Radar on Medicare Advantage

Medicare Advantage enrollment over the last year grew by 7.4%, reflecting slower growth than previous years and falling slightly below CMS’s expectations. According to the latest update to AIS’s Directory of Health Plans (DHP), the MA program enrolled nearly 31 million beneficiaries as of February. That data reflects the full outcome of the 2023 Medicare Annual Election Period (AEP), which ran from Oct. 15 through Dec. 7. Despite the slowdown in enrollment, insurers’ increased investments in Special Needs Plans (SNPs) appear to be paying off, while MA plans say their attempts to maintain affordability while enriching benefits contributed to their AEP successes.

“We are basically at the very tail end of the Baby Boomers aging into Medicare as of 2023,” remarks Rebellis Group CEO Betsy Seals, referring to the generational group whose births peaked in 1958. “Looking at the overall numbers, I think that we have a lot yet to discover about this next generation and how they’re going to shop and switch and enroll. So that’s going to be interesting.”

Medicare Advantage enrollment is approaching 31 million lives as of February 2023, a 7.4% increase from this time last year, according to AIS Health’s analysis of data that included enrollment from the 2023 Medicare Annual Election Period (AEP). And while CMS says MA enrollment now represents about half of the total Medicare population, the rate of that growth seems to be slowing down — AIS’s analysis of the 2022 AEP recorded an 8.5% annual increase, and a 9.9% increase in 2021.

Of the 2.1 million people new to Medicare Advantage this year (AIS’s collection of AEP data excludes some Medicare-Medicaid dual eligibles, see note below), 81.8% selected a plan from one of the five largest payers — UnitedHealthcare, Humana Inc., CVS Health Corp.’s Aetna, Elevance Health, Inc. and Kaiser Permanente. These five payers enroll 69.6% of the overall market. UnitedHealthcare alone scooped up more than 875,000 members year-over-year, compared to No. 2 Humana’s 456,000. Aetna and Elevance, meanwhile, both saw annual increases of more than 7%. And while Cigna Healthcare’s MA business pales in comparison to other publicly traded insurers, the payer’s 106-county expansion seems to have paid off, netting 15,000 new members. Last year, it lost more than 6,000. Not every large insurer fared well in the AEP, however. Centene Corp.’s enrollment dropped by more than 90,000 lives after a poor showing in 2023’s Star Ratings.

Since CMS posted its 2024 Advance Notice for Medicare Advantage and Part D plans a month ago, the MA industry has been in a frenzied state trying to understand the impact of proposed risk model changes on revenue while vocalizing its displeasure prior to the March 3 end date of the comment period. While CMS projected that MA plans may see an average 3.3% increase in risk scores, a new analysis from Pareto Intelligence based on client data suggests that the impact to risk scores could vary widely, increasing at best by 2% and dropping by up to 14% — for an average decline of 4%. 

CMS, in its annual Advance Notice of updates to Medicare Part C and Part D payment policies for the coming plan year, included significant changes to the risk model that is used to adjust MA plan reimbursement. In addition to removing thousands of diagnosis codes and renumbering several Hierarchical Condition Categories (HCCs) used to determine MA plans’ risk scores, the agency proposed moving from using ICD-9 codes to the “more commonly used” ICD-10. And in doing so, CMS explained that it removed certain diagnostic categories that are coded more frequently in MA relative to fee-for-service (FFS) Medicare. Specifically, the proposed 2024 CMS-HCC model (version 28) would contain 115 diagnostic HCCs, up from the 86 used in the current model (version 24), but use just 7,770 ICD-10 codes, down from 9,797 ICDs under the current model.