Medicare Advantage enrollment grew by more than 507,000 lives during the 2023 Open Enrollment Period (OEP), according to CMS’s May data release and AIS’s Directory of Health Plans. That’s a significant increase from last year’s OEP, when plans added about 230,000 new members from February to May 2022. The news comes just weeks after a KFF analysis found that the number of seniors enrolled in MA vs. original Medicare officially crossed the 50% threshold.
Top Three MAOs Express Confidence in Adapting to Risk Model Changes
As the industry prepares for a comprehensive overhaul of the model used to determine Medicare Advantage insurers’ risk-adjusted pay, the three largest MA organizations signaled during recent earnings calls that they are well positioned for the changes.
Reporting first-quarter 2023 financial results on May 3, CVS Health Corp. beat Wall Street expectations of $2.09 per share with adjusted earnings per share (EPS) of $2.20, largely driven by better-than-expected membership in the health care benefits segment despite a year-over-year increase in medical loss ratio. Total revenues increased 11% from the first quarter of 2022 to reach $85.2 billion, fueled by growth across all segments, while the health care benefits segment (Aetna) generated revenues of $25.9 billion, up from $23.1 billion a year ago. Medical membership grew sequentially by 1.1 million members to a total of 25.5 million lives as of March 31, reflecting increases across all product lines including growth of 900,000 enrollees in the Affordable Care Act exchange business.
2023 AEP May Dictate Post-COVID Marketing, Benefit Design Strategies
Since the conclusion of the 2023 Medicare Annual Election Period (AEP), several common threads have emerged from industry reports, Medicare Advantage insurers and marketing experts. These include a slow start to the AEP, a higher rate of switching among MA enrollees, increased use of digital channels, and member confusion or frustration with certain benefits. These observations and other data may help MA insurers and their marketing partners predict future member movement and influence strategy when it comes to both marketing and benefit design.
While the midterm elections certainly created a distraction, inflation and economic concerns may have created a drag in signups, suggested Dan Paladino, vice president of healthcare client experience with Amsive, while speaking at the 14th Annual Medicare Market Innovations Forum, held March 27-29 in Orlando. At the same time, the digital marketing agency observed more people using digital tools to conduct their research about coverage, such as online educational videos and Google search. “When that happens, they’re not picking up the phone and calling as early as we would probably like and I think some of our clients would like,” said Paladino, during a panel discussion moderated by AIS Health.
MAOs Focus on Helping Members Understand the Benefits That Attracted Them
As the Medicare Advantage program saw slower enrollment during the 2023 Annual Election Period (AEP) than previous years, many insurers that enriched their benefits while maintaining affordability and effectively communicated these changes saw above-average growth. AIS Health, a division of MMIT, spoke with several plans that credited their localized approach, enhanced relationships with sales agents and new supplemental benefits with helping to increase their membership over the AEP.
Meanwhile, during the Open Enrollment Period (OEP) that allows MA enrollees to make a one-time coverage switch and ends on March 31, insurers have been working hard to ensure a positive experience, hosting member welcome calls and events and educating members on how to use their new benefits. According to AIS’s Directory of Health Plans, MA enrollment from February 2022 to February 2023 grew by 7.4%, compared with 8.5% in the year prior.
Despite AEP Slowdown, Insurers Say Affordable Options, Richer Benefits Resonated With Enrollees
Medicare Advantage enrollment over the last year grew by 7.4%, reflecting slower growth than previous years and falling slightly below CMS’s expectations. According to the latest update to AIS’s Directory of Health Plans (DHP), the MA program enrolled nearly 31 million beneficiaries as of February. That data reflects the full outcome of the 2023 Medicare Annual Election Period (AEP), which ran from Oct. 15 through Dec. 7. Despite the slowdown in enrollment, insurers’ increased investments in Special Needs Plans (SNPs) appear to be paying off, while MA plans say their attempts to maintain affordability while enriching benefits contributed to their AEP successes.
“We are basically at the very tail end of the Baby Boomers aging into Medicare as of 2023,” remarks Rebellis Group CEO Betsy Seals, referring to the generational group whose births peaked in 1958. “Looking at the overall numbers, I think that we have a lot yet to discover about this next generation and how they’re going to shop and switch and enroll. So that’s going to be interesting.”
Medicare Advantage Rolls Reflect 7% Year-Over-Year Growth, Slower 2023 Annual Election Period
Medicare Advantage enrollment is approaching 31 million lives as of February 2023, a 7.4% increase from this time last year, according to AIS Health’s analysis of data that included enrollment from the 2023 Medicare Annual Election Period (AEP). And while CMS says MA enrollment now represents about half of the total Medicare population, the rate of that growth seems to be slowing down — AIS’s analysis of the 2022 AEP recorded an 8.5% annual increase, and a 9.9% increase in 2021.
Seniors’ Plan Loyalty Wavers as Deft Saw 15% Medicare Advantage Switch Rate in 2023 AEP
Each year, Deft Research surveys a panel of Medicare beneficiaries to better understand consumer decision making during the Medicare Annual Election Period (AEP) and help carriers and their partners strategize for the next plan year. Deft’s 2023 Medicare Shopping and Switching Study, the latest in the firm’s Senior Market Insights Service series, features responses from more than 3,000 seniors who were surveyed immediately after the AEP and an additional 1,800 individuals who were surveyed regularly during the October-December period.
While the overall switching rate among seniors shopping during the AEP was relatively unchanged from prior years at 11%, Deft observed that switching by Medicare Advantage beneficiaries reached 15%, up from 12% seen in the prior two periods. That wasn’t surprising given that Deft’s AEP Gut Check Study from July 2022 suggested seniors’ frustration with plan-offered flex cards and interest in Part B giveback benefits might inspire them to shop around.
Humana Anticipates Strong EPS Growth in 2023, Cites Individual MA Enrollment Increase
During its fourth-quarter and full-year 2022 earnings call on Feb. 1, Humana Inc. said that it will have strong adjusted earnings per share (EPS) growth and see a significant increase in its individual Medicare Advantage (MA) enrollment this year.
Humana projects its adjusted EPS in 2023 will be at least $28, which “is slightly favorable to prior statements” and is 10.9% higher than its $25.24 adjusted EPS for 2022, Jefferies analyst David Windley wrote in a note to clients on Feb. 1.
AEP Wrap Up: Humana Vies for Industry-Leading Medicare Advantage Growth Position
After a lackluster 2022 open enrollment season characterized by churn associated with its external marketing channels, Humana Inc. is touting above-industry growth after the 2023 Annual Election Period (AEP) that concluded last month. Presenting at the 41st Annual J.P. Morgan (JPM) Healthcare Conference in San Francisco, Humana Chief Financial Officer Susan Diamond said investments in the company’s products, sales channels and other aspects of its Medicare Advantage business are helping it “get back to an industry leading position” and achieve double-digit percentage enrollment gains this year.
According to the latest monthly enrollment data posted by CMS, MA now enrolls more than 30.6 million individuals, including more than 25 million in individual MA plans. That data reflects enrollment as of the Jan. 1, 2023, payment date (i.e., enrollment accepted through Dec. 2, 2022). Those figures do not reflect the full outcome of the AEP, which ran from Oct. 15 through Dec. 7, and are lower than CMS’s projection of 31.8 million for 2023, pointed out Citi’s Jason Cassorla in a Jan. 17 investor note. “[W]e expect enrollment to rise in the final 5 days of AEP and subsequently grow throughout 2023 considering both age-ins” and the Open Enrollment Period that runs from Jan. 1 through March 31, he wrote.
Seniors Make the Switch to Medicare Advantage in Increasing Numbers
The number of seniors who switched from traditional Medicare to Medicare Advantage increased annually from 2016 to 2020, according to new research published in JAMA Health Forum. The switch rate from traditional Medicare to MA grew to 6.8% in 2020 — more than three times higher than the switch rate from MA to traditional Medicare. This trend was noticed across populations with a variety of traits, including age, race and mortality status, and was particularly strong among Medicare-Medicaid dual eligibles. Switch rates from MA to traditional Medicare, meanwhile, are largely on the decline, but still more common among duals than non-duals. The study’s authors suggested this movement was a contributor to overall MA growth, noting that MA’s share of Medicare enrollment is projected to exceed 50% this year. They also observed that switching accounted for a growing share of new MA enrollment growth, rising from 49% in 2016 to 67% in 2020.