Managed Medicaid

Centene Corp.’s results for the fourth quarter of 2023 were largely positive, earning mild praise from Wall Street analysts. While Centene was the latest health insurer to face higher-than-expected Medicare Advantage utilization, executives claimed that the firm’s MA performance was far less worrisome than that of its peers — an argument that analysts seemed to accept.

Centene’s Medicare medical loss ratio (MLR) for the quarter was an eye-popping 95.3%, up from 87.5% in the fourth quarter of 2022, an increase of 780 basis points (bps). According to Jefferies analyst David Windley, that figure was 510 bps above Wall Street consensus projection for Centene’s Medicare book of business. However, during a Feb. 6 earnings call, Centene CEO Sarah London and Chief Financial Officer Drew Asher both insisted that the high MLR figure was not a reason for concern, was not caused by the same factors that drove high MLRs for MA peer firms like Humana Inc., and was accounted for in 2024 guidance.

As of Feb. 1, at least 16.4 million Medicaid enrollees had been disenrolled from coverage since last April, representing about one-third of people who had applied to have their coverage renewed, according to KFF. KFF said the number of people disenrolled is likely higher “due to varying lags for when states report data.” Of the people who had been disenrolled, 71% were terminated for procedural reasons, meaning they did not complete the renewal process in time. The disenrollment rates ranged from 13% in Maine to 61% in Texas. Overall, states and Washington, D.C., have reported renewal outcomes for 52% of people enrolled in Medicaid, while the remaining 48% of people were awaiting decisions as of Feb. 1.

Dirk McMahon, UnitedHealth Group’s president and chief operating officer, plans on retiring, effective April 1. McMahon joined UnitedHealth in 2003 and has been president and COO since February 2021. UnitedHealth has not named a replacement for McMahon, whose previous roles at the company included CEO of UnitedHealthcare and president and COO of Optum.

Black Medicaid enrollees were more likely to be hospitalized for preventable reasons than white enrollees, regardless of whether they were enrolled in the Supplemental Security Income (SSI) program, according to an Urban Institute study.

Using data from CMS, the analysis studied preventable hospitalization rates across 21 states and among Medicaid enrollees ages 19 to 64 for the three most common types of preventable conditions: asthma/chronic obstructive pulmonary disease (COPD), diabetes, and heart failure. For all three conditions, preventable hospitalization rates were significantly higher for people enrolled in Medicaid through the SSI program — meaning they have a qualifying disability — compared with those who enrolled through other pathways.

Medicare Advantage plans next year can expect to receive, on average, a 3.70% increase in risk adjusted revenue, according to the 2025 Advance Notice of payment changes for MA and Part D plans, released on Jan. 31. That’s when taking into account a 2.45% revenue decline stemming from CMS’s phased-in risk model revision and fee-for-service (FFS) normalization, an effective growth rate of 2.44% and an average increase in risk scores of 3.86%, according to a CMS fact sheet. CMS this time last year estimated that plans would see a modest rate increase of 1.03%, but revised that projection to 3.32% for 2024 after deciding to phase in changes to the CMS-Hierarchical Condition Categories risk adjustment model starting this year. CMS said it plans to proceed with the phase-in as described in last year’s rate notice and is “proposing updates to the Part D risk adjustment model to reflect the redesign of the Part D benefit as required by the IRA [Inflation Reduction Act].” CMS requested comments on the proposals by March 1; the final rate notice is expected to be released no later than April 1.

Since integrating physical and behavioral health into its managed Medicaid program beginning in 2016, the state of Washington has not seen significant changes in utilization, quality measures or health outcomes, according to a recent JAMA Health Forum study. Experts tell AIS Health, a division of MMIT, that the study illustrates the challenges associated with integrating behavioral and physical health care that may not be fully apparent until the process begins.

K. John McConnell, Ph.D., the study’s lead author, tells AIS Health that Washington is just one of many states that in recent years have moved away from so-called carve-out models in Medicaid, where one health plan handles physical health and a separate behavioral health organization manages behavioral health. Most states now have carve-in designs where states contract with managed care organizations (MCOs) that are responsible for payment for all health care services for their members.

A rule recently finalized by CMS may address widespread problems with Medicaid prior authorization identified in an HHS Office of Inspector General (OIG) report, industry experts say. However, they suggest that to truly solve the problem of improper coverage denials, states and Congress must limit managed care organizations’ leeway in such matters.

The CMS Interoperability and Prior Authorization Final Rule, released on Jan. 17 and scheduled for publication in the Feb. 8 Federal Register, should help providers and patients better understand why a given request was rejected, experts tell AIS Health, a division of MMIT. The rule requires MCOs to share precise, specific reasons for denials and make those decisions faster. Most provisions in the final rule also apply to Medicare Advantage organizations, state Medicaid and Children’s Health Insurance Program fee-for-service programs, and Affordable Care Act plans sold on the federally facilitated exchanges. Additionally, the regulation includes interoperability and data transparency provisions.

Although 2024 seems far removed from the height of the COVID-19 pandemic, the ripple effects associated with that disruptive global crisis are still influencing how this year will turn out for the U.S. health insurance sector, two top credit ratings firms predict.

“We’re calling it the pandemic hangover,” says Brad Ellis, senior director in Fitch Ratings' North American insurance rating group.

“I think this year might be the last year we’re seeing what we call pandemic-related effects on the industry,” adds James Sung, director of insurance ratings at S&P Global.

Medicaid drug spending shows no signs of slowing despite a drop in prescriptions, according to new research from KFF. Net spending on prescription drugs grew 47% to $43.8 billion from fiscal year (FY) 2017 to 2022. The average Medicaid enrollee had 11.4 prescriptions in FY 2017, with a net spend of $39 per prescription. In FY 2022, the number of prescriptions per enrollee dropped to 9.4, while net spending per prescription rose to $58.

Meanwhile, Medicaid enrollment climbed to historic levels amid the COVID-19 pandemic, reaching 96.3 million lives in June 2023, according AIS’s Directory of Health Plans (DHP). With the end of the COVID-era continuous enrollment provision, states are now in the middle of a lengthy — and sometimes controversial — unwinding process. Yet utilization (the overall number of prescriptions) stayed under 2017 levels despite the enrollment boom. That could be because the number of days supplied per prescription has increased, with 90-day supplies becoming more common, in addition to lower utilization overall.

Since states resumed the Medicaid eligibility redetermination process — with the first beginning in April 2023 — almost 14.4 million people have lost coverage. That’s according to KFF’s Medicaid Enrollment and Unwinding Tracker, with data representing all states and the District of Columbia as of Jan. 9. States restarted their routine eligibility checking process this spring and summer after being effectively prohibited from doing so during the COVID-19 pandemic. Among the 14 million-plus people who have lost coverage since redeterminations resumed, 71% lost coverage for procedural reasons, KFF said.

CMS on Jan. 9 approved an amendment to New York’s section 1115 demonstration, allowing the state to “make large investments in wide-ranging Medicaid initiatives.” Those initiatives include establishing base reimbursement rates for safety net hospitals; connecting people to housing and nutritional support services; enhancing access to coordinated treatment for substance use disorders; and making long-term investments in the state’s health care workforce. As part of the waiver, New York will also “increase and sustain provider payment rates and Medicaid managed care payment rates for obstetrics, primary care, and behavioral health,” CMS said.

At least 13.3 million people lost their Medicaid or Children’s Health Insurance Program (CHIP) coverage and another 24.9 million had their coverage renewed as of December 2023, according to the KFF Medicaid enrollment and unwinding tracker. Starting April 1, 2023, states were permitted to resume disenrolling people from Medicaid who were no longer eligible or failed to complete the redetermination process after a multiyear pause during the COVID-19 public health emergency.

The disenrollment rate so far has ranged from 62% in Texas to 10% in Maine. Overall, 71% of coverage losses were due to procedural reasons, when individuals didn’t complete their renewal process within a specific time frame or the state was unable to reach them. Over 90% of disenrolled people had their Medicaid coverage terminated for procedural reasons in New Mexico (95%), Utah (94%) and Nevada (91%).