Annual Election Period/AEP

Trends emerging from early analyses of CMS’s 2024 Medicare Advantage and Part D “landscape files” include a lower concentration of $0 premium plans, increases in monthly premiums by some of the biggest insurers, and less aggressive but continued expansions into new service areas. But industry observers caution against reading too much into the data, given the nuances of benefit design that are not detectable from the landscape files. That said, it’s clear the major publicly traded insurers made a few tradeoffs in order to maintain benefit stability and remain competitive amid financial headwinds.

Insurers reporting second-quarter 2023 earnings earlier this year said they factored the emerging trend of increasing utilization into MA bids that were due in June. Also impacting pricing for next year’s offerings is the phasing in of substantial revisions to the CMS-Hierarchical Condition Categories (HCC) risk adjustment model that could reduce payments depending on plan type and coding practices, along with certain Part D changes resulting from the Inflation Reduction Act (IRA) that increase the cost burden for plans in the catastrophic phase of the benefit.

During a Sept. 20 KFF webinar, presenters and panelists seemed to agree on one thing: Regulations aimed at curbing misleading Medicare Advantage TV ads are a welcome fix for a mounting problem. Even an executive from the largest health insurance trade group acknowledged that “bad actors” in the MA marketing space need to be reined in — although he also stressed that most people are satisfied with their private Medicare plans. 

Meanwhile, CMS Administrator Chiquita Brooks-LaSure, who kicked off KFF’s hour-long virtual event, made it clear that the Biden administration is ratcheting up scrutiny of MA plans primarily in response to rising consumer complaints.  

As Medicare Advantage insurers prepare for the Oct. 1 start of Annual Election Period (AEP) marketing, they face an increased level of scrutiny as CMS implements various provisions aimed at curbing misleading and aggressive marketing practices. But new research suggests that some of the marketing misconduct of years past could rear its ugly head again this fall, prompting industry experts to question whether CMS should take additional steps or if action from Congress is needed.

Released on Sept. 12, the Commonwealth Fund’s survey of seniors’ experiences during the last week of the 2023 AEP tells the familiar tale of Medicare beneficiaries inundated with marketing messages during open enrollment. Nearly all seniors saw or received some form of plan marketing — ranging from phone calls to television advertisements — and more than three-quarters reported seeing television or online ads once daily. Additionally, 73% received phone calls at least once a week, and 30% reported receiving at least seven calls in a week. And despite CMS rules barring marketers from calling beneficiaries unless they’ve agreed to be contacted or requested the call, 74% of all respondents reported receiving an unsolicited call from a plan or plan representative.

Economic instability, food insecurity, limited access to transportation and overall lack of support are seniors’ top barriers to staying healthy, according to new data from Alignment Health. Sponsored by the tech-enabled Medicare Advantage insurer, the second-annual Social Threats to Aging Well in America survey polled 2,601 seniors across Alignment’s six-state service area, asking them about their financial, physical and emotional needs — and how those needs are impacting their health. Their responses illuminate the types of supplemental benefits that could prove most valuable to seniors weighing their coverage options as the 2024 Annual Election Period approaches.

Not having enough money for medical expenses was the most common overall obstacle to health, reported by 41% of survey respondents who anticipate any upcoming challenges. And about 20% of respondents cited financial instability as their top obstacle to health and wellness. One in 5 seniors said they’ve skipped out on needed medical care, and lack of funds was the No. 1 reason for doing so. In addition, 14% of seniors said they have outstanding medical debt, and 11% do not think they will be able to pay all of their medical bills in the coming year. When asked about supplemental benefits, nearly half (46%) of respondents said they would take advantage of assistance with rent, mortgage payments, and/or utility bills. Seniors also responded positively to fuel and grocery allowances.

Medicare Advantage insurers can’t share the juicy details of their new plan offerings until Oct. 1, but they are taking steps to prime the market and help boost enrollment during the 2024 Annual Election Period (AEP) with “preheat” strategies. Such efforts are often used to create or reinforce brand awareness in the month or two leading up to the AEP, and some insurers are shifting more dollars to this channel as consumer switching is expected to rise again this year, marketing experts tell AIS Health, a division of MMIT. (Warning: The following article contains an abnormal amount of marketing lingo.)

“Before AEP starts, ‘market warming’ with mail and DRTV [direct response television] continues to pay off. In fact, many say that if a plan misses pre-AEP market outreach, they’ve missed most of the available leads for the period. For some plans, these early leads represent over half of all AEP volume,” says Lindsay Resnick, executive vice president with Wunderman Thompson Health. However, such efforts are successful only if the plans’ “sales funnel” and call center are prepared to handle high call volumes and if they have a “lead nurturing” process in place to optimize the value of these leads, he advises. For example, “responder non-converters” (i.e., those who have responded in the past but did not become members) tend to convert at higher rates, he notes.

Medicare Advantage enrollment growth has exploded in recent years, topping 31 million lives as of July 2023, according to AIS’s Directory of Health Plans. But a new analysis from McKinsey and Company warns this free-for-all won’t last forever, and payers will have to adjust their strategies and evolve to meet a changing market.

The consulting firm estimated that annual growth in MA membership will slow to 3% in 2031, a far cry from the 8% rate seen in 2022. That’s largely because MA’s market strongholds — which McKinsey says are primarily urban — will become too saturated over time. While 2023 marked the first time more than 50% of seniors were enrolled in MA, actual MA penetration rates vary widely depending on region. McKinsey found that the 50% figure holds true for urban (or metropolitan) areas, but nonmetropolitan areas lag behind at 41%. McKinsey projects nonmetropolitan areas won’t reach 50% penetration until 2031, presenting opportunities for payers to shore up untapped markets. “Payers will seek to build the networks and capabilities to grow in historically less penetrated markets, such as those with large rural populations,” analysts wrote. Those markets could include entire states — McKinsey noted that CMS’s June data release showed a 59% penetration rate in Michigan, while Wyoming’s was just 13%.

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.

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.

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.

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.