Radar on Medicare Advantage

As select publicly traded insurers highlighted how increased Medicaid membership, rising yet still-below-normal levels of utilization, COVID-related costs and rate adjustments affected their third-quarter 2020 earnings, they appeared to approach the remainder of 2020 and full-year 2021 with equal parts caution and optimism.

Excluding one-time non-operating items such as its exit from Puerto Rico, Molina Healthcare Inc. on Oct. 29 reported adjusted earnings per share of $3.36 for the third quarter of 2020, compared with adjusted EPS of $2.83 for the third quarter of 2019. Molina’s overall membership grew sequentially during the quarter by 13%, or 478,000 members — of which approximately 473,000 were Medicaid enrollees — while premium revenue rose 17% from the prior quarter to $4.8 billion. Those results reflect Passport Health Plan’s membership and revenue, which Molina assumed in Kentucky on Sept. 1.

Following up on its promise to advance the timeline for releasing rates and other information relevant to the 2022 bid cycle, CMS on Oct. 30 posted Part 2 of the 2022 Advance Notice, which indicated Medicare Advantage plans will receive one of their largest pay boosts in recent history — about 2.8%. That’s compared with an estimated increase of 0.93% given in Part 2 of the 2021 Advance Notice, although that figure improved to 1.66% in the final rate notice (RMA 4/16/20, p. 1).

CMS on Sept. 14 released Part 1 of the Advance Notice, which contained mostly expected items such as the final phaseout of the legacy Risk Adjustment Processing System (RAPS) in determining risk scores (RMA 9/17/20, p. 1). That notice in the past has come out anywhere from December to January, but CMS at the time said it was moving things up to accommodate an early final rate notice release of mid-January 2021 given the uncertainty associated with the COVID-19 pandemic. CMS is statutorily required to post the final rate notice for the coming calendar year by early April.

As Medicare Advantage and Part D sponsors started promoting their offerings during the 2021 Annual Election Period that began on Oct. 15, several major insurers notably mentioned their participation in the first year of the CMS Part D Senior Savings Model (SSM). Perhaps the Trump administration’s most tangible action on insulin costs, the model is intended to reduce Medicare expenditures and improve care quality, but the expense to seniors will vary by plan type and region, observes a new analysis from Avalere Health.

Introduced through the CMS Center for Medicare & Medicaid Innovation (CMMI) in March, the five-year model is intended to lower out-of-pocket costs for diabetic seniors by featuring “predictable” copayments of no more than $35 for a broad set of insulins beginning in 2021 (RMA 3/19/20, p. 1).

✦ Despite care utilization patterns rising closer to normal levels in the third quarter of 2020, adjusted earnings per share (EPS) for UnitedHealth Group fell 10% year-over-year to $3.51 as the company undertook “extensive consumer and customer financial assistance measures,” the insurer reported on Oct. 14. Medical loss ratio for the quarter was 81.9%, compared with 82.4% a year ago, driven by “modestly lower care patterns and the return of the health insurance tax,” and offset by COVID-19 assistance measures that included support of state testing and contact tracing efforts. For the quarter ending Sept. 30, the UnitedHealthcare segment recorded $50.4 billion in revenue, compared with $48.1 billion in the third quarter of 2019. That increase was fueled by growth in the firm’s public-sector and senior programs, which served 935,000 additional people year to date, and was partially offset by declining commercial enrollment. As of Sept. 30, UnitedHealthcare served 5.67 million Medicare Advantage lives (up from 5.6 million in the second quarter) and 6.4 million Medicaid enrollees (compared with 6.2 million in the previous quarter). UnitedHealth raised its full-year adjusted EPS outlook to a range of $16.50 to $16.75, from an earlier range of $16.25 to $16.55. Visit www.unitedhealthgroup.com/investors.

✦ Clover Health recently unveiled its intent to go public via a merger with Social Capital Hedosophia Holdings Corp. III, which is a special purpose acquisition company. The transaction, which is expected to close in the first quarter of 2021, values Clover at $3.7 billion and will provide up to $1.2 billion in cash for the newly constituted company. Visit www.cloverhealth.com.

Through its longstanding Medicare Part D partnership with Humana Inc., Walmart has always had its toe in the insurance market. But two moves unveiled this month indicate the retail giant is digging deeper into the health care space: (1) the launch of its own Medicare insurance brokerage, and (2) a new co-branded Medicare Advantage offering with tech-focused insurer Clover Health, which is planning to go public (see brief, p. 8).

For the 2021 plan year, San Francisco-based Clover Health on Oct. 1 introduced two new PPO plans: LiveHealthy: Clover Powered, Walmart Enhanced, and LiveHealthy LI: Clover Powered, Walmart Enhanced. The options will be available to about 500,000 Medicare-eligible beneficiaries in eight Georgia counties. The venture-backed firm in August said it plans to triple its geographic footprint, increasing its MA service area to 108 counties in eight states (RMA 9/3/20, p. 1). Clover currently services 57,000 MA enrollees in 34 counties across seven states.