From Medicare Advantage News

Partial Enrollment Data for AEP Show Small Gains, but Big Ones in High-Star Plans

Published biweekly, MEDICARE ADVANTAGE NEWS provides news and business strategies about Medicare Advantage plans, product design, marketing, enrollment, market expansions, CMS audits, and countless federal initiatives in MA and Medicaid managed care.

January 22, 2015Volume 21Issue 2

There are many qualifiers that limit what trends are clear in the partial enrollment data for the Medicare Advantage and stand-alone Prescription Drug Plan (PDP) 2015 Annual Election Period (AEP) CMS released Jan. 15. But there is one message that seems abundantly clear, industry analysts tell MAN. To a degree unmatched in prior AEPs, there has been a massive move from MA plans with lower CMS star quality ratings to those with higher ratings, a move the observers attribute not to beneficiaries’ star awareness but instead to the better benefits and reduced costs the higher-rated plans can afford because of the rebate dollars that plans rated four stars or above get from CMS.

This trend, the observers say, helps explain why Humana Inc. posted a 6% MA enrollment increase — mostly in its HMOs — from Dec. 1, 2014, to Jan. 1, 2015, in the data, while several other publicly owned insurers with lower average star ratings had smaller membership gains or even reductions. In fact, consultant Eric Hammelman, a vice president at Avalere Health LLC, tells MAN, Humana shows a similar trend even when comparing its lower-rated plans against its higher-rated ones. Enrollment in the company’s MA plans with three- or 3.5-star ratings actually fell 192,000, while those in four- and 4.5-star products soared 387,000, he says.

Initial AEP Data Show Modest Gains

As was the case a year ago, CMS is making interpretation of the January figures somewhat complex because they cover only enrollments recorded through Dec. 4, three days before the end of the AEP (MAN 1/30/14, p. 1). Hammelman points out that omission of the three last days plus any enrollments accepted earlier but not yet recorded can make a huge difference, citing the 1.8% monthly increase in the January 2014 figures compared with the December 2013 total that turned into a 5.5% advance when the February 2014 enrollment data was added in (MAN 2/27/14, p. 1).

This time, CMS reported that MA enrollment totaled 15,992,979 for the Jan. 1, 2015, payment date, reflecting enrollments through last Dec. 4, up just 132,731 or less than 1% from the 15,860,248 reported for Dec. 1, reflecting enrollments through Nov. 7. In the year-ago period, the comparable gain was about 216,000. But after other prepaid contracts are figured in — including 331,194 in what the agency called “Medicare-Medicaid plans” (MMPs), up from 185,418 for Dec. 1, 2014 — the prepaid total for Jan. 1, 2015, is 16,938,030, up 305,384 or 1.8% from the 16,632,646 for Dec. 1.

Star Ratings Had ‘Phenomenal’ Indirect Impact

While the gains reflected in the new figures are a “little low,” says Hammelman, they are in line with the size of percentage hikes in the Jan. 1 figures a year ago. He suggests that the more important data are the “phenomenal” differences in the performance of high- versus low-star-rated plans this time, reflecting the end of the CMS stars bonus demonstration with the 2014 payment year and the reversion to no stars bonuses in 2015 for plans with ratings of below four stars. That means for “two plans in the same county with close to the same bids and costs, the higher-star plan could get twice as many rebate dollars” from CMS, he asserts.

Such situations may have hurt UnitedHealth Group, according to Hammelman, which has an average star rating of only about 3.5. Essentially all of United’s 5% or approximately 161,000-member gain from December to January, to a total of 3,372,878, came on the employer-plan side, while the company was “down a bit” on individual MA members, he finds.

The reasons for and implications of some of the other data in this month’s CMS report are less clear. The report, for instance, indicates that enrollment in MA Special Needs Plans (SNPs) as of the Jan. 1 payment totaled 1,994,037, down substantially from 2,103,909 for Dec. 1. Hammelman says that while he doesn’t know what caused the drop, a “big piece” probably relates to the large membership increases in the MMPs, which gained some enrollees from SNPs for dual eligibles. MMP enrollment in California’s CMS-backed duals demo alone, for instance, as reported on the state’s www.Calduals.org website, jumped to 199,908 this month from 58,945 in December 2014 while still well below securities analysts’ expectations.

Consultant Steve Arbaugh, CEO of ATTAC Consulting, cites a similar factor, saying that both CMS-backed and state duals demos are contributing substantially to enrollment growth and that this will continue as both kinds of demos keep expanding.

Regional PPO Enrollment Falls Nearly 50,000

There was a drop in MA regional PPO enrollment to 1,224,777 in the January CMS report from 1,274,402 a month earlier. Hammelman attributes this partly to less focus on those products than in the past by MA insurers because of such factors as the difficulties in designing benefits across multiple service areas and the declining “room” to make those products attractive compared with more tightly managed MA HMOs as MA plan payment rates drop toward parity with Medicare fee-for-service. This means it’s become harder for regional PPO sponsors to bid low and get big CMS rebates with which to make the plans appeal to beneficiaries, he explains.

On the PDP side, the January enrollment data also were a little lower than expected but perhaps explained by certain factors that make comparisons less meaningful than they might be otherwise, according to Hammelman. The CMS data show Jan. 1 PDP enrollment of 23,684,808, up less than 145,000 from 23,539,926 for December. Hammelman goes a little further back and finds an approximately 157,000 increase since November, compared with 337,000 for the same period one year earlier.

These data are “a little confusing,” he tells MAN, since the employer side of the PDP market has declined slightly as employers move retirees from PDPs to MA, partly via private exchanges that count in the individual-market enrollment data, to get better savings. If one looks at just the non-employer side of the PDP market, enrollment was up about 312,000 in the November-January period, a bigger gain than the 250,000 in the year-ago period, he says.

Looking at individual PDP insurers, he sees the most significant enrollment move as CVS Health unit CVS/caremark picking up more than 600,000 additional members versus the year-ago period, when it operated under CMS marketing and enrollment sanctions. In the opposite direction, Anthem, Inc. lost nearly 100,000 members for 2015 because the amounts of its bids meant it has no PDPs that qualify for receiving CMS auto-assigned beneficiaries eligible for the low-income subsidy, Hammelman points out.

On the MA side, Humana had the biggest gain in absolute terms, going from 2,915,886 members in December to 3,091,136 in January. But Hammelman, looking at the November-January period, notes that the insurer actually lost about 20,000 members on the employer side while growing about 8% on the non-employer side. Moreover, the company said at the JPMorgan annual health care conference in San Francisco Jan. 13 that it now expects non-employer MA growth of 300,000 to 350,000 during 2015, up from its previous guidance of 235,000 to 255,000.

Aetna Inc. MA membership advanced to 1,124,517 on Jan. 1 from 1,081,451 on Dec. 1 or about 4% despite a small drop in its employer book of business, Hammelman notes. Again, he adds, star ratings were a big factor as it lost 92,000 members since Nov. 1 in plans with ratings of three to 3.5 stars, but gained 135,000 members in plans with higher ratings.

Among other publicly owned insurers, Cigna Corp. MA enrollment gained nearly 5% to 483,548 this month, but Anthem shed nearly 90,000 members or 16.35%, the CMS data show. The Anthem figure is misleading, though, says Hammelman, since the insurer lost a 103,000-member employer group and had only a slight drop on the non-employer side. Plus even that was influenced by service-area exits, so the company should wind up the AEP in the February figures with a gain on the non-employer side.

Universal American Corp. overall lost MA covered lives going into 2015 because of market exits, but the loss was smaller than expected, Hammelman says. The insurer itself, in a Form 8-K filing with the Securities and Exchange Commission Jan. 12, reported that its enrollment rose 13% in its “core markets” in Texas and the Northeast to 103,700 in January from 91,500 in December.

View the CMS enrollment data at http://tinyurl.com/ocdjugx.

© 2015 by Atlantic Information Services, Inc. All Rights Reserved.


Get the latest intelligence on Medicare Advantage and Part D star ratings, including changes anticipated for 2016 and practical steps you can take to make sure your plan implements the new measures successfully, at AIS’s Jan. 29 Virtual Conference, “Medicare $tar Ratings: Health Plan Strategies for Improving Quality Performance.” Click here for program and speaker information, and to order a recording today!.

It's quick and easy to sign up for FREE access to AISHealth.com!

Why do I need to register?