Radar on Medicare Advantage

After informing three local plans of its decision to ignore the findings of an administrative law judge (ALJ) and move forward with statewide long-term care contracts awarded to Centene Corp. and UnitedHealth Group, the Arizona Health Care Cost Containment System (AHCCCS) on Sept. 12 in a surprise move extended existing agreements for one year. “Members continue to be the agency’s primary focus throughout this process,” stated AHCCCS, just days after insisting that its procurement process was applied “fairly to all bidders, including the non-awarded health plans.”

In the “Director’s Decision” posted Sept. 9, however, the state Medicaid agency said it was denying the appeals of Mercy Care, Blue Cross Blue Shield of Arizona, and Banner-University Family Care, and it defended its request for proposals (RFP) process, which the ALJ concluded was flawed and should be redone. That was after, according to a statement from AHCCCS, more than one managed care organization “submitted additional information for the Director to consider following the ALJ’s Decision.” AHCCCS said that information was “neither reviewed nor considered in developing the Director’s Decision.”

As insurers await the October release of the 2025 Star Ratings, Chicago-based insurer Zing Health is pursuing a lawsuit stemming from CMS’s calculation of the 2024 Star Ratings, which prompted an unprecedented redo and resubmission of 2025 bids. Based on the third year of poor performance from that initial calculation, CMS in December 2023 informed Zing that it intended to terminate its Medicare Advantage Prescription Drug (MA-PD) contract serving approximately 3,000 enrollees at the end of this year. Although termination was avoided when CMS recalculated the 2024 Star Ratings, the insurer has a few demands of CMS for the “irreparable harm” caused by its initial calculation.

A Humana Inc. executive speaking at the Wells Fargo Healthcare Conference on Sept. 4 said the Medicare Advantage-focused insurer will exit 13 counties where membership was “insignificant” and reduce its plan offerings in other counties, impacting an estimated 560,000 MA members next year. The selected counties will leave Humana’s footprint largely intact, while impacted members in other counties will have Humana plans to choose from, Chief Financial Officer Susan Diamond told Wells Fargo analyst Stephen Baxter. “The exit itself is positive in the sense that those plans were not contributing,” said Diamond. And in the other counties, if Humana can “ultimately retain more of those members, that’s incrementally positive because the plan choices left behind are priced in such a way that they will be positively contributing.” Despite seeing elevated utilization and medical cost pressure in the first half of the year, the insurer on Sept. 3 reaffirmed its full-year guidance of approximately $16.00 adjusted earnings per share. Diamond during the conference added that Humana is seeing more prior authorization decision appeals than it has seen historically. She also disclosed that Humana anticipates greater utilization of supplemental benefits such as over-the-counter cards and dental services in the fourth quarter, "just recognizing the benefit changes we've made for 2025."

As part of CMS and the Biden administration’s overall framework for health equity, Medicare Advantage organizations’ ability to assess social risk factors (SRFs) and address care disparities has taken on new importance this year, thanks to the introduction of the Health Equity Index (HEI) to the Star Ratings. Starting in 2027, insurers won’t be penalized for failing to close gaps in care on certain quality measures, but qualifying Parts C and D sponsors will be rewarded if they perform well on the HEI, which CMS has described as a “methodological enhancement” to a subset of existing measures. Quality experts say readiness varies across the industry, and plans need to better understand where to target interventions and where they stack up against other plans that may qualify for the HEI.

And not all plans will qualify: Contracts that enroll a minimum threshold percentage of enrollees with social risk factors (SRFs) will be assessed and divided into three tiers of performance. Plans that perform in the top tier will receive 1 point, the middle tier will receive 0 points, and the bottom tier is assigned -1 point for each measure. After a series of calculations, the points translate to an HEI score that ultimately determines whether plans receive a reward that is applied to quality bonus payments for the 2027 Star Ratings.

The countdown is on until the 2025 Medicare Annual Election Period (AEP), which runs annually from Oct. 15 through Dec. 7, and Medicare Advantage plans are anxiously awaiting intel on how their competitors responded to upcoming Medicare Part D changes stemming from the Inflation Reduction Act (IRA). And while marketing rules remain largely unchanged this AEP — thanks to a district court putting CMS’s plans to restructure broker compensation on hold — the 2025 AEP is likely to throw plans more than a few curveballs.

Those were just some of the takeaways shared by industry veterans during an Aug. 22 webinar, “2025 AEP Sales Strategy in the New Regulated Environment,” which was co-hosted by EvolveNXT and Rebellis Group.

After major insurers reported second-quarter financial results that reflected continued medical cost pressure in the government business, analysts revisited their takes on expectations for CVS Health Corp.’s Aetna, Centene Corp. and industry peers. Two notable factors driving some of the headwinds in the back half of the year are the 2025 Medicare Annual Election Period (AEP), which kicks off on Oct. 15, and the impact of Medicaid redeterminations. The latter was of particular concern to analysts after Sept. 4, when Centene provided an update at the Wells Fargo Healthcare Conference signaling lower-than-expected Medicaid enrollment.

For managed care organizations with a large Medicaid footprint, the consistent takeaway for Barclays after second-quarter earnings reports was “incremental trend pressure relative to current expectations,” stemming from redeterminations picking up in the first half of the year “that put increased acuity pressure on state rates,” wrote equity research analysts on Aug. 22. “From here, membership should start to stabilize, which is the first step toward recovery.”

As CMS firms up plans to collect more granular information from Medicare Advantage organizations on service coverage denials, a timely analysis from KFF finds that their use of prior authorization (PA) surged to over 46 million requests in 2022. This marks a notable increase from the 37 million requests recorded in 2019, reflecting both the growing enrollment in MA plans and the expanding scope of services requiring prior approval. And while several insurers this year have publicized their efforts to eliminate PA requirements, providers say they’re still feeling the burden, and at least one major MA insurer is adding new PA restrictions.

While PA helps control costs and prevent unnecessary utilization, it can introduce potential barriers to timely care and frustrations for providers. Nearly all MA enrollees (99%) are subject to prior authorization for some services, particularly high-cost ones like inpatient hospital stays, skilled nursing facility stays and chemotherapy.

Centene Corp. late last month riled agents and brokers with the news that it would no longer pay new and renewal commissions for enrollments in its stand-alone Prescription Drug Plan (PDP) products. During a Sept. 4 presentation at the Wells Fargo Healthcare Conference, Centene executives for the first time publicly acknowledged the firm’s controversial decision.

“One important thing to note on PDP, partly because of the IRA [Inflation Reduction Act] changes and then final rate notice provisions at the time that we filed bids, we made the difficult decision to eliminate broker commissions this year for PDP only,” Centene CEO Sarah London emphasized during the conference. She added that “we'll continue to pay full commissions in Medicare Advantage and obviously work very closely with the broker community to support the work they do, to support our members.”

CMS released the first set of negotiated prices for 10 drugs with the highest total gross Part D spending, as directed by the Inflation Reduction Act (IRA). The agency published the list of 10 drugs selected for Medicare price negotiations a year ago and on Aug. 15 posted the maximum fair prices reached with manufacturers, reflecting discounts that range from 38% to 79% off of list price. The negotiated prices will take effect in 2026 and are expected to generate an aggregated savings of $1.5 billion in out-of-pocket costs for seniors. CMS estimated that about 9 million people with Medicare use at least one of the 10 negotiated drugs, which include highly utilized brand-name drugs Eliquis (apixaban) for the prevention and treatment of blood clots and Jardiance (empagliflozin) for the treatment of diabetes, heart failure and chronic kidney disease. CMS will continue to engage in price negotiations on select high-cost Part B and Part D drugs for future years.

After an administrative law judge (ALJ) agreed with protesters that the Arizona Health Care Cost Containment System (AHCCCS) used an “arbitrary and flawed procurement process” that involved the use of undisclosed scoring criteria when awarding new contracts for the Arizona Long Term Care System (ALTCS), the implementation of the new pacts is on hold. AHCCCS on Aug. 13 said it is “pausing member transition activities” related to the new contracts that were scheduled to begin Oct. 1 and initially awarded to subsidiaries of Centene Corp. and UnitedHealthcare (UHC).

AHCCCS has 30 days to accept, modify or reject the ALJ’s decision, which was issued Aug. 9. The agency said it is “currently in the process of reviewing” the decision.