Radar on Medicare Advantage

As Congress is likely to look for offsets through future budget reconciliation measures and new reports spotlight the soaring cost of prescription drugs in Medicare Part D, industry experts agree that a legislative overhaul to the Part D program is inevitable. And while there’s been bipartisan support for restructuring the Part D benefit and increasing manufacturer and plan liability, the details of any legislative proposal that advances will be critical for Part D sponsors’ bid planning and coverage decisions.

Three proposals introduced in 2019 sought major changes to Part D and had varying levels of bipartisan support. They are: The Lower Costs, More Cures Act (H.R. 19/S. 3129), introduced by Republican senators including Medicare Advantage champion Mike Crapo (R-Idaho); The Prescription Drug Pricing Reduction Act (PDPRA), introduced by Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.); and The Elijah E. Cummings Lower Drug Costs Now Act (H.R. 3), which passed the House in December 2019. But for reasons that included a divided Congress, heavy pharmaceutical industry lobbying and a priority shift to the COVID-19 pandemic, they did not become a reality.

✦ President Joe Biden at press time was expected to name Chiquita Brooks-LaSure as the new CMS administrator, according to multiple news reports. Currently a managing director with Manatt Health, Brooks-LaSure is a former director with HHS and CMS who played a key role in passing and implementing the Affordable Care Act.

✦ Two weeks after President Joe Biden issued an executive order instructing federal agencies to review waivers and policies that may “reduce coverage or otherwise undermine Medicaid,” including Medicaid work requirements, Acting CMS Administrator Elizabeth Richter notified states that the agency is retracting the additional procedures for potential waiver withdrawals presented in letters of agreement with former Administrator Seema Verma. CMS said it will instead “adhere to the regulations and STCs [special terms and conditions], which generally provide that States will receive notice and an opportunity to request a hearing before a determination to suspend, modify, or withdraw a demonstration project becomes effective,” according to an excerpt of one of the letters posted by JD Supra. Notably, the letter issued to Tennessee did not retract approval of the TennCare III waiver, which establishes a fixed funding approach. Visit https://bit.ly/2M0wlJc.

Last year, Medicare Advantage plans for the first time were able to extend a variety of non-primarily health-related items and services to their chronically ill beneficiaries, but insurer adoption of these benefits was relatively small. In 2021, the availability of such benefits has more than tripled, suggesting carriers are becoming more comfortable with a variety of new supplemental benefits and the idea of incorporating cost offsets into their bids.

At the same time, an examination of 2021 Plan Benefit Package (PBP) data illustrates the heavy influence of the COVID-19 pandemic on benefit design, as more insurers are offering grocery delivery, virtual companionship and other services aimed at supporting isolated seniors. But whether those services are one-offs or will be sustained by insurers remains to be seen.

Although many publicly traded insurers touted enrollment growth from the 2021 Medicare Annual Election Period (AEP) when reporting fourth-quarter and full-year 2020 earnings, some expressed the concern that care deferrals seen last year may have a negative impact on Medicare Advantage risk adjustment payments this year.

Humana Inc. on Feb. 3 posted a loss of $2.30 per share on an adjusted basis, which was driven by three main factors: (1) higher treatment and testing costs related to COVID-19 that were more than offset by a decline in non-COVID utilization, (2) ongoing pandemic relief efforts, and (3) increased expenses associated with the AEP. Humana ended the year with approximately 4.6 million total MA members, reflecting year-over-year growth of 11%, driving consolidated revenue growth of 90% in 2020. The company expects to gain between 425,000 and 475,000 individual MA members this year, for growth of 11% to 12%.

Recent data from the 2021 Medicare Annual Election Period (AEP) reflects the anticipated increase in Medicare Advantage enrollment, which is up 9.8% from a year ago and indicates penetration exceeding 43%, according to industry estimates. But multiple factors are making it harder for MA organizations to attract new members, and while plans are enhancing their benefit offerings to stay competitive, they must do so in a way that aligns with their star ratings and other financial goals.

For our occasional series of interviews that examine pertinent issues through the words of the industry’s leading executives, AIS Health spoke with GHG Vice President John Selby, whose long career in the insurance industry includes 10 years in various roles at Horizon Blue Cross Blue Shield of New Jersey. In his new role at the Convey company formerly known as Gorman Health Group, he is responsible for developing and executing growth strategies for GHG and its clients.