The expansion of Medicare Advantage (MA) is just the newest layer in a complex myriad of health standards, regulations and metrics. However, unlike some healthcare developments in recent years, payers and others in the healthcare ecosystem appear to be pleased with this one.
In April, the Centers for Medicare and Medicaid Services (CMS) published a Final Rule and Call Letter that approved several new programs available to MA plan sponsors. CMS expanded the definition of “primarily health-related” supplemental benefits, which opens the opportunity for MA plans to offer additional services that “increase health and improve quality of life.”
With greater flexibility to offer a variety of plans in the same county and expand existing coverage to address social determinants of health, MA organizations will be better positioned to pursue value-based care and population health strategies. Not only does MA represent an opportunity to improve healthcare outcomes for a large population, it also represents a lucrative market for payers as the “Silver Tsunami” enroll in MA.
MA plans will receive a 3.4 percent increase in federal payments in 2019. That's nearly 90 percent more than the 1.84 percent increase proposed in February, according to a report in McKnight’s Long-Term Care News. (https://www.mcknights.com/news/medicare-advantage-pay-to-jump-as-enrollment-grows/article/764233/)
Representing a big slice of the healthcare pie, some 20 million Americans, or about one-third of all Medicare beneficiaries, have enrolled in the MA program. It’s catching on, too. CMS estimates Medicare Advantage to grow by nine percent to 20.4 million in 2018.
The Bipartisan Budget Act of 2018, enacted in February, includes several changes that will “improve” the MA program, AHIP said in a statement to the House Ways and Means Committee Subcommittee on Health. Most MA plans will offer additional coverage for enrollees with specific chronic conditions. These benefits can include additional vision, hearing, dental, and/or health and wellness programs not considered “primary health related” but serve to improve or maintain the overall health of the individual. It also permits MA plans to offer additional telehealth benefits as part of the basic benefits beginning in 2020.
Broadly speaking, MA is a type of Medicare health plan offered by a private company that contracts with Medicare. MA plans provide all Part A and Part B benefits. The plans also include:
- Health Maintenance Organizations (HMOs)
- Preferred Provider Organizations (PPOs)
- Private Fee-for-Service Plans
- Special Needs Plans
- Medicare Medical Savings Account Plans
Medicare Advantage is “based on the promise of choice for seniors,” said Rep. Sander Levin, D-Mich., and ranking Democratic member of the House Ways and Means Committee Subcommittee on Health said during a May 8 hearing on Capitol Hill. “Those who prefer care without restrictions on doctors and hospitals can enroll in the traditional Medicare program, while those who prefer a managed care alternative” can enroll in Medicare Advantage, the congressman said.
Payers are already seeing additional black ink on their earnings statements as Medicare Advantage grows as a service offering. For example, United Health Group (UHG) just reported that revenues in the retirement market, including Medicare and Medicare Advantage, grew by $2.4 billion in the first three months of 2018, contributing significantly to overall revenue increases. UHG served 330,000 more Medicare Advantage beneficiaries through individual and group retiree plans, an increase of 10.6 percent over 2017, the company said in an earnings press release.
Commercial payers with large Medicare Advantage populations capitalize on valuable cost-sharing benefits for members and could provide lessons for other payers, according to a recent article in Health Payer Intelligence (HPI).
HPI highlights two examples:
- Harvard Pilgrim provides Medicare Advantage plans with $0 co-pays for prescription drugs and imaging tests as well as reduced co-pays for provider visits.
- Humana offers multiple Medicare Advantage plans that are designed with $0 premiums, $0-$10 co-pays, and no annual deductible to encourage higher enrollment.
For many experts, the new Medicare Advantage flexibility couldn’t come at a better time. “From a growth, regulatory and profitability standpoint, MA shows promise for taking advantage of the silver tsunami (baby boomer’s aging into Medicare) on the horizon,” according to a white paper by technology firm Cerner.
With exciting enhanced service opportunities and lucrative revenue streams on tap, payers would be wise to take a deeper dive into new Medicare Advantage regulatory parameters to best inform an effective and flexible strategic action plan.