Tag Archives: Medicare Advantage Profits

Medicare Advantage will have more enrollment, lower premiums in 2018

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http://www.healthcaredive.com/news/medicare-advantage-will-have-more-enrollment-lower-premiums-in-2018/506293/

Dive Brief:

  •  The CMS says Medicare Advantage (MA) members will have more choices and lower premiums in 2018. Medicare open enrollment starts on Oct. 15.
  • The average MA monthly premium is expected to decrease by about 6% from $31.91 in 2017 to $30 in 2018. The CMS said 77% of MA enrollees who stay with their current plan will have the same or lower premiums in 2018.
  • MA’s enrollment is expected to increase by 9% to 20.4 million in 2018. The CMS expects that slightly more than one-third of Medicare enrollees will have an MA plan next year.

Dive Insight:

While the CMS has talked negatively about the Affordable Care Act (ACA), CMS Administrator Seema Verma is a big fan of MA. Verma (a candidate for HHS secretary in the wake of Tom Price’s departure) said MA and Medicare Part D “demonstrate what a strong and transparent health market can do — increase quality while lowering costs.”

Payers are enjoying positive financial numbers in the MA market. UnitedHealth Group said recently that it believes eventually half of all Medicare beneficiaries will have an MA plan. Payers are looking at the MA market for growth opportunities. In some cases, payers, such as Humana, are cutting back on ACA plans and investing more in MA.

Despite the CMS’ overall support of MA, the agency still sees one way to improve the program. The CMS wants MA payers to provide current and accurate information about their providers. The CMS found that 45% of MA provider directories had incorrect information, such as listing which providers are taking new patients, or providing the wrong phone numbers and addresses.

Currently, the CMS can only review MA plans’ provider networks when there is a triggering event. This can include when the insurance company starts in MA or extends its coverage, or the CMS receives a complaint about provider network issues. The CMS wants to have more oversight over provider network information, so that it can ensure the information is up to date.

While MA plans have been popular with the CMS, members and payers, there is a concern about a small number of payers monopolizing the market. The Kaiser Family Foundation said UnitedHealth controls nearly one-quarter of the MA market and is a major MA player in 42 states and the District of Columbia. KFF found UnitedHealth, Humana and Blue Cross Blue Shield affiliates make up 57% of MA enrollment and the top eight MA payers comprise three-quarters of the market.

Another issue for MA payers is that federal investigators are concerned about how much MA is paying insurers. The Department of Justice (DOJ) is investigating payments to insurance companies involved with MA.

Two of the bigger cases involve UnitedHealth. The payer is involved in two whistleblower lawsuits that allege MA overpaid the insurer by billions. The DOJ joined the lawsuits, which allege that UnitedHealth changed diagnosis codes to make patients seem sicker, which resulted in higher reimbursements to the insurer.

The CMS estimated that it overpaid $14.1 billion in 2013 to MA organizations. Medicare Advantage payers received about $160 billion in 2014. The CMS estimated about 9.5% of those payments were improper.

Health insurers working the system to pad their profits

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https://www.publicintegrity.org/2015/08/17/17863/health-insurers-working-system-pad-their-profits

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Commentary: taking advantage of Medicare Advantage

One of the reasons the health insurance industry worked behind the scenes in 2009 and 2010 to derail Obamacare was the fear that changes mandated by the law would cut their Medicare Advantage profits. Medicare Advantage plans are federally funded but privately run alternatives to traditional fee-for-service Medicare.

Although the industry’s biggest trade group, America’s Health Insurance Plans, said repeatedly that insurers supported Obamacare, the group was secretly financing the U.S. Chamber of Commerce’s TV campaign against reform. Among the companies most concerned about the law were those benefiting from overpayments the federal government had been making to their Medicare Advantage plans since George W. Bush was in the White House.

Bush and other Republicans saw the Medicare Advantage program as a way to incrementally privatize Medicare. To entice insurers to participate in the program, the federal government devised a payment scheme that resulted in taxpayers paying far more for people enrolled in the Medicare Advantage plans than those who remained in the traditional program. The extra cash enables insurers to offer benefits traditional Medicare doesn’t, like coverage for glasses and hearing aids, and to cap enrollees’ out-of-pocket expenses.

When the Affordable Care Act became law in 2010, the payments to Medicare Advantage plans exceeded traditional Medicare payments by 14 percent. To end what they considered an unfair advantage for private insurers, and to reduce overall spending on Medicare, Democrats who wrote the reform law included language to gradually eliminate the over-payments.  So far, the 14 percent disparity has been reduced to 2 percent.  The final reductions are scheduled to be made next year.

Despite that decrease, the fears by Republicans and insurance company executives that the reductions would lead to a steady decline in Medicare Advantage enrollees have proved to be completely unfounded. In fact, the plans have continued to grow at a fast clip.

In March 2010, the month Obamacare became law, 11.1 million people were enrolled in Medicare Advantage plans—one of every four people eligible for Medicare. That was an increase from the 10.5 million Medicare Advantage enrollees in March 2009. Since then, Medicare Advantage membership has grown by more than 8 percent annually. Now 17.3 million—one in three people eligible for Medicare—are enrolled in private plans.

As Center for Public Integrity senior reporter Fred Schulte has written over the past year, many insurers have discovered that even though the overpayments are being reduced, they can boost profits another way: by manipulating a provision of a 2003 law that allows them to get additional cash for enrollees deemed to be sicker than average.

A risk-coding program was put in place by the government primarily because insurers were targeting their marketing efforts to attract younger and healthier—and thus cheaper— beneficiaries. Under the risk-coding program, insurers are paid more to cover patients who are older and sicker; the idea was to encourage the firms to cover those folks by offering a financial incentive. They get more money, for example, to cover someone with a history of heart disease than they do for someone with no such risk.  Last week Schulte uncovered whistleblower accusations that a medical consulting firm and more than two dozen Medicare Advantage plans have been ripping taxpayers off by conducting in-home patient exams that allegedly overstated how much the plans should be paid.

The Center for Medicare and Medicaid Services has refused to provide information that would enable taxpayers to know just how widespread fraud and abuse in the Medicare Advantage program might be. But CMS announced earlier this year that it will implement plans designed to make it harder for insurers to manipulate the risk scores. As you can imagine, insurers have howled and have put on a full court press to get CMS to scuttle those plans, but so far the agency says it intends to go forward. We’ll see.

This all matters to insurers because more and more of their revenue and profits are coming from the Medicare and Medicaid programs. When Aetna announced a few weeks ago that it planned to buy Humana, which has more than three million Medicare Advantage members—second only to UnitedHealthcare—Aetna and Humana executives said 56 percent of revenues from the combined company would come from the government programs.

Indeed, some of the firms would not be growing at all if it weren’t for their government business. When Aetna announced second quarter earnings earlier this month, the company noted that its membership in Medicare and Medicaid programs was up 8 percent over the same period last year. By contrast, its commercial membership was down from last year.

Despite that dip in commercial membership, Aetna surprised Wall Street with stronger profits than financial analysts had expected.

So don’t expect the Medicare Advantage program to wither on the vine because of Obamacare. If anything, it will continue to grow—as will the profits of the private insurers that participate in the program.