Radar on Medicare Advantage

CMS Flexes Reporting Muscle With Proposed Service-Level Data Collection

In a Paperwork Reduction Act (PRA) notice issued on Aug. 9, CMS informed Medicare Advantage organizations of its plans to collect more granular information on service-level decisions, including both initial determinations and appeals. Sources say this approach aligns with CMS’s continued focus on health equity and transparency, and it could lead to greater oversight of prior authorization decisions.

To plan sponsors, the transmittal should not have come as a surprise, given that the 2024 MA and Part D rule finalized in April affirmed CMS’s authority to collect detailed information from MA organizations and Part D plan sponsors. “An example of increased data collection could be service level data for all initial coverage decisions and plan level appeals, such as decision rationales for items, services, or diagnosis codes to have better line of sight on utilization management and prior authorization practices, among many other issues,” CMS stated in that rule.

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Summer of Deals Heats Up Integrated MA Market

The summer of 2024 is shaping up to be a hotbed of M&A activity among health systems that operate Medicare Advantage plans. While the year kicked off with Point32Health, Inc.’s planned acquisition of Baystate Health’s Health New England, which serves about 12,000 MA members, a flurry of deals announced in recent weeks will further shake up the landscape.

Kaiser Permanente in June unveiled its second Risant Health deal just a few weeks after shoring up its purchase of Geisinger Health, a 10-hospital system that operates one of the largest insurers in Pennsylvania. This time, the MA stalwart set its sights on Cone Health, a system of four hospitals in North Carolina. The health system also operates Triad HealthCare Network, a physician-led ACO, and an MA plan.

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Part D Plans Muster Readiness for Potentially ‘Transformative’ M3P Program

Along with other major changes to the Medicare Part D benefit, beneficiaries starting next year will have a $2,000 limit on their annual out-of-pocket (OOP) prescription drug costs, thanks to the Inflation Reduction Act (IRA). If seniors find themselves uncomfortably close to that threshold, they also can smooth those OOP costs over the course of the 2025 plan year through the IRA-established Medicare Payment Prescription Plan (M3P) program. While sources agree the program has the potential to improve access to prescription drugs, they say its success is also largely dependent on how well plans inform patients that the option is available.

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Cycle of Protests Dictates Playbook for Medicaid MCOs, Says Industry Expert

As evidenced by hotly contested Medicaid contract awards in Florida, Kansas and Texas this year, local and regional health plans are increasingly being shut out of opportunities to serve enrollees in their communities. And though a recent administrative law judge decision in Arizona suggests the winds could be changing, community plans need to become more strategic about their approach to procurements, says one industry expert.

Beyond the headlines, “so much more has happened in the Medicaid space than the eligibility redetermination process,” says Clay Farris, founder and practice lead of client solutions at Mostly Medicaid, which offers advisory services to community plans and other stakeholders across the Medicaid continuum. He is referring to the so-called unwinding of policies that were in place during the COVID-19 public health emergency, when a yearslong pause on routine eligibility checks led Medicaid and Children’s Health Insurance Program (CHIP) enrollment to hit an unprecedented 94 million in March 2023. As of Aug. 1, at least 24.8 million people had been disenrolled from Medicaid because of redeterminations, KFF reports.

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Analysts Contemplate Future of MA Under Harris Versus Trump

With Vice President Kamala Harris poised to get the Democratic nomination for president, Wall Street analysts have been busy prognosticating what that means for the array of for-profit health care firms they cover — including Medicare and Medicaid insurers.

So far, select analysts are predicting that Harris’ ascendance will give Democrats a greater chance of winning the election, which would be bad news for Medicare Advantage-focused insurers but good for those more focused on Medicaid and the Affordable Care Act exchanges.

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Headwinds Aside, MCOs Foresee Long-Term Growth in Medicaid Managed Care

During recent conference calls to discuss second-quarter 2024 earnings, Centene Corp., Elevance Health, Inc. and Molina Healthcare Inc. all discussed the long-term Medicaid growth opportunity despite declining membership resulting from redeterminations and increasing medical costs — scenarios that they expect to stabilize next year. And while Centene may be scaling back its Medicare Advantage footprint and Elevance pursued a “disciplined approach” to 2025 bids, all three emphasized their continued focus on serving dual eligible Medicare-Medicaid beneficiaries.

For the quarter ending June 30, Centene on July 26 posted adjusted earnings per share of $2.42 and said it is on track to deliver adjusted EPS of at least $6.80 for the full year. The company ended the quarter with more than 13.1 million Medicaid members, down from just over 16 million a year ago. However, its total membership increased slightly to nearly 28.5 million members, with growth in the Affordable Care Act exchanges and Medicare Prescription Drug Plan (PDP) businesses offsetting Medicaid losses. Its overall medical loss ratio for the quarter was a higher-than-expected 87.6%, as cost pressures in Medicaid led to a segment MLR of 92.8% (compared with 88.9% in the prior year quarter).

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With More Subsidy Upfront, Part D Average Bid Will See 180% Increase in 2025

Following an unprecedented year-over-year increase in 2024 stemming from provisions in the Inflation Reduction Act (IRA), the Medicare Part D national average monthly bid amount (NAMBA) is projected to increase by $115, or nearly 180%, to $179.45 in 2025. That number reflects big changes to the Part D benefit, such as the government passing more risk to Prescription Drug Plan (PDP) and Medicare Advantage Prescription Drug (MA-PD) sponsors, but it doesn’t mean the full bump in estimated costs will be passed onto consumers. At the same time, the federal government on July 29 unveiled a new demonstration opportunity for PDPs intended to provide additional premium stability across the Part D market.

The NAMBA — an enrollment-weighted average of the estimated cost to Part D plan sponsors of providing the basic benefit package — was always expected to increase because of benefit changes taking effect next year; it was just a question of how much higher it would be.

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Quality Bonus Payments Grew $10B Since 2015 — but Who Really Benefits?

The Medicare Advantage quality bonus program (QBP) can be a boon to insurers and an object of scorn to MA’s critics. With both MA enrollment and QBP payments to highly rated plans on the rise, concern about overpayments and access to high-quality plans is mounting. Seeking greater understanding of these issues, a new analysis of CMS data from the Urban Institute examined changes in Stars performance, MA plan demographics and QBP payments from 2015 to 2023. Researchers found that both Star Ratings and QBP payments per enrollee increased from 2015 to 2023, with total QBP payments reaching nearly $13 billion in 2023 compared to $3 billion in 2015. The analysis also found that plans that receive the most bonus payments are also more likely to enroll the most socioeconomically advantaged beneficiaries, raising questions about whether enhanced benefits are reaching the populations most in need of them.

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Amid String of Medicaid RFP Losses, Will CareSource Stay the Course?

As publicly traded insurers vie for contracts in an increasingly competitive Medicaid environment, this year has seen a considerable uptick in bid protests and legal challenges with billions of dollars at stake. Dayton, Ohio’s CareSource, one of the largest not-for-profit Medicaid insurers in the U.S., has participated in at least five such protests after embarking on an aggressive market expansion. And while its approach involving strategic partnerships with local providers has had mixed results, the insurer is intent on pursuing states where it believes it can best serve enrollees, whether that be through Medicaid or other product lines.

CareSource currently serves 2.1 million enrollees in Medicaid, Affordable Care Act exchange and dual eligible plans. According to AIS’s Directory of Health Plans (DHP), nearly 1.8 million (or about 85%) of those lives are in Medicaid or duals plans in Georgia, Indiana, Michigan and Ohio. Its home state of Ohio is its largest Medicaid market, where it serves approximately 1.2 million individuals.

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News Briefs: Humana Heightens MA Enrollment Projections for 2024

In its second quarter 2024 earnings report, Humana Inc. said it now expects individual Medicare Advantage membership growth of approximately 225,000 this year, up from its previous projection of approximately 150,000. The insurer on July 31 reported adjusted earnings per share of $6.96, which was higher than internal and Wall Street projections but down from its prior year EPS of $8.94, and Humana reaffirmed its adjusted EPS guidance of “approximately $16.00.” It also maintained its full-year medical loss ratio guidance of “approximately 90 percent,” which “prudently allows for the higher net inpatient costs observed in the second quarter to continue for the remainder of the year,” according to prepared remarks from Jim Rechtin, president and CEO. During a July 31 conference call to discuss the results, Rechtin added that the company has seen some “modest claims pressure in Medicaid” but does not expect it to impact full-year results. The company’s Medicaid membership is on track to grow by 250,000 lives and reach roughly 1.5 million members by the end of the year. That increase is primarily driven by new contracts in Oklahoma and Indiana, as well as growth in Humana’s Ohio Medicaid business, and partially offset by the redetermination process that is mostly completed. Its active Medicaid footprint is now nine states.

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