Another Flood of Good News for Medicare Advantage

September 22, 2014
|In Compliance, Part D, Performance Optimization, Policy & Health Reform, Sales & Marketing, Star Ratings, Strategy
|By GHG Advisors

Last week the Centers for Medicare and Medicaid Services (CMS) did its annual data dump for the 2015 Medicare Advantage (MA) and Prescription Drug Plan (PDP) bids.  Even with MA plans sailing into the worst rate environment in over 15 years, the data offered another flood of good news for the industry.

Several takeaways from our first review of the terabytes of CMS data:

  • 2015 will look a lot like 2014, with slightly fewer plan options. The average MA premium will rise $2.94/month, or $1.30/month on an enrollment-weighted basis, and 61% of MA enrollees will see no premium increase.  Having said that, zero-premium options are down 18% in 2015, following a 14% decline this year as previously-free plans institute modest monthly fees to offset payment rate cuts in the Affordable Care Act (ACA).  It speaks to how well the market is working as plans compete intensely for share.
  • The number of MA plan bids were down 4.3%, but most of the reduction was attributable to non-renewing Private Fee-for-Service plans, and good riddance — PFFS remains the worst policy fart in Medicare. PFFS products are down 31% next year following a 61% year-over-year decline in 2014.  Network-based plans like HMOs and PPOs were only down 0.9%, showing tremendous commitment to this line of business across the country as MA membership surges past one-third of all Medicare enrollment.
  • PDP bids were down around 7%, mostly attributable to consolidation among Pharmacy Benefit Management companies. Humana remains the cheapest PDP in 33 out of 34 regions.  Aetna will get auto-assignment of low-income beneficiaries in 10 new regions, while WellCare lost auto-assigns in 10 regions.
  • CMS implied MA membership in 2015 at 16.9 million, or growth of just 2.7%. That’s very conservative — we expect 5-8% growth in 2015, following 10% growth in 2014.  CMS suggested that MA enrollment is up 42% over 2010 levels — stunning growth that defies the funeral dirge played for the private Medicare option the year the ACA passed.
  • Most of the major publicly-traded MA sponsors are keeping or expanding their service areas in 2015.  Eminent analyst Josh Raskin of Barclay’s points out that publicly-traded companies’ enrollment growth in 2014 is up 9% year-to-date, while all others are at 8%.
  • Humana continues to account for 25% of all MA/Special Needs Plan offerings nationally.

“Since the Affordable Care Act was enacted, enrollment in Medicare Advantage plans is now at an all-time high, and premiums have fallen,” said CMS Administrator Marilyn Tavenner. “Seniors and people with disabilities are benefiting from a transparent and competitive marketplace for Medicare health and drug plans.”

The good news didn’t end there.  MA quality continues to improve as the Star Ratings performance-based payment system continues to punch WAY above its weight.  40% of MA contracts were awarded 4+ Stars for 2015, but 60% of enrollees are members of those plans, showing a 30% increase since 2012 and demonstrating the competitive advantage high-performing plans now enjoy. Beneficiaries are now choosing higher-quality plan options in far greater numbers, and ALL of the roughly 200 plans we work with have made Stars their top priority for focus and investment. Stars has proven to be a game-changer in MA and a model all other government-sponsored programs from Medicaid to ObamaCare’s marketplaces are beginning to follow.  NCQA’s 2015 health plan rankings show California-based Kaiser once again leading the pack among Medicare plans.

To me, the CMS data shows the triumph of government-sponsored, highly-regulated insurance markets.  Medicare Advantage is one of the few examples of government getting it mostly right in partnering with private-sector companies to accomplish a tremendous public good, and continues to be a beacon of hope as ObamaCare enters what promises to be an even tougher second season.

For more updates, follow me on twitter @JohnGorman18

 

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