Supplemental Benefits

As Medicare Advantage insurers face revenue headwinds driven by changes to risk adjustment, Star Ratings and benchmark rates, one overarching question at recent conferences and webinars has been, how will MA plans do more with less? Medicare beneficiaries in recent years have flocked to MA largely because of rich benefit offerings they can’t get in fee-for-service Medicare, and they have grown accustomed to items like comprehensive dental, flex cards and fitness benefits. But as the June 3 bid deadline approaches, insurers are considering what benefits they may have to tweak and how they’ll market those benefits to consumers for 2025.

During an April 3 webinar cohosted by Deft Research and Rebellis Group, Deft Vice President of Client Services Rob Lourenço said the market is already showing signs of revenue changes trickling down to the consumer. In its latest Medicare Shopping and Switching Study, Deft observed a slight “pullback in certain benefits” and at a high level saw more removals of benefits than additions this year. Comparing plans that were offered in both 2023 and 2024, Deft saw that routine eye exam coverage remained stable, while 4% of plans removed eyewear coverage and 1% added the benefit, resulting in a net decline of -3% for eyewear access.

When it comes to aging in place, seniors in the U.S. have a hodgepodge of programs and services available to them, and health plans can be a connector to and integrator of those services in their respective markets. Speakers at AHIP’s 2024 Medicare, Medicaid, Duals & Commercial Markets Forum, held March 12 to 14 in Baltimore, agreed that health plans can also play a valuable role in driving innovations across the Medicare and Medicaid programs, such as providing emergency and acute care in the home, supporting family caregivers, and advocating for policy solutions.

Before CMS in 2020 introduced the Hospital Without Walls program enabling health systems to provide acute hospital care in the home, integrated insurer-provider Kaiser Permanente (KP) launched the Advanced Care at Home (ACAH) model. One of several KP initiatives that support aging in place, ACAH leverages expert care teams and technology to provide 24/7 physician-led acute care and coordinate patients’ recovery in the familiar setting of the home. Eligible patients are identified in urgent care, emergency and/or inpatient settings but must also meet certain social and clinical criteria, explained Rachna Pandya, regional strategic implementation leader of Medicare operations and strategy, during the session, “Best Practices to Support Aging in Place.”

President Joe Biden’s fiscal year 2025 budget proposal included a familiar item from the previous year: a proposal to establish new medical loss ratio (MLR) requirements for supplemental benefits in Medicare Advantage. Without an estimated economic impact or additional detail, that proposal was included as a line item in the 188-page document released by the White House Office of Management and Budget. According to a March 11 fact sheet on the budget, the administration also aims to build on recent efforts to improve prescription drug affordability by accelerating the pace of Medicare drug price negotiations, expanding the Inflation Reduction Act’s inflation rebates and $2,000 out-of-pocket cap beyond Medicare and into the commercial market, and extending the IRA-established $35 cost-sharing limit for Medicare-covered insulin to the commercial sector. Further, the budget seeks to strengthen Medicare by “modestly increasing” the Medicare tax rate on incomes above $400,000, and it “directs an amount equivalent to the savings from the proposed Medicare drug reforms” into the Medicare Hospital Insurance trust fund.

Nearly 33 million individuals were enrolled in Medicare Advantage as of February, demonstrating a year-over-year increase of 7.1% and Annual Election Period growth of 4.0%, according to AIS Health’s analysis of the latest AEP data. Those figures reflect a continued slowdown in MA growth as fewer baby boomers age into Medicare. At the same time, switching among MA consumers continues to rise, and with less rebate and risk adjustment revenue expected this year, insurers had tough decisions to make to stay competitive.

According to the latest Medicare Shopping and Switching Study from Deft Research, MA switching during the 2024 AEP reached a “multiyear high” of 16%, compared with 15% in the 2023 AEP and 12% in the prior two periods. While previous Deft studies identified increasing levels of frustration with supplemental benefits as a top driver of switching, this year’s changes were “more so due to reductions in benefits and added cost,” says George Dippel, president of Deft Research.

As Medicare Advantage organizations grapple with rising medical costs — driven in part by increased spending on supplemental benefits such as dental, vision and over-the-counter coverage — CMS is tasking plans with the immediate submission of utilization data for “all items and services, including supplemental benefits” through the MA Encounter Data System (EDS). That requirement, which is retroactive to Jan. 1, presents a host of challenges as supplemental benefit vendors may not have the kind of detailed information CMS is seeking. And it raises broader questions about how the data will be used.

Supplemental benefits have been on the rise since plan year 2019, when CMS’s reinterpreted definition of “primarily health-related” enabled MAOs to include benefits like adult day health services, support for caregivers of enrollees and therapeutic massage in their plan benefit packages. In 2020, MAOs began offering Special Supplemental Benefits for the Chronically Ill (SSBCI), a category of “non-primarily health related” items and services that can be made available to certain beneficiaries. According to health care research and advisory services firm ATI Advisory, the number of plans offering expanded primarily health-related supplemental benefits and/or non-primarily health-related SSBCI grew from 628 plans in 2020 to 2,334 plans in 2024.

As Medicare members become increasingly comfortable with using technology to manage their care at home, tech-enabled vendors continue to flood the Medicare Advantage space to offer solutions aimed at everything from fall prevention and functional mobility to specific conditions like Alzheimer’s and cardiovascular disease. Speaking at the 7th Annual Medicare Advantage Leadership Innovations forum, held Jan. 30 and 31 in Scottsdale, Arizona, vendors and MA plans shared the nuanced and personalized approaches they’ve taken to engage seniors with digital solutions.

“I think one of the challenges with [seniors and] technology is trying to really navigate tension between high tech and high touch. And I think that’s one of the things that you need to really figure out with your members early on: What are their preferences and needs? What resources do they have available?” said Joel Salinas, M.D., chief medical officer with Isaac Health, who spoke on a member engagement panel moderated by AIS Health, a division of MMIT.

For our annual series of outlook stories on the year ahead in Medicare Advantage, AIS Health, a division of MMIT, asked multiple experts what they view as MA organizations’ “keys to success” in 2024 and what critical investments will help them unlock their goals. Responses ranged from using artificial intelligence and other digital tools to improve the member experience to strategically striking value-based agreements with providers.

“If health plans don’t do a good job of educating or empowering the members with information, then the member effort increases, which frequently leads to member churn,” observes Srikanth Lakshminarayanan, senior vice president of the Center of Excellence for Healthcare Engagement Services at Sagility, a tech-enabled business process firm that supports payers and providers. “With MA membership increasing literally day by day, it’s important for health plans to make a conscious effort at doing a good job on member onboarding and retention. People who come out of their commercial plan into a Medicare plan need handholding of a different kind. They often need to know how Medicare works, what’s the supplemental spend, etc.”

As the first round of fourth-quarter and full-year 2023 financial results were reported by publicly traded insurers in January, modest enrollment growth during the recently concluded Annual Election Period (AEP) and continued utilization pressures were prominent Medicare Advantage themes during earnings calls. Although analysts were particularly concerned with results posted by Humana Inc., which notably moved up its earnings release date, some maintained that the MA-focused insurer remains poised for long-term growth in the sector.

Humana Inc. on Jan. 25 introduced 2024 adjusted earnings per share (EPS) guidance of “approximately $16” — compared with the Wall Street consensus of $29.14. But that was after a regulatory filing indicated that inpatient utilization was higher than expected in the fourth quarter of 2023, primarily during November and December, “as well as a further increase in non-inpatient trends, predominantly in the categories of physician, outpatient surgeries, and supplemental benefits, which emerged with the November and December paid claims data.” Humana’s stock plummeted after the disclosure, and the impact reverberated throughout the managed care sector, denting the share values of competitors including CVS Health Corp. and Elevance Health, Inc.

Insurers are more carefully tailoring their preventive supplemental benefit offerings to support Medicare Advantage enrollees aging in place, with benefits such as home and bathroom safety modifications more than doubling between 2023 and 2024, according to a new Faegre Drinker analysis of Plan Benefit Package (PBP) data. But as CMS takes steps to gather more data on supplemental benefits, less impactful benefits could be thinned from the pack while those with greater potential to improve health outcomes are embraced by insurers.

Faegre Drinker has been tracking the growth of expanded supplemental benefits since 2020, when MA insurers were in the early days of experimenting with new offerings under CMS’s reinterpretation of “primarily health related” supplemental benefits and first began offering Special Supplemental Benefits for the Chronically Ill (SSBCI). The consulting firm's latest analysis, published on Dec. 5 and shared in advance with AIS Health, focuses on the preventive supplemental benefit market due to the large variance in uptake, with some benefits offered by fewer than 100 plans and others featured in more than 5,000 PBPs. This year, Faegre Drinker split the categories into two types: popular (i.e., offered by more than 1,000 plans) and less popular (i.e., those offered by fewer than 1,000 plans).

Plans participating in the Medicare Advantage Value-Based Insurance Design (VBID) Model next year must begin reporting beneficiary-level utilization data on three key supplemental benefit categories: food, transportation, and general supports for living (e.g., utilities assistance). That requirement was included in a 2024 request for applications released late last year, and CMS officials have since hinted that the agency is interested in gathering additional information about supplemental benefit usage from the MA industry at large. But in a move that flew largely under the radar, the agency in September issued a proposal to begin requiring all MA organizations to submit information about supplemental benefits at a greater level of detail than some plans may be able to provide at this time, industry experts tell AIS Health, a division of MMIT.

Supplemental benefits have been on the rise since plan year 2019, when CMS’s reinterpreted definition of “primary health-related” enabled MAOs to include benefits like adult day health services, support for caregivers of enrollees and therapeutic massage in their plan benefit packages (PBPs). And with the passage of the CHRONIC Care Act of 2018, MA plans in 2020 began offering Special Supplemental Benefits for the Chronically Ill (SSBCI), a category of “non-primarily health related” items and services that can be made available to certain beneficiaries.