Of all privately insured markets, Medicare Advantage had the highest gross margins per member in 2023, reaching $1,982, according to a new analysis from KFF on insurers’ financial performance. Margins have been consistently higher in MA than other sectors over the past decade. KFF pointed out that while gross margins are generally one good indicator of financial performance, they do not necessarily mean higher profitability, as gross margins do not account for any administrative costs or tax liabilities. Researchers analyzed data compiled by Mark Farrah Associates based on information provided by insurers to the National Association of Insurance Commissioners.
Unprecedented Star Ratings Update Will Impact Nearly 2M Members
Following its unprecedented decision to recalculate the 2024 Medicare Advantage Star Ratings after two federal judges agreed there were flaws in their initial calculation, CMS on July 2 released the updated 2024 scores for Part C and Part D contracts. Plans’ overall ratings were updated only if they improved under the revised methodology. Overall, 63 Medicare Advantage Prescription Drug (MA-PD) plan contracts that enroll more than 1.9 million members were impacted, according to AIS Health’s analysis of the CMS release and AIS’s Directory of Health Plans (DHP).
New Studies Tout Benefits of High Duals Integration, Pinpoint Shortcomings
As CMS applies pressure on health plans and states to enhance coordination for dually eligible Medicare-Medicaid enrollees and as congressional lawmakers urge momentum for the Delivering Unified Access to Lifesaving Services (DUALS) Act, the path to integrated care remains a challenge in many states. And two recent studies show that beneficial outcomes, even for enrollees in Dual Eligible Special Needs Plans (D-SNPs), are not guaranteed.
In separate analyses looking at the New York and Virginia markets, researchers discovered a wide range of improvement areas that, even among highly integrated D-SNPs (HIDE-SNPs) and fully integrated D-SNPs (FIDE-SNPs), could capitalize on the potential of the D-SNP approach. The study covering the Virginia market, published last month in JAMA Health Forum, analyzed the impact of exclusively aligned enrollment (EAE), which the study authors describe as “the highest level of D-SNP integration.” This occurs when the parent organization’s D-SNP (a type of Medicare Advantage plan) is limited to individuals who are also enrolled in that organization’s Medicaid managed care organization.
MAOs, Brokers, Agents Get Relief With Legal Pause on Policy Changes
Medicare Advantage insurers and the agents and brokers who sell their plans got a temporary reprieve this month when the U.S. District Court for the Northern District of Texas granted a stay in two cases seeking to stop CMS from implementing new agent and broker regulations. Sources say this means the previously finalized restrictions on payments and contract terms will not take effect for the 2025 Annual Election Period, which starts on Oct. 15 and is preceded by official marketing activities beginning Oct. 1, but they advise plans to consider implementing compliant arrangements for plan year 2025 in case things go awry.
MA VBID Model Participants Face New Era of Increased Accountability
CMS’s Medicare Advantage Value-Based Insurance Design (MA VBID) model — which offers MA organizations enhanced flexibility to tailor a variety of interventions to address health-related social needs — has gone through multiple iterations since its inception. In what CMS officials consider the third phase of its evolution, MA VBID participants will soon face new accountability for driving savings, addressing health equity and delivering meaningful supplemental benefits.
The MA VBID model, which was launched by the CMS Center for Medicare and Medicaid Innovation (CMMI) in 2017, has seen participation grow from nine MA organizations in three states to 69 MAOs serving an estimated 8.7 million VBID beneficiaries across the U.S. Having been extended through 2030, it is currently CMMI’s longest-running model and the only model specifically testing innovations in MA. Those innovations initially included offering supplemental benefits or reduced cost sharing to enrollees with certain chronic conditions or who participated in care management and/or disease management activities.
News Briefs: CMS Final Guidance on M3P Gives Leeway for Enrollee Identification
After considering stakeholder feedback on its draft second guidance for the Medicare Prescription Payment Plan, CMS on July 16 released final guidance that gives plans more flexibility around identifying Part D enrollees who are likely to benefit from the M3P. Starting next year, the M3P requires stand-alone Prescription Drug Plans and Medicare Advantage Prescription Drug plans to give enrollees the option to pay out-of-pocket prescription drug costs in the form of capped monthly payments versus paying the full amount at the pharmacy. After finalizing its first guidance in February, CMS released a draft of the second installment, with a public comment period that ran from Feb. 15 through March 16. CMS in a July 16 memo to plan sponsors said it received more than 100 responses from a broad range of stakeholders, including patient advocates, data vendors, Part D sponsors and pharmacy benefit managers, and it made several clarifications and changes in response. Those included clarifying that it does not expect Part D plans that exclusively charge $0 cost sharing for covered Part D drugs to all plan enrollees to offer members the option to spread out their OOP costs through the M3P and giving plans the option to send an election request form with the member’s ID card mailing or separately in a different mailing. The agency also will allow plans to develop their own strategies for ongoing outreach during the plan year to enrollees who are likely to benefit from the M3P. CMS on July 16 also released a final set of model and standardized materials to support Part D sponsors in meeting their education, outreach and communications requirements for the program.
VNS Health Pursues ‘Near Duals’ MA Growth in NYC and Beyond
Medicare Advantage membership growth during both the 2024 Annual Election Period (AEP) and the Open Enrollment Period (OEP) was largely driven by major insurers (namely, CVS Health Corp.’s Aetna) and some of the insurtechs, according to a recent AIS Health analysis. But many of the regional and provider-led insurers that performed well during the AEP also continued their growth through the OEP. One such plan is VNS Health, which has long catered to underserved New Yorkers with complex needs and recently relaunched MA plans designed for Medicare-Medicaid dual eligibles and “near duals.”
As part of an annual series on the growth stories of AEP/OEP “winners,” AIS Health, a division of MMIT, spoke with leaders at VNS Health about their successful reentry into MA.
House Bill Would Cover Obesity Drugs for Sliver of New Medicare Enrollees
The House Ways and Means Committee on June 27 cleared legislation authorizing Medicare Part D plans to cover obesity drugs for new enrollees who had commercial coverage for the treatments in the year prior to aging into the program, a move that may prove to be largely symbolic because of its limited impact.
The bill is a significantly slimmed down version of the Treat and Reduce Obesity Act (TROA) and was offered at the markup by committee leadership as a substitute for the original bill. TROA advanced in a bipartisan 36-4 vote.
Currently, obesity drugs are not defined as “covered” Part D drugs. The bill would allow, but not require, plans to cover the treatments for obesity in some individuals.
News Briefs: Chevon Ruling Could Bring More Legal Challenges to Rules Governing MA, Medicaid
The Supreme Court’s June 28 rulings overturning the so-called Chevron doctrine could impact federal regulation of multiple industries, including Medicare Advantage, and lead to increased legal challenges to HHS regulations. In a 6-3 decision, the Court ruled on a pair of related cases — Loper Bright Enterprises v. Raimondo and Relentless Inc. v. Dept. of Commerce — that lower courts must “exercise their independent judgment in deciding whether an agency has acted within its statutory authority,” as required by the Administrative Procedure Act (APA). The doctrine stems from a 1984 case, Chevron v. National Resources Defense Council, which dealt with environmental issues but established a legal framework allowing federal agencies such as HHS broad authority to interpret “ambiguous” laws through rulemaking. Without such discretion, the judicial system will have more power to interpret unambiguous rules that face legal challenges, which are common in MA and other highly regulated sectors of health insurance. “We believe the decision will impact the broader legislation process which we view as a positive for healthcare in general,” observed securities analyst Ann Hynes of Mizuho Securities. “HHS and CMS may face difficulties in administering Medicare and Medicaid as tasked by Congress. To ensure the agencies’ interpretations are enforced, Congress would likely need to refine the Medicare and Medicaid statutes to expand the scope of agency authority and address any existing ambiguous language by memorializing the agencies’ interpretations,” warned attorneys from Baker Donelson prior to the ruling. “Without discretion given to the agencies, health care organizations and beneficiaries would have a greater chance of success in bringing litigation against the agencies.”
Report: Medicare Advantage Members Spend Less on Health Care Than Other Seniors
Seniors enrolled in Medicare Advantage spend thousands less on annual health care costs than their fee-for-service (FFS) Medicare counterparts — and the spending gap is growing.
That’s according to a new report from ATI Advisory commissioned by the Better Medicare Alliance (BMA), a research and lobbying organization that advocates for MA. Researchers analyzed 2019 to 2021 Medicare Current Beneficiary Survey and Cost Supplement files from CMS and found that MA members were less likely to experience health-related cost burdens and spent less on health care out of pocket. That’s despite the fact that MA beneficiaries are more likely to have lower incomes than their FFS counterparts. In 2021, more than half (52%) of MA members had incomes below 200% of the federal poverty line (FPL) vs. 33% of FFS beneficiaries.