Radar on Medicare Advantage

With 74 Medicare Advantage Prescription Drug plan contracts earning a 5-star rating for 2022, compared with just 21 such plans last year, an unprecedented number of MA-PD plans have the ability to market 5-star products throughout the year — thanks in large part to COVID-related adjustments to the star ratings that are not likely to reoccur. According to multiple industry experts, that anomaly presents a unique set of challenges for plans that weren’t expecting to be 5 stars and could create some unusual midyear enrollment shifts.

That all depends, however, on how aggressive 5-star plans are with their marketing and how many enrollees take advantage of the so-called 5-star special enrollment period (SEP). While MA insurers have the advantage of marketing their 5-star plans year round, enrollees who are in a service area where a 5-star plan is available may switch from their current Medicare plan to a 5-star contract one time between Dec. 8 and Nov. 30. 

In its new rule proposing an array of policy and technical changes for the 2023 Medicare Advantage and Part D contract year, CMS devoted a large section to advancing integration of Medicare and Medicaid benefits for dually eligible individuals. Though the rule is largely in line with the goals of the SNP Alliance, whose member plans serve approximately 2.5 million Special Needs Plan (SNP) enrollees, the organization says many of the proposals will require greater collaboration between states and plans, as well as more specificity and standardization around the proposed collection of social determinants of health (SDOH) data.

The proposed rule, Medicare Program; Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs (87 Fed. Reg. 1842, Jan. 12, 2022), included the following provisions:

The pandemic-fueled boom in 5-star rated Medicare Advantage contracts could cause “significant market disruption” in 2022, suggests a new report from Wakely. In an analysis of enrollment data from CMS, the actuarial consulting firm found that 5-star contracts account for 19% to 30% of MA intra-year enrollment growth (i.e., enrollment gains occurring between February and December of a particular year), with 5-star contracts growing between 3.8% and 5.1% midyear. Since 5-star plans have the advantage of marketing their products all year long and enrolling members who qualify for the 5-star special enrollment period, the major increase in the number of available 5-star plans has the potential to create unprecedented enrollment shifts later this year. The report warned, however, that midyear plan switchers may have a less-than-favorable risk profile.

In addition to floating a variety of potential changes aimed at advancing health equity in the Medicare Advantage and Part D programs, CMS in its Feb. 2 release of the 2023 preliminary rate notice estimated that MA plans will see an average pay boost of 8% in 2023. And that estimate could change: CMS for 2022 originally estimated that plans would receive an average reimbursement increase of 2.8%, then bumped that estimate up to 4.08% in the final rate announcement. 

To Evercore ISI, the 2023 estimate isn’t far off from the “all-in” rate increase of 7.6% in 2022, when considering average risk coding trend, which varies by company.