Membership Growth

Although health insurers have been vocal about their desire to transition people into Affordable Care Act marketplace plans if they lose Medicaid during the resumed redetermination process, a new “secret shopper” survey suggests those customers will encounter a thicket of aggressive marketing for limited-benefit plans that could ultimately leave them on the hook for massive medical bills.

Researchers at Georgetown University Center on Health Insurance Reforms (CHIR) conducted their survey between June 9 and June 30, 2023, creating two profiles for hypothetical Texas residents who were informed they’d be losing Medicaid due to income ineligibility. “Terri” is 22 years old with no pre-existing conditions, and “Lorraine” is 36 with high cholesterol. Both live in a two-person household and have an annual income of $25,000 — qualifying them for the maximum premium and cost-sharing subsidies the ACA marketplace can offer. That means they can access, theoretically, silver plans with a $0 monthly premium that cover an average of 94% of the cost of covered benefits.

In March, the national uninsured rate hit an all-time low of 7.7%, according to new data from the Centers for Disease Control and Prevention. Citi analyst Jason Cassorla wrote in an Aug. 3 investor note that the low rate “is not surprising” since Medicaid continuous enrollment provisions enacted during the pandemic were still in effect at that time – as were enhanced Affordable Care Act marketplace subsidies and the “generally stable to improving employment rate.” However, now that states have been permitted to restart Medicaid eligibility checks, the uninsured rate is almost certain to go back up, he pointed out.

Amazon.com., Inc. is expanding its virtual care offering, Amazon Clinic, to all 50 states and the District of Columbia. “In addition to message-based consultations in 34 states, Amazon Clinic now supports video visits nationwide,” the retail giant said in an Aug. 1 press release. Amazon first rolled out Amazon Clinic last November, but it was not available in all states at that time. Customers using the Amazon Clinic can access services via the Amazon website or mobile app, where they can “compare response times and prices from multiple telehealth provider groups, complete an intake form, and connect with their chosen provider,” the release stated. Patients do not need insurance to access the Amazon Clinic’s services and it doesn’t accept insurance; but the release noted that “medication prescribed by clinicians may be covered by insurance.”

Humana Inc. on Aug. 2 said it expects to enroll approximately 825,000 members in its individual Medicare Advantage products this year, adding another 50,000 members to its initial projections and reflecting year-over-year growth of 18%. For the quarter ending June 30, the MA-focused insurer reported adjusted earnings per share (EPS) of $8.94, up from $8.76 in the second quarter of 2022, and a medical loss ratio (MLR) of 86.3%, up from 85.8% a year ago. The company raised its full-year 2023 adjusted EPS guidance to “at least $28.25,” reflecting a 25-cent increase. Humana also highlighted “stabilizing” MA utilization based on its most recent claims activity and said it continues to predict a full-year MLR of between 86.3% and 87.3%.

CVS Health Corp. on Aug. 2 reported second-quarter 2023 consolidated revenues of $88.9 billion, including $26.7 billion in revenue for the health care benefits segment, and reflecting overall growth of 10.3% from the year-ago quarter. Adjusted operating income for the health care segment declined by nearly 20% from a year ago, partly because of increased outpatient utilization in Medicare Advantage when compared with pandemic-driven utilization levels in the prior year, CVS Health explained in a detailed earnings release. For the quarter ending June 30, the company recorded an MLR of 86.2%, compared with 82.7% in the year-ago quarter, and adjusted EPS of $2.21, down from $2.53 in the second quarter of 2022. CVS Health confirmed its adjusted EPS guidance range of $8.50 to $8.70.

Provider groups that want to sponsor a Medicare Advantage plan have multiple avenues of entering the market and competing with large national players — including building a plan from scratch. But funding, state licensure and other regulatory requirements are key considerations before taking the leap, according to experts who spoke during a recent webinar hosted by Manatt Health.

“There are a lot of players in the market, and a lot of providers are trying to figure out if this is a good strategy for them,” said Paul Carr-Rollitt, partner with Manatt Health, during the July 20 webinar, Creating Provider-Sponsored Medicare Advantage Plans: Opportunities, Risks and Keys to Success.

As the MA market expands, there is increasing interest among provider-based groups — from hospitals, health systems and physician associations — to make an entrance. While the market is currently “dominated by a few key players” and considered “highly concentrated,” that doesn’t mean provider-sponsored groups that are intrigued by the idea must be forced to the sidelines, Carr-Rollitt said.

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%.

Government-focused publicly traded insurers reporting second-quarter 2023 earnings in July devoted a fair amount of discussion to the impact of Medicaid redeterminations on enrollment and rate adjustments, while analysts were interested in the recent trend of increased medical costs, particularly on the Medicare side. Despite these potential headwinds, the insurers appeared confident in their financial outlook for 2023, as all four raised their earnings projections for the full year.

After pausing eligibility verifications in exchange for receiving enhanced federal funding during the COVID-19 public health emergency (PHE), states were allowed to begin disenrolling people who longer qualify for Medicaid as of April 1. According to the latest update to AIS’s Directory of Health Plans, managed Medicaid enrollment as of June was nearly 73.4 million across 41 states, compared with 72.9 million a year ago — a decline that doesn’t yet fully reflect the impact of ongoing redeterminations. Nevertheless, some states have aggressively moved forward, prompting CMS to issue revised guidelines on best practices to avoid terminations driven by procedural reasons. Florida, for example, has already lost some 224,000 managed care enrollees (or close to 5%) from a year ago, according to DHP’s estimates.

Only three Medicare Advantage insurers received a civil monetary penalty (CMP) as a result of a program audit last year, according to the 2022 Part C and Part D Program Audit and Enforcement Report published on July 18. CMPs based on 2022 program audit referrals totaled $63,220, and another $200,000 in fines stemmed from one-third financial audit findings. By contrast, the previous audit cycle resulted in approximately $1 million in CMPs issued based on 2021 referrals, and nearly half of that amount related to one-third financial audits. The latest audit cycle included 291 contracts under 25 separate parent organizations covering approximately 33.6 million, or 62%, of beneficiaries enrolled in the Parts C and D programs. CMS in the report said the amount of the CMP “does not automatically reflect the overall performance of a sponsor” and that the summary of findings is “not intended to reflect overall industry performance and should not be interpreted to mean that there are pervasive issues throughout the industry related to the noncompliance we identified.”

Payers’ increasing interest in offering integrated health plans for Medicare-Medicaid dual eligibles, namely Dual-Eligible Special Needs Plans (D-SNPs), also led to a proliferation in “look-alike” plans marketed to duals. The main difference — look-alike plans are not legally required to contract with state Medicaid programs on care coordination, a cause of concern for advocates and policymakers alike. As D-SNPs gained traction over the past decade, enrollment in look-alike plans also grew rapidly, according to a new study published in the July 2023 issue of Health Affairs. While CMS has already cracked down on look-alike plans — new regulations caused dozens of contract non-renewals for 2023 — the study authors suggest that look-alike plans still pose a potential threat to improving integrated care delivery for duals, who are often more medically and socially vulnerable than other Medicare beneficiaries.

New data from Deft Research suggests that Medicare Advantage plans continue to struggle with retaining their dual eligible members, mainly because of problems associated with the supplemental benefits offered to address social needs. Published on June 29, Deft’s 2023 Dual Eligible Retention Study found that duals switch plans at about twice the rate of other MA beneficiaries. And while Deft says duals “absolutely depend” on supplemental benefits such as dental care, grocery allowances and utility assistance, duals’ reported issues with their current health coverage often stem from these enhanced offerings, whether they be a source of confusion or just prove difficult to use.

An estimated 30% of dual eligibles make a coverage change over the course of a year, and 8% of duals have already made a switch this year as of mid-May, according to Deft. (Dual eligibles can enroll in or switch dual plans once per quarterly Special Enrollment Period or during the Medicare Annual Election Period). By contrast, Deft in its 2023 Medicare Shopping and Switching Study, which is based on the responses of about 5,000 Medicare beneficiaries, observed that switching by “full pay” (i.e., those receiving no extra help) MA beneficiaries shot up to 15% this past AEP, compared with 12% in the prior two periods.

The return of Medicaid redeterminations, which the managed care sector expected to be a daunting challenge, has proven even more difficult to handle than anticipated. States have begun to seek more time and resources from CMS to manage staggering amounts of beneficiary outreach and other administrative chores. Now, thanks to recent regulatory guidance, states can also pay managed care organizations to take on some of that work.

Several states — which are ultimately responsible for handling the income checks and disenrollments necessary for what many have called the “unwinding” of COVID-19 pandemic-related continuous enrollment — have paused redeterminations or extended their deadlines for enrollees to complete their redetermination paperwork, and others may follow. The pauses are clear evidence of the scale and complexity of the task at hand.