Radar on Medicare Advantage

In a major win for Democrats facing midterm elections in the fall, the Biden administration this month passed the Inflation Reduction Act, a $430 billion-plus spending package that contained some of the president’s key priorities for climate, drug pricing and tax reform. While the legislation made headlines for allowing Medicare to negotiate the prices of certain drugs, industry experts say it’s changes to the Medicare Part D program that have the greatest potential to save seniors money and to force plans to rethink their management of the drug benefit.

The Inflation Reduction Act of 2022 (H.R. 5376) passed along party lines in both chambers and was signed into law on Aug. 16. It includes $369 billion to fight climate change, imposes a 15% corporate minimum tax and extends enhanced Affordable Care Act subsidies for another three years. Notable among the other health care provisions, the law requires CMS to negotiate the prices of prescription drugs, starting in 2026 with 10 Part D-covered drugs (including highest cost drugs and biologic agents, excluding “small biotech drugs” and certain orphan drugs to treat only one rare disease or condition). That number will increase to 15 in 2027 and 2028 — when Part B covered drugs may be included in the list of drugs subject to negotiation — and will rise to 20 agents in 2029 and beyond.

As Medicare Advantage insurers gear up to compete for enrollment during the 2023 Annual Election Period (AEP) that begins on Oct. 15, a handful of companies have already unveiled service area expansions that are pending CMS approval. Several of them named new territories in Texas, where some 4 million Medicare beneficiaries reside.

According to DHP data from both the AEP and the three-month Open Enrollment Period that follows on Jan. 1, UnitedHealthcare dominated both periods and grabbed 45.1% of the overall OEP gains, followed by CVS Health Corp.’s Aetna and Centene Corp. But two other major insurers — Cigna Corp. and Humana —were notably missing the list of top gainers, despite investments in their MA segments. Now, those companies are taking steps to make up for the lackluster enrollment they experienced in 2022.

In its annual release of the Medicare Part D payment benchmarks and other bid-related information for the coming plan year, CMS on July 29 reported that the national average monthly bid amount will continue a years-long downward trend, dropping to a historic low of $34.71. At the same time, monthly premiums are expected to take a slight dip. While both pieces of information — released by CMS in an effort to help Part D sponsors finalize their premiums and prepare for open enrollment this fall — reflect positive trends and a competitive market, upcoming changes included in the recently passed Inflation Reduction Act of 2022 could start to reverse those trends in the future.

The national average monthly bid amount is a weighted average of the standardized bid amounts for each stand-alone Prescription Drug Plan (PDP) and Medicare Advantage Prescription Drug (MA-PD) plan. Bids were submitted by PDPs and MA-PD plans in early June. CMS said it anticipates releasing the 2023 premium and cost-sharing information for 2023 Medicare Advantage and Part D plans in September.

Despite a challenge earlier this year to its longstanding pact with Mississippi Medicaid, Centene Corp. on Aug. 10 said its Magnolia Health Plan subsidiary was selected to continue serving the Mississippi Coordinated Access Network (MississippiCAN) and the Mississippi Children’s Health Insurance Program (CHIP). Meanwhile, the state’s Division of Medicaid (DOM) unveiled its intent to award new four-year contracts to two other insurers, including new entrant and CareSource affiliate TrueCare, which will bump leading managed care organization UnitedHealthcare out of the market.

Centene over the past year has reached multiple settlements with states regarding its handling of Medicaid pharmacy benefits. In June 2021, the health care giant agreed to pay $55.5 million to Mississippi after a 2019 investigation by the Office of the State Auditor concluded Centene’s pharmacy benefit manager was overbilling the state.