Annual Election Period/AEP

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.

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.

A recent status report on the Medicare Advantage program presented by analysts with the Medicare Payment Advisory Commission led one MedPAC member to accuse leadership of producing a negative report for partisan political purposes. According to a MedPage Today writeup of a recent MedPAC public meeting, Brian Miller, M.D., of Johns Hopkins University said the report “appears to be slanted to arrive at a foregone conclusion in order to set up and provide political cover” before CMS issues its annual rate notice and “reads like attack journalism.” The report, which was presented on Jan. 12, showed that national market concentration in MA is nearing the Herfindahl-Hirschman Index (HHI) “highly concentrated” threshold, which the Dept. of Justice and the Federal Trade Commission use to review mergers. According to the presentation, the three largest MA insurers combined enroll 58% of MA members and in a typical market enroll roughly 80% of beneficiaries. That report also suggested that MA coding continues to generate excess payments relative to fee-for-service Medicare. Specifically, the MedPAC analysis of CMS enrollment and risk score files estimated that coding intensity will drive payments to MA organizations of $54 billion this year, up from $47 billion in 2023. “It is not lost on me that this discussion is occurring immediately prior to the CMS Medicare Advantage rate notice,” stated Miller, according to a transcript of the meeting. “The Chair has noted that he is in regular communication with CMS leadership. This gives the appearance that MedPAC as an independent and thoughtful policy organization is being hijacked for partisan political aims.” CMS’s annual preliminary rate notice is due out by Feb. 1.

The Cigna Group may sell its Medicare Advantage business to Health Care Service Corp. for between $3 billion and $4 billion, according to the Wall Street Journal. After Cigna and Humana Inc. reportedly abandoned their rumored talks of combining, Bloomberg last month reported that HCSC and Elevance Health, Inc. were competing to buy Cigna’s MA segment. Sources close to the matter said Cigna is in “exclusive talks” with HCSC, which operates Blue Cross and Blue Shield plans in five states, the Wall Street Journal reported on Jan. 3.

After securing an amended credit agreement with JP Morgan, Bright Health Group, Inc. on Jan 1. finalized the previously announced sale of its Medicare Advantage assets to Molina Healthcare, Inc. The technology-driven startup on Dec. 29 said an amendment to its credit facility with JP Morgan would reduce the final repayment amount by roughly $30 million to approximately $298 million. With the close of the MA sale — which involves the California plans Brand New Day and Central Health Plan — the company has eliminated its secured debt and will use the remaining proceeds of the sale to “provide a solid foundation” for advancing its NeueHealth accountable care organization business, according to a Jan. 2 press release. Molina in December said it would buy the MA plans for approximately $425 million, down from the originally announced $510 million; analysts speculated the discount had to do with underperformance in Bright’s MA business due to heightened Medicare utilization trends in 2023.The deal nets Molina 121,863 MA members, boosting its membership by 115%, according to AIS’s Directory of Health Plans.

As part of new actions to lower health care and prescription drug costs by promoting competition, the Biden administration on Dec. 7 said it aims to further improve Medicare Advantage transparency. Noting that the MA program now serves roughly half of Medicare-eligible beneficiaries, the Biden administration in a fact sheet said it is committed to ensuring that MA plans “best meet the needs of people with Medicare, there is timely access to care, and the market has healthy competition.” Therefore, early next year HHS will solicit from the public “programmatic data” to better understand “the effects of market shifts on consumers and care outcomes.” When asked during a Dec. 6 press call for more details on this effort, a senior administration official responded: “We’ll be seeking additional information that will allow the agency to explore new policies and learn more about this really important program for seniors and people with disabilities.” Additionally, the administration said it will build on recent steps “[c]racking down on anticompetitive and anti-consumer practices” in MA and continue to implement updates to MA payment “that improve payment accuracy, address gaming, and recover overpayments.”

Insurers are more carefully tailoring their preventive supplemental benefit offerings to support Medicare Advantage enrollees aging in place, with benefits such as home and bathroom safety modifications more than doubling between 2023 and 2024, according to a new Faegre Drinker analysis of Plan Benefit Package (PBP) data. But as CMS takes steps to gather more data on supplemental benefits, less impactful benefits could be thinned from the pack while those with greater potential to improve health outcomes are embraced by insurers.

Faegre Drinker has been tracking the growth of expanded supplemental benefits since 2020, when MA insurers were in the early days of experimenting with new offerings under CMS’s reinterpretation of “primarily health related” supplemental benefits and first began offering Special Supplemental Benefits for the Chronically Ill (SSBCI). The consulting firm's latest analysis, published on Dec. 5 and shared in advance with AIS Health, focuses on the preventive supplemental benefit market due to the large variance in uptake, with some benefits offered by fewer than 100 plans and others featured in more than 5,000 PBPs. This year, Faegre Drinker split the categories into two types: popular (i.e., offered by more than 1,000 plans) and less popular (i.e., those offered by fewer than 1,000 plans).

Only 42% of Medicare Advantage Prescription Drug (MA-PD) contracts that will be offered in 2024 achieved an overall rating of 4 stars or higher, compared with approximately 51% of contracts in 2023, according to the latest Medicare Part C and Part D Star Ratings data. Weighted by enrollment, the average MA-PD Star Rating fell from 4.14 for 2023 to 4.04, with approximately 74% of MA-PD enrollees estimated to be enrolled in contracts that achieved 4 or more stars for 2024, compared with 72% for 2023, CMS reported on Oct. 13.

Those changes were largely expected due to the application of the new Tukey outlier deletion methodology, which was used in determining the cut points for measures not directly related to member experience and largely achieved CMS’s stated goal of infusing more “predictability and stability” into the Star Ratings.

UnitedHealth Group on Oct. 13 said overall revenues for the third quarter of 2023 climbed 14% from a year ago to $92.4 billion, reflecting double-digit growth at both its Optum and UnitedHealthcare divisions. The company also recorded a medical loss ratio of 82.3%, which was higher (worse) than the 81.6% reported for the third quarter of 2022. UnitedHealth said that was largely due to the previously disclosed uptick in inpatient care, primarily among seniors, and business mix. Revenues for the UnitedHealthcare insurance segment rose 13% from a year ago to $69.9 billion, reflecting growth in the number of people served. The company estimated it will have added nearly 1 million Medicare Advantage customers by the end of the year. The company raised its 2023 adjusted earnings per share outlook to a range of $24.85 to $25, from a previous range of $23.60 to $23.75 per share.

With the Oct. 1 start of marketing for the 2024 Annual Election Period (AEP), several major publicly traded insurers have unveiled somewhat slower plans for geographic expansion than in previous years, while CMS’s 2024 MA and Part D landscape files suggest that premium increases were a common way to offset potential rate cuts. But according to recent press releases unveiling product enhancements for next year, insurers appear to be extending enhanced supplemental benefits to the broader MA population while offering Dual Eligible Special Needs Plan (D-SNP) beneficiaries greater flexibility to address nonmedical needs.

As the 2024 Annual Election Period approaches, Medicare Advantage insurers that began marketing on Oct. 1 have been touting service area expansions and/or the robust provider networks attached to their plans. But in the months and, in some cases, days leading up to the Oct. 15 start of open enrollment, some high-profile contract negotiations have played out in a very public way, with providers expressing their frustration with administrative delays, care denials and less-than-adequate rates. And the loss of key providers could have serious consequences from a network adequacy standpoint, even leading to an enrollment freeze if MA organizations are not careful, warns one compliance expert.

On top of concerns about overly burdensome prior authorization policies used by MA organizations, “providers are getting squeezed” from both sides, remarks Jane Scott, executive vice president of special projects for Rebellis Group. “Providers are getting squeezed on the fee-for-service, CMS side for their reduction in fee reimbursement. And then the health plans also want to reduce reimbursement for savings on their own part, while trying to stay competitive. And in doing that, they may have to reduce their service area size, their network offering, different things…and so that causes some market change.”