Medicare Advantage Enrollment Grows
Gains Concentrated Among Major Players
Medicare Advantage enrollment grew 8.0% from September 2018 to September 2019, according to AIS’s Directory of Health Plans (see a complete month-by-month timeline below), continuing a trend of greater MA gains as more baby boomers, seeking more personalized benefits, age into Medicare. In advance of the Annual Election Period (AEP) starting on Oct. 15, CMS on Sept. 24 said it expects MA enrollment to reach new highs in 2020, growing about 10% to 24.4 million lives.
Growth this past year was concentrated among the largest payers in the MA space, with the top five experiencing enrollment gains of about 16% on average year over year (see breakdown below). The big winner was Aetna Inc., which took on its largest-ever MA expansion in 2019, adding its offerings to more than 350 new counties.
While still on top, market leader UnitedHealthcare’s post-AEP gains were smaller than the 400,000 to 450,000 members (excluding dual eligible Special Needs Plans) the company anticipated, instead adding only about 290,000 lives.
NOTE: All enrollment totals include dual eligible Special Needs Plans (D-SNPs) except where noted. AIS defines post-AEP enrollment as total MA membership as of February 2019.
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Administration Drives Access to More High-Quality Medicare Plan Choices in 2020
Consistent with the direction of President Trump’s recent Executive Order on Strengthening and Improving Medicare for Our Nation’s Seniors, the Centers for Medicare & Medicaid Services (CMS) announced today that seniors will have access to more high-quality Medicare Advantage and Part D prescription drug plans in 2020. Most people with Medicare will have access to Medicare Advantage and Part D plans with four or more stars in 2020, and approximately 81 percent of Medicare Advantage enrollees with prescription drug coverage will be in plans with four and five stars in 2020, an increase from 69 percent in 2017.
Medicare Advantage remains a popular choice among beneficiaries and has high satisfaction rates. Due to recent actions CMS has made to protect and strengthen Medicare Advantage, Medicare Advantage plans are better able to compete on the basis of cost and quality. As a result, beneficiaries are benefiting from more plan choices, lower costs and increased quality. As announced last month, on average, Medicare Advantage premiums are expected to decline by 23 percent from 2018, and will be the lowest in the last thirteen years for the more than 24 million people with Medicare who are projected to enroll in Medicare Advantage for 2020. Beneficiaries will have more plan choices, with about 1,200 more Medicare Advantage plans operating in 2020 than in 2018.
“President Trump continues to be the great protector of the Medicare program for our nation’s seniors,” said CMS Administrator Seema Verma. “Thanks to the President’s leadership and commitment, the improvements that CMS has made to the Medicare Advantage and Part D programs means that seniors will have access to more high-quality plans. Proposals for more government in our healthcare – such as Medicare-for-All – would eviscerate the progress we’ve made to strengthen the program by empowering patients to make informed choices in choosing high-quality plans that best fit their needs.”
Approximately 52 percent of Medicare Advantage plans that offer prescription drug coverage will have an overall rating of four stars or higher, compared to approximately 45 percent in 2019. The average star rating for all Medicare Advantage plans with prescription drug coverage has improved to 4.16 out of 5 stars, increasing from 4.02 in 2017.
More Medicare beneficiaries will have access to a greater number of high-quality stand-alone Medicare Part D prescription drug plans. In 2020, based on current enrollment, approximately 28 percent of enrollees will be in stand-alone prescription drug plans with 4 stars or higher, an increase from approximately 3 percent in 2018. And the average star rating for a stand-alone prescription drug plan has improved from 3.34 in 2019 to 3.50 in 2020.
Earlier this year, CMS made improvements to the Medicare Advantage and Part D Star Ratings so that consumers can more easily identify high-value and high-quality plans. The Star Ratings methodology was enhanced to better account for differences in a plan’s enrollee population.
The Star Ratings system helps people with Medicare, their families, and their caregivers compare the quality of health and drug plans being offered. Medicare health and drug plans are given a rating on a 1 to 5 star scale, with 1 representing poor performance and 5 stars representing excellent performance. Medicare beneficiaries can compare health coverage choices and the Star Ratings through the online Medicare Plan Finder tool available at Medicare.gov (https://www.medicare.gov). CMS publishes the Medicare Advantage and Part D Star Ratings every year to measure the quality of, and reflect the experiences of beneficiaries in, Medicare Advantage and Part D plans.
It will be easier than ever to compare Medicare Advantage and Part D plans on Medicare.gov. As the 2020 Medicare Open Enrollment period approaches, CMS for the first time in a decade launched a modernized and redesigned Medicare Plan Finder – the most-used tool on Medicare.gov – that allows users to shop and compare Medicare Advantage and Part D plans (including by total costs of estimated annual drug costs plus premiums) as well as compare costs between original Medicare, Medicare prescription drug plans, Medicare Advantage plans and Medicare supplemental insurance (Medigap) policies.
Medicare Open Enrollment begins on October 15, 2019, and ends on December 7, 2019. During this time, Medicare beneficiaries can compare coverage options like Original Medicare and Medicare Advantage and choose health and drug plans for 2020. Medicare health and drug plan costs and covered benefits can change from year to year, so people with Medicare should look at their coverage choices and decide on the options that best meet their health needs. They can visit Medicare.gov (https://www.medicare.gov), call 1-800-MEDICARE, or contact their State Health Insurance Assistance Program.
For more information on the 2020 Medicare Advantage and Part D Star Ratings, including a fact sheet, please visit: https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn/PerformanceData.html, and download the “2020 Part C and D Medicare Star Ratings Data” zip file in the downloads section.
To view the premiums and costs of the 2020 Medicare Advantage and Part D plans, please visit: https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn/index.html.
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The Mad Rush to Sell Private Medicare Plans to Seniors
Health insurers across the U.S. will race to enroll more seniors in lucrative government-backed Medicare plans this month, even as a roiling debate over the role of private companies in health coverage shapes the presidential race.
The plans, known as Medicare Advantage, are the private-sector, taxpayer-financed alternative to traditional Medicare. Selling them has become a crucial profit center for the insurance industry: Baby Boomers are aging into the program, propelling its growth, while at the same time health insurance products sold to people under 65 are facing pressure from all sides.
The private plans also sit squarely in the middle of the race for the presidency: Some candidates for the Democratic nomination, including Senators Bernie Sanders and Elizabeth Warren, have backed a proposal to do away with private health insurance across all markets. Last week, President Donald Trump signed an executive order aimed at bolstering Medicare Advantage, and said Democrats would upend the program.
In 2019, about 22 million people, or roughly a third of all Medicare enrollees, got their Medicare coverage through the private plans. For each person who signs up, the insurers collect a fee from the government. It was $11,545 on average this year, which adds up to about $254 billion. The Medicare Advantage enrollment period opens Oct. 15.
Insurers see it as a lucrative market they can’t afford to pass by. Medicare products are the biggest business at the biggest health insurance company, UnitedHealth Group Inc.’s insurance unit. Centene Corp. agreed to pay $15 billion this year for WellCare Health Plans Inc. in part to get access to the company’s large Medicare business. Startups like Clover Health, which has raised more than $900 million from investors including GV, Alphabet Inc.’s venture capital arm, are targeting Medicare customers with new technologies intended to deliver care more efficiently.
UnitedHealthcare will sell Medicare coverage in 100 new counties in 2020, reaching 90% of the eligible market. Humana Inc., which specializes in Medicare Advantage, will expand to 29 new counties. Humana Chief Executive Officer Bruce Broussard told investors in July that membership was growing at the fastest pace in a decade, and the company expects to add half a million members this year. Cigna Corp., which has a comparatively smaller Medicare business, is expanding to 37 new counties next year and projecting 10% to 15% average annual membership growth through 2025. CVS Health Corp.'s Aetna unit is expanding to 264 new counties in 2020.
Medicare is especially critical to insurers as their traditional business selling health plans to employers and individuals slows. A smaller percentage of the U.S. workforce is enrolled in employer coverage than two decades ago, according to data from the Kaiser Family Foundation, a nonprofit health research group, as the cost of those benefits rises faster than workers’ earnings.
“We all know that 11,000 Americans turn age 65 every day and then the percent of those that choose” Medicare Advantage is accelerating, Anthem Inc. Chief Financial Officer John Gallina said at a conference in June. He called it “a huge opportunity that we’ve missed in the past, that we now need to capitalize on.”
Anthem’s Medicare Advantage membership grew by 25% in the 12 months ending June 2019, far faster than any other category. Anthem is expanding to 77 new counties in 2020.
Seniors in traditional Medicare can go to any doctor or hospital that participates, as most do. Those who choose Medicare Advantage plans trade that freedom of choice for an insurance company’s more limited network. In exchange, they get extra benefits. Medicare Advantage policies often wrap in prescription-drug plans, vision and dental care. Many offer free gym memberships or fitness programs. They also cap members’ total out-of-pocket costs. In traditional Medicare, seniors have to buy policies known as Medicare supplement or Medigap plans to limit their out-of-pocket expenses.
Starting in 2019, a federal rule change permitted Medicare Advantage plans to offer other perks like transportation and meal delivery. The goal is to address so-called social determinants of health, the many non-medical aspects of people’s lives that affect their well-being. Plans will offer a greater variety of those benefits in 2020.
Some Cigna plans in Texas will pay for air conditioners for the first time next year. Anthem will offer pest-control services, because vermin can affect chronic health conditions such as asthma. Carriers are also testing benefits like adult day care; home safety improvements, like grab bars, to prevent falls; and in-home help for people who need assistance bathing or dressing.
“We actually find a lot of beneficiaries are living in environments that really need support and help,” said Martin Esquivel, vice president of Medicare product management at Anthem.
Medicare doesn’t provide those things in its traditional fee-for-service program, partly because of the risk of inappropriate payments or fraud. In Medicare Advantage, the government’s payment to plans is limited, so that risk is managed by the plans.
The growth of Medicare Advantage shows demand for private managed-care plans exists even when seniors have a purely public option. “No one’s forcing them to do this,” said Dan Mendelson, founder of consultant Avalere Health and a partner at private equity firm Welsh Carson Anderson & Stowe. Seniors are increasingly comfortable giving up some choice of doctors in exchange for Medicare Advantage’s perks, he said. “It’s the choice that makes it really remarkable, that seniors are choosing this.”
While two-thirds of Medicare enrollees choose to stick with the original program, that share is declining. Mendelson said Medicare Advantage enrollment has grown by 8% annually in recent years. At that pace, more than half of Medicare members will be in private plans by 2025, he estimates.
Many people can get Medicare Advantage for no additional premium beyond what they pay for traditional Medicare. The average monthly premium for Medicare Advantage is $23 in 2020, down from $26.87 the prior year, according to the Centers for Medicare and Medicaid Services. It’s at the lowest level since 2007.
Plans have historically been paid generously. A decade ago, Medicare paid private plans 14% more than it would have spent for the same beneficiaries in the traditional program, according to the Medicare Payment Advisory Commission, known as MedPAC, which counsels Congress on Medicare policy. That helped finance additional benefits that enrollees found attractive, but it raised the program’s costs and put little pressure on plans to deliver more efficient care. The 2010 Affordable Care Act lowered those payments. They’re now about 1% above traditional Medicare payments, according to MedPAC.
People who choose to enroll in Medicare Advantage plans also typically have lower health spending before they enroll, compared with similar people in traditional Medicare, according to an analysis by the Kaiser Family Foundation. That means the way payments are set “may systematically overestimate expected costs of Medicare Advantage enrollees,” the Kaiser researchers wrote. Plans have been also faulted by government watchdogs for improperly denying care.
Medicare Advantage plans pay about 86% of their premium revenue out in medical claims, a similar proportion to other health insurance products, according to a separate Kaiser Family Foundation report. But the opportunity to profit is higher. Partly because Medicare beneficiaries use more medical care than younger people, there’s more money at stake for each member. Gross margins in Medicare Advantage – the difference between premiums collected and claims paid, before counting administrative costs – are about $1,600 per enrollee, roughly double the value in commercial plans, according to Kaiser’s analysis.
“This appears to be a fairly profitable market,” said Tricia Neuman, director of the Kaiser Family Foundation’s program on Medicare policy. The group sees more carriers enter the market than exit each year. “If it weren’t profitable, they wouldn’t be doing it,” Neuman said.
“We had no idea how hard it would be, how long it would take, the infrastructure we’d have to develop,” said Vivek Garipalli, chief executive officer of Clover Health. The company has about 42,000 members, mostly in New Jersey.
Other new technology-focused insurers are trying to break into the market. Oscar Health announced its first Medicare plans this year. Startup Devoted Health, which is led by former Obama administration officials, raised $360 million to launch its Medicare Advantage plans in 2019.
Those companies are betting that technology can deliver better care more efficiently, by using data to help physicians manage patients with chronic conditions, for example. Medicare Advantage is an ideal proving ground to test that idea, because plans make money if they can deliver savings without compromising quality.
“Health care has effectively had zero productivity gains over the last 20 years,” said Bob Kocher, a partner at venture firm Venrock. The firm backed Devoted Health and Kocher served as the company’s chief medical officer for a year. “There should be a lot of pent-up opportunity here to apply technology to make health care much more productive, and that would also make health care more affordable.”
--With assistance from Hannah Recht.
This article was provided by Bloomberg News.
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The Ultimate Guide to Social Media Marketing
In the U.S. alone, 77% of the population has a social media account of some kind. Whether it’s to chat with friends, stay connected to people across the globe, or for business and networking purposes, consumers are on social media for a multitude of reasons.
Due to the sheer number of active users on these platforms, marketers are quickly learning about the importance of targeting their customers through social media. In fact, investments in social media advertising across the world are projected to grow to about 48 billion U.S. dollars by 2021.
With so many people checking their smartphone notifications and social media feeds while traveling, commuting, and even relaxing, what better way to market than on social media?
Social Media Marketing is Effective
Social media advertising reaches audiences in a low-cost, impactful, and effective way. This is exactly why social media campaigns have become a crucial marketing technique for businesses everywhere.
With billions of people on social platforms — and continued growth in monthly users and influence — it’s hard to imagine how businesses could remain relevant without creating a social media presence.
Using social media will allow you to reach your target audience, engage with current and potential customers, create brand loyalty, increase website traffic, and drive sales. Marketing on social isn't just a trend, it’s a powerful industry technique that is here to stay and will help you reach more people all over the world.
CMS Projects Record-High Medicare Advantage Enrollment in 2020