Radar on Medicare Advantage
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FMO Lawsuits Could Delay Agent and Broker Compensation Rules
With Medicare Advantage plan bids off to CMS for the 2025 plan year, MA organizations now turn their attention to arrangements with agents and brokers who will sell their plans this fall and the field marketing organizations (FMOs) that support them. But at least three complaints have been filed challenging CMS’s implementation of new provisions that will impact those relationships and take effect Oct. 1.
A central question raised in all three complaints is whether CMS exceeded its regulatory authority by abruptly setting a cap on administrative payments made to agents and brokers by MA organizations that have long been allowed in the MA program. Sources say a delay or additional clarifying guidance could result from at least two of the complaints, which were filed in a federal court with a history of striking down HHS regulations. CMS, meanwhile, is taking the stance that it is following Congress’ orders to ensure a level playing field among plans.
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More States Offer Health Benefits to Retirees Exclusively Through MA Plans
As of this year, a dozen states provide health coverage to their Medicare-eligible retirees only through Medicare Advantage plans, according to a recent KFF review.
Employer-sponsored health care coverage for retirees was generally designed to coordinate with or wrap around traditional Medicare. Yet over the past few years, many states have shifted to contracts with private insurers to provide all Medicare-covered benefits and extra benefits for their retirees. These moves may help states reduce spending on retiree health costs and simplify administration.
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News Briefs: SCAN Wins Lawsuit Over 2024 Star Ratings Calculations
SCAN Health Plan won a legal challenge to CMS’s calculation of the 2024 Star Ratings that could have major implications for quality bonus payment (QBP) outlays and 2025 cut point generation. According to a June 3 memorandum opinion filed in the U.S. District Court for the District of Columbia, Judge Carl Nichols agreed with the not-for-profit Medicare Advantage insurer that CMS “failed to follow its own regulation,” which resulted in SCAN receiving an incorrect Star Rating. In a lawsuit filed against HHS in December, SCAN argued that CMS was “arbitrary and capricious” when it applied new guardrails (i.e., restricting the movement of cut points by no more than 5% in either direction) to hypothetical cut points for the previous year rather than actual cut points, yet did not amend its regulations to reflect that decision. Judge Nichols agreed that the “best and most natural reading” of CMS’s so-called Guardrail Rule was that it referred to actual cut points in both the initial year and the following year, and he granted the plaintiff’s motion for summary judgment. SCAN, which serves roughly 277,000 MA enrollees in five states, had a 4.5 Star Rating for six consecutive years until 2024, when it received a 3.5 Star Rating, costing it nearly $250 million in lost quality bonus payments. Elevance Health, Inc. in December filed a similar lawsuit; the insurer in March disclosed that CMS “updated” its original ratings, which will lead to an additional $190 million in revenue for plan year 2025. MA insurers Hometown Health Plan and Zing Health also have similar suits pending, reported Modern Healthcare.
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Not in Kansas Anymore: Aetna Gets Left Out of Medicaid Awards
Ousting CVS Health Corp.’s Aetna from the current roster of Medicaid managed care organizations serving the Kansas Medicaid program, Elevance Health, Inc.’s Healthy Blue was chosen as the third insurer for new KanCare contracts starting Jan. 1, 2025. Incumbents Sunflower Health Plan (Centene Corp.) and UnitedHealthcare Community Plan held onto their spots. The awards mark the latest in a string of wins for Centene and Elevance and another disappointment for Aetna.
According to results posted by the Kansas Dept. of Health and Environment on May 14, seven MCOs responded to the request for proposals (RFP) process that began in October 2023 after a delay. Serving nearly 154,000 enrollees, UnitedHealthcare currently has the biggest share of the Kansas Medicaid market, per AIS’s Directory of Health Plans. Aetna, meanwhile, serves nearly 133,000, or about 31% of KanCare enrollees.
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Amount of Medicaid Funds Flowing to MCOs Is Poised to Rise, KFF Predicts
Taking a look at the overall state of Medicaid managed care, KFF earlier this month compiled data from prior years of its surveys and analyses to identify notable trends. About 75% of all Medicaid beneficiaries are enrolled in risk-based managed care — with that percentage set to grow as Oklahoma transitions away from fee-for-service (FFS) Medicaid — and most states spend at least 40% of total Medicaid dollars on payments to MCOs. KFF noted that spend could increase as states shift higher-cost, higher-need beneficiaries, such as disabled individuals and adults aged 65 and older, into managed care. Moreover, most states (32 states including Washington, D.C.) with managed care carve in their pharmacy benefits to MCO contracts, observed KFF.
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