives in 2024, said President and CEO Karen Lynch. “Our success was driven by targeted investments that were strengthened by CVS Health assets and allowed us to create differentiated value for members,” she stated. “We are improving member experiences by focusing on simplicity, offering unique designs, and maintaining stable networks.”
For the three months ending Dec. 31, 2023, adjusted operating income for the insurance segment fell 26% from the fourth quarter of 2022 to $676 million, while medical loss ratio (MLR) climbed 270 basis points to 88.5%. Chief Financial Officer Thomas Cowhey said the decline in earnings and higher (worse) MLR were partly due to utilization pressure in certain categories that persisted from the third quarter of 2023, including outpatient and supplemental benefits such as dental and vision, while the company saw an increase in costs related to seasonal immunizations, including the newly launched RSV vaccine.
For 2024, the company increased its MLR projection by 50 basis points to 87.7% — mostly because of MA, including a Stars-related headwind — and lowered its EPS guidance to at least $8.30 from a previous estimate of at least $8.50. Lynch explained that the company is “taking a cautious stance” on its MA utilization outlook until it has “further clarity of these industry-wide trends.”
“All in all, we think revising the 2024 guide is the right move as it — at least somewhat — sheds the utilization-related overhang; however, our calculated implied cost trends and MA MLRs suggest CVS isn’t out of the woods yet,” wrote Raymond James analysts on Feb. 8. CVS Health’s guidance “implies a cost trend that’s lower than” or in line with that of Humana and UnitedHealth, “despite adding an estimated ~$10 PMPM [per member per month] in benefits,” versus Humana, which cut benefits by about $13 PMPM, they estimated.
“Additionally, we note CVS’s implied [year-over-year] MA MLR increase is ~210 bps, but after removing the STARs headwind of ~130 bps (65 bps impact on whole book/~50% MA mix), there’s only ~80 bps of cushion left for growth/benefit enrichment and utilization headwinds,” they cautioned. “That said, if the company can manage through 2024, we think 2025 is a cleaner and more attractive story.”
Molina Healthcare, Inc. on Feb. 7 reported full year consolidated MLR of 88.1%, which was in line with the company’s expectations and its long-term target range. Medicare MLR was higher than expected at 90.7%, which was largely due to higher utilization of supplemental benefits, in-home services and high drug costs throughout the year, the company said. Performance in the government-focused insurer’s Medicaid and Affordable Care Act exchange businesses helped alleviate some of that cost pressure.
During the company’s Feb. 8 earnings conference call, CEO Joseph Zubretsky added that he is confident Molina’s 2024 bid strategy, adjustments to benefit design, and various operational improvements will return the Medicare business to “mid-single digit profitability” this year.
Molina reported consolidated adjusted EPS of $4.38 for the recent quarter and $20.88 for full-year 2023. For 2024, the company introduced guidance of at least $23.50 in adjusted EPS.
Reporting a Medicare MLR of 95.3% for the recent quarter, Centene Corp. executives during the company’s Feb. 6 earnings call insisted the high figure was not caused by the same factors that drove high MLRs for MA peer firms like Humana and was accounted for in 2024 guidance. CEO Sarah London explained that the company’s 2024 MA bids “incorporated a level of elevated medical trend related to non-inpatient services.”
In response to a question from Wells Fargo analyst Stephen Baxter regarding the high Medicare MLR, London further clarified that there was little variation from quarter to quarter on inpatient utilization. A “step-up” in outpatient utilization during the second quarter continued throughout the year and was driven by the categories of orthopedics, durable medical equipment and cardiovascular care, while there was also an increase in COVID-related costs in December.
The company’s fourth quarter adjusted EPS of 45 cents and full year adjusted EPS of $6.68 came in “slightly ahead of internal expectations,” according to London. In Medicare, the recent AEP “largely hit the mark with respect to our target membership, including sales, retention and disenrollments.” And after making investments in its Dual Eligible Special Needs Plan products, Centene projects that by the end of 2024, D-SNP members will make up more than 35% of its MA membership, she stated. Centene’s growing MA business remains disproportionately smaller than its ACA and Medicaid businesses. For 2024, the company reiterated its adjusted EPS outlook of “greater than $6.70.”
In an investor note posted Feb. 6, Baxter remarked that Centene’s relatively small MA exposure appears manageable in light of potential tailwinds, such as momentum in its exchange business.
Deviating from its peers, The Cigna Group on Feb. 2 reported full-year adjusted EPS of $25.09 that exceeded expectations and raised its 2024 guidance to EPS of at least $28.25. The company during its earnings call highlighted fourth-quarter 2023 revenue of $51.1 billion, reflecting a 12% year-over-year increase driven by Evernorth Health Services and Cigna Healthcare. The latter segment’s MLR for the recent quarter was 82.2%, which was “favorable to expectations,” largely because of the company’s U.S. commercial employer business, said CFO Brian Evanko. The division’s full-year MLR also exceeded expectations at 81.3%; for 2024, the company is projecting an MLR range of 81.7% to 82.7%.
Cigna posted the financial results just days after it announced the pending sale of its MA business to Health Care Service Corp. (HCSC). Serving just under 600,000 lives, MA is a small part of Cigna Healthcare, which served nearly 19.8 million medical lives as of Dec. 31, 2023. When asked during the question-and-answer portion of the earnings call about whether that segment is still attractive, President and CEO David Cordani called the deal with HCSC a “win-win” and “a clarification to our strategy within our portfolio.” And while Cigna continues to view MA “as an attractive growth market,” the capital investment it required relative to the size of the company’s portfolio — combined with the current regulatory environment — led Cigna to decide “it was best to enter this transaction.”
He added that the company has been very “deliberate” in expanding its service portfolio and value proposition within Evernorth so that it can support health plan partners with their government businesses. As part of the transaction with HCSC, which they expect to close in early 2025, Evernorth will continue providing pharmacy benefit services to the Medicare businesses.
Reporting earnings after the release of CMS’s Advance Notice, which estimated that plans can on average expect to see a 3.70% increase in risk adjusted revenue (a -0.16% impact without underlying risk score trend), a couple of insurers expressed their disappointment in anticipated funding.
“The funding level was broadly consistent with our expectation, which we do not believe is sufficient to cover current medical cost trends. We believe that the changes to Part D as a consequence of the Inflation Reduction Act necessitate additional funding to cover the comprehensive member benefits provided, and the increased risk that plans are assuming as a result of the redesign,” remarked Aetna’s Lynch.
Added Centene’s London: “Bearing in mind the continued expectation for the multi-year phase-in of the risk adjustment model change that was finalized in 2023, we view the preliminary rates as insufficient with respect to general medical cost trend expectations.” But the final rate announcement, due in early April, will offer a “better directional sense” for next year’s bid strategy, she said.
]]>“I think one of the challenges with [seniors and] technology is trying to really navigate tension between high tech and high touch. And I think that’s one of the things that you need to really figure out with your members early on: What are their preferences and needs? What resources do they have available?” said Joel Salinas, M.D., chief medical officer with Isaac Health, who spoke on a member engagement panel moderated by AIS Health, a division of MMIT.
]]>“I think one of the challenges with [seniors and] technology is trying to really navigate tension between high tech and high touch. And I think that’s one of the things that you need to really figure out with your members early on: What are their preferences and needs? What resources do they have available?” said Joel Salinas, M.D., chief medical officer with Isaac Health, who spoke on a member engagement panel moderated by AIS Health, a division of MMIT.
Meeting members where they’re at is important, he continued, “because if you just come at them very aggressively with the high-tech end, you end up missing a lot of people who really benefit from the high-touch piece. But if you do too much of the high-touch end, then you have to manage a lot of the operational costs that come along with that.” Isaac Health offers a digital platform that provides early population-level screening, diagnosis, medical treatment and care coordination for people with Alzheimer’s and other cognitive disorders.
Given that primary care physicians aren’t typically addressing cognitive issues until they’re more advanced, “we really want to be proactive about addressing these needs that people have,” Salinas added. “And once we actually connect with people, they have a care navigator who serves as a consistent face for them…however they prefer — over phone call or text messaging. We find that text messaging is one of the ways that our members that work with us really prefer to communicate. And what we’ve seen is over the course of about six months, over 70% continue to work with us. And I think part of that is of how we give a nice cadence of touchpoints with them.”
When introducing seniors to benefits available from 9amHealth, a virtual cardiometabolic clinic for people living with conditions like diabetes, hypertension and obesity, a personalized approach is preferred. “Connecting through their health plan is really helpful,” remarked panelist Avantika Waring, M.D., chief medical officer. “I think there’s a lot of fear of folks just reaching out of nowhere, and so knowing that it’s coming from their plan that they trust is really helpful.” To that end, she said 9amHealth has had more success reaching out via text and phone calls versus email to get eligible members signed up. Additionally, “we have had a lot of success sending out mailers or welcome boxes — everybody loves swag.”
Waring added that about 30% of people who are eligible for its programs tend to enroll, but “engagement tends to be quite high” once they are enrolled and using the services available to them, such as lab work performed in the home. She said 9amHealth’s care team, on average, interacts with enrolled members six times per month.
“I think one of the challenges we hear the most when we work with an MA plan is enrollment in these programs,” said James Li, cofounder and CEO with Mighty Health, a digital platform that helps older adults with functional mobility, pain and weight issues. “I think ultimately, there are a lot of incredible point solutions and digital solutions that are out in the market, but we hear a lot of concern…from health plans on how do we actually get folks involved in this program [and] is it worth the lift implementing the program and getting this off the ground? That’s top of mind when we think about tackling enrollment from multiple different channels as well.”
Mighty Health’s per-member per-month payments from its plan partners are dependent on whether those members are actively using the program, “so retention is incredibly important to us, and we noticed when we poll members…they are more likely to stay with the health plan” if they engaged in the solution over at least six months. He added that Mighty Health typically sees 60% engagement 24 weeks into members using the program.
“We have a tendency to do a one-size-fits-all approach when it comes to communication and engagement, so understanding what’s going to work for certain cohorts is really important,” suggested panelist Brandon Solomon, vice president and chief growth officer with Convey Health Solutions. “We’ve been managing [supplemental] benefits for over 14 years. And we’ve seen just a gradual adoption of digital channels.”
When it comes to managing supplemental benefits like flex cards and over-the-counter allowances, “maximizing every engagement point and getting them engaged in the right benefit that’s important to them is where we’re putting more emphasis,” added Solomon. To manage those benefits, Convey is annually fielding about 4 million phone calls from seniors, handling more than 2 billion digital touchpoints and shipping over 2 million products to members. “Each of those presents an opportunity,” such as the ability to supplement the incomplete or inaccurate information that a health plan may have and identify alternative phone numbers, emails and or addresses to improve outreach. In one use case, Convey was able to boost its reach rate by 30%, “just by supplementing additional data.”
Convey also works to incorporate the insights it gains from those touchpoints into its call centers, so that when a member calls in, “it’s a happier call than when they’re calling [about] an appeal or grievance…we know more about the member. So when you call in to place an order for healthy food and grocery, we can then say, ‘Did you know if you complete an annual wellness visit, you’ll get $50 more that you can use for additional healthy foods?’” said Solomon. “Maximizing the touch points we have is where we’ve been able to leverage technology and analytics to improve and drive members to the next best clinical action.”
Location is also a big factor in tech enablement. In Seattle, for instance, “there are a lot of seniors who retired from the tech industry,” Waring said. “They’re like digital natives, they’ve eased into Medicare using technology, they use Amazon, they’re expecting that kind of digital engagement. But in other geographies, that may not be the case. And so having multiple modes to get people enrolled, get them signed up — whether it’s having somebody call them on the phone or working with their caregiver — I think that flexibility is really the most essential part.”
Isaac’s core markets are in New York, North Carolina and Florida, “and with one of the plans that we work with in a very rural part of North Carolina, it’s got 50% internet connectivity, so you can imagine how difficult it is to be able to reach with technology,” said Salinas. As a result, Isaac introduced a “telepresenter model,” where anyone with difficulty accessing the internet can receive a home visit from a personal care aide, “and we’ve gotten pretty reasonable engagement from that process.”
When reaching out to vulnerable populations, “we think really carefully about a series of underlying metrics” and the importance of connecting members with people are who are “culturally competent, who can greet you in your own language or cultural relevancy,” said Robbins Schrader, CEO of SafeRide Health, who spoke on a panel focused on health equity. “And when you combine those two, you create an experience that works and that people trust. And trust is everything.”
And while SafeRide is providing transportation as its primary function on behalf of plans, “it learns a lot about the member,” he said. “If you see folks, you know, going to a pharmacy that happens to be in a grocery store six times a week, perhaps there’s a conversation to be had around, ‘Well, is it really the medicine that you’re looking for or is this a way for you to get your groceries? And if it’s about [the latter], let’s help you connect you to a service that can do that at a fraction of the cost of providing transportation.’ And so it’s thinking about that continuum between brick and mortar, home health, telehealth and getting other unmet needs filled…[that] is the future of our industry.”
At MVP Health Care, which has MA members in New York and Vermont, building a digital care app called Gia was rooted in the identification of customers’ unmet needs, explained Simone Brooks, innovation strategist, during a separate presentation. During the pandemic, the insurer observed that “inequitable digital access caused people to become disconnected from their families, from their friend groups, their churches and faith communities,” she said. “Inequitable digital access also became a big barrier to sufficient health care, preventing people from getting the care that they need at the time that they need it.”
As a result, MVP partnered with Galileo to launch Gia, a mobile app that provides 24/7 virtual care, while enabling them to manage prescriptions, lab tests, preventive health visits and other aspects of care. It also offers a fully bilingual experience with Spanish-speaking providers, she said.
]]>CMS this time last year projected an all-in rate increase of 1.03%, which included an effective growth rate of 2.09% and expected revenue declines of -3.12% — stemming from changes to the CMS-HCC risk model and fee-for-service (FFS) normalization — and -1.24% due to changes in Star Ratings from the prior year. The agency also estimated an underlying MA risk score trend of 3.30%. Subsequent studies suggested that the removal of thousands of diagnosis codes, renumbering of several HCCs, and other technical changes would reduce plans’ risk scores by anywhere from 2% to 14%. In the final rate notice, CMS revised its all-in rate increase projection to 3.32% after deciding to phase in the risk model changes over a three-year period.
]]>CMS this time last year projected an all-in rate increase of 1.03%, which included an effective growth rate of 2.09% and expected revenue declines of -3.12% — stemming from changes to the CMS-HCC risk model and fee-for-service (FFS) normalization — and -1.24% due to changes in Star Ratings from the prior year. The agency also estimated an underlying MA risk score trend of 3.30%. Subsequent studies suggested that the removal of thousands of diagnosis codes, renumbering of several HCCs, and other technical changes would reduce plans’ risk scores by anywhere from 2% to 14%. In the final rate notice, CMS revised its all-in rate increase projection to 3.32% after deciding to phase in the risk model changes over a three-year period.
In the 2025 Advance Notice, CMS estimated a -2.45% revenue decline due to a combination of the risk model changes and FFS normalization, a -0.15% revenue decrease stemming from Star Ratings changes, an effective growth rate of 2.44%, and an average increase in risk scores of 3.86%, for an all-in revenue change of 3.70%, according to a fact sheet.
CMS also confirmed its plan to continue phasing in the impact of risk model revisions, with full implementation occurring in payment year 2026. For payment in 2024, risk scores will be calculated as a blend of 67% of scores derived from the 2020 CMS-HCC model and 33% of scores using the 2024 CMS-HCC model. For 2025, that blend will flip to 67% of risk scores calculated with the 2024 model and 33% of scores calculated with the 2020 model, according to the notice.
“For the most part, the revenue information that came out in the Advance Notice on the Part C side [was] sort of a continuation down a path that was already known and set in place a year ago,” says Matt Kranovich, principal and consulting actuary with Milliman. While CMS is phasing in significant changes to the risk model over a three-year period, it also made a technical update to the way it calculates the county-level benchmarks that determine a plan’s maximum revenue per member per month (prior to risk adjustment), he notes. The technical update removes certain medical education expenses from the overall costs that go into the U.S. per capita cost figures, which are used to estimate the FFS Medicare growth rate (i.e., the effective growth rate).
And similar to the blended percentages for the phase in of the new CMS-HCC risk model, the impact of that technical update is being phased in over three years and will have “a little bit of a downward impact on benchmark growth,” explains Kranovich.
“In a lot of cases, the move to v28 [version 28, the risk model being phased in] has been sort of a small negative in terms of planned revenue — although not in all cases; I have seen specific situations where a certain plan’s morbidity mix and their population type actually makes the conversion to v28 a positive,” Kranovich tells AIS Health, a division of MMIT. “So it’s not an across-the-board negative; it does very much depend on your population.”
And while it’s “far too early” to make specific predictions on how the average revenue increases could impact supplemental benefit offerings next year, Kranovich says he doesn’t think the preliminary rate notice “lifted the cloud” hanging over those investments. “You may see certain plans continue to invest, but that’s really going to be a competitive decision and truly…an investment, because I don’t see a big bucket of cash being helicoptered over the market with this Advance Notice,” he remarks.
Humana Inc., for one, disclosed that “the company anticipates the proposals in the Advance Notice would result in a change to its benchmark funding that is approximately 160 basis points worse than its expectation of a flat rate environment,” according to a Feb. 5 filing with the U.S. Securities and Exchange Commission. In an earlier filing, Humana had signaled that inpatient utilization was higher than expected in the fourth quarter of 2023. The insurer in the new filing said it did not expect the rate notice to include “proposed effective growth rate restatements…in light of the higher medical cost trends experienced across the industry, as well as the negative impact of CMS’ proposed normalization factors.” Humana did not, however, change its recently provided 2025 growth outlook of $6 to $10 adjusted earnings per share.
In one of his first statements as AHIP’s new president and CEO, Mike Tuffin noted that amid the myriad changes facing the MA program, the policies included in the Advance Notice “must be evaluated.” Publicly traded insurers have declared that the policies represent a “real reduction in funding,” he noted, while various news outlets and analysts have pointed out that without CMS’s expected (or to quote one analyst, “hypothetical”) average risk score increase of 3.86%, the revenue impact is -0.16%, he added.
A Jan. 31 research note from TD Cowen’s Gary Taylor, for instance, observed that the notice included “+3.86% coding-creep assumption that does not reflect a real increase in benchmark rates.” The true impact to earnings, he wrote, “[a]lways primarily depends on 2025 actual medical cost trends. In order to maintain or improve margins, the combination of rate increase [plus] coding [plus] medical management [plus] benefit design have to match or exceed underlying MA cost trends.”
And while in a more typical year a higher growth rate would allow plans to enhance benefits while maintaining margins and moving the needle on MA penetration, TD Cowen for now expects the -0.16% proposed rate decrease “would lead to another year of incremental supplemental benefit reductions,” within current total beneficiary cost limits.
Tuffin, a former senior vice president for external affairs with UnitedHealth Group, in his statement warned that “less resources will be available at a time when seniors are utilizing more care,” referring to the continued medical cost trends observed by publicly traded insurers. Moreover, he argued that “it is essential that funding keep pace to ensure stability and prevent erosion in the benefits and affordability seniors count on in Medicare Advantage.” Tuffin rejoined AHIP on Jan. 8, having served as executive vice president for public affairs with the industry trade group from 2003 to 2012.
Nevertheless, the projected revenue change has historically improved with the final rate notice, and the industry could see an average increase of 0.84%, Taylor predicted. Such improvements are partly because of the rebasing amount, which is not included in the Advance Notice and reflects a shift to more recent underlying data used to calculate the county benchmark rates, adds Kranovich.
The bigger surprises, contend Kranovich and fellow Milliman actuary Kevin Pierce, were on the Part D side. And those came in the form of two key changes: (1) updates to the RxHCC model used to adjust Part D plans’ risk scores based on the relative health of their members, and (2) a clarification around the out-of-pocket maximum for Part D enrollees.
“We’re still interpreting what [the risk model updates mean] for each different type of member and plan, etc.,” Kevin Pierce, a senior consulting actuary at Milliman, tells AIS Health’s Radar on Drug Benefits. “But generally speaking, some of these risk score models struggle with predicting risks at the far end of the spectrum,” meaning very healthy and very sick members. “Because there is such a concentration of risk in a small portion of the population, plans could be over- or under-compensated for some of those members,” he says.
While that issue always existed, it’s now “amplified” with the Part D benefit changes because the federal reinsurance amount is set to decrease so significantly, meaning a greater share of Part D revenue will be subject to risk adjustment, Pierce adds. “The new risk score model probably helps offset some of that, but…it’s not going to fix everything and solve all of health plans’ problems,” he says.
The Advance Notice also contained a lengthy section featuring codified and proposed changes on the horizon, but one industry expert says it’s the weight of patient experience and complaints/access measures going back down to a 2 that will have the biggest plan impact. CMS in the notice reminded plans that that change will take effect with the 2026 Star Ratings, or the 2024 measurement year. That will impact 11 Part C measures and five Part D measures, according to a table in the Advance Notice.
For the 2021 Star Ratings, CMS had increased the weight of member experience measures based on the Consumer Assessment of Healthcare Providers and Systems (CAHPS) and administrative data from 1.5 to 2, and for the 2023 Star Ratings increased the weight of those measures to 4. That forced plans to refocus their efforts and shift their limited resources, observes Babette Edgar, Pharm.D., founder of BluePeak Advisors, a division of Gallagher Benefit Services, Inc. For example, plans were conducting “more interim surveys on patient experience to take the pulse of how they were doing. And they may have hired more staff to focus on patient experience.…So now that it’s back to a 2, there are other measures that plans may want to focus on so that they make sure the more heavily weighted ones are getting more attention.”
CMS in the Advance Notice also sought feedback on concepts and measure updates to the Star Ratings process. For the Part C measure, Plan Makes Timely Decisions about Appeals and Reviewing Appeals Decisions (i.e., the timeliness measure), CMS said it is considering eliminating the five-day mail grace period for cases that are electronically submitted to the Independent Review Entity. To Edgar, however, “that’s not that big of a deal, as most plans are already submitting electronically. So those five days are not an issue. And it aligns with the timeliness requirements for standard and expedited Part B drug cases,” she notes. “But any [proposal] that takes time away, plans are going to be concerned because they build their processes [based on] the maximum allowable days.”
In addition, the agency said it is considering developing a new measure that would evaluate whether Part D sponsors are engaging in certain pricing tactics (e.g., submitting artificially high or low prices to display on the Medicare Plan Finder during the Annual Election Period) by evaluating whether plans are substantially increasing or decreasing the MPF prices for drugs following AEP. Edgar, who is the former director of the Division of Finance and Operations for the Medicare Drug Benefit Group at CMS, says she is not currently aware of plans that are doing this, “at least not the plans that we work with…because they would get fined as an outlier” and lose visibility on the Plan Finder.
CMS requested comments on the proposals by March 1; the final rate notice is expected to be released no later than April 1.
Contact Edgar at babette_edgar@ajg.com, Kranovich at matt.kranovich@milliman.com, and Pierce at kevin.pierce@milliman.com.
]]>In 2023, 13.4 million Part D beneficiaries received full or partial LIS benefits. The program provides assistance with paying premiums and deductibles, and it reduces any post-deductible cost sharing for beneficiaries. The majority of LIS beneficiaries are “deemed,” meaning they are automatically enrolled in the program based on dual eligibility with Medicaid and/or enrollment in a Medicare Savings Program (MSP). (This also includes non-duals who receive Supplemental Security Income.) But 17% of LIS beneficiaries are “nondeemed,” meaning they are not enrolled in Medicaid or an MSP and must apply for LIS themselves. All LIS beneficiaries undergo annual redeterminations, but the process for deemed beneficiaries is automatic, leaving the nondeemed population to face potential administrative challenges and unnecessary coverage loss.
]]>In 2023, 13.4 million Part D beneficiaries received full or partial LIS benefits. The program provides assistance with paying premiums and deductibles, and it reduces any post-deductible cost sharing for beneficiaries. The majority of LIS beneficiaries are “deemed,” meaning they are automatically enrolled in the program based on dual eligibility with Medicaid and/or enrollment in a Medicare Savings Program (MSP). (This also includes non-duals who receive Supplemental Security Income.) But 17% of LIS beneficiaries are “nondeemed,” meaning they are not enrolled in Medicaid or an MSP and must apply for LIS themselves. All LIS beneficiaries undergo annual redeterminations, but the process for deemed beneficiaries is automatic, leaving the nondeemed population to face potential administrative challenges and unnecessary coverage loss.
Studying Medicare enrollment and Part D event data from 2007 to 2018, researchers found that 99% to 100% of deemed beneficiaries retained their full LIS subsidy each year. The annual retainment rate for nondeemed beneficiaries, meanwhile, ranged from 84% to 78%.
Beneficiaries who temporarily lost LIS during the year paid more for their prescriptions than any other cohort — as much as an extra $52 per month, a whopping 700% increase. By drug class, their average monthly spending increased by $5.50 for antilipid (cholesterol-lowering) drugs, $6.60 for antidepressants, $19.11 for diabetes drugs and $35.47 for antipsychotics. Those who experienced temporary LIS loss also filled fewer prescriptions, which may signal issues with medication adherence. Findings were similar for beneficiaries who lost LIS for an extended period or had their subsidy reduced. Beneficiaries who maintained their subsidy experienced little to no change in monthly out-of-pocket costs or the total number of prescriptions filled.
The study authors pointed to two key findings of concern. The first is that LIS disenrollment was often temporary. About 25% of nondeemed beneficiaries who lost LIS regained it within the same year, which likely points to beneficiaries facing administrative hurdles rather than actual changes in eligibility. Secondly, Black and Hispanic beneficiaries were more likely to experience temporary LIS loss than their white counterparts, so these administrative challenges are more likely to affect people who are already facing social barriers that can impact health status.
It’s possible that unnecessary LIS loss is making disparities in medication adherence — and therefore health outcomes — worse, though more research is needed on this front. The study authors noted that people with lower incomes are already more likely to struggle with adherence, and losing LIS can make affording medications even more difficult.
Policymakers should consider measures that would make LIS eligibility a simpler process and cut down on temporary benefit losses, the researchers recommended. Some nondeemed LIS beneficiaries may be eligible for MSPs — and automatic LIS enrollment — without knowing it, they observed. The Social Security Administration is supposed to forward LIS applications to states to evaluate MSP eligibility, but since these rules vary by state, many people will still need to fill out a separate MSP application, creating an additional paperwork burden.
“Policymakers could streamline eligibility systems across MSPs and LIS by automatically verifying MSP and LIS eligibility using data from other state-administered programs with income-based eligibility, such as the Supplemental Nutrition Assistance Program (a process known as ex parte renewal),” the authors wrote.
Unnecessary LIS loss may be further exacerbated by the end of the COVID-era Medicaid continuous enrollment provision and the ongoing unwinding process. Like regular Medicaid beneficiaries, people enrolled in MSPs are also subject to redeterminations, and the process has faced criticism for its many administrative errors leading to improper disenrollments.
“For people with Medicare, disenrollment from Medicaid or an MSP could have cascading effects on LIS enrollment by affecting whether they remain deemed eligible for LIS,” the authors wrote. “Nondeemed individuals face the risk of losing LIS intermittently; therefore, policymakers could consider temporary measures that preserve or extend LIS eligibility for a minimum beyond a disruption in Medicaid coverage.”
“Such administrative complexity can widen holes in an already porous safety net for older adults and highlight opportunities for simplifications to improve how health care assistance programs serve those in need,” the authors concluded.
]]>Much time and energy has been focused on thinking about how drug pricing, rebating and Part D plan design may shift due to changes set to finish taking effect in 2025 including new caps on enrollee out-of-pocket spend and more liability falling on plans rather than taxpayers.
But a “sleeper issue here is what all of this is going to mean for Medicare Part B drugs,” said Avalere’s Kesley Lang on a January webinar on the health policy outlook for the new year.
]]>Much time and energy has been focused on thinking about how drug pricing, rebating and Part D plan design may shift due to changes set to finish taking effect in 2025, including new caps on enrollee out-of-pocket spend and more liability falling on plans rather than taxpayers.
But a “sleeper issue here is what all of this is going to mean for Medicare Part B drugs,” said Avalere’s Kesley Lang on a January webinar on the health policy outlook for the new year.
“We can expect that with growing premiums, fewer PDP [Prescription Drug Plan] options, we may see an acceleration of the trend of beneficiaries choosing Medicare Advantage plans, which is going to shift the landscape around affordability, access,” Lang said.
Plans may try to mitigate impacts of the Part D redesign through the potential shift of beneficiaries toward Part B drugs, added Mina Allo.
There has already been a trend toward increased Medicare Advantage enrollment compared to the fee-for-service market, and MA plans have “structural advantages compared to Part D plans in terms of shouldering some of the financial liability shifts brought forth by Part D redesign, which may serve as another tailwind to MA enrollment,” Avalere’s Mark Gooding said in response to follow up questions from Pink Sheet.
“Finally, MA plans cover Part B services covered under [fee-for-service], but have had flexibilities to apply step therapy to Part B drugs in specific instances since 2019. While Part B drugs have traditionally been more likely to be stepped through Part D drugs first, some of the financial dynamics under the redesigned Part D benefit may shift greater access towards Part B treatments in this new environment,” Gooding said.
Allo said it will be important to look at how to capture any of these changes, such as if there are access barriers created for patients for a Part D product relative to competition that may fall into the Part B benefit.
Of course it is hard to know exactly how all of this will shake out. A greater shift toward Medicare Advantage could create other challenges for Part B drug manufacturers given the greater utilization management in that program.
And given the Part D redesign there may be some reasons for seniors to think more about sticking with those standalone plans if they can.
“While many Medicare Advantage members benefit from a $0 premium and some of the enhanced services, there comes a rather steep out of pocket responsibility in your Medicare Advantage benefit. And we now have a Part D benefit that has introduced a $2,000 out of pocket cap, which is substantially lower than Medicare Advantage out of pocket cap,” said Avalere’s VP Lance Grady.
This article originally appeared in Pink Sheet. AIS Health and Pink Sheet are part of the same parent company, Norstella.
]]>A recent letter from AHIP questions “the validity of the conclusions” made in a recent Medicare Payment Advisory Commission (MedPAC) status report estimating spending differences in Medicare Advantage versus fee-for-service Medicare. The letter refers to a January MedPAC presentation estimating that higher coding by MA organizations will drive an estimated $54 billion in additional payments to MAOs this year, while favorable selection will contribute approximately $36 billion. In the Jan. 26 letter to MedPAC Chair Michael Chernew, AHIP Executive Vice President for Policy and Strategy Jeanette Thornton points out that the favorable selection analysis “did not quantify the extent to which prior FFS spending for those who switch into MA may reflect barriers to access and thus do not translate into lower MA spending, or other reasons that actual MA spending may change over time after people enroll.” Additionally, “the benchmark analysis made MA costs appear higher because it used costs for all FFS enrollees,” including nearly 15% of the FFS population who are enrolled only in Medicare Part A. This is not the first time AHIP has taken issue with MedPAC’s comparative data: In a February 2021 “Correcting the Record” blog post, AHIP argued that another MedPAC analysis failed to make an “apples to apples” comparison of program enrollees by including beneficiaries with Part A-only coverage when calculating per-enrollee spending in Part B.
After years of providing companionship benefits to Medicare Advantage plans, Papa is launching “phase two” of its business with new offerings supporting MA plans’ Star Ratings goals. Unveiled on Feb. 5, Papa’s SDoH Navigation program will helps plans better understand the social determinants of health that are impacting their members and enable “more successful connections to community resources,” said Papa. Its Star Enhancement program will focus on advancing actions that directly impact the Star Ratings, such as annual wellness visits and in-home assessments, immunizations and screenings. Leveraging Papa’s national network of on-the-ground Papa Pals, its remote team of social care navigators and its technology platform, MA plans can layer these configurable programs onto Papa’s core supplemental benefit to meet the specific needs of their member populations, added the company.
In a memo issued on Feb. 6, CMS clarified the rules surrounding Medicare Advantage plans’ use of artificial intelligence to make coverage determinations. For example, when using an algorithm to help determine medical necessity, MA plans must base decisions on individual patients’ circumstances, rather than determining coverage based “on a larger data set.” Amid critical reports about MA insurers’ use of algorithms that have spurred lawsuits against UnitedHealth Group and Humana Inc., the frequently asked questions document expounded on prior authorization and utilization management (UM) policies that were finalized in April 2023 and take effect this year. Other topics covered in the 14-page document included spelling out when MA plans can use internal coverage criteria when making medically necessary benefit determinations and clarifying terms such as “publicly accessible” and the “two-midnight rule.” CMS reminded plans of its intention to assess UM-related performance of plans serving approximately 88% of people with MA in 2024 through both focused audits and routine program audits.
PERSON ON THE MOVE: Humana Inc. hired David Dintenfass to serve as president of enterprise growth. In the newly created role, he will be responsible for leading the company’s growth plan with a primary focus on customer acquisition, retention and experience, said Humana. Dintenfass joins Humana from Fidelity, where he served as executive vice president, head of products and emerging growth markets.
]]>In a press release unveiling the deal, the Chicago-based insurer said the acquisition will accelerate its growth in “an important market segment” and “bring many opportunities to HCSC and its members - including a wider range of product offerings, robust clinical programs and a larger geographic reach.” HCSC is customer-owned, meaning policyholders and not stockholders are the owners, and is an independent licensee of the Blue Cross and Blue Shield Association. Its Blues plans currently enroll 204,638 members across five states: Illinois, Montana, New Mexico, Oklahoma and Texas.
]]>In a press release unveiling the deal, the Chicago-based insurer said the acquisition will accelerate its growth in “an important market segment” and “bring many opportunities to HCSC and its members — including a wider range of product offerings, robust clinical programs and a larger geographic reach.” HCSC is customer-owned, meaning policyholders and not stockholders are the owners, and it is an independent licensee of the Blue Cross and Blue Shield Association. Its Blues plans currently enroll 204,638 members across five states: Illinois, Montana, New Mexico, Oklahoma and Texas.
According to DHP, HCSC’s MA enrollment has grown by more than 80% since 2019. After extending its Medicare offerings to 90 new counties in 2022, HCSC in 2023 pursued its “largest-ever service area and product expansion” with the addition of 150 new counties, and in 2024 it entered 99 additional counties.
In addition to expanding its MA business, the insurer in 2022 purchased Trustmark Health Benefits, a third-party administrator that works with sponsors of self-insured plans. The majority of its 17 million medical lives are enrolled in commercial plans.
Cigna entered the MA business when it finalized its $3.8 billion acquisition of HealthSpring in 2012, but the firm has struggled to compete in an industry dominated by market leaders UnitedHealthcare and Humana Inc. According to DHP, the insurer enrolled 587,447 MA members as of January. With a market share of just 1.78%, it ranks as the eighth-largest MA insurer. Cigna’s last major MA expansion was in 2023, when it grew its geographic footprint by 22% with the addition of 106 new counties.
In a separate Cigna press release on the transaction, Cigna Group Chairman and CEO David Cordani said the agreement will “enable Cigna to drive meaningful value for all our stakeholders, providing an enhanced ability to accelerate investment and growth in our services platform, while further deepening our commitment to our existing health benefits platform," referring to the company's Evernorth Health Services and Cigna Healthcare segments.
"While we continue to believe the overall Medicare space is an attractive segment of the healthcare market, our Medicare businesses require sustained investment, focus, and dedicated resources disproportionate to their size within The Cigna Group’s portfolio," he added.
“We think this is hard to argue with, and the deal would also preserve strategic flexibility,” remarked Wells Fargo analyst Stephen Baxter in a Jan. 31 note to investors. “The deal is clearly financially attractive” for Cigna, he noted, “particularly over the near term given the challenging Medicare Advantage utilization backdrop.”
As of AIS Health press time, publicly traded insurers that had reported fourth-quarter and full-year 2023 earnings revealed ongoing increases in utilization that impacted earnings. Cigna is scheduled to release its latest financial results on Feb. 2.
“This announcement does not come as a surprise given there has been discussion in the press that [Cigna’s] Medicare business was for sale, despite the collapse of the [Humana] acquisition,” observed Mizuho Securities analyst Ann Hynes, referring to reported talks between Humana and Cigna about a possible combination. In a Jan. 31 note to investors, Hynes suggested that Humana “will likely come back to the table in 2025 when HUM’s earnings and growth trajectory stabilizes and the regulatory environment for large M&A potentially improves post the Presidential election. Based on past checks, the current [Dept. of Justice] does not favor when companies sell a business to gain approval for large M&A approved during the regulatory process, so the divestiture of the business now provides a clean slate for 2025.”
As part of the transaction, Cigna and HCSC entered a four-year service agreement allowing Cigna’s Evernorth segment to continue providing pharmacy benefit services to the Medicare businesses. Cordani added that Cigna still sees “significant, meaningful growth opportunities for government services, including Medicare, in our Evernorth Health Services portfolio of businesses.”
Upon completion of regulatory approvals and other customary closing conditions, HCSC expects the deal to close early in 2025.
]]>Humana Inc. on Jan. 25 introduced 2024 adjusted earnings per share (EPS) guidance of “approximately $16” — compared with the Wall Street consensus of $29.14. But that was after a regulatory filing indicated that inpatient utilization was higher than expected in the fourth quarter of 2023, primarily during November and December, “as well as a further increase in non-inpatient trends, predominantly in the categories of physician, outpatient surgeries, and supplemental benefits.” Humana’s stock plummeted after the disclosure, and the impact reverberated throughout the managed care sector, denting the share values of competitors including CVS Health Corp. and Elevance Health, Inc.
]]>Humana Inc. on Jan. 25 introduced 2024 adjusted earnings per share (EPS) guidance of “approximately $16” — compared with the Wall Street consensus of $29.14. But that was after a regulatory filing indicated that inpatient utilization was higher than expected in the fourth quarter of 2023, primarily during November and December, “as well as a further increase in non-inpatient trends, predominantly in the categories of physician, outpatient surgeries, and supplemental benefits, which emerged with the November and December paid claims data.” Humana’s stock plummeted after the disclosure, and the impact reverberated throughout the managed care sector, denting the share values of competitors including CVS Health Corp. and Elevance Health, Inc.
For the quarter ending Dec. 31, 2023, Humana reported an adjusted loss of 11 cents per share and an adjusted medical loss ratio (MLR) of 91.4% for its insurance segment. That was compared with a previous MLR estimate of 89.5% and a year-ago MLR of 87.4%. Adjusted earnings for the full year 2023 were $26.09, down from an earlier projection of “at least $28.25” and slightly up from $25.88 for the full year of 2022.
While discussing the latest earnings release — which was originally scheduled for Feb. 5 — executive leadership emphasized the firm’s confidence in the long-term attractiveness of the MA segment.
“The increase in utilization that emerged late in the fourth quarter was a significant deviation from an already elevated level impacting the industry,” outgoing CEO Bruce Broussard said in his prepared remarks. “Importantly, the MA program was designed to be dynamic and respond to changes in medical trends. Looking to 2025, we are evaluating MA pricing actions and expect earnings growth in other lines of business as well as our ongoing productivity and trend-mitigation initiatives to quickly restore our margins and resume a path of compelling earnings growth.” As of now, the company is anticipating between $6 and $10 of adjusted EPS growth in 2025, he added.
Chief Financial Officer Susan Diamond noted the firm would have more visibility into earnings once CMS released the 2025 preliminary rate notice, which later occurred on Jan. 31. Ultimately, “2025 may be a repositioning year where we may see lower-than-industry-average growth depending on the level of competitor pricing actions,” Diamond warned. However, “we would feel that we would be repositioning for sustainable growth on a go-forward basis in terms of membership at a more sustainable margin over the long term,” she said.
During the question-and-answer portion of the call, Broussard added that he thinks “the whole industry will possibly reprice” for next year, given persistent utilization trends and regulatory changes in 2025 and 2026.
For full-year 2024, Humana reiterated its membership growth outlook of 1.8%, or approximately 100,000 new enrollees, which was included in a Jan. 18 filing with the U.S. Securities and Exchange Commission. The company in that filing said it enrolled approximately 120,000 new members during the AEP but expects that to “decline slightly by year end due to the more limited sales opportunity post AEP and the expectation that the Company will see slightly higher attrition within its Dual Special Needs Plan (D-SNP) offerings over the next several months as members lose dual eligible status from the on-going Medicaid redetermination process.”
That anticipated lack of growth outside of open enrollment, however, “differs from competitor expectations,” noted Wells Fargo analysts on Jan. 23. Moreover, this is the third year in a row that Humana has “had significant difficulty forecasting MA enrollment,” pointed out Wells Fargo’s Stephen Baxter. “For valuation to sustainably re-rate, we think the company will need to instill significantly greater confidence it can grow membership in a predictable and repeatable manner beyond whatever near-term repricing is required,” wrote Baxter.
After initially warning that Humana’s updated estimates would “introduce significant incremental concern for MCOs with meaningful MA exposure,” Baxter in a Jan. 29 note said they reflected “a series of conservative assumptions and likely will foster some optimism that results could ultimately outperform.”
Other analysts were cautiously optimistic: Maintaining an outperform rating, Leerink Partners on Jan. 26 remarked on Humana’s “strong incumbency characteristics” that keep it positioned for MA growth. Leerink analysts also said they believe Humana can return to its long-term compound annual growth rate estimate of 13% by 2026 and hit its EPS target of $37.
And on Jan. 26, Mizuho Securities maintained a buy rating while downgrading its share price target from $550 to $400 and significantly cutting its adjusted EPS expectations to $16.10 (down from $31.45) and $24.00 (vs. $37.00) for 2024 and 2025, respectively. “We believe the downside risk to the reset expectations is low and, over time, there is more upside to our estimates and price target if utilization trends stabilize, the competitive environment eases and the company executes on margin expansion in Medicare Advantage,” wrote Mizuho Managing Director Ann Hynes.
Cantor Fitzgerald’s Sarah James, meanwhile, lowered Humana’s price target to $391 (from $597) in a Jan. 26 note outlining the firm’s incremental concerns. “We believe it could take until 2026 or 2027 to return to normalized margins. Management indicated it would likely take two selling seasons to return to target margins,” wrote James. “We believe benefit cuts and pricing for margin expansion in 2025 and 2026 is likely, and despite our belief that three other payors will also cut benefits again in 2025, we believe it’s likely, given the scope of margin recovery needed at Humana, it will grow below market rate.”
Reporting fourth-quarter 2023 financial results nearly a week before Humana’s regulatory filing, UnitedHealth Group on Jan. 12 posted an MLR of 85.0%, which came in 10 basis points higher than the company’s expectations and exceeded the Wall Street consensus of 84.1%. UnitedHealth attributed the higher (worse) MLR to increased RSV vaccinations and higher COVID-related costs, but said trends in outpatient care activity among seniors — which had driven up medical costs in the first half of the year — were in line with expectations. For 2024, it is guiding to an MLR of 84.0%, give or take 50 basis points.
During the company’s Jan. 12 earnings call, leadership emphasized the appropriateness of the insurer’s MA bids for 2024 and said it is prepared for lower MA reimbursement over the next three years. “We believe our assumptions of ongoing care activity and approach to supplemental benefit management are entirely appropriate for the environment we are planning for and feel positive about our positioning for growth entering this three-year period,” stated UnitedHealth CEO Andrew Witty.
The UnitedHealthcare insurance segment added about 100,000 more customers during the 2024 AEP, which UHC Medicare & Retirement CEO Tim Noel said was “a little bit light” compared to what the firm was expecting for the end of November, with more growth expected outside the AEP between February and December of this year. UHC reaffirmed its full-year MA membership growth projection of 450,000 to 550,000 lives, which Noel also referred to as “a little bit more modest than we have grown in past years” but “reflective of our response to the new risk model changes, what we saw in outpatient utilization patterns early in 2023, and reflecting that in the 2024 pricing.”
Analyses of the preliminary enrollment results from the 2024 AEP (which ran from Oct. 15 through Dec. 7) suggest that industry MA enrollment trends are “largely in line with” CMS’s projection of 33.8 million for 2024, according to a Jan. 18 research note from Citi analyst Jason Cassorla. Although CMS’s January 2024 enrollment report (which reflects enrollments as of Dec. 8) does not show the full impact of the AEP, Cassorla said it points to industrywide enrollment growth of between 7.0% and 7.5% year, compared with a 9.3% increase from December 2022 to December 2023.
Echoing a theme of scaled-back benefits and modest enrollment expectations in MA, Elevance Health, Inc. on Jan. 24 reported fourth quarter adjusted EPS of $5.62 and full-year 2023 adjusted EPS of $33.14, which were both above company expectations. Since 2018, Elevance has achieved a compound annual growth rate of nearly 16% and exceeded its long-term target range of 12% to 15%, CFO Mark Kaye boasted during the company’s Jan. 24 earnings call.
Operating revenue for the full year exceeded $170 billion, reflecting a year-over-year increase of 9.3%, due to growth in both the health benefits segment and the Carelon health services division. And for 2024, the company provided an initial adjusted EPS projection of “greater than $37.10, reflecting growth of at least 12% year over year,” he added.
But with its MA business accounting for just 17% of total revenue, Elevance’s medical cost trends appeared to be largely insulated from the utilization pressures experienced by its peers. The company posted improved MLRs of 89.2% for the fourth quarter and 87.0% for the full year, which it attributed to “premium rate adjustments in recognition of medical cost trend, most notably in our Commercial Health Benefits business,” stated Kaye. For 2024, Elevance is projecting a “flat benefit expense ratio of 87%, plus or minus 50 basis points,” which “reflects a consistent approach to reserves and a prudent thought process around utilization” and more specifically in MA, “continued appropriate expectations around utilization and medical cost trends,” added Kaye.
From Bank of America’s perspective, Elevance is “likely seeing the same pressure as everyone else, but since its margins were below target in 2022, it had already priced for 100s of basis points of margin improvement in 2023/2024,” wrote analyst Kevin Fischbeck in a Jan. 25 note to investors. “This has given them the cushion to weather the higher trend and still report flattish MA earnings.”
Elevance expects MA membership this year to be “roughly flat…on an organic basis, but earnings to improve,” stated President and CEO Gail Boudreaux during her prepared remarks. “While our plans continue to offer attractive and valuable benefits, we took intentional actions as part of our 2024 bid strategy to address product sustainability and, as such, we experienced greater-than-expected attrition in certain markets,” she explained. At the same time, MA “cost trends…continue to develop as we expected, and we are confident that the assumptions underlying our bids for 2024 are appropriate.”
In response to a question about lower enrollment expectations in MA, Boudreaux pointed out that Elevance “exited some markets very specifically that were underperforming.” Felicia Norwood, president of Elevance’s government health benefits segment, explained that with the coming risk model revisions, Elevance “really saw no path to long-term attractive, sustainable economics in those markets,” and those exits represent a decline of about 84,000 members. Norwood also noted that Elevance scaled back on supplemental benefits in Puerto Rico, which has a higher mix of duals, and expects a membership decline there of about 90,000 in 2024. On the U.S. mainland, meanwhile, Elevance is expecting some “disenrollment in certain markets due to very aggressive offerings by select competitors.”
]]>Among the 10 insurers rated by Moody’s — which account for approximately two-thirds of all MA members — aggregate earnings stemming from MA decreased by 2% from $10.8 billion in 2019 to $10.6 billion in 2022, the most recent year available. During that same period, the aggregate MA earnings margin fell from 4.9% to 3.4% and earnings per member dropped by 28% ($732 to $526). While those earnings remain higher compared to other segments, earnings per member in the Medicaid and commercial segments increased, offsetting the decline in MA for an overall increase of 2.7% to $216 per member, according to the Jan. 23 Moody’s report.
]]>Among the 10 insurers rated by Moody’s — which account for approximately two-thirds of all MA members — aggregate earnings stemming from MA decreased by 2% from $10.8 billion in 2019 to $10.6 billion in 2022, the most recent year available. During that same period, the aggregate MA earnings margin fell from 4.9% to 3.4% and earnings per member dropped by 28% ($732 to $526). While those earnings remain higher compared to other segments, earnings per member in the Medicaid and commercial segments increased, leading to an overall decline of 2.7% to $216 per member, according to the Jan. 23 Moody’s report.
“It has become increasingly clear that Medicare Advantage is facing some, to use the cliché, headwinds,” remarks Dean Ungar, a vice president and senior analyst at Moody’s, referring to the risk model revision that is being phased in starting this year and reports of increased utilization that will likely persist throughout 2024. After digging into its data on earnings and margins, Moody’s observed that MA “in theory is a great segment — earnings per member are high — but it also seems to be the case that it’s not that easy to be successful in it. And that’s even before you get to the risk revision and the utilization issue that impacted 2023,” Ungar tells AIS Health, a division of MMIT.
The Moody’s report is based on survey information that is confidentially reported and shared in aggregate. It suggests that while the dominant health insurers have grown earnings and generally maintained margins, smaller and newer entrants are struggling. According to AIS’s Directory of Health Plans, the three largest MA insurers — UnitedHealthcare, Humana Inc. and CVS Health Corp.’s Aetna — enroll 58.2% of the MA market as of January 2024.
“The big firms have scale. They have the ability [to] spread out some of the fixed costs (e.g., advertising) more efficiently,” says Ungar. “And some of the new entrants into Medicare Advantage don’t have the expertise in all aspects of running health insurance, like in terms of provider networks and all the kind of nuts-and-bolts things that you need to do to make this work.”
The MA market is “likely to remain under pressure,” and not just because of increased utilization, he adds. “The program is always facing funding pressure,” from the anticipated depletion of the Medicare Part A Trust fund — which the Medicare Trustees now expect to happen in 2031, an improvement over a previous projected date of 2026 — to likely reimbursement declines from CMS’s risk model revision.
Ungar points out that MA is still a competitive market, and some insurers may chase membership growth at the expense of profitability. Preliminary data from the 2024 Annual Election Period shows that Aetna, for example, outpaced its major MCO peers with an estimated 15% increase in MA enrollment. But its revenue this year will be impacted by the company’s Star Ratings for 2023, notes Ungar. And “with the risk model revision coming in, [which has been] referred to as a pay cut, the response has been to curtail some of the benefits in the plans.” UnitedHealthcare and Humana both made softer-than-usual benefit enhancements and captured more modest AEP enrollment than their usual trajectory, he continues.
Regardless of what happens with utilization, plans can reprice from year to year and include revised expectations in next year’s bids, points out Ungar. “I don’t think there’s any conclusive reason” for the increased utilization, he adds. There are more seniors seeking care that they put off at the height of the COVID-19 pandemic, there’s a rebound in staffing shortages, and clearly, the “pent-up demand” that was so often mentioned during the pandemic is coming to fruition.
While it’s possible that there will be a “natural ceiling” in MA penetration — which is now at about 50% of all Medicare-eligible enrollees — and these cost pressures will continue as the risk model changes are implemented, Ungar maintains that MA can be a profit center.
“The attractive parts of it are very attractive if you’re an insurer.…Seniors just consume a lot more health care, and you get paid for that. And if you can manage it properly, even if the net margins are a little bit lower than commercial, you’re still going to make more money. Four percent on $1,000 is better than like 5% on $400.…So it’s still attractive. I think it’s going to be all about [whether] you can manage it.”
Contact Ungar via Nicky Vogt at nicky.vogt@moodys.com.
]]>“If health plans don’t do a good job of educating or empowering the members with information, then the member effort increases, which frequently leads to member churn,” observes Srikanth Lakshminarayanan, senior vice president of the Center of Excellence for Healthcare Engagement Services at Sagility, a tech-enabled business process firm that supports payers and providers. “With MA membership increasing literally day by day, it’s important for health plans to make a conscious effort at doing a good job on member onboarding and retention. People who come out of their commercial plan into a Medicare plan need handholding of a different kind. They often need to know how Medicare works, what’s the supplemental spend, etc.”
]]>For our annual series of outlook stories on the year ahead in Medicare Advantage, AIS Health, a division of MMIT, asked multiple experts what they view as MA organizations’ “keys to success” in 2024 and what critical investments will help them unlock their goals. Responses ranged from using artificial intelligence and other digital tools to improve the member experience to strategically striking value-based agreements with providers.
“If health plans don’t do a good job of educating or empowering the members with information, then the member effort increases, which frequently leads to member churn,” observes Srikanth Lakshminarayanan, senior vice president of the Center of Excellence for Healthcare Engagement Services at Sagility, a tech-enabled business process firm that supports payers and providers. “With MA membership increasing literally day by day, it’s important for health plans to make a conscious effort at doing a good job on member onboarding and retention. People who come out of their commercial plan into a Medicare plan need handholding of a different kind. They often need to know how Medicare works, what’s the supplemental spend, etc.”
By one estimate, a plan with 75,000 members and 14% churn will lose nearly half a billion dollars in revenue and $71 million in projected gross profit, he adds. And research indicates that close to 20% of MA members leave during the first year of enrollment with a plan and 50% change plans within five years.
Meanwhile, the use of online tools to support their Medicare decision making during the AEP is on the rise. According to a McKinsey and Co. survey, 29% of respondents reported visiting health insurers’ websites during the 2022 AEP and 26% said they used CMS’s Medicare Plan Finder, compared with 14% and 19% in the 2020 AEP.
“Digital onboarding is an area where most investments are happening — new member packets using self-serve options, which ensures seamless onboarding — has really taken off, which helps with member experience and thereby member churn. All omnichannel services from text to invisible apps have seen a 15-to-20%-point increase in adoption rates,” observes Lakshminarayanan.
“Another significant advancement is the use of generative AI to provide an opportunity to better explain coverage and benefits. To an earlier point, if 29% of members don’t understand the benefits, sometimes they don’t know what to ask. This is where generative AI can help make it easy for members to understand their coverage. While this capability is new and very few health plans have been able to fully adopt this functionality, this will be a game changer in technology that will improve member experience by reducing their effort and improving their knowledge of their plan.”
Darren Ghanayem, a managing director at global management and technology consulting firm AArete, agrees that plans should invest in the digital experience they’re providing members. “Medicare Advantage members are increasingly tech savvy and want an easy, positive, engaging experience — both online and via mobile,” he tells AIS Health. “Other critical technology investments will include improving administrative functions — to automate manual processes and enhance data governance to flag or auto-correct corrupted data.”
Beyond digital investments, “[t]ightening up administrative costs will be a key to success,” says Ghanayem. “Now is the time for Medicare Advantage plans to optimize their processing and administration because lowering administrative costs will allow more revenue to be invested in member benefits. This can compound into a better member experience and a higher Stars score for future revenue.”
Additionally, MA plans “should focus on data quality and accuracy because data fuels quality programs and allows plans to make more informed decisions on where to focus. Without quality data, the plans may not focus on the right actions,” he says. “Plans should also scrutinize their prior authorization model of care to ensure it’s really creating the effective outcome for which it was designed.”
“With some evidence that enrollment in $0 premium plans has plateaued, perhaps some plans in some markets will pivot to focus more on enrollees that are more discerning than on affordability metrics alone,” weighs in Tricia Beckmann, a principal with Faegre Drinker Consulting. Additionally, “[k]nowing membership clinically and what is needed to succeed in the revamped Star Ratings program, from provider partnerships, product design, to care management programs” will be critical. “At the same time, it seems diabetes care is an important area to invest for any plan given the correlation among several diabetes care-related Star measures that has been studied.”
“Given the competitive trend of health plan consolidation, nationals’ market position and performance and over-arching pressure on payment rates (e.g., rate deceleration, impacts of the Inflation Reduction Act (IRA), Star measure complexity/rule changes, risk adjustment model changes),” HealthScape Advisors Principal Cary Badger and Managing Director Alexis Seedy Levy suggest the following winning strategies for regional plans:
As plans pursue the D-SNP space, they must consider integration of Medicare and Medicaid provider contracting strategies that ensure continuity of care, add Badger and Seeder Levy. “Health plans are now looking to leverage value-based contracting with strategic providers that look at the member’s whole care continuum and total cost of care, which leverage coverage across Medicare and Medicaid to optimize the benefit dollar,” they tell AIS Health. “This is a major shift from managing patients within a specific contract for coverage independently, creating potential gaps in care and cost management. This is also a result of regulatory trends to move D-SNP to an integrated contract with state and federal agencies, combined with the unique opportunity for D-SNP growth within the individual marketplace.”
“D-SNP continues to be a focus for plans looking to grow. The nationals have largely signaled this is their intent,” weighs in John Selby, senior vice president for strategy, sales & marketing with Rebellis Group. The impact of the IRA, which will require plans to manage an increasing share of responsibility for catastrophic drug costs, “may limit how much plans can continue to invest in supplemental benefits, however. A ‘good’ 2025 bid may mean not having to reduce supp benefits.”
When asked what other trends may continue to gain traction in MA, Selby points to plan/provider integration through partnerships or acquisitions. “Often these are more involved than value-based arrangements and may include co-branding, marketing [and] the use of data to maximize their potential,” he says.
“I think the advent of value-based contracting and risk sharing models in a larger way with providers is only going to increase in ’24 and ’25,” concurs Steve Arbaugh, managing principal and CEO with ATTAC Consulting Group. “One of the things that you’re seeing through some of the majors, is you’ll see them begin to focus on vertical integration — they’re buying up primary care practices, other delivery parts of the delivery system, so on and so forth. So they’re becoming more like provider-sponsored plans, but they are working to control their underlying cost structures in critical markets in a very different way, other than…just paying somebody trying to put in utilization management tools. I think that’s a trend that will continue as we move forward in the next couple of years.”
“Value-based care will continue to be a challenge, but it’s essential to keep working this relationship to ensure mutual benefit for providers, payers and members,” adds Ghanayem.
Contact Arbaugh via Kimberly McCall at kmccall@attacconsulting.com, Badger and Levy at cbadger@healthscape.com, Beckmann at tricia.beckmann@faegredrinker.com, Ghanayem at dghanayem@aarete.com, Lakshminarayanan via Addie Reed at addie.reed@finnpartners.com, or Selby at jselby@rebellisgroup.com.
]]>K. John McConnell, Ph.D., the study’s lead author, tells AIS Health that Washington is just one of many states that in recent years have moved away from so-called carve-out models in Medicaid, where one health plan handles physical health and a separate behavioral health organization manages behavioral health. Most states now have carve-in designs where states contract with managed care organizations (MCOs) that are responsible for payment for all health care services for their members.
]]>K. John McConnell, Ph.D., the study’s lead author, tells AIS Health that Washington is just one of many states that in recent years have moved away from so-called carve-out models in Medicaid, where one health plan handles physical health and a separate behavioral health organization manages behavioral health. Most states now have carve-in designs where states contract with managed care organizations (MCOs) that are responsible for payment for all health care services for their members.
“There was probably some hope that just doing that simple administrative fix [of moving to a carve-in model] would really be a catalyst for true integrated care at the delivery system level,” says McConnell, director of the Center for Health Systems Effectiveness at Oregon Health & Science University. “Our paper suggests you need more than that.”
Heather Saunders, a post-doctoral fellow at KFF’s Program on Medicaid and the Uninsured, says the study results are “very interesting,” particularly because there has not been much research into the effectiveness of integrating care in Medicaid. She also notes that while states have varied approaches to their Medicaid programs, many are having MCOs manage both behavioral and physical health because it in theory could lead to a more simplified approach for providers and patients. However, that is not always the case, and Saunders notes that some states have different MCOs serving select counties and/or regions.
“From a provider perspective, they’ve got potentially multiple managed care organizations with multiple different administrative processes and documentation requirements,” Saunders says. “And that also filters down to the enrollee level. They’re kind of having to navigate and figure a lot of this stuff out, as well….If someone’s feeling depressed, anxious, can’t get out of bed, it adds layers that might make it even more confusing to navigate these complicated systems.”
The JAMA Health Forum study authors noted that Washington phased in its integrated model with some counties transitioning in 2016 and others over the ensuing four years. By 2020, all the state’s counties had carve-in models.
The researchers compared measures before and after financial integration, using claims-based data of health services use, quality and health-related outcomes for more than 1.4 million people ages 13 to 64 years old who enrolled in Medicaid MCOs in Washington between Jan. 1, 2014, and Dec. 31, 2019, and remained in the same county.
The authors also evaluated measures associated with social determinants of health, including rates of homelessness, arrests and employment. They classified enrollees into three groups: those with serious mental illness (SMI), those with mild or moderate mental illness (MMI) and those classified as having no mental illness.
The researchers wrote that “across all three enrollee types, we found no significant changes in claims-based utilization measures” or quality metrics when comparing before and after their counties transitioned to the carve-in model. They added that “most claims-based measures of outcomes were also unchanged,” although they said there was a slight decrease in cardiac events among enrollees with MMI, as well as small decreases in employment and small increases in arrests among enrollees with SMI.
In addition to examining claims, the researchers conducted interviews with 10 community leaders who participated in the transition to a carve-in model, eight behavioral health agencies (BHAs) and six MCO administrators.
“Interviewees described the transition to [integrated managed care] as an administrative change but not a care delivery change,” they wrote. “Informant discussions indicated that [integration] primarily affected the structure and financing of managed care, not the delivery system.”
McConnell notes that the move to a carve-in model has been more difficult for mental health providers because they were accustomed to working with BHAs rather than MCOs.
“The primary care clinics, a lot of them were only vaguely aware of this transition, whereas the behavioral health clinics, it really was a massive shift,” he says. “They had new contracts, new partnerships, all of that type of stuff.”
McConnell adds that the “biggest surprise” of the study was the lack of providers using collaborative care model (CoCM) codes, which Washington first introduced in 2018 to reimburse clinicians for the time they spend coordinating physical and behavioral health. From 2018 to 2019, only 0.05% of outpatient specialty or primary care mental health claims used CoCM codes.
“I think what people were hoping was if you have a specific CPT code out there and the state is saying we want you to integrate and we’ll pay you to integrate, then we’d see a lot more use of those codes,” McConnell says. “But they essentially didn’t get used at all.”
Despite the potential challenges of integrating behavioral and physical health, states have continued to use carve-in models for their Medicaid programs. A KFF report published in May 2023 found the majority of states have MCOs cover behavioral health services. However, the responses varied based on the type of service. A total of 44 states responded to the survey by December 2022, although the response rates were different for each question.
For instance, 22 states that responded to the survey always carved in specialty outpatient mental health, while eight always carved out those services; 23 states always carved in inpatient psychiatric hospital services, while five always carved out those services; and five always carved in qualified residential treatment programs, while 17 carved out those programs.
Most states also had multiple behavioral health delivery system models depending on the type of service, according to the KFF survey. Of the 44 states that responded, 42 had a fee-for-service model for at least one behavioral health service, 30 had a managed care model, 11 had a limited benefit prepaid health plan, eight had an administrative services organization and five had a county/government-administered ASO. Those figures were all for fiscal year 2022.
“Each state has a different way of delivering services, and it varies by type of service and by population,” Saunders tells AIS Health. “It’s quite complicated and potentially confusing. That may impact access to care.”
North Carolina is one of the states that has recently integrated behavioral and physical health. In January 2022, the North Carolina Dept. of Health and Human Services launched a program to expand integrated mental and primary care services in the state’s primary care clinics.
Shannon Dowler, M.D., chief medical officer for North Carolina’s Medicaid program, said during a recent Manatt webinar that the state patterned the program after the CoCM that was developed at the University of Washington in the 1990s. Since then, more than 90 randomized controlled trials have evaluated the model. Most of the studies have found the CoCM “to be more effective than usual care for patients with depression, anxiety, and other behavioral health conditions,” according to the University’s Advancing Integrated Mental Health Solutions Center.
In the CoCM, the primary care provider works with a behavioral health manager and a psychiatric consultant to serve patients. The team creates a treatment plan for patients with clearly defined goals and tracks patients’ progress in a registry. Providers are also reimbursed for the quality of care they deliver and achieving clinical outcomes.
Dowler noted that nearly 80% of Medicaid patients received behavioral health care via their primary care providers, so those providers are crucial to understanding patients’ conditions, although it would be beneficial if those people also had access to a trained mental health professional.
Challenges exist for adopting a CoCM, according to Dowler. She says it costs a primary care practice about $30,000 to implement the program, which she admits “is probably a pretty conservative estimate” and expensive for small providers, especially those in rural areas. It is also sometimes difficult to recruit and train a behavioral health manager, who Dowler said “is probably the most important person on that three-person team for really successfully implementing the model.”
As of last month, about 20 primary care practices in North Carolina had already implemented the CoCM, while Dowler estimated another 20 are in the midst of implementing it. The state plans on measuring outcomes such as the rates of hospitalizations and emergency room visits and whether providers are billing for the CoCM codes, which encourage them to integrate behavioral and physical health. North Carolina will also track provider satisfaction with the model.
Hugh Tilson Jr., executive director of North Carolina Area Health Education Centers, noted during the webinar that he hopes the state “can create not only a financially viable model that translates into better outcomes” but also help providers “feel like they are doing a better job, managing issues better [and] providing better patient care.”
“I think the timing of this is really, really good,” Tilson Jr. said. “I’m optimistic we’ll see positive results.”
Contact McConnell at mcconnjo@ohsu.edu and Saunders via Tammie Smith at tammies@kff.org.
]]>MedPAC projects that in 2024, the government will pay $88 billion more than it would pay if MA members were instead beneficiaries of fee-for-service (FFS) Medicare, continuing a trend that has proliferated in recent years. These overpayments, MedPAC analysts outlined for the commission, are driven by MA plans’ enrollment of a largely healthy risk pool, which is then subject to “coding intensity” (i.e., the higher coding patterns due to financial incentives that don’t exist in FFS Medicare).
]]>MedPAC projects that in 2024, the government will pay $88 billion more than it would pay if MA members were instead beneficiaries of fee-for-service (FFS) Medicare, continuing a trend that has proliferated in recent years. These overpayments, MedPAC analysts outlined for the commission, are driven by MA plans’ enrollment of a largely healthy risk pool, which is then subject to “coding intensity” (i.e., the higher coding patterns due to financial incentives that don’t exist in FFS Medicare).
The higher coding by MA organizations will drive an estimated $54 billion in additional payments, while favorable selection will contribute approximately $36 billion, analysts estimated. “Favorable selection occurs if risk-standardized MA spending would have been lower than the local fee-for-service average,” explained Luis Serna, principal policy analyst and co-author of the status report.
“Higher coding organizations have a competitive advantage because they receive larger payments for enrolling the same beneficiaries as other organizations, and they can offer more extra benefits and attract new enrollees simply because of their coding efforts,” said Principal Policy Analyst Andrew Johnson, Ph.D., who co-presented with Serna.
That’s as the market approaches the Herfindahl-Hirschman Index (HHI) “highly concentrated” threshold — the mark the Dept. of Justice and the Federal Trade Commission use to review mergers. The status report noted that 58% of all MA members are served by one of the three largest participating payers: UnitedHealthcare, Humana Inc. and CVS Health Corp.’s Aetna. Drilled down to the local level, most markets are already “highly concentrated.” The three largest payers in each county typically enroll more than 80% of all MA enrollees, and the effect is even more pronounced in rural counties.
Consolidation is a concern because decreased competition can lower quality, drive up premiums and reduce the availability of supplemental benefits, the commissioners noted.
“We have allowed MA to buy the market,” Lynn Barr, the founder of Caravan Health and a MedPAC member, said at the meeting. “That is why MA is growing. It’s not because the quality is so great…We’ve created untenable incentives for people to be in Medicare Advantage, and then we pay brokers $600 to recruit them, and they get $300 a year every year they stay in that MA plan.”
Many of the commissioners struck similar notes throughout the meeting. But Brian Miller, M.D., assistant professor of medicine and business at Johns Hopkins University, called the analysis “fundamentally flawed” and accused the commission of holding a political bias against MA.
"It’s not lost on me that this discussion is coming immediately prior to the CMS Medicare Advantage rate notice,” Miller said of the notice that was subsequently released on Jan. 31. “The chair [Harvard’s Michael Chernew, Ph.D.] has noted he is in regular communication with CMS leadership. This gives the appearance that MedPAC as an independent, thoughtful policy organization is being hijacked for partisan political aims, while the organization’s analysis appears to be slanted to arrive at a foregone conclusion, in order to set up political cover for a massive MA rate cut.”
He continued: “I think this is important for the public record because it gets to how balanced we are and how we approach programs, and this didn’t really feel very balanced. “I think it’s really important again that it’s a neutral, thoughtful policy analysis.”
While Miller’s fellow commissioners didn’t voice support for his argument, the Better Medicare Alliance (BMA), an industry trade group that includes insurers, also took issue with the report.
“We have concerns about MedPAC’s methodology and how they reached their conclusions,” BMA President and CEO Mary Beth Donahue said in a statement. “The implications for beneficiaries, especially given that Medicare Advantage serves 51 percent of the Medicare population, including vulnerable and underserved communities, would be consequential if policymakers advanced policies without complete information and acknowledging the concerns raised in today’s meeting.”
AHIP, too, has raised concerns about MedPAC’s reporting in recent years.
]]>The Biden administration on Jan. 25 issued a request for information seeking feedback on the best way to enhance Medicare Advantage data capabilities and increase public transparency. In a press release, HHS noted that “transparency is especially important now that MA has grown to over 50% of Medicare enrollment, and the government is expected to pay MA health insurance companies over $7 trillion over the next decade.” To that end, the agency said it’s seeking data-related input on aspects of the MA program including access to care, prior authorization, provider directories and networks, supplemental benefits, marketing, care quality and outcomes, value-based care arrangements and equity, and “healthy competition in the market, including the effects of vertical integration and how that affects payment.” CMS is accepting comments through May 29.
Citing reports of overwhelmed seniors being “bombarded” by third-party marketers providing misleading information about plan options and the “largely unregulated sale of seniors’ information to lead-generators” and third-party marketing organizations (TPMOs), Senate Finance Committee Chair Ron Wyden (D-Ore.) wrote to five major insurance distributors seeking detailed information about their business practices. The Senate Finance Committee last fall held a hearing to discuss ways to rein in misleading marketing practices in Medicare Advantage and improve seniors’ shopping experiences. At the time, Wyden said his staff planned to conduct “further inquiry” into the “slimy practices” of third-party Medicare marketers, following a November 2022 report on “aggressive marketing tactics” observed by state insurance commissioners and State Health Insurance Assistance Programs. In letters dated Jan. 11, Wyden asked the CEOs of eHealth, Integrity Marketing Group, GoHealth, SelectQuote and Willis Towers Watson (TRANZACT) to provide, among other things, a list of the TPMOs and lead generators from which they purchased leads during 2018 and 2022. They're also being asked to share how many individuals they enrolled in an MA plan during the time between 2018 and 2022, how many individuals disenrolled within three months of their enrollment, and how many individual leads they purchased from a TPMO or lead generator in 2018 and 2022. Wyden requested the information be returned by Jan. 31.
Since North Carolina implemented Medicaid expansion under the Affordable Care Act on Dec. 1, 2023, more than 314,000 state residents have gained access to Medicaid as of Jan. 12, according to an enrollment update from the NC Dept. of Health and Human Services (NCDHHS). Approximately 273,000 of those beneficiaries were automatically enrolled after qualifying for Family Planning Medicaid, while another 41,000 signed up for coverage on their own. Moreover, about 25% of new enrollees reside in rural counties, while the other 75% live in urban areas, according to the NCDHHS’s Medicaid expansion enrollment dashboard.
Black Medicare Advantage beneficiaries and lower-income enrollees were more likely to choose MA plans with dental or vision benefits, according to a new study published in JAMA Health Forum. The exploratory, observational cross-sectional study used data from the 2018 to 2020 Medicare Current Beneficiary Survey linked to MA plan benefits. Based on a nationally representative sample of roughly 8,000 beneficiaries, researchers observed that a higher percentage of racial and ethnic minority beneficiaries, individuals with lower income, and beneficiaries with less educational attainment were enrolled in plans with a dental, vision or hearing benefit. For example, 77.1% of Black beneficiaries and 68.3% of white beneficiaries were enrolled in a plan with a dental benefit. Meanwhile, 88.2% of Black beneficiaries and 88.0% of Hispanic beneficiaries were in a plan with a hearing benefit, compared with 85.4% of white enrollees in the sample. As the federal government prepares to adjust the Star Ratings for health equity, implements a new risk model that may lead to lower risk adjusted payments and “allows increasing flexibility in supplemental benefit offerings, these findings may inform benefit monitoring for MA,” the study authors concluded.
The New Hampshire Department of Health and Human Services (DHHS) approved three new contract awards for the state’s managed Medicaid program. All three of the selected MCOs — AmeriHealth Caritas, Centene Corp.’s Granite State Health Plan and Boston Medical Center’s Well Sense Health Plan — are incumbents to the program. The five-year contracts are slated to begin Sept. 1, 2024, and they emphasize “a primary care and prevention model of access to services through a more meaningful and holistic role of providers in the delivery of managed care services,” stated DHHS. New Hampshire currently serves 163,715 Medicaid beneficiaries, with more than 99% enrolled in managed care plans, according to AIS’s Directory of Health Plans.
PERSON ON THE MOVE: Michael Carson was named president and CEO of WellCare, where he will be responsible for the Centene Corp. subsidiary’s Medicare business performance, strategy and growth. Carson’s previous three CEO stints were at CareAbout, Bright Health Plan and Harvard Pilgrim Health Care. He succeeds Richard Fisher, who was appointed to the operations leadership team under Chief Operating Officer Susan Smith.
]]>The suit was filed by Elevance and affiliated entities in 18 states on Dec. 29 in the U.S. District Court for the District of Columbia. In its complaint, Elevance contends that CMS’s actions were “unlawful, and arbitrary and capricious” when it applied Tukey to the 2024 Star Ratings while contradicting its own policy of establishing “guardrails” for determining Star measure cut points. It also alleges that CMS was arbitrary and capricious when calculating the cut points and determining the plaintiffs’ Star Rating on a single Part D measure — Call Center-Foreign Language Interpreter and TTY Availability.
]]>The suit was filed by Elevance and affiliated entities in 18 states on Dec. 29 in the U.S. District Court for the District of Columbia. In its complaint, Elevance contends that CMS’s actions were “unlawful, and arbitrary and capricious” when it applied Tukey to the 2024 Star Ratings while contradicting its own policy of establishing “guardrails” for determining Star measure cut points. It also alleges that CMS was arbitrary and capricious when calculating the cut points and determining the plaintiffs’ Star Rating on a single Part D measure — Call Center-Foreign Language Interpreter and TTY Availability.
Historically, a lawsuit like Elevance’s has not been common practice, but it involves “a process that is the most complicated and arguably contentious piece of regulatory interpretation…since Stars came out of the demo phase,” says Melissa Newton Smith, founder and senior advisor of the newly launched Newton Smith Group, a firm focused on Medicare Advantage and Star Ratings services.
CMS in June 2020 finalized plans to begin using the Tukey methodology for removing outliers before calculating cut points for measures not directly related to member experience. CMS at the time said it would delay the application of Tukey until the 2022 measurement year (which is reflected in the 2024 ratings). The change was erroneously removed from the Electronic Code of Federal Regulations (CFR), and CMS had to issue a technical correction to properly codify the regulatory language in the December 2022 publication of its proposed MA and Part D rule for 2024.
When Tukey was finally applied to the ratings, the outcome rocked the industry. For 2024, only 42% of MA Prescription Drug (MA-PD) contracts achieved an overall rating of 4 Stars or higher — qualifying them for quality bonus payments in 2025 — compared with approximately 51% of contracts in 2023. According to Smith, the application of Tukey raised 19 cut points by more than 10% for the 2024 Star Ratings, and 74 plans lost their fourth star.
Elevance was one of the most severely impacted insurers: Its three biggest contracts fell below the 4-star threshold, and 35.1% of its members were estimated to be enrolled in a 4-star contract this year, compared to 64.4% in 2023. During an October conference call to discuss third-quarter 2023 earnings, the company called out lower consumer survey scores (e.g., Consumer Assessment of Healthcare Providers and Systems) and the application of Tukey for non-CAHPS measures as causing the significant decline.
The Elevance suit picks up on “two detailed technical elements” around the implementation of Tukey, starting with the omission of Tukey from the CFR, Smith tells AIS Health, a division of MMIT. “My read of the lawsuit is that Elevance is first claiming that that confusing operations environment while the sentence was missing introduced a lack of clarity during the measurement period,” she remarks.
But the more compelling component of Elevance’s argument is that CMS’s implementation of Tukey in the calculations is “inconsistent with the verbiage codified inside the CFR,” says Smith, who was senior vice president for stars and strategy with Gorman Health Group and most recently served as chief consulting officer at Healthmine.
CMS in an April 2019 final rule made other changes to the way it calculates cut points for non-CAHPS measures by adding mean resampling and guardrails that were intended to prevent the cut points from increasing or decreasing by more than 5% each year — a move that was also intended to increase the predictability and stability of the cut points. But after observing the “unintended consequences of the policy” with the 2022 and 2023 Star Ratings, CMS in its December 2022 rule proposed to remove the guardrails that it claimed restricted maximum allowable movement of non-CAHPS measures cut points and did not fully take into account industry shifts in performance.
CMS further explained: “[T]he combination of mean resampling and Tukey outlier deletion, with Tukey outlier deletion being finalized after the bi-directional guardrails policy, will provide sufficient predictability and stability of cut points from one year to the next when there are not significant changes in overall industry performance, but at the same time allow cut points to adjust when there are significant changes in performance as there was during the COVID–19 pandemic. We believe it is important for cut points to be allowed to shift by more than 5 percentage points when there are unanticipated, large changes in industry performance in the future.”
Elevance Health, Inc. et al vs. HHS et al (1:23-cv-03902-RDM) highlights that very quote and points out that the technical notes for the 2024 Star Ratings “reaffirmed the importance of the guardrails.” But when CMS determined cut points for the 2024 Star Ratings, it did so assuming Tukey had been applied to the simulated cut points for the 2023 Star Ratings, rather than using the actual 2023 cut points, therefore increasing the cut points by more than 5 percentage points and acting contrary to law and its own rules, argues the complaint.
What’s important about those arguments is that CMS said in preamble language in the April 2019 and June 2020 final rules that it was going to perform “a rerun of the data from the prior year when one of the new mechanisms is put in place…so that you’re comparing apples to apples,” explains Lesley Yeung, member of the healthcare and life sciences practice of Epstein Becker Green. “But that’s not how it’s written in the regulations, and my argument would be that they never mentioned it in anything other than preamble language up until the 2024 technical notes,” which weren’t even made available until after the plan preview period, she adds.
Between every August and September preceding the October release of the next year’s Star Ratings, plans have two brief periods during which they can preview their performance results, and many plans were thrown when CMS applied the 5% guardrails to the simulated 2023 Star Ratings and not to the official 2023 Star Ratings, explains Smith.
Yeung agrees that leading up to that time, it wasn’t obvious to plans that the simulated data was going to be used. “There wasn’t enough notice that they were going to rerun the data based on a simulation to compare apples to apples, [as though] Tukey had been implemented the year before,” says Yeung. “To my knowledge, this is the first time that the prior year’s data was rerun before applying the guardrails, even though CMS suggested in preamble language that they would rerun the data for mean resampling too and that was introduced before Tukey. And so, CMS’s previous performance, and then a lack of notice, makes an argument that plans were a little bit blindsided by this. CMS has and is going to continue to point to the fact that they discussed it in the preamble language, but the APA argument comes in because previous case law basically says that preamble language, while informative, is not given the same level of judicial deference as the codified regulatory language.”
Smith says she has worked with plans that were equally blindsided and harmed by this process, and she would not be surprised if other insurers filed legal challenges. “If a legal scholar determines the references to guardrails for purposes of simulation data is not legally defensible, then CMS may have to recompute the 2024 Star Ratings to reapply the guardrails before the quality bonus provisions can be applied,” she predicts. And if the argument is successful, “it’s my interpretation that all it does is delay the effective implementation of Tukey by a year and smooth it instead of the huge jump in many of the cut points we experienced in the 2024 Star Ratings.”
When contacted by AIS Health, a CMS spokesperson says the agency generally does not comment on matters in litigation.
Elevance in the suit says these and other cut point calculations caused it to lose “hundreds of millions of dollars in Quality Bonus Payments and rebates.” Regarding the foreign language interpreter/TTY measure in particular, CMS seeks “to evaluate the plan’s accessibility by using ‘secret shopper’ callers to call the plans,” states the complaint. “With respect to Plaintiffs, Defendants incorrectly concluded that they missed a single call, despite Defendants’ own evidence that the call never even connected to Plaintiffs’ phone lines through no fault of Plaintiffs. Based upon that erroneous conclusion as to the single call, Defendants also determined that Plaintiffs failed to meet the cut point for a 5-Star rating for this measure.”
That measure, according to the suit, assesses the percentage of time that TTY services and foreign language interpretation were available when needed by callers to the Prescription Drug Plan’s prospective enrollee customer service line, and it assigns 5 Stars when 99% or more of CMS’s secret shopper calls are counted as successful. Elevance argued in the suit that achieving such a rate was “mathematically impossible” based on CMS’s statistical modeling and the denominator range it used (61 to 64) and did not consider statistical equivalence. It pointed out that success rates of 60/61, 61/62, 62/63 and 63/64 would never produce 99%, and only a perfect score would achieve a 5-Star rating (Elevance achieved 98.4%).
“Setting a success rate that is impossible to achieve is arbitrary and capricious,” the insurer contended. Further, Elevance argued that there is no evidence that the single call CMS counted as missed ever connected with Elevance’s call center. Elevance estimated that the supposed missed call equates to an approximate impact of $190 million in missed bonus payments and suggests that other MAOs “suffered the same fate…by having TTY calls that never connected to their system counted against the plan.” Elevance noted that it submitted reconsideration requests to CMS for the contracts impacted but says that process is “insufficient to address the issues that Plaintiffs challenge.”
“One phone call does make a difference — we’ve seen that with a number of plans,” says Tina Dueringer, vice president for clinical and quality with Rebellis Group. “But there’d have to be a technical reason” for CMS to change its practice, like if the missed call was erroneously identified. “They are saying the phone call never occurred…and that it shouldn’t count against them.”
Dueringer says this situation exemplifies why plans should establish teams that include someone from every part of the organization who is monitoring changes in Stars and the impact to enrollees. That way, “you have visibility if this phone call did take place, [and] that leader in that department should be speaking to this at some kind of governance meeting so that they have visibility this is happening.”
Contact Dueringer at tdueringer@rebellisgroup.com, Smith at msmith@newtonsmithgroup.com and Yeung at lyeung@ebglaw.com.
]]>Modern Healthcare on Jan. 8 broke the news that consistently poor Star Ratings for Centene Corp.’s WellCare Health Insurance of Arizona and WellCare Health Insurance of North Carolina would force the exits of two Medicare Advantage Prescription Drug (MA-PD) contracts from the MA market. According to separate letters to the subsidiaries dated Dec. 27, CMS decided to impose intermediate sanctions after WellCare failed to achieve a Part C summary Star Rating of at least 3 Stars in three consecutive rating periods for the specific contracts. That means the contracts had to stop enrolling new Medicare beneficiaries and cease all marketing activities, effective Jan. 12.
]]>Modern Healthcare on Jan. 8 broke the news that consistently poor Star Ratings for Centene Corp.’s WellCare Health Insurance of Arizona and WellCare Health Insurance of North Carolina would force the exits of two Medicare Advantage Prescription Drug (MA-PD) contracts from the MA market. According to separate letters to the subsidiaries dated Dec. 27, CMS decided to impose intermediate sanctions after WellCare failed to achieve a Part C summary Star Rating of at least 3 Stars in three consecutive rating periods for the specific contracts. That means the contracts had to stop enrolling new Medicare beneficiaries and cease all marketing activities, effective Jan. 12.
The Arizona contract, H5199, has been in operation since Jan. 1, 2018, and as of the 2024 Star Ratings release in October 2023, had three consecutive years of low Part C summary ratings, which qualify a contract for termination. The North Carolina contract, H7175, has been in operation since Jan. 1, 2020, and it also had three consecutive years of low Part C ratings as of last fall. Each contract scored summary ratings of 2.5, 2 and 2.5 for 2022, 2023 and 2024, respectively, according to the letters. CMS said it would terminate both contracts at the end of this year.
Meanwhile, a third contract termination was issued against Zing Health. CMS on Dec. 27 informed the Chicago-based plan that it was imposing intermediate sanctions effective Jan. 12 and at the end of this year terminating contract H7330. The MA-PD plan earned a Part D summary rating of 2.5 Stars for three years in a row.
To Tina Dueringer, vice president of clinical and quality with Rebellis Group, this is just the beginning of CMS’s heightened enforcement of MA plans and quality. “Over the last five years or so, especially once COVID hit, and not only just for Stars…CMS has really been lenient for plans on the enforcement side. I think we’re seeing a pretty dramatic changeover now, especially from last year,” remarks Dueringer.
CMS in recent years has also finalized important changes to the Star Ratings “that have changed the playing field,” she adds. For one, CMS’s recent implementation of the Tukey outlier deletion methodology caused an industrywide shift in ratings and prompted a legal challenge from Elevance Health, Inc. By removing outliers from the cut point calculations for measures not directly related to member experience, it will be harder for top performing plans to maintain 4 and 5 stars, while further pushing down poor performing plans, Dueringer suggests to AIS Health, a division of MMIT.
Also coming is the introduction of the Health Equity Index (HEI), which will replace the current reward factor and incentivize insurers to address social risk factors and disparities in certain quality measures. The HEI will likely have “the biggest impact over the next couple years,” predicts Dueringer. “Plans don’t realize it’s going to impact them the way that it will until they start looking at the data,” and for some plans so far, the data has been “pretty shocking.”
Measurement begins this year for the HEI, which will be reflected in the 2027 Star Ratings. And CMS will only be rewarding those plans in the top third of qualifying contracts. “What I’m seeing is plans are not prepared for that. They have to start looking at their population that actually qualifies for the health equity index” and how they are servicing members with social risk factors, such as those receiving the low-income subsidy, “and then comparing them on a national level with other plans to see how they’re doing,” Dueringer explains.
“So not only are you looking at Stars through your membership as a whole, now you’re looking at it to say how are you doing with this membership that has social needs," she continues. "And they’re the hardest to reach — they’re the homeless, the people who need to have care and typically don’t get care. Now that those interventions have to be based and built, how do we reach those members and do this work? Before it was a priority, but I don’t know if it was prioritized enough compared to where it should be.”
In the case of Centene, CEO Sarah London in public comments recently stated that the company’s focus in turning around its Star Ratings began with the administrative and operational measures, with increased attention on metrics such as service levels, customer satisfaction scores, complaints and appeals and grievances.
“[We] feel good about how that tracked for the first year and continuing to hold progress on that front,” London said during the 42nd Annual J.P. Morgan Healthcare Conference, held Jan. 9-11 in San Francisco. Moving forward, Centene will shift its focus to HEDIS measures and the Consumer Assessment of Healthcare Providers and Systems (CAHPS) and make “sure that our members are getting in to see their providers, that those gaps in care are getting closed so that those HEDIS measure numbers tick up. And then there’s a very high correlation between members seeing their doctors and then responding positively on the CAHPS surveys, so you get a twofer if you focus on that.”
She added that Centene has made significant investments in its member outreach and provider engagement capabilities to make sure that enrollees are seeing their providers, and the insurer has enhanced its network where there may be gaps. London reiterated prior statements that Centene aims to move 85% of its members into contracts with 3.5 Stars or higher by October 2025.
In a LinkedIn post, ATRIO Health Plans Chief Quality Officer Jessica Assefa noted that the recent contract terminations and others “could have a ripple effect” on MA Star Ratings and the potential to earn HEI reward points in the 2027 ratings.
“The removal of consistently low-performing plans will intensify competition among remaining plans striving for 4-star or higher ratings. Plans below this threshold may find it challenging to stand out in the increasingly competitive landscape,” wrote Assefa.
“The removal of low-performing SNPs (like Centene’s WellCare plans) could raise the bar for top-third performance nationally, making it more challenging for plans to earn HEI reward points in 2027. Plans need a strategic approach considering both star ratings and potential HEI rewards,” she added. A good first step would be “retrieving your plan’s data” from the Health Plan Management System “to assess your eligibility for enrollment or proximity to meeting the criteria,” she suggested. “If eligible, examine your plan’s measure level data to pinpoint unique improvement opportunities and identify overarching themes. For instance, if your plan excels in CAHPS for members with [social risk factors] but falls short in HEDIS measures, delve into specific domains such as preventive care, disease management, etc. Or, if CAHPS, identify pain points such as health plan customer service or access to care, and formulate improvement strategies accordingly.”
Contact Dueringer at tdueringer@rebellisgroup.com.
]]>Researchers from CMS, the FDA and policy research firm Acumen LLC studied claims and encounter data to calculate market share for 20 biosimilars across seven product categories. Biosimilar uptake was higher for MA members in every category but bevacizumab, the generic name for Genentech’s targeted cancer therapy Avastin. Avastin currently has four biosimilars available, with a fifth approved last month.
]]>Researchers from CMS, the FDA and policy research firm Acumen LLC studied claims and encounter data to calculate market share for 20 biosimilars across seven product categories. Biosimilar uptake was higher for MA members in every category but bevacizumab, the generic name for Genentech’s targeted cancer therapy Avastin. Avastin currently has four biosimilars available, with a fifth approved last month.
Researchers noted that bevacizumab can be used off-label to treat age-related macular degeneration, and further stratified the data by ophthalmic vs oncologic usage. While ophthalmic biosimilar use was “very low,” biosimilar uptake for bevacizumab’s cancer indications was 1.1 times greater in MA than TM, similar to the other categories. “This suggests the apparent greater biosimilar use in TM when aggregated across indications is due to the differential dilution of market share by the large overall proportion of ophthalmic usage,” the authors wrote.
Biosimilar use is likely higher in MA vs. TM because MA payment practices and utilization management tools like preauthorization encourage the use of lower-cost products, researchers noted. Further research could account for any population differences between the two groups that might also drive differences in uptake.
“Current estimates of biosimilar savings are greater than $20 billion, meaning each percent increase in overall biosimilar uptake could represent hundreds of millions of dollars,” the study authors concluded. “It is important to validate the increased biosimilar uptake observed in MA and investigate potential mechanisms through which managed care may encourage greater biosimilar use.”
]]>The proposed rule was issued on Nov. 6 and published in the Nov. 15 Federal Register and contained provisions aimed at improving access to behavioral health, enhancing transparency around supplemental benefits, streamlining enrollment options for dual eligibles, encouraging biosimilar product substitution, and assessing the impact of prior authorization policies on health equity. CMS accepted comments through Jan. 5, and it received hundreds of comment letters addressing the rule’s more controversial proposals seeking to place new limits on agent and broker compensation.
]]>The proposed rule was issued on Nov. 6 and published in the Nov. 15 Federal Register and contained provisions aimed at improving access to behavioral health, enhancing transparency around supplemental benefits, streamlining enrollment options for dual eligibles, encouraging biosimilar product substitution, and assessing the impact of prior authorization policies on health equity. CMS accepted comments through Jan. 5, and it received hundreds of comment letters addressing the rule’s more controversial proposals seeking to place new limits on agent and broker compensation.
Specifically, the rule proposed to:
The proposals would be applicable for all contract year 2025 marketing and communications, effective Sept. 30, 2024. The agency explained in the proposed rule that it has learned that “many MA and PDP plans, as well as third-party entities with which they contract” — such as FMOs — have effectively been circumventing established compensation limits by making additional payments to agents and brokers, and such payments “appear to be increasing.” At the same time, similar additional payments made to FMOs by MA organizations have been on the rise, observed the agency. CMS said it believes that these financial incentives are “contributing to behaviors that are driving an increase in MA marketing complaints received by CMS in recent years.” Such incentives also fail to ensure that beneficiaries are enrolling in the right plan, and they are anticompetitive, as larger, well-paid FMOs are more likely to contract with national plans, CMS contended.
Of the 794 comments posted to the rule’s dedicated comment portal at regulations.gov, nearly 300 comments discussed the agency’s proposal to restructure agent and broker compensation, and many of them came from independent agents and brokers defending the current framework that allows for separate add-on fees and the critical support of their FMOs. As one anonymous commenter succinctly put it, “If these rules are passed it will be the beginning of the end for brokers.”
Many commenters criticized CMS’s market value analysis estimating a proper administrative services fee of $31 and called for a more comprehensive examination to come up with an estimate that better aligns with the administrative efforts associated with marketing and selling MA plans and enrolling prospective customers. Others espoused the “value-added support” that agents provide and the tools their FMOs furnish to assist with quotes, call recording, communication and marketing materials, and annual certifications.
Additionally, some commenters testified to the role that agents and brokers play in demystifying the complex Medicare market for consumers, while others suggested that CMS is “confused” and misdirecting its frustration with misleading marketing practices at the agents, brokers and FMOs.
“[T]he proposal of a cap on total broker compensation is misguided and disingenuous, not only does it risk negatively impacting the valuable support agents deserve, but consumer choice and protection too,” wrote one anonymous commenter. “The enactment of the agent and broker compensation section of this rule proposal will unnecessarily disrupt the MA marketplace and is not predicated on business practices prevalent in the industry. Independent agents and brokers provide the MA marketplace with the best selection of products across numerous national and regional carriers. This proposed regulation will have a detrimental impact on the MA distribution process and will result in less choice for consumers.”
Meanwhile, the National Association of Benefits and Insurance Professionals (NABIP) took issue with the flat payment proposal and standard administrative fee of $31. Formerly known as NAHU, the association represents more than 100,000 licensed health insurance agents, brokers, general agents, consultants and employee benefits specialists.
“NABIP members strongly oppose all of these changes and believe they would cause havoc to the way Medicare Advantage plans are currently marketed and serviced, at great detriment to Medicare beneficiaries,” according to NABIP’s formal comment letter submitted on Jan. 5. “The new compensation standards contained in the proposed rule would effectively eliminate the existing model of servicing agents working with and through FMOs, thereby denying the marketplace all of the benefits these entities provide to both agents and brokers and Medicare beneficiaries.”
The letter then went on to clarify some of the “misunderstandings” demonstrated in CMS’s rulemaking and explain the various ways FMOs and other third-party entities administratively support “the downstream group of servicing brokers.”
NABIP pointed out that there is an important distinction between FMOs and certain third-party marketing organizations (TPMOs). While FMOs can be TPMOs, “TPMOs can also be an entity that is not contracted and certified with any Medicare Advantage carrier. The TPMOs who do not qualify as FMOs are often the multi-vertical lead generators that buy and sell ‘lead’ data across multiple industries, FMOs and brokers,” wrote NABIP, referring to the types of entities that CMS, in 2022 rulemaking, largely blamed for marketing complaints.
Further, NABIP raised the question of “how different carriers will weather a forced transition to handling all sales, marketing, and agent services internally” if FMOs are forced out of the marketplace by the administrative payment limits. “Some will likely be able to ramp up broker support services more quickly and efficiently than others, incenting servicing agents and their clients to work with those carriers, rather than their competitors. Also, not all Medicare Advantage carriers will have the ability, or appetite, especially initially, to contract with the thousands of independent servicing agents and brokers who will want to represent them. The result will be less representation of carrier choices in the marketplace.”
“Personally, I think both the agents and the plans should be defending the FMOs for different reasons.…It’s a Venn diagram,” says John Selby, senior vice president of strategy, sales and marketing with Rebellis Group. “From my experience on the distribution side, as well as on the plan side, the FMOs are critical to both the plan and the agent for similar reasons. They are providing resources on behalf of the plan to make it easier for agents to work with that plan and sell their products, so the plan doesn’t need to invest additional resources and additional money in servicing these agents at the individual level. They rely on the FMO to do that for them. The brokers and agents rely on the FMOs to make them more efficient, to save them money to educate them to train them.”
Deft Research, meanwhile, issued a brief in December explaining that the proposed caps on payments to both agents and FMOs could create negative disruption for members. While enrollees value best-fit plans, they’ve historically had challenges understanding and using their coverage — both key experiences that influence seniors’ perception of the quality of their MA plan, suggested the brief. According to Deft Research surveys from 2023, 65% of seniors were extremely satisfied with the help understanding coverage provided by their agent vs. 48% of seniors through their carrier/health plan. Moreover, “seniors are more than twice as likely to report that their AEP agent made sure they knew the basics of using coverage compared to reporting that they received a call from their carrier at the start of the plan year to ensure the same,” stated the brief.
“[T]he need for one-on-one communication, coupled with too many members for carriers to reach in a personalized way, coupled with seniors’ reluctance to pick up the phone when their carrier calls, coupled with the ease of ignoring carrier mail, means the good efforts by carriers too often go unrecognized,” wrote Deft Research President George Dippel. “Agents are skilled at helping ensure seniors understand their coverage, and they rely on FMOs to provide them the technical resources to do their best. These are services worth paying for — especially considering the lack of an effective alternative.”
He also pointed out that unlike 2022 rulemaking that led to call recordings, which created a disruption for FMOs and agents but were positively perceived by seniors, the proposed 2025 rule “would create a direct, negative impact on services FMOs and agents provide, leading to negative disruption, this time, to the beneficiary.”
At the end of the day, “the goal is admirable and appropriate: put the enrollee in the best plan that meets their needs,” Selby says of the proposals. But if they force the exit of FMOs, agents and brokers “would suffer as a result. And it wouldn't just be a financial suffering — it would, I believe, represent a huge knowledge gap that would have to be filled.” Insurers, as NABIP pointed out, would have to shoulder the extra costs of supporting agents, and with market pressures like new financial responsibility stemming from implementation of the Inflation Reduction Act and risk model revisions, “now is not the time for plans to be taking on significant administrative costs,” adds Selby.
As for the plans, the Alliance of Community Health Plans (ACHP) — which had lobbied for a restructuring of agent and broker payments — in its formal comment letter expressed support for CMS’s attempt to address “perverse financial incentives” through the proposals. However, it suggested that CMS raise the compensation cap from the proposed $31 to $50. “ACHP readily acknowledges the essential role brokers play in ensuring seniors can easily navigate the enrollment process and find the best health plan to meet their needs,” wrote ACHP President and CEO Ceci Connolly on Jan. 3. “ACHP member companies note that testing, licensing, appointing and training an agent on average can cost close to $50. We further encourage CMS to work closely in partnership with industry stakeholders to develop a methodology for establishing the total administrative payment amount in future years and updating it for cost inflation on an annual basis.”
AHIP, which has historically submitted comment letters on CMS’s annual proposed rule for MA and Part D plans, did not file comments this year. When contacted by AIS Health for comment, the industry trade group did not respond as of AIS Health press time.
Contact Selby at jselby@rebellisgroup.com.
]]>Meanwhile, Medicaid enrollment climbed to historic levels amid the COVID-19 pandemic, reaching 96.3 million lives in June 2023, according AIS’s Directory of Health Plans (DHP). With the end of the COVID-era continuous enrollment provision, states are now in the middle of a lengthy — and sometimes controversial — unwinding process. Yet utilization (the overall number of prescriptions) stayed under 2017 levels despite the enrollment boom. That could be because the number of days supplied per prescription has increased, with 90-day supplies becoming more common, in addition to lower utilization overall.
]]>Meanwhile, Medicaid enrollment climbed to historic levels amid the COVID-19 pandemic, reaching 96.3 million lives in June 2023, according AIS’s Directory of Health Plans (DHP). With the end of the COVID-era continuous enrollment provision, states are now in the middle of a lengthy — and sometimes controversial — unwinding process. Yet utilization (the overall number of prescriptions) stayed under 2017 levels despite the enrollment boom. That could be because the number of days supplied per prescription has increased, with 90-day supplies becoming more common, in addition to lower utilization overall.
The reason behind the rise in spending is clearer — drug prices have increased substantially in recent years. KFF pointed to price increases for branded drugs, as well as increasingly high launch prices for new drugs.
With millions of people likely to lose coverage as Medicaid redeterminations continue, the utilization landscape could shift “depending on how much enrollment declines and how the health needs of those remaining on the program change,” KFF wrote. “While national trends in the number of Medicaid prescriptions may remain relatively stable as they have in recent years, loss of Medicaid coverage on an individual level could have severe consequences for those who rely on regular access to prescription drugs.”
]]>CMS on Jan. 17 finalized the Interoperability and Prior Authorization rule, which includes new PA standards for Medicare Advantage organizations, Medicaid managed care plans and other government-funded payers. Among other things, it aims to automate certain PA functions with the implementation of the Health Level 7 Fast Healthcare Interoperability Resources Prior Authorization application programming interface and shortens the response time to PA requests from 14 calendar days (72 hours if expedited) to seven calendar days (still 72 hours for expedited requests) for MA insurers as well as Medicaid and Children’s Health Insurance Program plans. CMS said the policies combined will improve PA processes and reduce burden on patients, providers and payers, resulting in approximately $15 billion in estimated savings over 10 years.
Following a successful Annual Election Period (AEP), Alignment Healthcare, Inc. on Jan. 8 reported that Medicare Advantage enrollment in its Alignment Health Plan grew by 44% from a year ago to a total of approximately 155,500 members as of Jan. 1. The company added that it expects to have 162,000 to 164,000 members enrolled by the end of 2024. On that strong membership growth, the company said it is reaffirming its expectation to achieve adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) breakeven in 2024. Other company highlights include its California HMO earning 4 stars for 2024, marking its seventh consecutive year as a 4-star or greater plan, and being named a 2024 Best Insurance Company for MA in North Carolina by U.S. News & World Report for the second consecutive year.
PEOPLE ON THE MOVE: Longtime Star Ratings expert Melissa Newton Smith has founded the Newton Smith Group, a consulting and advisory firm focused on Medicare Advantage and Star Ratings. She most recently served as chief consulting officer with Healthmine and prior to that led stars and strategy for Gorman Health Group.…Kelly Munson was hired to serve as the new president and CEO of AmeriHealth Caritas, effective Feb. 1. Munson most recently served as president of Aetna Medicaid, a CVS Health company, and prior to that was executive vice president and chief Medicaid officer with WellCare Health Plans. After AmeriHealth’s longtime CEO Paul Tufano stepped down, effective Sept. 1, Thomas Hutton has been serving as interim CEO. Hutton is the executive vice president and general counsel of AmeriHealth Caritas’ parent company, Independence Health Group.…MVP Health Care welcomed James Reed, M.D., as its newest board member. Reed is the former president and CEO of St. Peter’s Health Partners.
]]>Here, in no particular order, are the major challenges and unknowns facing MAOs in 2024 and beyond:
]]>For our annual series of outlook stories on the year ahead in Medicare Advantage, AIS Health, a division of MMIT, spoke with more than a dozen industry experts on the challenges facing MA insurers and the potential strategies to stay ahead of them. One running theme from this year’s conversations is the sheer level of uncertainty MA organizations are facing in 2024 and beyond, from revenue headwinds driven by changes in risk scoring and the Star Ratings to yet-to-be-finalized proposals around broker compensation and supplemental benefits. And that’s all while managing an overhaul of the Medicare Part D benefit, thanks to the Inflation Reduction Act (IRA) of 2022. And many of these changes “could have substantial impacts on revenue, which impacts benefit design, supplemental benefits, and so on,” says Steve Arbaugh, managing principal and CEO with ATTAC Consulting Group.
Here, in no particular order, are the major challenges and unknowns facing MAOs in 2024 and beyond:
Star Ratings and Health Equity
“In 2024, Medicare Advantage plans will face headwind pressures due to increased challenges with Stars and the subsequent impacts on reimbursement rates.…Plans with higher Stars scores will have an advantage going into the new year, and plans that have experienced declining Stars scores — which is most plans lately — will have to compete on the same field with lower revenue,” remarks Darren Ghanayem, a managing director at global management and technology consulting firm AArete. “Provider network relationships and incentive programs — which contribute to the Stars, and reimbursement rates — will be important in 2024. Payers must consider providers ‘team members’ with a shared goal of improving consumer health.”
With CMS’s application of the Tukey outlier deletion methodology — which caused a significant drop in the number of 5-Star plans for 2024 — “going back and recalibrating and understanding where you are relative to Stars, whether you can grab that revenue piece going forward is a challenge,” says Arbaugh. “If you look at the 2025 Star Ratings, you really only have one measure left to be able to move that needle — your Consumer Assessment of Healthcare Providers & Systems [CAHPS] scores, which will be developed in the spring — so obviously people are very focused on that.”
A related challenge, he adds, will be around the implementation of the Health Equity Index (HEI), which will replace the current reward factor starting with the 2027 Star Ratings and reward insurers for their efforts to assess social risk factors and address disparities in certain quality measures. “The data gathering is starting in 2024 and will run into 2025, and our experience is that we don’t believe the plans have begun to analyze their data and break it down — and break down their membership and understand all the factors that are related to that quite yet,” Arbaugh tells AIS Health. And there’s more they could be doing in terms of segmenting their populations and understanding what interventions to apply. “What’s going to work in one part of their service area may not work in another part of the service area for the same low-income people because they have different characteristics. That detail of analysis is a shift that plans have to make in ’24 to begin to get their interventions in place…so that if they’re eligible for the HEI index for plan year ’27 that they actually can get some of those dollars.”
Broker Compensation, Supplemental Benefit Changes
“Speaking from a product and sales perspective, plans will need to solve for the impact of the IRA on their 2025 bids, as well as the potential disruption to distribution that could result from the 2025 proposed rule regarding broker compensation,” says John Selby, senior vice president with Rebellis Group. As plans seek ways to compensate for their increased Part D financial responsibilities, one target could be supplemental benefits. “Savings could be found by eliminating or reducing benefits, despite the fact that supplemental benefits are highly valued and influence beneficiaries’ decision making. We are also watching to see if the reporting burden proposed by CMS could dampen innovation in, or the growth of, supplemental benefits.”
Separate from a new reporting requirement on supplemental benefits, a November proposed rule included a requirement that MA plans send a midyear notification to enrollees about their unused supplemental benefits. “There’s a lot of money being spent” on supplemental benefits, points out Arbaugh. Could such a notification lead to an increase in the use of supplemental benefits? “Where plans may have been able to offer certain benefits in the past and had some relatively low utilization, all of a sudden, they may begin to say, ‘Well, what kind of change will that have in 2025 [after the first notification] and what do I need to do to adjust my bid? Plans may begin to look at their supplemental benefits in a different way.”
CMS in its November proposed rule also introduced new constraints on broker compensation that “as written, could radically change the relationship between FMOs [field marketing organizations] and plans,” points out Selby. “While most observers believe the final rule will include at least some compromises, FMOs could be forced to revisit their reliance on ‘administrative fees’ or overrides, and that could cause plans to have to take on more responsibility dealing with brokers. The rule presently is an over-reach — local brokers continue to be lumped in with TPMOs [third-party marketing organizations] that skirt or ignore the current rules — but CMS is rightly determined to protect seniors.” While the rule has yet to be finalized, “given the attention being paid to sales and marketing by CMS, Congress, and even the FTC [Federal Trade Commission], we would expect the 2025 final rule to include at some of the changes proposed, probably more than less,” he adds.
Continued Focus on Risk Adjustment
Another challenge this year relates to CMS’s implementation of changes to the CMS-Hierarchical Condition Categories (HCC) risk adjustment model. Beginning in 2024, CMS will remove thousands of diagnosis codes mapped to HCCs for payment and renumber several HCCs in response to certain diagnostic categories being coded more frequently in MA relative to FFS Medicare. But that transition will be phased in over three years, starting with a blend of 67% of risk scores derived under the current model and 33% of the risk scores under the finalized 2024 model. The impact of the transition “will likely vary by plan/population type and by the MAO’s historical coding completeness,” says Matt Kranovich, principal and consulting actuary with Milliman.
With the HHS Office of Inspector General (OIG) releasing a “toolkit” last month identifying the diagnosis codes most submitted without supporting medical records, plans will also need to identify whether they have these high-risk HCCs in their data and consider “how far back” to run the data and “get it clean,” advises Arbaugh.
Other Funding Challenges
“Medicare Advantage organizations are also affected by the changes to Medicare payment rates. Congress failed to move many of its typical year-end extensions of Medicare and Medicaid provisions [in 2023], leaving up in the air a range of provisions,” adds Jason Karcher, an actuary with Milliman. That includes a provision in the House’s Lower Costs, More Transparency Act (LCMTA) seeking to expand Medicare site-neutral payments, which “would reduce the cost for some services provided by hospital outpatient departments that look like services provided in a physician office,” he says.
The LCMTA, which passed the House on Dec. 11, also contains significantly expanded and more clearly specified provider and insurer transparency requirements. These “may be less likely to affect bottom lines but may affect administrative costs around the edges, with effects likely to be specific to each MAO’s current practices,” he advises. Additionally, community health centers (CHCs) could be adversely impacted if Congress does not extend funding (also included in the LCMTA) through the Community Health Center Fund, which is set to expire on Jan. 19. “This could have unpredictable effects on MA networks and ability to provide care in rural or underserved areas,” adds Karcher.
Contact Arbaugh via Kimberly McCall at kmccall@attacconsulting.com, Ghanayem via Anthony Priwer at apriwer@daltonagency.com, Karcher at jason.karcher@milliman.com, Kranovich at matt.kranovich@milliman.com, or Selby at jselby@rebellisgroup.com.
]]>Thanks to the Inflation Reduction Act (IRA) of 2022, sponsors of Medicare Advantage Prescription Drug (MA-PD) plans and Prescription Drug Plans (PDPs) are preparing for the biggest Part D changes in the program’s 18-year history. As plans consider how they’ll manage an increasing share of responsibility for catastrophic drug costs, sources say they await critical outstanding information, such as an updated Part D risk adjustment model and additional guidance on the Medicare Payment Prescription Plan.
“The Inflation Reduction Act of 2022 will be ushering in many benefit parameters that will need to be carefully included in planning for 2025,” observes Debra Devereaux, R.Ph., principal and chief pharmacy/clinical officer with Rebellis Group. For starters, the IRA eliminates the coverage gap (a.k.a. the “donut hole”) for seniors in 2025, and plans will be responsible for 60% of drug costs in the catastrophic phase of coverage, which is triggered when enrollees exceed a new $2,000 out-of-pocket cap. (Plans paid 15% of that share in 2023 and will pay 20% in 2024, while CMS will decrease its share from 80% to 20% in 2025, and manufacturer discounts will be introduced in the initial and catastrophic coverage phases.)
“Possible scenarios would be that members will be utilizing more high-cost specialty drugs for longer periods of time with the out-of-pocket spending cap,” Devereaux tells AIS Health, a division of MMIT. “Plans will likely expand utilization management criteria like step therapy and prior authorization to the limits of FDA labeling and local and national coverage determination criteria. Health plans will likely favor formularies with lower cost generics, older brand drugs with lower list prices, biosimilars etc. due to their 60% cost share in the catastrophic phase.”
There could be other IRA-related impacts “once the new Part D benefit is truly in place,” weighs in Matt Kranovich, principal and consulting actuary with Milliman. With the increased plan liability above the catastrophic threshold, as well as the corresponding reduction in federal reinsurance subsidies and expected increase in direct subsidies, it’s difficult to predict how plans will adjust their benefits and premiums in response to “the largest changes to the Part D program since its inception,” he continues. There are a number of related consequences to consider, such as the degree to which private reinsurance carriers will be called upon to insure catastrophic risk formerly handled in large part by federal reinsurance, as well as how the Employer Group Waiver Program (EGWP) market might be impacted differently from the individual Part D market due to the different dynamics and populations in play on the employer side.
Additionally, CMS plans to update the RxHCC risk score model for the 2025 payment year. This is the model used to risk-adjust Part D direct subsidy revenue, which is expected to represent a much larger share of overall Part D revenue as the federal reinsurance subsidy shrinks under the new post-IRA benefit design, says Kranovich.
He adds that recalibration is necessary “because the underlying plan liability the model is designed to predict was fundamentally changed by the provisions of the IRA.” Risk adjustment will therefore have a much more significant impact on Part D plan sponsor revenues than ever before. Stakeholders are not yet able to assess this impact, though, as the newly recalibrated model has not yet been made available by CMS for review and comment. Historically, information on new risk models is first made available in the Advance Notice, which for the 2025 plan year may not be released until early February.
MA-PD and PDP sponsors will also be watching for the second installment of guidance from CMS on implementing the Medicare Prescription Payment Plan (MPPP), which is intended to help Part D beneficiaries better manage their drug spending by spreading their out-of-pocket costs over the course of the plan year. Established by the IRA, the MPPP requires all Part D plans starting in 2025 to “offer enrollees the option to pay their out-of-pocket expenses in the form of capped monthly installment payments instead of all at once at the pharmacy,” explains Devereaux. “This is a complicated program and will require that plans devote time and resources to a successful implementation plan during 2024.”
The first part of the MPPP draft guidance, released in August 2023, included calculations for the monthly payment amounts, instructions for Part D sponsors on how to handle monthly billing, proposed thresholds for identifying Part D enrollees who are likely to benefit from the program, and suggestions about how to notify those members through the pharmacies about the program. A draft version of the second guidance is due to be released in early 2024, says Devereaux.
Meanwhile, CMS and drug manufacturers this year will conclude their first round of negotiations on the prices of 10 high-cost drugs that will take effect in 2026, and CMS will unveil an additional 15 Part D drugs up for negotiation this fall. Tricia Beckmann, principal with Faegre Drinker Consulting, points out that SCAN Health Plan’s move to “preemptively lower cost-sharing for several of the first tranche of IRA selected drugs is an interesting one and may make sense in certain other markets.”
Also worth noting is that a 2022 proposal to expand targeting criteria for Medication Therapy Management (MTM) — which could be used as another lever to manage drug costs — did not make it into a final rule published in April 2023 and has not been addressed in subsequent guidance to date. Changes such as requiring plan sponsors to target all 10 core chronic diseases identified by CMS and lowering the maximum number of covered Part D drugs from eight to five stand to dramatically increase the number of members eligible for the MTM program, according to Devereaux.
Contact Beckmann at tricia.beckmann@faegredrinker.com, Devereaux at ddevereaux@rebellisgroup.com, or Kranovich at matt.kranovich@milliman.com.
]]>GLP-1s are now “the No. 1 driver of non-specialty pharmacy trend,” Mercer’s lead pharmacy actuary Jon Lewis told AIS’s Health Plan Weekly in November. Zepbound joins fellow GLP-1s from Novo Nordisk A/S, Wegovy (semaglutide) and Saxenda (liraglutide), in the obesity market basket. (As diabetes therapies, Zepbound is marketed as Mounjaro, while Wegovy is known as Ozempic.) Despite crackdowns on off-label use of the drugs’ diabetes iterations and a seemingly endless wave of shortages, many in the industry are clamoring for increased consumer access to the drugs. The American Medical Association on Nov. 13 passed a resolution asking “health insurers to provide coverage of available FDA-approved weight-loss medications, including GLP-1 medications, to demonstrate a commitment to the health and well-being of our patients.”
]]>GLP-1s are now “the No. 1 driver of non-specialty pharmacy trend,” Mercer’s lead pharmacy actuary Jon Lewis told AIS’s Health Plan Weekly in November. Zepbound joins fellow GLP-1s from Novo Nordisk A/S, Wegovy (semaglutide) and Saxenda (liraglutide), in the obesity market basket. (As diabetes therapies, Zepbound is marketed as Mounjaro, while Wegovy is known as Ozempic.) Despite crackdowns on off-label use of the drugs’ diabetes iterations and a seemingly endless wave of shortages, many in the industry are clamoring for increased consumer access to the drugs. The American Medical Association on Nov. 13 passed a resolution asking “health insurers to provide coverage of available FDA-approved weight-loss medications, including GLP-1 medications, to demonstrate a commitment to the health and well-being of our patients.”
One group of patients currently has no covered access to weight loss drugs — Medicare beneficiaries.
While data from MMIT Analytics shows that many GLP-1s are readily available to seniors for the treatment of diabetes, using them for weight loss is another story. (MMIT is the parent company of AIS Health.) The Medicare Modernization Act of 2003, which established the Medicare Part D program, prohibits Part D plans from covering weight loss therapies, designating them as cosmetic treatments. Manatt, Phelps & Phillips and the Obesity Action Coalition, in a September white paper, urged CMS to rethink this policy and view obesity as a disease that can be treated beyond a cosmetic level. Lawmakers, too, are looking for reform. A bipartisan group of legislators from both chambers of Congress in July introduced the Treat and Reduce Obesity Act, which would allow Medicare to cover weight loss medications, obesity screenings and counseling. The bill was reviewed by the Senate Committee on Finance, where it currently sits.
By contrast, 16 states currently cover at least one anti-obesity or weight loss drug in their Medicaid programs, according to budget survey data from KFF. Five more states are considering adding coverage, which KFF mused could be due to the rise of GLP-1s. The therapeutic class is not limited to GLP-1s, however, and also includes lipase inhibitors such as Xenical (orlistat), one of the more commonly covered weight loss therapies for Medicaid patients. Among the states that cover GLP-1s for weight loss specifically are Maryland, California, Wisconsin and Kansas, according to MMIT data. Overall, about 13% of people receiving pharmacy benefits under Medicaid have preferred access to Saxenda and Wegovy, while an additional 25% have covered access, largely with utilization management restrictions such as prior authorization and/or step therapy applied.
]]>Humana Inc., for one, took a “thoughtful approach to bids to ensure we were meeting members’ needs while balancing the rate environment,” says George Renaudin, president and Medicare and Medicaid. That included maintaining or enhancing key benefits that were identified by consumers and brokers as most critical to members, such as $0 premiums, dental and Part B “givebacks.”
]]>From Star Ratings and risk model changes to a significant overhaul of the Medicare Part D benefit that will take effect over the next few years, Medicare Advantage insurers this year must anticipate the potential impact of major changes and ensure their products and services continue to satisfy members. Investment priorities highlighted by three influential MA carriers include digital solutions, member engagement strategies and value-based care.
Humana Inc., for one, took a “thoughtful approach to bids to ensure we were meeting members’ needs while balancing the rate environment,” says George Renaudin, president and Medicare and Medicaid. That included maintaining or enhancing key benefits that were identified by consumers and brokers as most critical to members, such as $0 premiums, dental and Part B “givebacks.”
At the same time, the company is “on a multi-year journey to provide frictionless interoperability (e.g., on-demand medical record access),” Renaudin tells AIS Health, a division of MMIT. “We aim to simplify and automate the exchange of data with providers, members, and payers to reduce friction and decrease waste in the system.” In 2022, approximately 165 million clinical records were shared and roughly 600,000 providers were connected to Humana’s interoperability capabilities, according to Renaudin.
As more digitally savvy consumers age into Medicare, Humana is seeing increased demand for digital solutions, he says. “We continue to pursue digital leadership across our business, such as with our product offerings — as an example, our Healthy Options Allowance, available on 100% of Dual Eligible Special Needs Plans, has web and app support to help members see their balance, find participating stores, and check item eligibility.”
Like other insurers, Humana anticipates value-based care will keep gaining traction as “broader consolidation in the provider space and new entrants highlight the continued trend toward VBC,” he adds. For example, Kroger recently began piloting in-store clinics focused on primary care for seniors, while Humana will continue to expand its CenterWell primary care offerings. Currently, 70% of Humana’s individual MA members are aligned to value-based providers — “the highest rate we have seen in our history of tracking this metric,” adds Renaudin.
For SCAN Health Plan, continuing to innovate in a way that addresses the needs of specific populations is a key priority for 2024, according to CEO Sachin Jain, M.D. The California-based not-for-profit insurer last year launched the industry’s first MA plan tailored to LGBTQ+ enrollees, “and we’d like to take that to the next level by further enhancing our offerings,” says Jain. For 2024, the company introduced a female-focused plan, SCAN Inspired, struck a 10-year value-based care partnership with ApolloMed, and preemptively lowered costs for six drugs selected for Medicare price negotiations that won’t take effect more broadly until 2026.
At the same time, the insurer’s parent company, SCAN Group, continues to make investments in outside firms. Recent examples include tech-enabled hospice care company Guaranteed, digital in-home care coordinator Dina, and Abridge, which offers a clinical conversation platform powered by artificial intelligence. But Jain says the company’s interest in AI — which the Biden administration has been trying to regulate in health care while not dampening innovation — is “more broadly, about making humans into super humans, as opposed to taking costs out.” For example, AI presents an opportunity to shorten training times for workers “to enhance their ability to deliver on what our members need,” he says. SCAN is also investing in two new clinical programs that are trying to move health care from inbound to outbound: a care navigator benefit that involves making outbound calls to members to navigate their care challenges and a geriatric home assessment, he adds.
In addition to forging strong partnerships with providers and leveraging care teams to close gaps in care, Aetna will continue to take steps to improve the member experience, asserts Terri Swanson, president of Aetna Medicare, a CVS Health company. “At a high level, health plans need to help Medicare Advantage members understand and use their benefits so they can have a better member experience,” Swanson tells AIS Health. And Aetna’s strong 2024 Star Ratings reflect those continuous efforts, she says. After a disappointing Stars performance in 2023, approximately 87% of Aetna’s MA members are expected to be in 4-star or higher plans this year.
“To better serve those enrolled in Medicare Advantage, it’s important to help them engage more seamlessly with their primary care physician,” she continues. “This will enable their doctor to coordinate any specialized care they may need.”
Member engagement strategies are critical to driving retention and member “stickiness,” according to HealthScape Advisors Principal Cary Badger and Managing Director Alexis Seeder Levy. They can also be used to support value drivers, such as risk adjustment factors, Star Ratings and medical costs, and should be deployed with a “focus on delivering this engagement at scale and in a more personalized way to drive desired outcomes,” they advise.
Following and staying on top of regulatory and policy changes, such as those finalized in an April CMS rule, will require flexibility for insurers this year. “We always work closely with CMS to ensure beneficiaries receive clear, correct and helpful information about their Medicare plan options,” says Swanson. “We want to make sure Medicare beneficiaries are getting the information they need and encourage them to do their research, so they fully understand their plans.”
Contact Badger and Levy at cbadger@healthscape.com, Jain via Seffrah Orlando at sorlando@scanhealthplans.com, Renaudin via Kelli LeGaspi at KLeGaspi1@humana.com, or Swanson via Dylan Russo at drusso@theblissgrp.com.
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