Insurtechs help drive MA membership growth

Photo: Cecilie Arcurs/Getty Images

As a concept, Medicare Advantage isn't new. Originally known as Medicare Plus Choice, it was passed with bipartisan support under the Clinton Administration with an eye toward giving seniors another option for receiving Medicare benefits. Flash forward to 2022, and the program has evolved into a full-blown force: Payers love it, patients report high satisfaction and enrollment is only expected to grow as it becomes ever more popular.

The Centers for Medicare and Medicaid Services said that this year, MA is projected to reach 29.5 million people compared to 26.9 million enrolled in a Medicare Advantage plan in 2021. 

In January, there was talk of a potential plateau when it came to MA's growth, spurred in part by major insurer Humana announcing that it was drastically reducing its Medicare Advantage enrollment estimates for 2022 due to a large number of terminations during the last enrollment period. 

In a filing with the Securities and Exchange Commission, the former projection of 325,000 to 375,000 new MA members was slashed to 150,000 to 200,000 new members. Humana also said it expected group MA membership to be generally flat throughout this year, as it didn't anticipate any large accounts will be gained or lost.

The news caused Humana shares to plunge and dragged down rivals' stocks as well. Humana shares fell 21% in January while UnitedHealth Group shares dipped about 5.4%, according to Bloomberg, Clover Health and Oak Street Health, which are newer to the Medicare game, saw shares dip 8.4% and 7.6%, respectively, upon the news.

At a Goldman Sachs conference in January, Humana CEO Bruce Broussard said aggressive pricing from marketplace rivals, which is likely unsustainable, played a role in the new projections, which will cause the company to focus more on business-wide profitability rather than margins in the individual Medicare business.

Cigna also predicted lower MA growth in 2022, CEO David Cordani said during the annual J.P. Morgan Healthcare Conference.
It's the insurtechs such as Clover Health that have grown membership. Clover Health is a Tennessee-based healthcare company offering Medicare Advantage plans and operating as a direct contracting entity with the U.S. government.

Clover has seen its slice of the MA pie get bigger, beating 2022 enrollment expectations by increasing 25% over the previous year. This outpaces the overall industry growth average of about 10% year-over-year. Clover began the year already above its 2022 average MA membership guidance of 82,000 lives.

Still, for Clover, the majority of its revenues don't come from being an insurance company. It makes a nontrivial amount of money on Medicare Advantage plans, but at this point still sees larger revenues from original Medicare, according to President and Chief Technology Officer Andrew Toy. 

Toy sees Medicare Advantage as an important avenue for innovation, and a way to improve care while lowering costs. 

"Most people would say healthcare is unsustainable," he said. "We need to reduce doctor burnout, and get better care at a lower cost, and any changes to the program that facilitate that are a good thing. We haven't found the perfect solution for healthcare yet."

Clover experienced membership growth in a number of service area counties across Georgia, New Jersey, Pennsylvania and South Carolina. The company's MA plans are available to eligible people in 209 counties across nine states.

This includes almost tripling membership in Georgia, where Clover's MA plans are available in 146 of the state's 159 counties. Last year, Clover increased the breadth and depth of its provider network throughout Georgia with the addition of dozens of hospitals, health systems and provider partners across the region, aligning about 5,000 new primary care physicians and specialists with its Medicare Advantage PPO network.

In explaining the reasons behind the MA plan growth, Toy credited benefit-rich health plans with low out-of-pocket costs, and a philosophy of encouraging beneficiaries to engage with the healthcare system, and their PCP in particular.

"We believe our dramatic growth in Georgia demonstrates how the model we honed in New Jersey is replicable in more states and look forward to further establishing Clover's MA presence in key markets this year," he said.

Mary Beth Donahue, president and CEO of Better Medicare Alliance, thinks fears of a MA plateau are overblown.

"I actually don't think there is a plateau," she said. "When we look at the enrollment, where last year it was 27 million, now we're over 28 million, and will be close to 30 million by the end of this year. I just don't think there's an issue with expansion. There is competition, and we want competition, because that ultimately serves seniors. Beneficiaries benefit from that.

WHY PAYERS LIKE MA

Insurers are expanding their Medicare Advantage offerings at a decent clip, with Humana announcing last fall it would debut a new Medicare Advantage preferred provider organization (PPO) plan in 37 rural counties in North Carolina in response to market demand in the eastern part of the state.

Around the same time, UnitedHealthcare, which already has significant market control with its MA plans, said it will strengthen its foothold in the space by expanding its MA plans in 2022, adding a potential 3.1 million members and reaching 94% of Medicare-eligible consumers in the U.S.

For the third straight year, health insurer Cigna is expanding its Medicare Advantage plans, growing into 108 new counties and three new states – Connecticut, Oregon and Washington – which will increase its geographic presence by nearly 30%.

Centene is also getting in on the act, expanding MA into 327 new counties and three new states: Massachusetts, Nebraska and Oklahoma. This represents a 26% expansion of Centene's MA footprint, with the offering available to a potential 48 million beneficiaries across 36 states.

According to Donahue, payers are attracted to the market because of the high level of satisfaction among beneficiaries; the major players smell an opportunity to expand their presence, and of course, their revenue.

"They're seeing that this is a program seniors are choosing to be in," said Donahue. "There's a very high satisfaction rate among seniors in Medicare Advantage. These plans want to be able to enroll people who want to be in the program. And seniors are saving money."

HOW MA IS EVOLVING

As with any long-standing program, MA has changed over the years, and further changes are afoot. In February, CMS released proposed payment policy changes for Medicare Advantage and Part D drug programs in 2023 that are meant to create more choices and provide affordable options for consumers.

The agency's end goal for Medicare Advantage is to match CMS' vision for its programs as a whole, which Administrator Chiquita Brooks-LaSure said is "to advance health equity; drive comprehensive, person-centered care; and promote affordability and the sustainability of the Medicare program."

CMS proposed an effective growth rate of 4.75% and an overall expected average change in revenue of 7.98%, following a 4.08% revenue increase planned for 2022.

"It's a new way to focus on health equity, which means making healthcare affordable and accessible by everyone," said Toy. "That is something this administration is already focused on, and I hope it will be continued by future administrations."

"I think it's really important to determine how we can continue to meet the needs of MA beneficiaries in the home, and tap into those providers and MA plans who are providing that care," said Donahue. "And also, when I talk about serving diverse populations, let's get those numbers up."

That might change some of the demographic numbers. Last fall, the Commonwealth Fund found that, after excluding beneficiaries in Special Needs Plans, beneficiaries enrolled in traditional Medicare do not differ significantly from MA enrollees on age, income, or receipt of a Part D low-income subsidy, which helps low-income individuals pay for prescription drugs. But beneficiaries in traditional Medicare are significantly more likely than MA enrollees to reside in a metropolitan area and more likely to live in a long-term-care or residential facility.

There are some areas in which Medicare Advantage plans appear to perform better than traditional Medicare. In particular, MA enrollees are more likely than those in traditional Medicare to have a treatment plan, to have someone who reviews their prescriptions, to have someone they can contact for help, and to receive a response to a health query relatively quickly. 

By providing this additional help, Medicare Advantage plans are making it easier for enrollees to get the help they need to manage their healthcare conditions, the report found. Medicare experts have suggested providing a similar service to beneficiaries in traditional Medicare through care coordinators.

The results also raise questions about whether Medicare Advantage plans are receiving appropriate payments. MedPAC estimates that plans are paid 4% more than it would cost to cover similar people in traditional Medicare. 

On the one hand, Medicare Advantage plans seem to be providing services that help their enrollees manage their care, and this added care management could be of significant value to both plan enrollees and the Medicare program. On the other hand, rates of hospitalizations and emergency room visits are similar for beneficiaries in Medicare Advantage plans and traditional Medicare. This calls into question the impact of the added services on healthcare use, spending and outcomes.

But since MA is undergoing a consistent and steady evolution, the picture could look different a year from now. And it may look different still a year after that. For payers and the federal government, Medicare Advantage is an ongoing experiment that can morph and shift with time.

"Medicare Advantage is very popular, and when something is popular, that means there's a market need that needs to be met," said Toy. "The market need is great healthcare with affordability. That has come at the cost of doctor choice, so when you pick MA plans thus far, you're always getting an HMO. You've traded choice for affordability.

"I think our vision is, 'Why should people make that choice?' Even for health equity, people should be able to see doctors in their own communities. Our vision is, keep the affordability, add choice to Medicare Advantage, and that's a really strong, interesting product."

THE LARGER TREND

The rise of MA can be linked back to consumer choice, Toy said.

Does the consumer want to see a large network of doctors? Then they may be best served by original Medicare, or an MA PPO product, such as the ones offered by Clover, he said. Does the consumer want to pay a monthly premium for peace of mind? Then a Medicare supplemental offering may be the way to go. And if the consumer wants the piece of mind without the premium or the cost sharing? That's where MA steps in.

"People like choice, and they like to pick these options," said Toy. "They pick MA because they're saying, 'I'd like lower out-of-pocket costs and more supplemental benefits than in original Medicare, or Medicare fee-for-service.' You get all of MA, all of Medicare all in one place, but typically you trade that for a narrower network."

For many seniors, MA is the preferred health insurance because of its low upfront monthly costs and added benefits. Medicare Advantage plans will continue to offer a wide range of supplemental benefits in 2022, including eyewear, hearing aids, both preventive and comprehensive dental benefits, access to meals (for a limited duration), over-the-counter items, fitness benefits and worldwide emergency/urgent coverage. 

In addition, the percentage of plans offering special supplemental benefits for chronically ill individuals will increase from 19% to 25%.

Those factors, among others, help to explain why MA represents an ever-increasing share of Medicare beneficiaries. Donahue attributes MA's explosive growth to its focus on cost savings and its benefits. More than 90% of MA plans, she said, provide access to fitness, vision, telehealth and dental benefits, and two-thirds of those plans also provide meal plans and transportation benefits. 

MA enrollees save about $1,640 per year over traditional Medicare, said Donahue. That helps to explain the numbers: In 2003, there were about 5 million MA enrollees. That number is now closer to 28 million, and if the trend lines continue in their current trajectories, MA will represent more than 50% of the total Medicare population.

"I don't know if anyone could have predicted the growth that we're seeing right now, and the population that we're serving," said Donahue. "Just look at the cost savings and the benefits.

"It's a program where it doesn't matter the color of your skin, your ethnicity," said Donahue. "You have a choice to be in this program, and we're seeing the increase in enrollment among diverse populations. That's a hallmark of MA. That said, there's so much more that we need to do. MA serves a majority of the diverse populations compared to fee-for-service, but there's always more seniors we need to reach. And we need to make sure we reach as many as we can."

POTENTIAL DRAWBACKS

Those narrower doctor networks are generally seen as one of very few drawbacks to the Medicare Advantage program. For the most part, consumers are satisfied with MA, and payers and other healthcare organizations are excited to see how and in what directions it will continue to evolve.

But not everybody is singing its praises. A year ago, North Shore Insurance Brokers managing partner Ina Goldberg warned that while consumers may save money now, they'll likely pay more as they get older.

The reason people pay later is that as they age they get sicker. It seems common sense that a person will need more medical care as they age. But relatively healthy seniors buying an MA plan at age 65 can't see down the road to the health problems they may have at age 85.

When the more serious health problems start is when seniors on Medicare Advantage plans start paying more out-of-pocket, according to Goldberg. 

What they pay will often add up to more than all of those monthly supplemental payments they would have made for original Medicare, she said. This is especially true if a beneficiary needs specialized care and sees a physician who is out-of-network.

"Medicare Advantage is a conspiracy on seniors because you pay more out-of-pocket than you ever will with a Medicare supplement," she said at the time. "Things will happen that I can't control. But that's what the future holds."
 

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com