Radar on Medicare Advantage

From lowering cost sharing on select services to participating in the new Part D insulin model, Medicare Advantage insurers are incorporating new benefit flexibilities into their overall management of diabetes, which impacts one in every three Medicare beneficiaries.

Diabetes accounts for more than $300 billion in U.S. health care spending, including $17 billion spent on insulin in the Part D program. It also ranks as the most common condition served by specialized benefits in MA. According to a recent Faegre Drinker analysis, 23.7% of plans offering condition-specific benefits this year are targeting diabetes. The most popular benefits include reduced cost sharing on podiatry, physician specialist and primary care physician services, and additional supplemental benefits related to podiatry, meals and worldwide urgent coverage (see chart, p. 3).

An earlier version of this story incorrectly said Alignment Healthcare, Inc. launched its initial public offering on March 18; it only established the pricing range and had not begun trading that day.

Orange, Calif.-based Alignment Healthcare, Inc. will soon become the third startup insurer in recent months to go public. Banking on the strong value proposition of Medicare Advantage, Alignment said it already has a “national expansion strategy” that it will put into action next year, but some experts question whether the measured growth the insurer has achieved primarily in California can be duplicated in other markets. The initial public offering is expected to be priced between $17 and $19 per share, according to a March 18 press release announcing the impending launch.

✦ Federal Medicaid officials this week issued letters to Arkansas and New Hampshire informing them of the Biden administration’s formal revocation of their “community engagement” waivers. The Supreme Court on March 29 was planning to hear oral arguments related to the Trump administration’s approval of Medicaid work requirements in both states, but earlier this month removed the hearing from its docket, suggesting that previous rulings striking down work requirements could stand. View the Arkansas letter at https://bit.ly/30XShsh.

✦ The Biden administration has canceled two changes to the Part D Payment Modernization Model for 2022. One would have extended new formulary flexibilities to participating Part D plans, including in the so-called protected drug classes, in 2022. The other would have removed downside risk from the model. View a notice on the model changes at https://bit.ly/3c35Mxj.

✦ In its first earnings report released as a publicly traded company, Clover Health on March 1 said it ended 2020 with more than 58,000 Medicare members, generated more than $670 million in revenue for the full year and reported a net loss of $91.6 million. The latter was an improvement over a net loss of $363.7 million in 2019, resulting from “year-over-year improvement of derivative valuation, offset by an unfavorable change in the fair value of warrant expenses,” the company explained in a March 1 press release. Its medical loss ratio for the year was 88.7%, compared with 98.6% for 2019; excluding the estimated net effect of COVID-19, its full-year normalized MLR was 90.5%, an improvement that was “driven by operational efficiency and the increase in the number of members managed by PCPs that use the Clover Assistant,” said the company. The Medicare-focused technology and health care company said it anticipates Medicare Advantage membership to be between 68,000 and 70,000 by Dec. 31, 2021. Visit https://bit.ly/2NSEArD.

✦ The American Rescue Plan Act of 2021 (H.R. 1319), passed by the House on Feb. 27, includes additional federal funding for states that newly adopt Medicaid expansion and creates a new option for states to extend pregnancy-related Medicaid and CHIP coverage to new mothers for 12 months, according to a summary from the Georgetown University Center for Children & Families. The bill would also require drug manufacturers to pay higher rebates to Medicaid on drugs that have had excessive price increases by eliminating a cap on total drug rebates that manufacturers must pay state Medicaid programs. However, Senate Democrats at press time reportedly agreed to delay that change, which is estimated to generate about $23.5 billion in savings to the federal government and states over 10 years, until 2024. Senate Democrats are likely to push the bill through via budget reconciliation (see story, p. 1), aiming for the March 14 deadline when emergency unemployment benefits expire. Visit https://bit.ly/3uOkyiw.

As policymakers consider proposals to revamp Medicare Part D, HHS secretary nominee and California Attorney General Xavier Becerra (D) during his Senate confirmation hearings last week vowed to make reducing the cost of prescription drugs a priority — although details on such a plan were scant. Meanwhile, his comments around ensuring a “level playing field” between Original Medicare and Medicare Advantage could have implications for MA plan reimbursement.

During a Feb. 23 Senate Health Committee hearing, Bernie Sanders (I-Vt.) was one of several senators who queried Becerra about drug pricing and asked him for “more specificity as to how we take on the drug companies and lower drug costs.” Becerra’s response, which did not appear to satisfy a skeptical Sanders, was that he would “deal with it swiftly” and that the government must take on drugmakers “by trying to go behind the curtain” to determine how they reach their prices.