Radar on Medicare Advantage

  • Trustees Say Pandemic Could Deplete Medicare Funds Sooner Than 2026

    The Medicare Board of Trustees in its 2020 annual report projected that Medicare’s hospital insurance (HI) trust, which funds Part A payments, will be depleted by 2026, the same time frame the board pointed to in its previous two reports. According to the trustees, the HI fund will continue to deplete as long as the number of Medicare-eligible seniors outpaces the number of working adults, all while the “volume and intensity” of services and price per service continue to increase. But the board noted that it cannot yet adjust its estimates to account for the unprecedented impact of the COVID-19 pandemic. The trustees explained that the outlook could be worse than the report’s high-cost scenario, which forecasts the HI fund running out in 2023 (see chart below). Though the largest source of Part A spending is inpatient hospital services ($147.3 billion), payments to private health plans for providing Part A services grew 17% to $119.1 billion from 2018 to 2019. The trustees said they expect 33.1 million people will be enrolled in Medicare Advantage by 2029, representing a 43% penetration rate. The graphics below show highlights of the 2020 report.
  • MA Plans Have Unique Opportunity to Guide the Suddenly Uninsured

    As seniors during the coronavirus pandemic face issues such as loneliness, social isolation and food insecurity, an added source of stress for some may be trying to enroll in Medicare, especially if they or their spouses have lost employer-based insurance. And Medicare Advantage plans are uniquely positioned to educate people over the age of 65 who may qualify for a Medicare special enrollment period (SEP).

    When the Medicare program was established in 1965, most people turning 65 were automatically enrolled in Part A and Part B because they began receiving Social Security benefits. Now, with many Americans working longer and delaying their Social Security benefits, the average age of those enrolling in Medicare is closer to 67 and a half, according to a recent Gorman Health Group webinar. And once Medicare-eligible individuals are beyond their Initial Enrollment Period (IEP), a seven-month window that opens three months before a person turns 65, they face a different set of rules and processes that could lead to lifetime financial penalties for enrolling late in Part B, according to the nonprofit organization Medicare Rights Center.

  • MA Growth Drives Earnings Outlook Amid COVID Uncertainty

    Insurers’ responses to the COVID-19 outbreak dominated recent first-quarter 2020 earnings calls, as did expected declines in utilization this quarter followed by a likely ramp-up of services later in the year, and waning commercial enrollment offset by increases in Medicaid and exchange membership. This anticipated volatility led some insurers to revise their full year earnings guidance, while some — including the two leading Medicare Advantage insurers — maintained their 2020 forecasts.

    For the quarter ending March 31, Humana Inc. reported better-than-expected adjusted earnings per share (EPS) of $5.40 and an improved medical loss ratio (MLR) of 85.1%. This was largely due to the reinstatement of the Affordable Care Act health insurer fee in 2020 and the continued shift in Medicare member mix as its standalone Part D membership (which carries higher MLRs in the first quarter) dropped while MA membership rose, summed up securities analyst A.J. Rice in an April 29 note from Credit Suisse.

  • COVID Could Revolutionize How MAOs Address Isolated Seniors

    Since COVID-19 reached pandemic status in mid-March, Medicare Advantage and other insurers have had to swap out many of their face-to-face interactions with members for telephonic and digital options. But for seniors who may be accustomed to visiting community centers, attending fitness classes or receiving a regular visit from a companion or meal delivery person, loneliness they may have already been feeling could worsen. Or they may be experiencing social isolation that’s impacting their mental health or ability to self-manage chronic conditions.

    For a closer look at loneliness and social isolation in the time of COVID-19, AIS Health gathered insights from a panel of experts on how the current pandemic is forcing MA insurers to rethink their strategies to address such issues and how it could permanently alter the way they interact with members.

  • News Briefs

     UnitedHealth Group on April 15 reported first-quarter 2020 adjusted earnings per share of $3.72, in line with the same period last year, and maintained its full year EPS outlook in the range of $16.25 to $16.55. These results reflected “minimal impact from the progression” of COVID-19 across the U.S., given that it emerged late in the quarter, according to a press release. Revenues for the quarter ending March 31 rose 6.8% to $64.4 billion, “reflecting broad-based revenue growth across Optum and UnitedHealthcare,” and UHC’s medical loss ratio dropped from 82.0% in the year-ago quarter to 81.0% in the recent quarter, largely as a result of the Affordable Care Act health insurer fee returning and partly offset by additional calendar days. UHC’s first-quarter revenues increased by 4.4% to $51.1 billion, primarily due to enrollment growth in Medicare Advantage and Dual Eligible Special Needs Plans; revenues in the Medicare & Retirement segment climbed 9.7% to $23.2 billion in the recent quarter, as the business grew to serve 5.6 million MA enrollees — a year-over-year increase of 410,000. The company added that UnitedHealth Group President and Optum CEO Andrew Witty is taking a leave of absence to help lead the World Health Organization’s new initiative for COVID-19 vaccine development. View the release at https://bit.ly/3co3qGC.

     Medicare Advantage has experienced year-to-date (YTD) enrollment growth of 6.4%, and added nearly 78,000 members from March to April, according to a Credit Suisse analysis of the latest enrollment figures from CMS. YTD enrollment this year is “above the pace of the prior two years,” which was 4.8% in 2019 and 5.2% in 2018, and “runs counter to conventional wisdom which says the return of the HIF [health insurer fee] should dampen the Y/Y growth rate,” wrote Credit Suisse analyst A.J. Rice on April 15. UnitedHealth Group and Humana Inc. were YTD growth leaders, as UnitedHealth added an industry-leading 355,900 members and Humana grew by 337,300 enrollees, Credit Suisse estimated. The five major MCOs (including CVS Health Corp.’s Aetna), which account for roughly 61.6% of total MA enrollments, have cumulatively grown 8.1% YTD, compared with 3.7% YTD growth for the remaining MA plans, added Rice. View the monthly enrollment report at https://go.cms.gov/3cln7P7 or contact Rice at aj.rice@credit-suisse.com.

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