Managed Medicaid

Medicare, Medicaid Segments May Be a ‘Mess,’ but Bounce-Back Expected

Although insurers have bet big — and cashed in — on privatized Medicare and Medicaid plans, recently those business lines have shown some signs of distress.

For example, Humana Inc. and CVS Health Corp.’s Aetna this week put concrete numbers behind the Medicare Advantage membership losses that they expect to sustain next year due to significant headwinds facing the MA industry. And heightened medical loss ratios in managed Medicaid dinged the otherwise solid first-quarter 2024 financial results recently reported by Centene Corp. and Molina Healthcare, Inc.

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News Briefs: CMS Extends Medicaid Redetermination Deadline

CMS on May 9 said it would allow states to complete their Medicaid eligibility redeterminations through June 30, 2025. The agency previously required states to finish the “unwinding” process by the end of 2024. During COVID-19, states were required to keep people enrolled in Medicaid or the Children’s Health Insurance program until the public health emergency ended, but starting last April, states were allowed to resume their eligibility checks for Medicaid coverage. As of May 10, states and Washington, D.C., reported they had completed about three-quarters of their eligibility decisions, according to KFF. About 48.1 million people had their coverage renewed, while 21.9 million people were disenrolled and 24 million people had not found out about their status. KFF reported that 69% of people who were disenrolled had their coverage terminated for procedural reasons.

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Amount of Medicaid Funds Flowing to MCOs Is Poised to Rise, KFF Predicts

Taking a look at the overall state of Medicaid managed care, KFF earlier this month compiled data from prior years of its surveys and analyses to identify notable trends. About 75% of all Medicaid beneficiaries are enrolled in risk-based managed care — with that percentage set to grow as Oklahoma transitions away from fee-for-service (FFS) Medicaid — and most states spend at least 40% of total Medicaid dollars on payments to MCOs. KFF noted that spending could increase as states shift higher-cost, higher-need beneficiaries, such as disabled individuals and adults aged 65 and older, into managed care. Moreover, most states (32 states including Washington, D.C.) with managed care carve in their pharmacy benefits to MCO contracts, observed KFF.

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Not in Kansas Anymore: Aetna Gets Left Out of Medicaid Awards

Ousting CVS Health Corp.’s Aetna from the current roster of Medicaid managed care organizations serving the Kansas Medicaid program, Elevance Health, Inc.’s Healthy Blue was chosen as the third insurer for new KanCare contracts starting Jan. 1, 2025. Incumbents Sunflower Health Plan (Centene Corp.) and UnitedHealthcare Community Plan held onto their spots. The awards mark the latest in a string of wins for Centene and Elevance and another disappointment for Aetna.

According to results posted by the Kansas Dept. of Health and Environment on May 14, seven MCOs responded to the request for proposals (RFP) process that began in October 2023 after a delay. Serving nearly 154,000 enrollees, UnitedHealthcare currently has the biggest share of the Kansas Medicaid market, per AIS’s Directory of Health Plans. Aetna, meanwhile, serves nearly 133,000, or about 31% of KanCare enrollees.

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California’s 3% Health Care Spending Target Prompts Angst, Anxiety

California recently became the latest state to implement a limit on health care spending growth, with a new state agency targeting an increase of no greater than 3% by 2029. Commercial payers have largely backed the spending targets, but providers have argued that the targets aren’t reachable and Medicaid stakeholders — including the state’s largest managed care organization — are concerned that the target may curtail access for beneficiaries and harm the solvency of safety net providers.

The spending target was set by the board of the Office of Health Care Affordability (OHCA), which was established in 2022. The board’s membership was appointed by Gov. Gavin Newsom, a Democrat. The board set target spending growth rates of 3.5% in 2025 and 2026, 3.2% in 2027 and 2028, and 3.0% in 2029. OHCA will require payers regulated by the state and providers alike to meet the designated spending targets. Organizations that don't meet the spending targets will be subject to a state-overseen corrective action plan and possibly fines.

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News Briefs: Walmart Cites Reimbursement Woes in Closing Clinics, Virtual Care

Walmart Inc. announced on April 30 that it is closing its 51 health centers in five states as well as its virtual care offering. The company said in a press release that it had determined “there is not a sustainable business model for us to continue” with its Walmart Health and Walmart Health Virtual Care centers and added that “the challenging reimbursement environment and escalating operating costs create a lack of profitability that makes the care business unsustainable for us at this time.” Walmart launched the clinics in 2019. The company will continue to operate its nearly 4,600 pharmacies and more than 3,000 vision centers.

UnitedHealth Group CEO Andrew Witty testified before the Senate Finance Committee and House Energy & Commerce Committe on May 1 about the cyberattack on Change Healthcare, a UnitedHealth subsidiary. Fierce Healthcare reported that Witty said much of Change’s data was stored in data centers rather than on the cloud and that hackers accessed a server that did not have two-factor authentication. Fierce also noted that several politicians criticized UnitedHealth for its massive vertical integration, noting it owns a PBM and is a major player in health care delivery. Axios reported that UnitedHealth “could face more regulation or even calls to divest some of its businesses in the fallout from the hack.” Last month, a bipartisan group of politicians wrote a letter to Witty seeking information about the cyberattack and noted that Change’s systems process about 15 billion transactions each year and are linked to about 900,000 physicians, 118,000 dentists, 33,000 pharmacies and 5,500 hospitals.

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Medicaid MLRs Dent Centene, Molina 1Q Earnings Reports

Higher-than-expected medical loss ratios (MLRs) in Medicaid were a common — albeit minor — pain point for both Centene Corp. and Molina Healthcare, Inc. when the companies reported their first-quarter 2024 financial results.

Centene, which reported its quarterly results on April 26, recorded an MLR of 90.9% for its Medicaid line of business, which was higher (worse) than the Wall Street consensus estimate of 90.3%.

Chief Financial Officer Andrew Asher said during the company’s earnings call that the figure was “a little higher in the quarter than we expected as we continue to work through the appropriate matching of rates and acuity in the short-term.”

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Centene Wins Big in Latest Round of Medicaid Contract Awards

For Medicaid-focused insurers facing the headwinds of the post-pandemic disenrollment backlog, a contract win can cause a major sigh of relief. That’s particularly true for Centene Corp., the largest managed Medicaid insurer in the U.S., which held onto three state contracts in Michigan, New Hampshire and Florida in recent months. Shares of Centene were up 3.5% following its April 12 win in Florida, where it currently serves 1.46 million members, according to AIS’s Directory of Health Plans (DHP).

Awards from Kansas and Georgia — where Centene is an incumbent — are expected to be announced in the coming weeks. Texas, meanwhile, is in the middle of a procurement process that could mean a plan switch for about 1.8 million beneficiaries. And it could spell the end of Centene’s winning streak. CEO Sarah London at the Barclays Global Healthcare Conference, held in March, said the company was “disappointed” in the scoring of its most recent Texas proposal, and planned to protest any contract loss. “I would say the biggest concern for the program overall is the idea that the results are going to force 1.8 million Medicaid members in Texas, which is a state that has a very high choice rate, to choose a different place,” London continued.

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SFHP Leverages Local Connections, In-House Capabilities to Launch D-SNP

To prepare for new integrated care requirements for dual eligible Californians, San Francisco Health Plan (SFHP) and other Medi-Cal plans are in throes of setting up a Medicare Advantage Dual Eligible Special Needs Plan (D-SNP) in their service area, if they haven’t done so already. During the 15th Annual Medicare Market Innovations Forum, held April 8-9 in Orlando, Florida, SFHP’s Diane Sargent discussed the daunting task of building a D-SNP and the tremendous potential to improve care delivery for up to 47,000 dual eligible beneficiaries in the plan’s service area.

As part of the California Advancing and Innovating Medi-Cal (CalAIM) initiative, the state’s Dept. of Health Care Services (DHCS) is implementing new policies to promote integrated care for duals that build on the Coordinated Care Initiative (CCI), the state’s financial alignment demonstration with CMS that included Medicare Medi-Cal Plans (MMPs) serving duals. Under the first phase of CalAIM, which kicked off in January 2023, DHCS launched D-SNPs in the seven CCI counites. Under an exclusively aligned enrollment (EAE) model, duals access their Medicare and Medi-Cal coverage via the same managed care plan. Managed care plans in non-CCI counties that wish to continue serving dual eligibles must launch EAE D-SNPs no later than Jan. 1, 2026.

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News Briefs: Kaiser Reports Data Breach Affecting 1.34M

Kaiser Foundation Health Plan, Inc. is notifying millions of current and former customers that their information may have been shared with third parties included Google, Microsoft and the social medial platform X. Kaiser reported the breach to the HHS Office for Civil Rights on April 12, according to an OCR filing, which stated that the number of individuals affected was 1.34 million. In a statement to the news outlet TechCrunch, Kaiser said that “certain online technologies, previously installed on its websites and mobile applications, may have transmitted personal information to third-party vendors.” Compromised data includes member names and IP addresses, as well as information about how members “interacted with and navigated through the [Kaiser Permanente] website and mobile applications, and search terms used in the health encyclopedia,” according to the article.

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