Radar on Medicare Advantage

  • News Briefs: Medicare Advantage Insurers Continue to Collect Higher Gross Margins

    Insurers in 2021 continued to command higher gross margins in the Medicare Advantage market than in other health insurance markets, according to a new Kaiser Family Foundation (KFF) analysis. Using financial data reported by insurers to the National Association of Insurance Commissioners (NAIC) and compiled by Mark Farrah Associations, KFF estimated that MA gross margins — or the amount by which total premium income exceeds total claims costs per enrollee per year — averaged $1,730 per enrollee in 2021, $2,257 in 2020, $1,819 in 2019, and $1,727 in 2018. Across all four years, MA insurers earned markedly higher gross margins than insurers in the individual, group and managed Medicaid markets, reported KFF. As seen in other markets, MA gross margins spiked in 2020 due to low utilization during the first year of the COVID-19 public health emergency.
  • 2024 Advance Notice Deep Dive Signals ‘Radical’ Change on the Horizon

    Two weeks ago, CMS in its 2024 Advance Notice projected that Medicare Advantage organizations can expect an average estimated change in revenue of 1.03%, when accounting for underlying factors. Although the industry had been bracing for a much smaller rate increase than the robust 8% CMS predicted this time last year, a deeper dive into the notice has plan sponsors and providers understandably concerned about potential rate reductions. That’s largely because the annual rate notice, which often includes proposed changes to the risk adjustment model used to determine plan payments, proposes a substantial redesign of the model.

    “This is the most radical change to the risk adjustment model since it started,” asserts risk adjustment consultant Richard Lieberman, who estimates that the Part C CMS-Hierarchical Condition Categories (HCC) model has gone through “four major iterations” since it was first used to adjust plan payments in 2004. One significant change in the proposed 2024 CMS-HCC model is that it has 115 payment HCCs, up from 86 in the current model, which was updated in 2020. In addition, CMS proposed moving from using ICD-9 diagnoses codes to the “more commonly used” ICD-10, as well as shifting to more recent underlying fee-for-service (FFS) Medicare data years to reflect 2018 diagnoses and 2019 expenditures (from 2014 diagnoses and 2015 expenditures).

  • GAO Wants CMS to Enhance Data Collection Efforts Around Supplemental Benefit Use

    As expanded supplemental benefits offered by Medicare Advantage plans continue to grow and attract enrollees, a new report from the Government Accountability Office (GAO) observed that there is still limited data on the extent to which beneficiaries are using these benefits. GAO suggested that CMS could do more to collect data on supplemental benefit use from MA organizations and recommended that it issue clarification on current encounter data reporting requirements.

    “We’ve heard CMS Administrator Chiquita Brooks-LaSure say at pretty much every recent public appearance that they want to understand where the dollars are going, making sure that they’re getting good value for their investments,” etc., remarks Tim Murray, a principal with the actuarial and consulting firm Wakely, an HMA company. “I think that has some read-through for risk adjustment, which is already playing out, but also of equal importance for the supplemental benefits. And I think if Medicare Advantage as an industry is going to be able to make a data-driven case that these supplemental benefits are actually driving sustainable value for members beyond marketing sizzle, then this issue will need to be addressed and remedied.”

  • Seniors’ Plan Loyalty Wavers as Deft Saw 15% Medicare Advantage Switch Rate in 2023 AEP

    Each year, Deft Research surveys a panel of Medicare beneficiaries to better understand consumer decision making during the Medicare Annual Election Period (AEP) and help carriers and their partners strategize for the next plan year. Deft’s 2023 Medicare Shopping and Switching Study, the latest in the firm’s Senior Market Insights Service series, features responses from more than 3,000 seniors who were surveyed immediately after the AEP and an additional 1,800 individuals who were surveyed regularly during the October-December period.

    While the overall switching rate among seniors shopping during the AEP was relatively unchanged from prior years at 11%, Deft observed that switching by Medicare Advantage beneficiaries reached 15%, up from 12% seen in the prior two periods. That wasn’t surprising given that Deft’s AEP Gut Check Study from July 2022 suggested seniors’ frustration with plan-offered flex cards and interest in Part B giveback benefits might inspire them to shop around.  

  • CVS-Oak Street Deal Could Boost Aetna MA Retention, but Faces Regulatory Risks

    Confirming a tie-up that had been rumored for months, CVS Health Corp. on Feb. 8 revealed that it struck a $10.6 billion deal to buy Oak Street Health, which owns primary care centers catering to Medicare-eligible patients. Executives of the two firms say the benefits of the proposed transaction abound for both CVS Health and Oak Street — such as improving retention for the Aetna segment’s Medicare Advantage business — but industry observers say the acquiring firm still faces a bevy of risks as it seeks to incorporate multiple new care delivery assets.

    During CVS Health’s conference call to discuss fourth-quarter and full-year 2022 financial results, CEO Karen Lynch and Mike Pykosz, Oak Street’s president, discussed the merits of the deal at length.

The Latest
Meet Our Reporters

Meet Our Reporters

×
×
×