Membership Growth

Medicaid eligibility redeterminations will restart in just a few weeks, on April 1, but few beneficiaries know that they could lose health insurance benefits in the coming months, according to a new poll from the Urban Institute and Robert Wood Johnson Foundation (RWJF). Although some plans are taking proactive steps to manage eligibility checks, experts tell AIS Health, a division of MMIT, that many aren’t, despite the potential for significant losses of revenue for Medicaid managed care organizations (MCOs).

The Urban Institute-RWJF poll found that in December, 64.3% of adults had “heard nothing at all about the return to [the] regular Medicaid renewal process.” Rates of awareness of eligibility redeterminations varied little by region, with all regions reporting a lack of awareness between 61.3% and 67.6%. Differences were also marginal across expansion and non-expansion states.

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.”

Insurers in 2021 continued to command higher gross margins in the Medicare Advantage market than in other health insurance markets, according to a new Kaiser Family Foundation (KFF) analysis. Using financial data reported by insurers to the National Association of Insurance Commissioners (NAIC) and compiled by Mark Farrah Associations, KFF estimated that MA gross margins — or the amount by which total premium income exceeds total claims costs per enrollee per year — averaged $1,730 per enrollee in 2021, $2,257 in 2020, $1,819 in 2019, and $1,727 in 2018. Across all four years, MA insurers earned markedly higher gross margins than insurers in the individual, group and managed Medicaid markets, reported KFF. As seen in other markets, MA gross margins spiked in 2020 due to low utilization during the first year of the COVID-19 public health emergency.

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.

CMS on Feb. 14 said the HHS Secretary has chosen three new models for testing by the CMS Innovation Center to help lower prescription drug costs, promote accessibility to life-changing drug therapies, and improve quality of care. The three models address the themes outlined in President Joe Biden’s executive order on lowering drug costs and meet the selection criteria thresholds of affordability, accessibility and feasibility of implementation, according to a Feb. 14 press release. First, the Medicare High-Value Drug List Model will encourage Part D plans to offer a low, fixed copayment across all cost-sharing phases of the Part D benefit for a standardized Medicare list of generic drugs that treat chronic conditions. Patients’ out-of-pocket costs for these generic drugs will be capped at a maximum of $2 per month per drug. Under the second model, the Cell and Gene Therapy Access Model, state Medicaid agencies will assign CMS to coordinate and administer multi-state, outcomes-based agreements with manufacturers for certain cell and gene therapies. Finally, under the Accelerating Clinical Evidence Model, CMS will develop payment methods for drugs approved under accelerated approval, in consultation with the Food and Drug Administration, to encourage timely confirmatory trial completion and improve access to post-market safety and efficacy data. This would reduce Medicare spending on drugs that have no confirmed clinical benefit, CMS stated.

Centene Corp. had a tough fourth quarter in 2022, with the insurer posting a $282 million loss for the period. The company’s executives attributed the rough ride to high administrative costs and lower-than-expected enrollment in Medicare Advantage. However, the firm posted solid results over the whole of 2022. Wall Street seems wary of Centene’s prospects over the next year, with analysts identifying notable challenges during 2023.

Centene took in $35.6 billion in revenue in the fourth quarter, up 9% year-over-year from 2021; total revenues in 2022 were $144.54 billion, up 15% from 2021. Net earnings for 2022 were $1.2 billion, or $2.07 in diluted earnings per share (EPS). The firm posted a loss of $0.38 per share during the fourth quarter of 2022. Medical loss ratio (MLR) was 87.7% in 2022, down from 87.8% in 2021. However, full-year earnings were dampened by selling, general and administrative expenses (SG&A), which increased from 7.9% in 2021 to 8.4% on an adjusted basis.

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.

Three years after states’ annual efforts to verify enrollees’ Medicaid eligibility were paused because of the COVID-19 public health emergency (PHE), states as of April 1 may begin terminating Medicaid coverage for individuals who no longer qualify. States and their managed care partners have been working to update beneficiary contact information for the inevitable return of redeterminations, and Medicaid managed care organizations can play a big role in raising awareness about the process, according to industry experts.

“I think that many members, probably 60% to 70% of folks, are just completely unaware that this is happening, and a lot of other folks just don’t realize the rigmarole they have to go through in order to maintain eligibility,” remarks Jerry Vitti, founder and CEO of Healthcare Financial, Inc., a firm that connects low-income, elderly, and disabled populations with Medicaid and other public benefit programs. “But plans can do mailings, do outreach, and be a connection point to Medicaid agencies where they can get enrolled.” Unfortunately, “they have uneven demographic information on these folks since the population is so transient, but they can reach out to members…and I think plans can do a really good job to build awareness of what’s happening and the implications.”

CMS in its 2024 Advance Notice projected that Medicare Advantage organizations can expect an average estimated change in revenue of 1.03%, when taking into account an average increase in risk scores of 3.3%. Even though analysts expected that rate to fall well below the robust 8% CMS predicted in its preliminary rate notice for 2023, they characterized it as low when excluding the risk scoring trend. The 2024 projection is also based on an effective growth rate of 2.09%, which CMS this time last year estimated would be 4.75%. Additionally, CMS will continue to apply the statutory minimum coding intensity adjustment of 5.9% to offset the effects of higher levels of coding intensity in MA relative to fee-for-service (FFS) Medicare. That coding intensity adjustment generated much discussion in comment letters on the Advance Notice last year. When asked during a Feb. 1 call with reporters why CMS again opted for the minimum adjustment, CMS Deputy Administrator and Center for Medicare Director Meena Seshamani, M.D., Ph.D., told AIS Health: “We continue to analyze and evaluate MA coding patterns, and 5.9% we feel is adequate at this time, and we continue to look at coding pattern differences, how we set that pattern adjustment [and] how that’s applied…in future years as well.” The preliminary rate notice also included technical updates to the risk adjustment model, including a reliance on condition categories from the ICD-10 classification system (instead of the ICD-9 system) and a shift to more recent underlying FFS data years to reflect 2018 diagnoses and 2019 expenditures.

During the open enrollment period that ended on Jan. 15 in most states, 16,306,448 people selected an Affordable Care Act marketplace plan, the Biden administration said on Jan. 25. That total represents a 13% increase compared to the same time last year, and accounts for plan selections through Jan. 15 on the 33 states using HealthCare.gov and through Jan. 14 or 15 on the 18 state-based marketplaces. While record-breaking for the exchanges, the signup total for 2023 is not final, as open enrollment continued through Jan. 23 for Massachusetts Health Connector and through Jan. 31 for DC Health Link, Covered California, Get Covered New Jersey, New York State of Health and Health Source Rhode Island. Still, the Biden administration hailed the new enrollment figures, with CMS Administrator Chiquita Brooks-LaSure stating: “On the tenth anniversary of the ACA Marketplaces, the numbers speak for themselves: more people signed up for plans this year than ever before, and the uninsured rate is at an all-time low.”