Radar on Medicare Advantage
Reporting 1Q Earnings, Select ‘Insurtechs’ See Brighter Days Ahead With MA Focus
Still intent on standing apart from established Medicare Advantage competitors with their use of technology, Medicare-focused “insurtechs” Alignment Healthcare, Inc. and Clover Health Investments Corp. recently reported first-quarter 2023 earnings that showed shrinking losses and increasing insurance revenue. While both insurers are focused on retaining and/or growing their MA membership, fellow startup Bright Health Group, Inc. will soon shed its MA business — its last insurance asset — to continue growing its noninsurance segment focused on value-based care (VBC) delivery.
Declaring a “strong start to the year,” Alignment Healthcare, Inc. on May 4 posted first-quarter revenue of $439.2 million, reflecting year-over-year growth of 27.1%. That was aided largely by a nearly 21% jump in health plan premium revenue to $399.7 million as MA membership climbed 16% to 109,700 lives, the company reported.
Reporter’s Notebook: National MA Summit Speakers Debate Imminent Risk Model Changes
Whether Medicare Advantage insurers like it or not, a host of changes are coming their way that will impact risk adjusted revenue starting in 2024 and could have downstream effects on beneficiaries and providers. The forthcoming overhaul of the CMS-Hierarchical Condition Categories (HCC) risk adjustment model, which will be phased in over three years starting in 2024, was arguably the hottest topic over four days of sessions at last month’s Fourth National Medical Advantage Summit, where industry experts’ views on the model ranged from supportive to reproving.
MA plans next year can expect to receive, on average, a 3.32% increase in risk adjusted revenue, driven in part by an underlying coding trend of 4.44%, CMS estimated in a fact sheet on the final 2024 MA and Part D rate notice. With that notice, CMS finalized plans to remove thousands of diagnosis codes mapped to HCCs for payment, transition to the use of ICD-10 codes and update the underlying fee-for-service (FFS) Medicare data years. CMS has explained that the new model is intended to reflect the cost of care more accurately by using the more commonly used ICD-10 system and addressing discretionary coding (i.e., upcoding) that leads to wasteful spending.
Through VBID Model, MAOs Tailor Interventions to Enrollees’ Evolving Social Needs
From CMS’s expanded definition of primarily health-related supplemental benefits to the introduction of Special Supplemental Benefits for the Chronically Ill (SSBCI), Medicare Advantage plans have gained increasing flexibility over the last few years to offer supplemental benefits that can address social needs. Through the ongoing MA Value-Based Insurance Design (VBID) model — the only MA-focused demonstration being tested by the CMS Innovation Center — MA organizations have even more flexibility to target and tailor a variety of interventions. During a recent virtual panel of the Fourth National Medical Advantage Summit, several longtime participants of the model agreed that such flexibility is critical to meeting beneficiaries’ evolving health-related and other social needs.
CMS first tested the model on a limited basis in 2017, allowing sponsors to offer reduced cost sharing for medications and offer high-value services to beneficiaries with select chronic conditions. Today, the model allows MAOs to tailor their MA plan offerings using several approaches and has 52 MAOs offering services to an estimated 6 million enrollees.
Kaiser, CareSource and Mich. Blues Deals Explore Value-Based Care, Will Impact Public Sector
A spate of deals and new initiatives from Kaiser Permanente, CareSource and Blue Cross Blue Shield of Michigan highlight the race for nonprofit insurers to expand and diversify in increasingly competitive markets, as well as the rise of value-based care.
Perhaps the most significant deal is Kaiser’s planned acquisition of Geisinger Health, a nonprofit health system of 10 hospitals in Pennsylvania that also operates the ninth-largest insurer in the state. If the deal gains regulatory approval, Geisinger will be the first member of Kaiser’s new Risant Health, a nonprofit alliance of health systems focused on value-based care. “Risant Health’s vision is to improve the health of millions of people by increasing access to value-based care and coverage and raising the bar for value-based approaches that prioritize patient quality outcomes,” Kaiser said in an April 26 press release. Kaiser aims to add “like-minded” regional or community-based health systems to Risant, which will operate “separately and distinctly” from Kaiser as a whole.
News Briefs: CMS Reinterprets ‘Marketing’ Definition, Expands Materials Subject to ReviewAs CMS continues to tighten oversight of misleading marketing activities, the agency will soon require Medicare Advantage organizations to file all materials that mention any type of benefit. In a May 10 memo from the Medicare Drug & Health Plan Contract Administration Group, CMS explained that while it previously interpreted the mentioning of widely available benefits (e.g., vision, dental, premium reductions) as “general descriptions” that were not “made with sufficient intent to draw attention to a particular plan or subset of plans” and lead to an enrollment decision “without information on the associated costs for enrollees,” complaints received through various channels have indicated otherwise. Therefore, CMS is expanding its interpretation of “marketing” to “include content that mentions any type of benefit covered by the plan and is intended to draw a beneficiary’s attention to plan or plans, influence a beneficiary’s decision-making process when selecting a plan, or influence a beneficiary’s decision to stay enrolled in a plan (that is, retention-based marketing) and thus subject to review.” As such, the agency will require any material or activity that is distributed by any means and mentions any benefit to be submitted into the Health Plan Management System effective July 10.
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