RADAR on Medicare Advantage

  • News Briefs

     UnitedHealth Group on April 15 reported first-quarter 2020 adjusted earnings per share of $3.72, in line with the same period last year, and maintained its full year EPS outlook in the range of $16.25 to $16.55. These results reflected “minimal impact from the progression” of COVID-19 across the U.S., given that it emerged late in the quarter, according to a press release. Revenues for the quarter ending March 31 rose 6.8% to $64.4 billion, “reflecting broad-based revenue growth across Optum and UnitedHealthcare,” and UHC’s medical loss ratio dropped from 82.0% in the year-ago quarter to 81.0% in the recent quarter, largely as a result of the Affordable Care Act health insurer fee returning and partly offset by additional calendar days. UHC’s first-quarter revenues increased by 4.4% to $51.1 billion, primarily due to enrollment growth in Medicare Advantage and Dual Eligible Special Needs Plans; revenues in the Medicare & Retirement segment climbed 9.7% to $23.2 billion in the recent quarter, as the business grew to serve 5.6 million MA enrollees — a year-over-year increase of 410,000. The company added that UnitedHealth Group President and Optum CEO Andrew Witty is taking a leave of absence to help lead the World Health Organization’s new initiative for COVID-19 vaccine development. View the release at https://bit.ly/3co3qGC.

     Medicare Advantage has experienced year-to-date (YTD) enrollment growth of 6.4%, and added nearly 78,000 members from March to April, according to a Credit Suisse analysis of the latest enrollment figures from CMS. YTD enrollment this year is “above the pace of the prior two years,” which was 4.8% in 2019 and 5.2% in 2018, and “runs counter to conventional wisdom which says the return of the HIF [health insurer fee] should dampen the Y/Y growth rate,” wrote Credit Suisse analyst A.J. Rice on April 15. UnitedHealth Group and Humana Inc. were YTD growth leaders, as UnitedHealth added an industry-leading 355,900 members and Humana grew by 337,300 enrollees, Credit Suisse estimated. The five major MCOs (including CVS Health Corp.’s Aetna), which account for roughly 61.6% of total MA enrollments, have cumulatively grown 8.1% YTD, compared with 3.7% YTD growth for the remaining MA plans, added Rice. View the monthly enrollment report at https://go.cms.gov/3cln7P7 or contact Rice at aj.rice@credit-suisse.com.

  • While MAOs Embrace ‘Flex Benefits,’ SSBCI Uptake Is Slow

    After a relatively modest first year, the number of condition-specific supplemental benefits offered by Medicare Advantage plans more than doubled from approximately 820 in 2019 to 1,850 this year, according to a new report from Faegre Drinker Consulting. And, in the first analysis of new Special Supplemental Benefits for the Chronically Ill (SSBCI) for 2020, Faegre Drinker found that only 245 plans out of approximately 6,000 MA plans total offered them. But the firm observed that adoption of the new “flexible benefits” permitted by CMS may improve as plans see what works and what doesn’t and explore their potential to increase enrollment, improve outcomes and generate net cost savings.

    “We see a big increase in condition-specific benefits in 2020, but the SSBCI uptake was pretty small,” remarks Michael Adelberg, a principal with Faegre Drinker and a former CMS MA official. Nevertheless, the industry is only at the start of a multiyear process to embrace flexible benefits, he points out.

  • Telehealth Increase Underscores Need for MA Risk Adjustment

    Just days after CMS mentioned in its final 2021 Medicare Advantage and Part D rate notice that it would issue separate guidance on the topic of telehealth and risk adjustment (see story, p. 1), the Trump administration unveiled a major shift in telehealth policy by giving plans new latitude to apply diagnoses from telehealth visits for risk adjustment purposes. While this removes a longstanding barrier to MA plans’ use of the technology, it remains unclear whether CMS is making a permanent policy change.

    “The 2019 Coronavirus Disease (COVID-19) pandemic has resulted in an urgency to expand the use of virtual care to reduce the risk of spreading the virus,” said the agency in an April 10 memo to plans. “CMS is stating that Medicare Advantage (MA) organizations and other organizations that submit diagnoses for risk adjusted payment are able to submit diagnoses for risk adjustment that are from telehealth visits when those visits meet all criteria for risk adjustment eligibility, which include being from an allowable inpatient, outpatient, or professional service, and from a face-to-face encounter.”

  • Amid Cost Unknowns, MAOs Will Get 1.66% Pay Increase

    Facing a host of cost-related unknowns, Medicare Advantage organizations next year will be working with a slightly higher-than-expected pay increase, although CMS in its final MA and Part D rate notice made no adjustments to directly account for the impact of COVID-19 or the expected influx of patients diagnosed with end-stage renal disease (ESRD). However, the permanent repeal of the Affordable Care Act health insurer fee (HIF) and an adjustment to the Total Beneficiary Cost (TBC) measure may help offset some of the associated costs.

    CMS in the 2021 rate notice released April 6 estimated that plans on average can expect a reimbursement increase of 1.66%. This was better than CMS’s initial projection of 0.93% in February (RMA 2/20/20, p. 1) but lower than the healthy 2.53% pay increase plans got this year.

  • Medicaid MCOs Brace for COVID-Related Enrollment Surge

    As the COVID-19 pandemic continues to dominate the news cycle, headlines related to rising unemployment often underscore the impact to Medicaid, suggesting that a “Record number of unemployed Americans will stress state Medicaid programs” (NBC News) and that the new coronavirus will hit Medicaid “like a punch in the mouth” (USA Today), to quote the National Association of Medicaid Directors’ Matt Salo. But what about the Medicaid managed care organizations that will absorb the newly jobless and uninsured?

    “I think that Medicaid MCOs are clearly in the best position to handle the influx of folks. They have the systems, they have the infrastructure and they have the experience to do this,” remarks Jerry Vitti, founder and CEO of Healthcare Financial, Inc., which connects low-income elderly and disabled populations with public benefit programs. While onboarding a wave of new members may put some initial stress on plans, the real “strain” will come from covering new members who have unmet health care needs, he suggests.

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