Radar on Medicare Advantage

As Health Equity Measurement Begins, MA Plans Must Use Precision to Close Gaps

Starting with the 2027 Star Ratings, CMS will begin rewarding Medicare Advantage plans for their efforts to assess social risk factors and address disparities in certain quality measures with the new Health Equity Index (HEI). Not all plans will qualify and only a third of top-performing plans will be rewarded, but the time is now for plans to look at how they are doing on the claims-based measures that will be impacted and how they are performing for members with one of the qualifying factors (i.e., eligible for Medicare and Medicaid, disability and/or the Part D low-income subsidy).

During a recent panel moderated by AIS Health, a division of MMIT, speakers at the 7th Annual Medicare Advantage Leadership Innovations forum discussed best practices for assessing members’ social needs and how plans can use data to address them and move the needle forward on health equity.

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Bigger Footprints, Stable Benefits, Value Adds Assisted AEP Wins

Nearly 33 million individuals were enrolled in Medicare Advantage as of February, demonstrating a year-over-year increase of 7.1% and Annual Election Period growth of 4.0%, according to AIS Health’s analysis of the latest AEP data. Those figures reflect a continued slowdown in MA growth as fewer baby boomers age into Medicare. At the same time, switching among MA consumers continues to rise, and with less rebate and risk adjustment revenue expected this year, insurers had tough decisions to make to stay competitive.

According to the latest Medicare Shopping and Switching Study from Deft Research, MA switching during the 2024 AEP reached a “multiyear high” of 16%, compared with 15% in the 2023 AEP and 12% in the prior two periods. While previous Deft studies identified increasing levels of frustration with supplemental benefits as a top driver of switching, this year’s changes were “more so due to reductions in benefits and added cost,” says George Dippel, president of Deft Research.

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Is the MA Boom Over? 2024 AEP Results Reflect Continued Slowdown

Medicare Advantage growth is slowing down after a pandemic-era windfall, according to AIS Health’s analysis of the 2024 Annual Election Period (AEP). As of February — when then the final AEP data is reported — total MA enrollment was approaching 33 million lives (AIS’s collection of AEP data excludes some Medicare-Medicaid dual eligibles; see note below). That’s a 4.0% increase from October 2023, when the AEP began, and down from 4.6% during the same time period last year and a high of 6.8% in 2021. CMS previously projected that MA enrollment would increase by roughly 7% to 33.8 million this year; the AIS Health analysis shows that MA enrollment grew 7.1% from a year ago.

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Immediate Reporting of Supp Benefits Usage Puts Added Pressure on MAOs

As Medicare Advantage organizations grapple with rising medical costs — driven in part by increased spending on supplemental benefits such as dental, vision and over-the-counter coverage — CMS is tasking plans with the immediate submission of utilization data for “all items and services, including supplemental benefits” through the MA Encounter Data System (EDS). That requirement, which is retroactive to Jan. 1, presents a host of challenges as supplemental benefit vendors may not have the kind of detailed information CMS is seeking. And it raises broader questions about how the data will be used.

Supplemental benefits have been on the rise since plan year 2019, when CMS’s reinterpreted definition of “primarily health-related” enabled MAOs to include benefits like adult day health services, support for caregivers of enrollees and therapeutic massage in their plan benefit packages. In 2020, MAOs began offering Special Supplemental Benefits for the Chronically Ill (SSBCI), a category of “non-primarily health related” items and services that can be made available to certain beneficiaries. According to health care research and advisory services firm ATI Advisory, the number of plans offering expanded primarily health-related supplemental benefits and/or non-primarily health-related SSBCI grew from 628 plans in 2020 to 2,334 plans in 2024.

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News Briefs: BMA-Sponsored Paper Predicts $33 PMPM Cut to Supplemental Benefits

A recent report commissioned by the Better Medicare Alliance (BMA) estimated that Medicare Advantage per-member per-month (PMPM) payments could drop by 1.0% if CMS finalizes proposals contained in the 2025 Advance Notice. It also estimated that the PMPM value of supplemental benefits, or reductions to premiums and cost sharing, would decline by an average of $33 or more. In its preliminary rate notice released in January, CMS projected that MA plans could see an average revenue increase of 3.70%, which included an estimated a -2.45% revenue decline due to a combination of risk model changes that are being phased in and fee-for-service Medicare normalization, an effective FFS growth rate of 2.44%, and an average risk score trend of 3.86%. The report, prepared by Berkeley Research Group (BRG), projected that MA medical cost inflation will rise by 4% to 6% in 2025 and that CMS’s estimated pay increase will not adequately cover increased medical expenses. Citing a National Association of Insurance Commissioners analysis, BRG pointed out that PMPM medical costs in MA increased by an estimated 7.3% for the first nine months of 2023, while recent insurer earnings reports suggest medical costs will continue to grow in 2024.

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AEP Winners List Alliances, Benefits, Expansions, Stars as Keys to Growth

Each year, AIS Health does a deep dive into the enrollment shifts that took place regionally and nationally over the Medicare Annual Election Period (AEP) and explores the myriad drivers of growth (or attrition). From benefit enhancements to creative new partnerships, three AEP leaders disclose details of their winning strategies to AIS Health, a division of MMIT.

From October 2023 to February 2024 — which reflects the full capture of lives enrolled during the AEP, which ran from Oct. 15 through Dec. 7 — CVS Health Corp.’s Aetna increased its MA enrollment by 18.9% and grabbed roughly half of all new enrollment in individual plans, including Dual Eligible Special Needs Plans (D-SNPs). Aetna significantly grew its geographic footprint in both segments, maintained stable provider networks, and on average, featured lower premiums, maximum out-of-pocket costs and drug deductibles in its non-SNP plans.

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Latest Earnings Reports Suggest MA Insurers Aren’t ‘Out of the Woods’

As the second batch of publicly traded insurers posted fourth-quarter and full-year 2023 financial results, continued utilization pressures in Medicare Advantage remained a prominent theme during earnings calls held in the first two weeks of February. Such pressures prompted Humana Inc. to slash its outlook for 2024, but this month only CVS Health Corp.’s Aetna lowered its adjusted earnings per share (EPS) guidance, while The Cigna Group — which is planning to sell its relatively small MA business — raised its outlook.

CVS Health Corp. on Feb. 7 reported fourth-quarter adjusted EPS of $2.12 and full-year adjusted EPS of $8.74. Consolidated revenue grew 11.9% year over year to $93.8 billion, while revenue for the Health Care Benefits segment, which includes Aetna’s MA business, increased 16% to nearly $27 billion. CVS Health said it added 1.3 million members in 2023, which reflected growth across multiple product lines.

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News Briefs: SCAN Group, CareOregon Abandon Combo Amid Regulatory Scrutiny

More than a year after unveiling their intent to form HealthRight Group, SCAN Group and CareOregon have abandoned their plans to combine. According to news reports, the parties called off their proposed combination on Feb. 13 after the Oregon Health Authority twice delayed offering a recommendation on whether to approve the deal, which would have created a $6.8 billion Medicaid and Medicare Advantage insurer. “SCAN and CareOregon share a commitment to preserving and protecting nonprofit, locally based healthcare and that has always been our goal in combining under the HealthRight Group,” said SCAN, the parent company of not-for-profit Medicare Advantage insurer SCAN Health Plan. “Our intent in coming together was to support Oregon’s healthcare system and the people that CareOregon serves. However, despite our efforts, there are still questions about our combination. As a result, SCAN Group and CareOregon have mutually agreed to withdraw our applications with the Oregon regulatory agencies and to terminate our affiliation agreement.” SCAN and CareOregon, which serves Medicare and Medicaid enrollees in Oregon, in December 2022 told AIS Health, a division of MMIT, that the partners aimed to be a “formidable not-for-profit partner” in the government program space.

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Is Medicare Part D Red Tape Worsening Outcomes for Low-Income Seniors?

Seniors who experienced fluctuations in eligibility for Medicare Part D’s low-income subsidy (LIS) spent more money on prescription drugs and filled fewer prescriptions overall, according to new research published in JAMA Health Forum. While researchers said questions remain about whether these temporary losses can impact medication adherence and health outcomes — particularly among non-white seniors — policymakers should consider streamlining LIS eligibility systems to reduce administrative barriers.

In 2023, 13.4 million Part D beneficiaries received full or partial LIS benefits. The program provides assistance with paying premiums and deductibles, and it reduces any post-deductible cost sharing for beneficiaries. The majority of LIS beneficiaries are “deemed,” meaning they are automatically enrolled in the program based on dual eligibility with Medicaid and/or enrollment in a Medicare Savings Program (MSP). (This also includes non-duals who receive Supplemental Security Income.) But 17% of LIS beneficiaries are “nondeemed,” meaning they are not enrolled in Medicaid or an MSP and must apply for LIS themselves. All LIS beneficiaries undergo annual redeterminations, but the process for deemed beneficiaries is automatic, leaving the nondeemed population to face potential administrative challenges and unnecessary coverage loss.

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MA Industry Braces for Part C Rate Cut, Part D Benefit Shakeup

As CMS proceeds with its planned phase-in of changes to the CMS-Hierarchical Condition Categories (HCC) risk adjustment model starting this year, the agency on Jan. 31 projected that Medicare Advantage plans next year can expect to receive an average increase of 3.70% in risk adjusted revenue. After picking apart the various factors that go into that assumption, however, the industry is bracing for an effective rate reduction, along with significant changes to the Part D benefit that incited proposed updates to the RxHCC risk adjustment model used to calculate direct subsidy payments to Part D plans.

CMS this time last year projected an all-in rate increase of 1.03%, which included an effective growth rate of 2.09% and expected revenue declines of -3.12% — stemming from changes to the CMS-HCC risk model and fee-for-service (FFS) normalization — and -1.24% due to changes in Star Ratings from the prior year. The agency also estimated an underlying MA risk score trend of 3.30%. Subsequent studies suggested that the removal of thousands of diagnosis codes, renumbering of several HCCs, and other technical changes would reduce plans’ risk scores by anywhere from 2% to 14%. In the final rate notice, CMS revised its all-in rate increase projection to 3.32% after deciding to phase in the risk model changes over a three-year period.

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