Medicare and Medicaid

Anthem, Centene Report Improved Medicaid Results

November 4, 2019

During their recent third-quarter earnings calls, Centene Corp. and Anthem, Inc. sought to assure investors and analysts that they have a handle on the Medicaid payment rate issue that has dogged some insurers this year.

On Centene’s Oct. 22 call, CEO Michael Neidorff touted the firm’s new Medicaid contracts in Iowa, New Mexico and Pennsylvania, saying “our new business more than offset the enrollment and revenue headwinds caused by ongoing eligibility redeterminations in certain states.”

By Leslie Small

During their recent third-quarter earnings calls, Centene Corp. and Anthem, Inc. sought to assure investors and analysts that they have a handle on the Medicaid payment rate issue that has dogged some insurers this year.

On Centene’s Oct. 22 call, CEO Michael Neidorff touted the firm’s new Medicaid contracts in Iowa, New Mexico and Pennsylvania, saying “our new business more than offset the enrollment and revenue headwinds caused by ongoing eligibility redeterminations in certain states.”

The redetermination process can result in a Medicaid population with a higher risk profile, Neidorff explained, but he noted that the company views it as a “temporary issue as we continue to work with our state partners to appropriately adjust our rates.”

During Anthem’s Oct. 23 call, CEO Gail Boudreaux noted that “Medicaid results improved this quarter, but at a slower rate than previously anticipated.” Elevated medical cost trend in the insurer’s Medicaid business was the primary culprit behind Anthem’s heightened medical loss ratio (MLR) in the second quarter, the company reported this summer.

To Oppenheimer analysts, Centene’s results “overcame a slight impact from the Medicaid re-determination process, which appears to be merely a time-lag as the states are adjusting rates accordingly,” Michael Wiederhorn and Matt Nirenberg advised investors in a research note.

For Anthem, Medicaid is “still a drag” on the company’s MLR results, Jefferies analyst David Windley concluded. The insurer “continues to negotiate rates with states that match the changing risk pool when redeterminations take healthy members off the rolls,” he added. “Like [Centene’s] description, the shortfall is a continuation of the rate mismatch issue that is well-known by the market, not higher utilization.”

Overall in the quarter, Centene reported adjusted earnings per share of 96 cents. Its MLR was 88.2%. Anthem’s adjusted net income was $4.87 per share, and its second-quarter MLR was 87.2%.

CMS Updates Medicare Plan Finder Amid Advocates’ Concerns

October 30, 2019

Having already rolled out a major redesign of the Medicare Plan Finder in August, CMS recently revealed additional updates it made before the start of Medicare open enrollment on Oct. 15 — including a feature that advocates have said is critical to helping people find the best Part D plan.

In an Oct. 11 email, a CMS spokesperson said the agency “added a feature that allows Medicare Plan Finder users to sort plans by the total cost of estimated annual drug costs plus premiums.”

By Leslie Small

Having already rolled out a major redesign of the Medicare Plan Finder in August, CMS recently revealed additional updates it made before the start of Medicare open enrollment on Oct. 15 — including a feature that advocates have said is critical to helping people find the best Part D plan.

In an Oct. 11 email, a CMS spokesperson said the agency “added a feature that allows Medicare Plan Finder users to sort plans by the total cost of estimated annual drug costs plus premiums.”

So did CMS’s plan finder update ease Medicare beneficiary advocacy organizations’ concerns about the redesigned tool? Partially, says Ann Kayrish, the National Council on Aging’s senior program manager for Medicare. She says while it’s good that the sort function is back, the total-cost feature is not available on the plan-comparison page — which makes comparing plans more complicated than it was before.

“In general, the opening week of open enrollment has been rocky as some of the basic information like extra help subsidy levels and copay have been inaccurate, [and] pharmacy status and cost information inconsistent,” she adds. “To increase confidence in plan selections, counselors are spending time contacting the plan or Medicare to confirm coverage information.”

In its Oct. 11 email, CMS noted that it also implemented several other changes to the Medicare Plan Finder prior to open enrollment, including:

✦ The ability to display drug tier costs;
✦ A footnote for excluded drugs;
✦ An option to add mail order on the pharmacy selection page;
✦ A note about over-the-counter drugs on the drug lookup page; and
✦ An option to compare a third retail pharmacy when mail order isn’t selected.

Datapoint: Group Health Cooperative Faces Whistleblower Lawsuit

October 29, 2019

Seattle-based insurer Group Health Cooperative is the subject of a whistleblower lawsuit that alleges the company manipulated its Medicare Advantage risk scores to receive additional reimbursement dollars from the federal government. The allegations date back to 2012. Kaiser Permanente acquired the renowned health plan, now known as Kaiser Foundation Health Plan of Washington, in 2017. The insurer currently serves 698,305 members, with 13.6% enrolled in Medicare Advantage products.

Seattle-based insurer Group Health Cooperative is the subject of a whistleblower lawsuit that alleges the company manipulated its Medicare Advantage risk scores to receive additional reimbursement dollars from the federal government. The allegations date back to 2012. Kaiser Permanente acquired the renowned health plan, now known as Kaiser Foundation Health Plan of Washington, in 2017. The insurer currently serves 698,305 members, with 13.6% enrolled in Medicare Advantage products.

Source: AIS’s Directory of Health Plans

Datapoint: Arizona Suspends Medicaid Work Requirements

October 28, 2019

Citing ongoing legal challenges in other states, Arizona has suspended implementation of its Medicaid work requirements program, which was set to begin Jan. 1, according to an Oct. 17 letter from the state to CMS. About 7% of Arizona’s 1,730,071 Medicaid beneficiaries would have been affected by the new program at launch. While work requirements have proved a popular reform idea in many states, implementation of approved changes has been rocky, as legal arguments in favor of the programs have not held up in court, and administrative changes proved more of a strain on state budgets than originally thought.

Citing ongoing legal challenges in other states, Arizona has suspended implementation of its Medicaid work requirements program, which was set to begin Jan. 1, according to an Oct. 17 letter from the state to CMS. About 7% of Arizona’s 1,730,071 Medicaid beneficiaries would have been affected by the new program at launch. While work requirements have proved a popular reform idea in many states, implementation of approved changes has been rocky, as legal arguments in favor of the programs have not held up in court, and administrative changes proved more of a strain on state budgets than originally thought.

Source: AIS’s Directory of Health Plans

More Than 80% of MA-PD Members Are Enrolled in a Highly Rated Plan, Latest Star Ratings Show

October 25, 2019

CMS reported in its 2020 star ratings release that 81% of Medicare Advantage Prescription Drug (MA-PD) members are enrolled in a plan rated at least 4 stars overall, up from about 75% last year, with more than half of MA-PD contracts scoring an overall 4 or above. Stand-alone Prescription Drug Plans (PDPs) continued to fare worse than MA-PD plans in the ratings, but saw a considerable shift in membership, with about 28% of members enrolled in a PDP rated 4 stars or above, up from 3.5% last year.

by Carina Belles

CMS reported in its 2020 star ratings release that 81% of Medicare Advantage Prescription Drug (MA-PD) members are enrolled in a plan rated at least 4 stars overall, up from about 75% last year, with more than half of MA-PD contracts scoring an overall 4 or above. Stand-alone Prescription Drug Plans (PDPs) continued to fare worse than MA-PD plans in the ratings, but saw a considerable shift in membership, with about 28% of members enrolled in a PDP rated 4 stars or above, up from 3.5% last year. CMS says just five contracts will be sanctioned as low-performing. Among the major players, Kaiser Foundation Health Plan came out on top of the ratings once again, with 94% of its MA-PD members enrolled in a 5-star contract, up from 80% in the 2019 plan year. UnitedHealthcare and Aetna Inc. also showed improvement, picking up their scores after not having any overall 5-star contracts last year. None of the top five payers’ MA-PD contracts scored below a 3 overall. See the full ratings distribution for all contracts below, plus a ratings and enrollment distribution for the top five insurers.

NOTE: Analysis does not include enrollment data from contracts that were too new to be rated, or did not have enough data available to measure a star rating.

SOURCE: CMS; DHP, AIS’s Directory of Health Plans

Executive Order Encourages Rulemaking Around Medicare Medical Savings Accounts

October 24, 2019

In an executive order, President Trump laid out several directives for the HHS secretary aimed at protecting Medicare for seniors while strengthening the Medicare Advantage program and providing more plan choices. The Oct. 3 order directed the agency to promote choice through actions that “encourage innovative MA benefit structures and plan designs, including through changes in regulations and guidance that reduce barriers to obtaining Medicare Medical Savings Accounts and that promote innovations in supplemental benefits and telehealth services.”

By Lauren Flynn Kelly

In an executive order, President Trump laid out several directives for the HHS secretary aimed at protecting Medicare for seniors while strengthening the Medicare Advantage program and providing more plan choices. The Oct. 3 order directed the agency to promote choice through actions that “encourage innovative MA benefit structures and plan designs, including through changes in regulations and guidance that reduce barriers to obtaining Medicare Medical Savings Accounts and that promote innovations in supplemental benefits and telehealth services.”

Out of the 22.4 million enrollees currently in an MA plan, about 6,800 are enrolled in a Medicare MSA, which is an MA plan bundled with a tax-free savings account. The number of insurance companies offering them currently stands at four.

Although MSAs are technically MA products, they work more like Original Medicare in that they have no network and must be accepted by all Medicare-participating providers, which are paid the lesser of billed charges or 100% of the Medicare allowable rate.

Regarding the limited availability of such plans, MSA provider Lasso Healthcare Insurance Co.’s President and Founder Jim Handlan explains that an MSA may not be an ideal addition to an established carrier’s portfolio for several reasons. One is that the provider network is often an insurer’s primary asset, whereas an MSA has no network. Second, it may be difficult for insurers with multiple Medicare products to sell something that is so different from an HMO or a PPO, he suggests. But Handlan says that’s a “surmountable problem,” while the bigger challenge lies with reimbursement and risk.

MSA enrollees tend to be on the healthier side and have lower-than-average risk scores, generating less risk-adjusted revenue than what an HMO or PPO typically receives. “By definition you’re going to get better selective risk with an MSA, but that doesn’t mean you’re not going to have catastrophic burden,” Handlan adds.