Managed Medicaid

State Medicaid programs have sent substantial amounts of capitation payments to managed care organizations for covering members who have died, a new report from the HHS Office of Inspector General (OIG) found. The problem has bedeviled Medicaid agencies and plans for a long time, Medicaid insiders say, and is indicative of outdated and underfunded data systems.

States paid $249 million in improper capitation payments for deceased Medicaid enrollees between 2009 and 2019, OIG found. In addition, the report said, three states have not recouped a combined outstanding balance of $41 million in such payments: Health plans owe the states of Michigan $27.5 million, New York $3.6 million and Kansas $9.7 million.

Just a few weeks after reports surfaced that The Cigna Group was looking to offload its Medicare Advantage business, reports emerged of a possible transaction with Humana Inc. that would create a diversified health insurance giant in the same weight class as CVS Health Corp. and UnitedHealth Group. Wall Street analysts agreed such a deal would invite scrutiny from regulators, partly because of Cigna’s substantial MA overlap with Humana, although multistate Blues insurer Health Care Service Corp. (HCSC) is reportedly interested in picking up Cigna’s MA book. To complete the square dance, rumors have also resurfaced of Walmart’s interest in purchasing Humana.

Reuters on Nov. 6 first reported that Cigna was exploring a sale of its MA business, which represents about 3% of its overall medical membership. Sources told the news outlet that the insurer was working with an investment bank to evaluate its options and that the potential sale could bring in several billions of dollars. Analysts at the time suspected that the move was an effort to preempt the intense antitrust scrutiny Cigna might face if it sought to merge with a government-focused firm such as Humana or Centene Corp.

Leading up to the 2024 Annual Election Period (AEP) that started on Oct. 15 and concluded on Dec. 7, major Medicare Advantage insurers unveiling geographic expansions signaled their continued pursuit of dually eligible Medicare-Medicaid beneficiaries. A new analysis of the 2024 Special Needs Plan landscape confirms that more SNPs designed specifically for dual eligibles will be available next year, while interest in Institutional SNPs (I-SNPs) appears to be waning after experiencing a short burst of growth. The Chronic Condition SNP (C-SNP) market, meanwhile, will remain relatively stable.

There will be 1,368 SNPs on the market in 2024, up from 1,320 in 2023 — a modest increase compared with the 10% jump between 2022 and 2023, according to the analysis from Clear View Solutions, LLC. Within the total, however, Clear View observed a notable increase in the number of D-SNPs. In 2024, there will be 874 D-SNPs available — including 698 plans that were available in 2023 and 176 new plans — compared with 809 in 2023 and 401 in 2018, before the Bipartisan Budget Act (BBA) of that same year granted permanent authorization to all SNP types. There are also more D-SNPs being added than dropped next year, which could be due to some plan consolidation, observes Clear View.

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.”

Three quarters into 2023, Moody’s Investors Service says the predictions it made at the start of the year for the health insurance sector — namely, earnings growth in the mid-to-high single digits — have largely proven accurate. However, while financial results were consistent with the credit rating firm’s expectations, analysts said in a new report that the reasons for those results were not exactly what they predicted.

“Our outlook was premised on reduced membership as a result of Medicaid redeterminations and the impact of a possible recession on commercial membership,” the analysts wrote in a report released on Nov. 20. “However, with no recession this year, commercial membership has been better than expected, but its growth has been offset by higher-than-expected MA [Medicare Advantage] utilization.” Additionally, “although Medicaid redeterminations are underway, their impact so far has been relatively small.”

Most employer-sponsored plans that have stop-loss insurance coverage should be able to pay for expensive gene therapies that have proven to be cost-effective, according to a recent paper from Health Affairs Scholar. However, a separate Health Affairs analysis published this month argues that payers must assess alternative payment models to afford the medications, which can cost more than $1 million per dose.

Aaron S. Kesselheim, M.D., one of the authors of the latter Health Affairs paper says that plans have taken varied approaches to paying for gene therapies ranging from “extremely permissive to extremely tight coverage.”

In 2024, managed care organizations will have to manage more complex care coordination requirements and compliance with ambitious equity goals in many states — even as Medicaid programs have been forced to step up reimbursement rates across many care categories. That’s according to the 2023 edition of KFF's annual survey of state Medicaid officials, which was released on Nov. 14.

The overwhelming majority of states are increasing Medicaid reimbursement rates across many care categories. Forty-eight states increased rates for at least one care category in 2023, and 47 will do the same in 2024. Only 21 states implemented at least one rate restriction in 2023, and 19 expect to do so in 2024.

That means total state spending for the safety net health insurance program is likely to increase, despite the ongoing reduction in total enrollment due to the return of eligibility redeterminations. Medicaid spending per enrollee is likely to increase in 2024, KFF found, while total Medicaid spending growth in the surveyed states will likely be 8.3% in 2023, down from 9.8% in 2022.

With more than 78% of Medicaid beneficiaries enrolled in managed care plans as of the latest update to AIS’s Directory of Health Plans (DHP), winning and maintaining state contracts is crucial to MCOs that serve the Medicaid population. Six states have pending requests for proposals (RFPs) that serve about 11 million lives combined, while four states recently awarded new contracts. 

In recent years, new Medicaid RFPs have emphasized population health, asking payers to focus on health equity and social determinants of health while integrating services such as behavioral health, managed long-term services and supports (MLTSS), and pharmacy services into acute care. For example, Georgia will shift its aged, blind and disabled Medicaid population from fee-for-service care delivery to managed care when its new contracts begin, and Virginia plans to combine its MLTSS and managed Medicaid plans into one program. States also want improved analytics capabilities to track member outcomes and simplify claims and appeals processes.  

The Cigna Group could be fielding offers for its Medicare Advantage book, according to a Nov. 6 Reuters report. Experts say that a spinoff is plausible given the small size of Cigna’s MA book and Cigna’s heavy focus on commercial insurance — and Wall Street analysts say the move could be a first step toward a megamerger with a government-focused insurer.

Wells Fargo and RBC analysts say that the move could be an effort to preempt the intense antitrust scrutiny Cigna might face if it sought to merge with a government insurance-focused firm such as Humana Inc. or Centene Corp., because Cigna would have only commercial and Affordable Care Act marketplace books after an MA spinoff.

The Cigna Group could be fielding offers for its Medicare Advantage book, according to a Nov. 6 Reuters report. Experts say that a spinoff is plausible given the small size of Cigna’s MA book and Cigna’s heavy focus on commercial insurance — and Wall Street analysts say the move could be a first step towards a megamerger with a government-focused insurer.

Wells Fargo and RBC analysts say that the move could be an effort to preempt the intense antitrust scrutiny Cigna might face if it sought to merge with a government insurance-focused firm such as Humana Inc. or Centene Corp., because Cigna would have only commercial and Affordable Care Act marketplace books after an MA spinoff.