Radar on Medicare Advantage

As the COVID-19 pandemic continues to ravage the U.S., recent research from the Kaiser Family Foundation demonstrates that people of color are more likely to test positive, require hospitalization and higher levels of care, and die from the novel coronavirus than white patients. This stark reality was top of mind during two industry conferences last month, as panelists from Medicare Advantage and Medicaid managed care organizations discussed the urgency of addressing racial disparities in health care and ways insurers can address them, from granular data collection and diverse hiring practices to working more collaboratively to effect change among providers.

As part of its “Bold Goal” initiative, Humana Inc. for several years been collecting data about various factors that impact the health of members in select communities around the country, and is now “digging into that next layer to really understand those determinants,” explained Vice President of Bold Goal and Population Health Caraline Coats during a panel at the Better Medicare Alliance (BMA) 2020 Medicare Advantage Summit, held virtually from Oct. 14-16.

With ballots still being counted in battleground states at press time, the outcome of the Nov. 3 presidential election was still too close to call. Meanwhile, it looked like Republicans will barely hold onto their majority in the Senate, while Democrats will continue to control the House. Nevertheless, analysts and investors seemed relatively confident in the positioning of managed care organizations, especially those with a stake in Medicare Advantage.

“We have seen enough to say that the election is shaping up well for Managed Care stocks,” wrote SVB Leerink analyst Stephen Tanal on Nov. 4. The firm reiterated its “bullish outlook” on publicly traded firms with minimal Affordable Care Act exposure, namely those with a diversified portfolio (e.g., Anthem, Inc. and UnitedHealth Group) and MA-focused Humana Inc. He added that the “final outcome in the Senate will be important for investor sentiment on Medicaid-focused MCOs that derive more of their earnings from ACA-related programs,” notably Centene Corp. and Molina Healthcare, Inc.

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).