Radar on Medicare Advantage

Acknowledging the growing prevalence of obesity in the U.S. and its existence as a chronic disease, CMS in its proposed Medicare Advantage and Part D rule for the 2026 contract year included a landmark provision to expand Medicare and Medicaid coverage of anti-obesity medications (AOMs). The proposal opens the door to more Part D coverage of costly glucagon-like peptide-1 (GLP-1) medications — which are now covered for the treatment of Type 2 diabetes or major adverse cardiovascular events — and industry experts question how sponsors will determine eligibility and control what’s likely to be a significant increase in costs.

In the rule, which was issued on Nov. 26 and is slated for Federal Register publication on Dec. 10, CMS proposed a reinterpretation of Medicare and Medicaid law to provide coverage of AOMs for the treatment of obesity under Medicare Part D and Medicaid. CMS estimated that some 3.4 million Part D beneficiaries would become newly eligible to gain coverage for AOMs, at a 10-year program cost of about $25 billion (out of expected Part D spending of $2.1 trillion). With the revision to current Medicaid exclusions, coverage of AOMs would increase federal and state spending by a total of $40 billion over 10 years, CMS estimated.

CareSource, which serves approximately one quarter of managed Medicaid enrollees in the Georgia Families program, on Dec. 2 became the only incumbent bidder out of four managed care organizations selected for new contracts expected to start in 2026. Major Medicaid players Centene Corp. and Elevance Health, Inc. were left out of the awards, while Humana Inc., Molina Healthcare, Inc. and UnitedHealthcare successfully bid on contracts that could generate at least $15 billion in combined annual revenue.

According to AIS’s Directory of Health Plans, nearly 1.7 million Medicaid beneficiaries in Georgia are in managed care, while another 1 million are in fee-for-service Medicaid. Three MCOs — CareSource, Centene’s Peach State Health Plan and Elevance Health’s Amerigroup Georgia — currently serve the program. With nearly 775,000 enrollees, Centene has the largest market share (46%).

President-elect Donald Trump on Nov. 19 named author and cardiac surgeon Mehmet Oz, M.D., aka television personality Dr. Oz, as his choice for CMS administrator, overseeing both the Medicare and Medicaid programs. Industry observers suggest the nomination could be a win for Medicare Advantage, although future policy changes will largely depend on the staff behind him.

“Dr. Oz does not have any government experience for us to draw from, but he did coauthor a pro-Medicare Advantage op-ed in Forbes in June 2020 that sheds some light into his views on health policy,” wrote Barclays analyst Andrew Mok on Nov. 19. That piece “supported expanding private Medicare to most citizens,” which translates to a “positive read-through” for publicly traded MA firms like Humana Inc., CVS Health Corp. and UnitedHealth Group.

Rebates paid to Medicare Advantage plans that bid below the benchmark reached $65.8 billion in 2024 and are projected to total $1.1 trillion over the next decade, according to the 2024 Medicare Board of Trustees Report. While those rebates must be used to lower premiums, reduce cost sharing or enhance benefits for MA enrollees, what if such resources were reallocated to fund extra benefits such as healthy foods and dental care for all Medicare beneficiaries?

That’s a central question posed by researchers in a new article, “The Opportunity Costs of Medicare Advantage Plan Rebates,” published Oct. 24 in the New England Journal of Medicine (NEJM). Comparing the total projected rebate dollars for 2024 from the Trustees report, with the projected costs of funding extra benefits for all Medicare beneficiaries, the article’s authors estimated that a “package of expanded benefits could be made available to all Medicare beneficiaries for less” than what would be spent on rebates in 2029.