Supplemental Benefits

CMS’s Medicare Advantage Value-Based Insurance Design (MA VBID) model — which offers MA organizations enhanced flexibility to tailor a variety of interventions to address health-related social needs — has gone through multiple iterations since its inception. In what CMS officials consider the third phase of its evolution, MA VBID participants will soon face new accountability for driving savings, addressing health equity and delivering meaningful supplemental benefits.

The MA VBID model, which was launched by the CMS Center for Medicare and Medicaid Innovation (CMMI) in 2017, has seen participation grow from nine MA organizations in three states to 69 MAOs serving an estimated 8.7 million VBID beneficiaries across the U.S. Having been extended through 2030, it is currently CMMI’s longest-running model and the only model specifically testing innovations in MA. Those innovations initially included offering supplemental benefits or reduced cost sharing to enrollees with certain chronic conditions or who participated in care management and/or disease management activities.

Outside of serving seniors through a Special Needs Plan geared toward institutional/institutional equivalent enrollees, Medicare Advantage plans are not fundamentally designed to support seniors’ long-term care needs. But with their inherent focus on care coordination and recent innovations in nonmedical benefits that can support aging in place, MA plans are uniquely positioned to address gaps in the continuum between Medicare and Medicaid, which is the primary payer of long-term services and supports (LTSS).

Speaking during a prerecorded session of the upcoming Virtual Fifth National Medicare Advantage Summit, panelists agreed that while nonmedical benefits were initially perceived as marketing tools to differentiate plans from their competitors, there is great potential for them to serve enrollees in the long term. Participants in the panel discussion, “The Opportunity for Medicare Advantage Plans to Address Long-Term Care Needs,” which will be livestreamed and archived on July 10, discussed a variety of benefit innovations and the mounting evidence around their impact to costs, outcomes and quality of life.

After interest among long-term care providers and Medicare Advantage insurers to partner on Institutional Special Needs Plans plateaued during the COVID-19 pandemic, a somewhat ambiguous provision in a recent CMS final rule has the potential to significantly increase the I-SNP market. By expanding the definition of qualifying facilities that serve institutionalized members, SNP experts say it could reduce current barriers to enrollment and garner interest from assisted living facilities (ALFs), which have largely been shut out of the I-SNP opportunity.

I-SNPs, which were permanently authorized in the Bipartisan Budget Act of 2018, currently restrict enrollment to MA-eligible individuals who meet the definitions of “institutionalized” (i.e., they continuously reside for 90 days or longer in one of several types of long-term care facilities or are expected to need the level of services provided in such a facility) or “institutionalized-equivalent,” meaning they reside in an ALF and get the same level of care they’d receive in a qualifying long-term care facility. Such facilities that currently qualify (as defined by Medicaid or Medicare statute) are skilled nursing facilities, nursing facilities, intermediate care facilities for individuals with intellectual and developmental disabilities, psychiatric hospitals, rehabilitation hospitals or units, long-term care facilities and “swing-bed” (e.g., critical access) hospitals.

Amid concerns about utilization trends, a disappointing final rate notice and ongoing regulatory changes, “headwinds” has been the dominant buzz word in Medicare Advantage for months. To gain a better understanding of the cost-containment levers MAOs can pull in the face of cost pressures, AIS Health, a division of MMIT, spoke with AArete Managing Director Paul Schuhmacher. In his work with the global management and technology consulting firm, Schuhmacher co-leads the payer practice, which supports approximately 120 plans across the U.S.

Editor’s note: This interview has been edited for length and clarity.

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.