Radar on Medicare Advantage

Starting April 1, states were once again allowed to start disenrolling people from Medicaid who no longer qualify. But after early indications that people getting kicked off the roles for procedural reasons, the federal government this week offered a stern warning to states that may have been too quick to begin disenrollments.

Eligibility redeterminations were suspended during the COVID-19 public health emergency as a condition of states receiving higher federal funding. In that time, more than 20 million people joined Medicaid rolls nationwide, with enrollment soaring to 95.9 million lives as of May 2023, according to the latest update to AIS’s Directory of Health Plans (DHP). With millions of people standing to lose coverage, many in the health care industry feared lack of beneficiary knowledge about the renewal process could cause mass procedural disenrollments among those who are still eligible for coverage.

As Medicare Advantage organizations prepare for the next bid cycle, each year seems to bring its own set of factors that threaten their ability to stay competitive amid potential cost increases. For the 2023 plan year, the expiration of COVID-related adjustments and expected decline in quality bonus payments had plans considering modest benefit enhancements. For the 2024 plan year, maintaining stable benefits and premiums amid anticipated rate cuts and uncertainty around Medicare Part D trends is the name of the game, according to actuaries who helped plans submit bids that were due on June 5.

After proposing substantial revisions to the CMS-Hierarchical Condition Categories (HCC) risk adjustment model that insurers argued would result in rate reductions, CMS on April 3 opted to phase in the changes starting with 2024. CMS at the time estimated that plans would, on average, see a 3.32% increase in risk adjusted revenue, although that will vary broadly by plan. CMS also estimated the combined impact of the risk model revision and fee-for-service normalization could reduce payments by 2.16%. However, given that the agency will apply a blended method to calculate risk scores next year, plans could see a 4.44% overall risk score trend.

After issuing a request for information (RFI) and reviewing feedback from stakeholders, Sen. Bill Cassidy, M.D. (R-La.), is circulating discussion draft legislation to improve coverage for Medicare-Medicaid dual eligibles. While several industry experts agree that the legislation is moving integration in the right direction, they also say certain elements of it may be overly ambitious and raise many questions, such as whether states that have limited the number of Medicaid managed care organizations will inhibit the ability of Medicare Advantage plans to participate in the new model. 

Cassidy, who frequently tackles health care issues as a member of several Senate committees, led a bipartisan group of senators in drafting the proposal, which was informed by more than 125 responses to the November RFI. According to a Cassidy aide, the senators will collect feedback through July 1 and hope to formally introduce legislation after Labor Day.