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.
Medicare Blog | Medicare News | Medicare Information
With MA open enrollment set to begin Oct. 15, Cigna announced it will launch its first MA PPO plans in 43 counties across eight states. It will also offer its existing HMO plans in 37 additional counties in nine states.
The insurer said it will make both plans available in the Denver area, its first foray into the state with MA.
In total, Cigna’s 2020 MA geographic footprint will include 80 counties across 17 states. Brian Evanko, president of Cigna’s government business, told FierceHealthcare growth in MA is a key element of the insurers’ long-term plans for growth.
“It’s a big step in that direction,” Evanko said.
Evanko said that Cigna’s broad geographic reach in other business sectors offers plenty of room for its MA footprint to grow. There are plan offerings in each market with a $0 premium, and 89% of 2020 plans offer a $0 copay on primary care visits, Cigna said.
Alongside the expanded plan offerings, Cigna announced that it will be testing new supplemental benefits targeting the social determinants of health for 2020. The Centers for Medicare & Medicaid Services finalized a rule earlier this year that allows MA plans to offer coverage for benefits targeting chronic care management, such as air quality tools for members with asthma.
Evanko said Cigna has in the past offered coverage for transportation and meals across business lines, finding success with, for example, a program that offered 14 days of meals after hospital discharge.
For 2020, Cigna will pilot an air conditioner allowance in some of its Texas plans, a fall prevention program for some Mississippi and Kansas beneficiaries, adult day care in New Jersey and will offer a patient attendant for medical visits in some Pennsylvania and Maryland plans.
In addition, Cigna intends to offer an acupuncture allowance in all its HMO plans and its PPO plans in Colorado and will test an expanded transportation benefit with some beneficiaries in Pennsylvania and Arizona that would include rides to the grocery store, church services and other nonmedical trips in addition to doctor visits and other rides for healthcare needs.
Evanko said the insurer selects supplemental benefit options based on member feedback and uses tests in certain markets as a barometer for benefits that may be beneficial to a broader group of members.
Some pilots build on existing offerings—such as the new transportation benefit, which also plays into ongoing work at Cigna to combat patient loneliness.
“We do this on a market by market basis to get the learning before we extrapolate it,” he said.
By Taylor McDonald – CSG Actuarial – May 7, 2019
CSG Actuarial, with information from the NAIC and other sources, reports total earned premiums in the Medicare Supplement market in 2018 totaled $32.4 billion, a 4.9% increase over 2017. The total Med Supp lives covered in 2018 increased to 14.05 million, up 3.9% from 2017. The top 12 carriers in terms of 2018 Medicare Supplement premiums were:
The 2018 overall Med Supp market loss ratio of 79.0% reflects a continued trend in the market of the overall loss ratios creeping back up towards “Pre-Modernized” levels of around 80%.
Walgreens Partnership Boosts Humana's Medicare Enrollment
By Bruce Jepsen – Forbes – February 7, 2019
Humana says its joint venture with Walgreens Boots Alliance is helping boost enrollment in Medicare Advantage, the fast-growing privately administered health coverage for U.S. seniors.
Humana reported a 9% increase in Medicare Advantage membership the health insurer attributed to physicians at more than 230 clinics including two sites inside Walgreens stores. It’s the latest sign showing the early stages of a joint venture between Humana and the nation’s largest drugstore chain is working and could be expanded beyond a pilot in the Kansas City market.
"Our 233 owned, joint ventured and alliance clinics, the majority of which are payer agnostic, including our two 'Partners in Primary Care' clinics inside Walgreens stores experienced positive results in the annual election period," Humana CEO Bruce Broussard told analysts Wednesday during the company's fourth quarter earnings call. "Humana MA membership grew over 9% in these clinics in the (annual election period) excluding the more mature Conviva clinics."
Humana, which has invested hundreds of millions of dollars acquiring and partnering with medical care providers in recent years, said its relationships helped it take Medicare Advantage market share away from rival insurers. Humana said it expects 2019 individual Medicare Advantage membership growth of “375,000 to 400,000 members, representing 12% to 13% growth,” the insurer reported Wednesday as part of its fourth-quarter 2018 earnings release.
Walgreens and Humana last year opened “senior-focused primary care clinics” inside drugstores as a way to complement Walgreens pharmacy services and Humana’s Partners in Primary Care centers that opened last year in Kansas City. The effort is designed in part to keep people out of the more expensive hospital setting and make sure Medicare patients have their care more closely monitored by Walgreens pharmacists and physicians in Humana’s health plan networks.
The two companies think they can do a better job of reaching patients who visit Walgreens retail locations and making sure they get better care upfront before they get sick. When the partnership was announced, Walgreens and Humana called it “a senior-focused neighborhood approach to health that brings together primary care, pharmacy, in-person health plan support and other services for Medicare beneficiaries.”
The Medicare Advantage growth is key for Humana, which is in a competitive battle with rival insurers like Aetna, UnitedHealth Group and Cigna, looking to tap into a market of more than 10,000 baby boomers aging into the Medicare population every day.
Medicare Advantage plans contract with the federal government to provide extra benefits and services to seniors, such as disease management and nurse help hotlines, with some even providing vision and dental care and wellness programs. CMS is changing regulations to allow Medicare Advantage plans to provide broader coverage in the future, which is also expected to boost enrollment. L.E.K. Consulting has projected Medicare Advantage enrollment will rise to 38 million, or 50% market penetration by the end of 2025.
Humana ended 2018 with 3.06 million individual Medicare Advantage members, which was up 7% from 2.86 million as of Dec. 31, 2017.
Cigna Plans Broader Medicare Advantage Offerings
By Bruce Jepson – Forbes – January 10, 2019
Fresh from the completion of the Express Scripts acquisition, Cigna CEO David Cordani plans to broaden the insurer’s offerings to more seniors choosing Medicare Advantage plans as part of a major business expansion in coming years.
Cigna’s disclosure this week at the JPMorgan Healthcare Conference comes as the insurer and its rivals including Aetna, Anthem, Humana and UnitedHealth Group are expanding into new geographic regions to sell more Medicare Advantage products. All of these insurers are taking advantage of a market of more than 10,000 baby boomers aging into the Medicare population every day.
“We are well positioned today and going forward for existing and new markets,” Cordani said of future MA offerings. “Today, Cigna focuses on the individual, not the group M.A. marketplace. The group M.A. marketplace presents a future growth opportunity for us.”
Cigna has more than 435,000 Medicare Advantage enrollees, which is far fewer than UnitedHealth, Aetna and Humana. But Cigna and an increasing number of other insurers see a bigger opportunity as the Centers for Medicare & Medicaid Services changes rules allowing health plans to provide richer benefit packages to attract more seniors to Medicare Advantage plans.
Cigna is also looking to offer new less restrictive health plans that allow seniors more choices outside of health plan networks by introducing preferred provider organization (PPO) plans for Medicare Advantage enrollees. Unlike PPOs, HMOs restrict doctor choices to their networks. Cordani didn’t disclose a timetable for the PPO offerings.
“Today, Cigna participates largely in the individual HMO portion of the marketplace, not the individual PPO part of the marketplace,” Cordani said. “That presents additional growth opportunity for us as we go forward, but that growth is built off of the success of the individual HMO market.”
Medicare Advantage plans contract with the federal government to provide extra benefits and services to seniors, such as disease management and nurse help hotlines with some even providing vision and dental care and wellness programs.
There are now more than 22 million Americans enrolled in privately-administered Medicare Advantage plans for 2019 with the number expected to continue to rise. Medicare Advantage enrollment will rise to 38 million, or 50% market penetration by the end of 2025, according to a report from L.E.K. Consulting.
Cigna also sees an opportunity as Medicare moves to value-based payment models and away from traditional fee-for-service reimbursement that has been shown to lead to unnecessary tests and procedures due to its emphasis on volume of care delivered.
Cordani said 85% of Cigna's Medicare Advantage “customers are in aligned value-based relationships.” “Those are very important in terms of how our model works: hand in glove with high-performing physician organizations and integrated hospital systems for the benefit of our M.A. customers,” Cordani said.
Cigna closes $67B Express Scripts acquisition, promising affordability and choice
Express Scripts is now part of Cigna after the $67 billion acquisition closed on Thursday. (Express Scripts)
By Evan Sweeney – FierceHealthCare – December 20, 2018
Cigna officially absorbed one of the largest pharmacy benefit managers in the country on Thursday, closing its $67 billion purchase of Express Scripts.
The acquisition gives Cigna significant leverage in a market in which insurers are increasingly partnering, acquiring or being bought by PBMs. With Express Scripts under its wing, Cigna joins CVS, UnitedHealth and Humana and Anthem as the primary vertically integrated powerhouses in the insurance industry.
Combined, Cigna and Express Scripts brought in more than $141 billion in revenues in 2017. In a statement, Cigna said the merger will "dramatically accelerate the number and breadth of value-based relationships."
“Today’s closing represents a major milestone in Cigna’s drive to transform our healthcare system for our customers, clients, partners and communities," Cigna President and CEO David M. Cordani said in a statement.
Best Insurance Companies for
Medicare eligible beneficiaries can enroll in a Medicare Advantage plan from a private insurance company instead of choosing Original Medicare Parts A and B. U.S. News provides a tool for Medicare-eligible beneficiaries to find the best Medicare plans for their needs. All plan information and star ratings come directly from the Center for Medicare and Medicaid Services (CMS) at Medicare.gov.
U.S. News analyzed insurance companies’ offerings in each state based on their CMS star ratings, and below provides a list of the Best Insurance Companies for Medicare Advantage. A Best Insurance Company for Medicare Advantage is defined as a company whose plans were all rated as at least three stars by CMS and whose plans have an average rating of 4.5 or more stars within the state. Read more about our methodology.
Click the links below to view the individual plans and their CMS star ratings. We also highlight Best Insurance Companies for Part D Prescription Drug Plans.
Other insurance companies have 5-star rated plans. Anyone researching Medicare Advantage plans should compare individual plans offered in their service area.
Every Year, Medicare evaluates plans based on a 5- star rating system. This is not a complete listing of plans available in your service area. For a complete listing please contact 1-800- MEDICARE (TTY users should call 1-877- 486-2048), 24 hours a day/7 days a week or consult www.medicare.gov.
Medicare Market Insights and
Medicare Advantage (MA) plans have been eagerly preparing their Medicare products in anticipation of the 2019 Annual Election Period (AEP) which is now upon us. The 2019 Medicare Advantage market is comprised of national health plans, Blue Cross Blue Shield organizations, prominent regional health plans and specialized Medicare companies. MA plans currently provide medical coverage for over 21.5 million beneficiaries. In the last three years, these plans have collectively increased enrollment by approximately 3.7 million members and currently cover over 34% of the nearly 63 million people eligible for Medicare benefits.
As Medicare companies finalize sales and marketing strategies, they analyze data from Medicare Plan Finder (MPF), an online tool that makes it easy for seniors to review options and shop for new Medicare plans. Medicare Benefits Analyzer™ , a Mark Farrah Associates’ database, helps simplify the analysis of the Medicare Plan Finder data for companies competing in this segment. This brief presents a snapshot of the 2019 Medicare Advantage market with insights from the Centers for Medicare and Medicaid Services (CMS) Medicare Landscape reports and discusses the plans that will be vying for business during the AEP.
The Competitive Medicare Landscape
MA plans, along with stand-alone PDPs (prescription drug plans), are immersed in competitive assessments as beneficiaries begin to choose plans during this Annual Election Period, which runs between October 15th and December 7th. Based on an aggregate analysis of CMS Landscape reports, a total of 3,810 distinct Medicare Advantage (MA) plan offerings are in the market lineup for the onset of the 2019 AEP. This includes MA plans, Medicare Advantage with prescription drug plans (MAPDs), Medicare/Medicaid plans (MMPs), and Special Needs Plans (SNPs). During the AEP, Medicare beneficiaries can choose to change MA plans or switch from Original Medicare to MA, and plan benefits will become effective on January 1, 2019.
MFA’s analysis of CMS landscape data found a total of 3,077 MA plans being offered for 2019, including MMPs, up from 2,619 in 2018. In addition, a total of 733 Special Needs Plans (SNPs) are available in 2019, up from 640 in 2018. Health Maintenance Organizations (HMOs) represent 68% of all MA plan types with over 2,600 offerings for the coming year. Stand-alone PDPs nationwide increased for 2019 with 910 plan offerings, as compared to 795 plans in 2018.
According to the CMS press release, Medicare Advantage premiums continue to decline while plan choices and benefits increase in 2019 ; Medicare Advantage average monthly premiums will decrease 6% from 2018, falling to $28. Enrollment is projected to experience 11.5% growth over 2018. In addition, over 91% of people with Medicare will have access to 10 or more Medicare Advantage plans, which is up from 86% for 2018.
Plan Competition for 2019
Based on the 2019 CMS Landscape reports, Humana continues to market more MA plans than any other company nationwide, with 548 distinct plans identified in MFA’s assessment. UnitedHealth continued to increase its MA plan offerings for the 2019 calendar year with 406 distinct plans identified, up 62 plans from last year. Aetna (including Coventry and other affiliates) is offering 355 plans for 2019. Anthem and the vast majority of other Blue Cross Blue Shield plans as well as WellCare and Centene also continue to have a notable plan offerings presence, respectively.
Read the full article here
Medicare Advantage / AEP Updates:
The 2019 Medicare Star Ratings Program: Making the Cut
The Centers for Medicare & Medicaid Services (CMS) last week published its 2019 Part C and Part D Medicare Star Ratings data and, along with it, the Technical Notes describing the methodology for the Star Ratings. Here, Ashley McNairy, product director for Cotiviti’s Government Quality solutions, breaks down the changes to the cut points, which can have a significant impact on a health plan’s score.
Cut points are the ranges within which a measure’s score needs to fall in order to be assigned a certain star value. As an example, here is the cut point range for Breast Cancer Screening (C01), which measures the percentage of female plan members aged 52 to 74 who had a mammogram during the past two years:
Every year, CMS adjusts these ranges slightly based on how the measures are trending. As the industry’s performance improves in a specific metric, in other words, you can expect the ranges to increase, so it becomes harder for a plan to hit the five-star mark.
Many health plans and analysts try to predict how these cut points may change year over year, as even a 1 percent change in a measure’s cut point range could drop the plan’s rating from five stars to four stars for that measure—or potentially even drop the plan’s overall rating.
Out of the 46 Part C and Part D measures that have carried over from 2018 to 2019, almost half have higher ranges in at least one of the thresholds. Some measures only moved one or two points in a couple thresholds; however, in general the two- and three-star ranges are higher, whereas the four- and five-star ranges were closer to last year’s cut points. This simply means it is harder to get even a two-star rating in several measures.
The most notable shift to higher cut points was the Medication Reconciliation Post-Discharge measure (C20), as each cut point threshold jumped at least 10 percent. As a measure that was only first introduced in 2018, this dramatic change could indicate that the cut points were simply too low in the first year, or that plans are exceeding expectations. These ranges will likely continue to grow, with plans’ measure scores averaging 56 percent for 2019 compared to 50 percent for 2018.
The other notable shift in cut points occurred in the three Care for Older Adult measures (C09-C11). These measures are required for Special Needs Plans (SNPs), which make up about 40 percent of all contracts. Both Medication Review and Functional Status Assessment had lower thresholds in the two- and three-star ranges, but stayed relatively the same in the four- and five-star ranges. For example, a plan only needs to achieve a 1 percent score to earn two stars for Medication Review, whereas last year plans needed to hit 59 percent. This seems like an odd starting point for a threshold in a measure where the average score improved from 90 percent to 92 percent this year. Alternatively, the Pain Assessment measure, which also saw average scores improved, shifted to higher cut points across each threshold.
Only one measure’s cut points stayed exactly the same: the Part C Customer Service measure, which is part of the Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey. Cut points for this measure stayed the same even as the other CAHPS measures all experienced slight changes. This could be due to overall health plan performance averaging the same for this measure for both 2018 and 2019.
With the quality of care in Medicare Advantage plans increasing each year and becoming more competitive for both market share and rebates, plans are understandably looking for more predictability in their Star Ratings. Out of the Cotiviti clients that had enough data for either an overall Summary Rating or a Part D score, 13 percent increased their rating, with several being either a four-and-a-half- or five-star plan. The majority of plans that worked with Cotiviti received the same rating as in 2018, which is a success to celebrate considering the many hurdles that plans have to overcome each year as the thresholds change.
Star Navigator is a quality improvement solution that enables Medicare Advantage plans to determine the most direct path to higher Star Ratings, then track and communicate their progress toward goals. Learn more from our fact sheet.