’21 Earnings Hang on Medicare Risk Adjustment Uncertainties

Although growing Medicare Advantage enrollment helped fuel better-than-expected first-quarter 2021 earnings for some publicly traded insurers, they appear to be approaching the full year with caution, as earnings in 2021 could be dampened by a couple of factors. These include the unfavorable impact of the health insurer fee (HIF) repeal for 2021 and lower Medicare risk-adjusted revenue — a recurring and expected theme during insurers’ recent quarterly earnings calls.

Risk scores that determine MA organizations’ risk adjustment payments for the current year are based on diagnoses gathered during the previous year to determine the relative health of an insurer’s MA enrollees and predict costs. But because the pandemic led many seniors to delay or forgo care, insurers’ ability to collect diagnoses last year was limited, despite the temporary authorization to use telehealth to gather diagnoses for MA risk adjustment.

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• Radar on Medicare Advantage