Medicare and Medicaid

Major MCOs Report Strong 2Q Gains in Medicare Advantage

September 1, 2020

While second-quarter 2020 earnings calls centered largely on uncertainty related to the COVID-19 pandemic, insurers with a large Medicare Advantage presence expressed satisfaction in membership growth so far this year and confidence in their positioning for the 2021 Annual Election Period (AEP).

Reporting second quarter earnings on Aug. 5, Humana Inc. exceeded analysts’ expectations with adjusted earnings per share (EPS) of $12.56 and other metrics that it attributed to customers delaying care due to stay-at-home orders and pandemic-related concerns.

By Lauren Flynn Kelly

While second-quarter 2020 earnings calls centered largely on uncertainty related to the COVID-19 pandemic, insurers with a large Medicare Advantage presence expressed satisfaction in membership growth so far this year and confidence in their positioning for the 2021 Annual Election Period (AEP).

Reporting second quarter earnings on Aug. 5, Humana Inc. exceeded analysts’ expectations with adjusted earnings per share (EPS) of $12.56 and other metrics that it attributed to customers delaying care due to stay-at-home orders and pandemic-related concerns.

Similar to other insurers, the company saw utilization drop by about 30% during the second half of March and into April, followed by a slight rebound in June. The insurer’s medical loss ratio (MLR) for the quarter was 76.4%, compared with 84.4% in the second quarter of 2019.

Humana also reported an 11% increase in individual MA membership to 3.88 million as of June 30, with individual MA premiums rising 20% to $13 million.

Reporting adjusted EPS of $2.64, up 40% from $1.89 in the second quarter of 2019, CVS Health Corp. on Aug. 5 attributed earnings growth to the impact of pandemic-related care deferrals on its Health Care Benefits segment, which includes Aetna. MLR hit 70.3% for the second quarter of 2020, compared with 84.0% in the second quarter of 2019.

Aetna reported that its commercial membership declined 2% from the prior-year period. Offsetting those declines was the “continued success of Medicare Advantage, which grew membership 2.6% sequentially,” Chief Financial Officer Eva Boratto stated during an Aug. 5 earnings call.

Cigna Corp. on July 30 delivered adjusted EPS of $5.81 for the quarter, compared with $4.30 for the comparable 2019 quarter, and consolidated revenue of $39.2 billion. Cigna President and CEO David Cordani said that the company anticipates “another year of attractive customer growth” for MA. Cigna had set a goal of increasing its MA enrollment by 10% to 15% this year and is “tracking well to that objective,” he said.

Lastly, market leader UnitedHealth Group on July 15 reported adjusted net EPS of $7.12, far exceeding analysts’ expectations of $5.28. MA membership as of June 30 was 5.6 million, up 0.5% from 5.57 million in the first quarter of 2020 and up 8% from 5.27 million in the second quarter of 2019.

Pricey Drugs and Discounts Cause Part D Costs to Shift to Medicare

August 28, 2020

In addition to unveiling details on its proposal to overhaul the Medicare Advantage quality bonus program (RMA 6/18/20, p. 3), the Medicare Payment Advisory Commission (MedPAC) in its June report to Congress recommended major reforms to the Part D program that would shift more drug costs from Medicare to payers and drug manufacturers (see pie charts below). Citing the use of high cost drugs pushing beneficiaries into the catastrophic phase of the benefit as leading to greater reinsurance spending, MedPAC once again recommended changing Medicare’s reinsurance subsidy from 80% to 20%. MedPAC would also do away with the coverage gap discount program and require drugmakers to provide discounts of at least 30% in the catastrophic phase.

by Carina Belles and Lauren Flynn Kelly

In addition to unveiling details on its proposal to overhaul the Medicare Advantage quality bonus program (RMA 6/18/20, p. 3), the Medicare Payment Advisory Commission (MedPAC) in its June report to Congress recommended major reforms to the Part D program that would shift more drug costs from Medicare to payers and drug manufacturers (see pie charts below). Citing the use of high cost drugs pushing beneficiaries into the catastrophic phase of the benefit as leading to greater reinsurance spending, MedPAC once again recommended changing Medicare’s reinsurance subsidy from 80% to 20%. MedPAC would also do away with the coverage gap discount program and require drugmakers to provide discounts of at least 30% in the catastrophic phase.

MedPAC also suggested that under the current Part D structure, how much manufacturers will have to pay in coverage gap discounts may factor into their decisions about price increases or launch prices, and pointed out that coverage gap discounts for relatively low priced drugs make up a larger share of drugmakers’ revenues. “For drugs and biologics with prices near or above the catastrophic threshold, manufacturer discounts in the coverage gap are small compared with their revenue from Part D prescriptions,” the commission wrote. The table below outlines this phenomenon using 2018 data.

SOURCE: MedPAC’s June 2020 Report to Congress. Visit www.medpac.gov.

Datapoint: Oscar to Launch New MA Partnership in Florida

August 27, 2020

Insurance startup Oscar Health last week said it is partnering with two Florida health systems, Fort Lauderdale’s Holy Cross Health and Hollywood’s Memorial Healthcare System in Hollywood, to offer new co-branded Medicare Advantage products for the 2021 plan year. Oscar is new to the MA sector, with just 1,635 of its 412,481 members enrolled in an MA plan.

Insurance startup Oscar Health last week said it is partnering with two Florida health systems, Fort Lauderdale’s Holy Cross Health and Hollywood’s Memorial Healthcare System, to offer new co-branded Medicare Advantage products for the 2021 plan year. Oscar is new to the MA sector, with just 1,635 of its 412,481 members enrolled in an MA plan.

Source: AIS’s Directory of Health Plans

E-Brokers Are Expected to Grow in Medicare AEP Amid COVID

August 24, 2020

As Medicare Advantage organizations prepare to promote their 2021 offerings this fall with no new guidance from CMS on marketing during a pandemic, plans and their broker partners are proceeding as though the safest approach is through digital and telephonic channels. One area that may see more growth than expected is the online broker space, experts say.

A website sponsored by an e-broker (also referred to as an electronic marketing organization, or EMO) contracts with a handful of insurers in a specific market and trains agents on the finer points of those carriers’ products, and the agents earn a per-enrollee commission. How consumers end up on an e-broker’s site varies.

By Lauren Flynn Kelly

As Medicare Advantage organizations prepare to promote their 2021 offerings this fall with no new guidance from CMS on marketing during a pandemic, plans and their broker partners are proceeding as though the safest approach is through digital and telephonic channels. One area that may see more growth than expected is the online broker space, experts say.

A website sponsored by an e-broker (also referred to as an electronic marketing organization, or EMO) contracts with a handful of insurers in a specific market and trains agents on the finer points of those carriers’ products, and the agents earn a per-enrollee commission. How consumers end up on an e-broker’s site varies.

“COVID forced telemedicine to grow three years in three months, and COVID is going to force more sophisticated, more consumer-friendly retail type experiences for digital purchasing of Medicare Advantage,” predicts Lindsay Resnick, executive vice president with Wunderman Thompson Health. “I think you’re going to see more uptake than we’ve seen in past AEPs,” he says, referring to the 2021 Annual Election Period that begins on Oct. 15.

Although many seniors now have a higher comfort level with online channels, it remains to be seen how much switching MA beneficiaries will be doing, given economic and other uncertainties created by the COVID-19 pandemic, suggests Resnick.

Meanwhile, the pandemic has large EMOs like eHealth, GoHealth and SelectQuote banking on increased traffic this fall. For the 2020 calendar year, eHealth expects 37% of its Medicare major medical plan enrollments to be completed online, compared with 27% the year before, according to CEO Scott Flanders.

Another option in the EMO space is GoHealth. In an email to AIS Health, Chief Marketing Officer Jarret DiToro says GoHealth seeks to differentiate itself by “taking a customer-first, carrier agnostic approach.” This means it operates on a “customer Life Time Value basis” and strives to place customers in their best-fit plan.

Cary Badger, principal with HealthScape Advisors, says he’s had numerous engagements with plan clients this year on the use of e-brokers, and he recommends they view it as “an incremental augmentation” of their overall distribution strategy and ensure a balance that includes a strong direct-to-consumer platform.

Datapoint: Oklahoma Nixes Medicaid Block Grants

August 20, 2020

Oklahoma will not move forward with its CMS-backed plan to implement Medicaid block grants, according to the state’s Medicaid director. The SoonerCare 2.0 program also would have established monthly premiums for some Medicaid members, as well as a work requirement. The state currently serves 799,353 Medicaid beneficiaries. Oklahomans voted in favor of full Medicaid expansion in June.

Oklahoma will not move forward with its CMS-backed plan to implement Medicaid block grants, according to the state’s Medicaid director. The SoonerCare 2.0 program also would have established monthly premiums for some Medicaid members, as well as a work requirement. The state currently serves 799,353 Medicaid beneficiaries. Oklahomans voted in favor of full Medicaid expansion in June.

Source: AIS’s Directory of Health Plans

Ballot Initiatives Show Divide Between Voters, Legislators on Medicaid Expansion

August 14, 2020

Voters in Oklahoma on June 30 and Missouri on Aug. 4 passed ballot initiatives to expand Medicaid coverage to a greater number of low-income adults, continuing a national trend of red state voters supporting increased access to health insurance. Other successful expansion initiatives in Idaho, Maine, Nebraska and Utah have exposed a divide between Republican-held state legislatures and the voters they represent in recent years, which may be driven even deeper as a result of job losses amid the COVID-19 pandemic. So what will be the next state to expand Medicaid? Voters in Florida and South Dakota could see it on the ballot in 2022, while Kansas’ and North Carolina’s Democratic governors are working to drum up bipartisan support. The map below shows Medicaid enrollment and expansion status in all 50 states, with breakdowns of current happenings in key states.

by Carina Belles

Voters in Oklahoma on June 30 and Missouri on Aug. 4 passed ballot initiatives to expand Medicaid coverage to a greater number of low-income adults, continuing a national trend of red state voters supporting increased access to health insurance. Other successful expansion initiatives in Idaho, Maine, Nebraska and Utah have exposed a divide between Republican-held state legislatures and the voters they represent in recent years, which may be driven even deeper as a result of job losses amid the COVID-19 pandemic. So what will be the next state to expand Medicaid? Voters in Florida and South Dakota could see it on the ballot in 2022, while Kansas’ and North Carolina’s Democratic governors are working to drum up bipartisan support. The map below shows Medicaid enrollment and expansion status in all 50 states, with breakdowns of current happenings in key states.

*Wisconsin partially expanded Medicaid to include all adults under 100% of the Federal Poverty Level in 2014.

SOURCE: DHP, AIS’s Directory of Health Plans, state Medicaid documents and local news reporting.