Payer Response to the Great Medicaid Unwinding
During the pandemic, the number of individuals in the U.S. enrolled in both fee-for-service and managed Medicaid programs increased dramatically. This increase was tied to a provision in the Families First Coronavirus Response Act, which boosted federal dollars to the states in exchange for keeping individuals covered through Medicaid, even if their eligibility changed since they enrolled.
In April 2023, states resumed eligibility redeterminations, leading to a steep and continuing decline in Medicaid enrollment. In the last few years, Medicaid unwinding has become one of the defining events in the government-sponsored coverage space, impacting the enrollment of millions of people on managed and fee-for-service state Medicaid programs.
To better understand how payers are navigating this enrollment churn, the MMIT Index team conducted a Rapid Event Primer in September 2024. The results highlight how these shifts impact factors like therapy adherence, coverage continuity, plan design and member assistance programs.
Uptake In Health Exchange, Employer-Sponsored Plan Enrollment
In the U.S., Medicaid is less of a blanket program and more of a quilt, with approaches to eligibility and administrative protocols varying significantly by state and region. In fact, 42% of participating payers in the MMIT Rapid Event Primer identified state-specific factors contributing to higher Medicaid disenrollment rates.
When Medicaid beneficiaries lose coverage, where can they go? The majority of payer respondents (85%) noted that their organization has seen an increase in individuals transitioning from Medicaid to other lines of business. Enrollment data from MMIT’s Directory of Health Plans indicates that many former Medicaid beneficiaries have sought coverage in the public health insurance exchange, which reported a record-breaking open enrollment season in Q1 2024.
Results from the Rapid Event Primer confirmed this shift, with 88% of payers who have experienced channel transitions noting that their health exchange business has seen an increase since April 2023. For 59% of these payers, employer-sponsored plan enrollment also increased during this time period. Slightly more than one-third (35%) of these payers also reported additional growth in their Medicare line of business.
Clearly, many payers have been successful at converting those who were disenrolled from Medicaid into new channels within their organization.
Concerns About Declining Medication Adherence
When patients lose coverage, their access to necessary therapies may be disrupted until they can re-establish coverage through another channel or find other resources, such as manufacturer patient assistance programs or clinics that waive out-of-pocket costs.
While the causality between adherence and disenrollment is hard to track without claims data, many responding payers suspect that Medicaid unwinding has negatively affected therapy adherence. One large national payer stated that “[adherence] has surely decreased significantly,” while payers from independent plans estimated adherence reductions between 20% to 40%.
One pharmacy director said Medicaid disenrollment has led to “lower adherence to medications as well as an increase in progression from lack of follow up,” while another stated that Medicaid unwinding has resulted in “gaps in access; cost barriers; increased reliance on assistance programs (coupons, discounts, charitable programs); and disruptions in continuity of care.”
While none of the payers surveyed has implemented formulary changes in response to Medicaid disenrollment, one payer reported streamlining its prior authorization process for high-need medications in an effort to reduce delays for those transitioning to new coverage.
Assistance Bridging the Coverage Gap
Fortunately, the majority of responding payers have programs in place to help members bridge the gap between losing Medicaid and finding new coverage from a different channel.
Most payers (80%) indicated that they have a transition navigation program to help beneficiaries shift from Medicaid to a health exchange plan. One large national MCO initiates proactive outreach to members to inform them of their eligibility and financial assistance options, and helps them enroll on the exchange. One payer noted that they have “outreach specialists trained to provide choices for those being disenrolled and provide a timeline to allow for a smooth transfer,” while several others said they train case managers and call center staff to help members.
For payers who have seen an increase in employer-sponsored plan enrollment, 80% of respondents also have programs and resources in place to help members make the switch. One payer commented that they “offer case management services to help members find in-network providers and transfer prescriptions” to improve continuity of care, while others said they have onboarding programs and active hotlines to assist members.
For each category, payers noted that people often need help understanding the differences in benefits between plans. It was rare for payers to have dedicated programs to bridge the gap between Medicaid and Medicare coverage. Only one payer reported this type of transition program, though existing Medicare Advantage marketing may provide the visibility and awareness that eligible seniors need to enroll.
Looking Ahead to Future Shifts
Although Medicaid unwinding has been in effect for more than a year, coverage shifts will certainly continue into 2025. With 23% of those disenrolled from Medicaid still uninsured, we can expect payers to keep courting this potential membership.
The majority of payers responding to our Rapid Event Primer are taking proactive steps to assist this population. Most (80%) are partnering with insurance brokers or community health navigators, and 70% are conducting targeted outreach campaigns. More than one-third (40%) are offering lower-cost plans designed to appeal to individuals transitioning from Medicaid.
Manufacturers should keep monitoring the ongoing shifts in channel enrollment, as these patterns can significantly impact a brand’s payer mix and patient utilization. In the months to come, a proactive response to evolving coverage dynamics can help pharma companies promote continuity of care for patients treated with their therapies. For example, a manufacturer could develop support materials for patients who recently switched plans, or marketing documents to help payers understand the economic burden of switching new enrollees to different medications.
Analyze enrollment data and market share for every U.S. health plan with MMIT’s Directory of Health Plans. For unblinded payer perceptions on market trends, learn more about the Biologics & Injectables Index.
