Radar on Medicare Advantage

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

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

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

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

Through an emphasis on primary care, enhanced care coordination, data sharing and clearly aligned incentives, providers and health plans continue to pursue value-based arrangements in pursuit of higher quality outcomes and lower costs of care across insurance types. According to the latest survey results from the Health Care Payment Learning & Action Network, Medicare Advantage continues to lead advancements in value-based care with roughly 64% of payments in 2023 flowing through some type of alternative payment model, compared to 42% for fee-for-service (FFS) Medicare and 45% across all lines of business.

The total added value for standard Medicare Advantage plan enrollees is dropping by nearly $16 next year, according to a new Milliman analysis using its proprietary MACVAT tool. MACVAT uses each MA plan’s benefit offerings and premiums to create an associated “value added.” Between 2022 and 2023, the average total value added for general enrollment plans (i.e., non-Special Needs Plans) grew by roughly 9%, or $22.35, due to enhancements in Part C and Part D benefits, coupled with reductions in member premiums, according to the Milliman white paper. From 2023 to 2024, the total value added was relatively flat, but between 2024 and 2025, it will decrease by more than 6%. That’s partly because of “leaner MA plan benefit offerings,” as national carriers are “notably scaling back benefits,” Milliman observed. Part C benefit value, in particular, will decrease by nearly $11 per member per month next year, added the actuarial and consulting firm.  

Multiple industry experts say the current administration’s last major Medicare Advantage and Part D rulemaking attempt was largely “business as usual,” with CMS expanding on policies of the Joe Biden presidency and digging further into persistent issues like utilization management (UM), misleading marketing and provider directory accuracy. And they say it’s likely that some — but not all — provisions will make it into the final rule, which would be released by the incoming Republican administration under President-elect Donald Trump.

“It certainly seems like this was written as if there was going to be another Democratic administration, as the overall trend of CMS regulatory policymaking in the last four years” has been to further regulate MA, observes Tricia Beckmann, principal with Faegre Drinker Consulting. “Some of the provisions are probably an overreach in so far as they don’t align with what we think is the posture of the Trump administration versus some areas that are potentially tricky,” such as UM and insurers’ reported use of artificial intelligence to deny claims, which has drawn concern from both sides of the aisle and from providers, she points out.