Radar on Medicare Advantage

Given the outcomes of two legal challenges to CMS’s application of a new Star Ratings methodology last year, CMS on June 13 confirmed plans to recalculate the 2024 Star Ratings — and notified all Medicare Advantage organizations of a “limited opportunity” to resubmit their bids for the 2025 plan year. As a result, plans that stand to benefit from the recalculations and their actuaries are now scrambling to get changes into CMS by its June 28 deadline.

In what industry experts agree is an unprecedented situation, CMS’s decision came shortly after the U.S. District Court for the District of Columbia agreed with SCAN Health Plan that CMS’s failure “to follow its own regulation” resulted in the not-for-profit MA insurer receiving an incorrect 2024 Star Rating, which cost the plan nearly $250 million in quality bonus payments (QBPs) for 2025. That same court also ruled that CMS must recalculate Anthem Blue Cross and Blue Shield of Georgia’s Star Ratings. Elevance Health, Inc., the parent company of the Anthem Georgia plan, filed a lawsuit against HHS in December and disclosed in March that CMS had updated its original ratings, which will lead to an additional $190 million in revenue for plan year 2025.  SCAN filed a similar suit in December.

The use of supplemental benefits in Medicare Advantage can markedly improve health care utilization, decreasing members’ inpatient admissions and increasing wellness visits and preventive screenings, suggests new research from Elevance Health, Inc.’s Public Policy Institute. And the effect is especially pronounced for Medicare-Medicaid dual eligibles, who are more likely to have greater care needs and face socioeconomic vulnerabilities.

Following legislation and regulatory changes in 2018 and 2019 that established new types of supplemental benefits and expanded the definition of what CMS considers “primarily health-related,” payers began to offer supplemental benefits that target these health-related social needs, such as food insecurity and lack of access to transportation.

During presentations at recent investor conferences and meetings, three of the industry’s so-called “insurtechs” expressed a notable degree of confidence in their ability to profit from the Medicare Advantage space, even as their more diversified and established publicly traded peers struggle with increased utilization and diminishing reimbursement. That’s largely because of the investments they’ve made in proprietary technology that is driving care coordination.

In opening remarks at the company’s June 10 annual stockholder meeting, Clover Health Investments, Corp. CEO Andrew Toy touted year-over-year improvement in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) — the company recorded a profit for the first time — “all in the same year that the greater Medicare Advantage ecosystem took a step back.” Referring to its cloud-based, artificial intelligence-powered clinical support tool Clover Assistant, he told investors, “The fact that our entire clinical management model is driven by technology is something that we believe to be a significant moat for us and something that bodes well for our business as we move into a technology-centric, AI-accelerated world.”