Whether they are new to the insurance market altogether or got their start on the Affordable Care Act (ACA) exchanges, many insurance startups this fall are placing their bets on Medicare Advantage.

With MA enrollment increasing each year as a percentage of the overall Medicare program and the Trump administration’s continued efforts to bolster the MA program, the time is right for these startups to pursue the market, suggests Patrick Phillips, founder and CEO of Health care technology firm Cavulus.

By Lauren Flynn Kelly

Whether they are new to the insurance market altogether or got their start on the Affordable Care Act (ACA) exchanges, many insurance startups this fall are placing their bets on Medicare Advantage.

With MA enrollment increasing each year as a percentage of the overall Medicare program and the Trump administration’s continued efforts to bolster the MA program, the time is right for these startups to pursue the market, suggests Patrick Phillips, founder and CEO of Health care technology firm Cavulus.

Some advantages these plans have over longstanding MA insurers that typically operate multiple lines of business is “they don’t have a health plan culture to overcome” and can build their own technological infrastructure from scratch to avoid gaps in operations and member touchpoints that are often created by legacy systems, Phillips adds.

Orange, Calif.-based Alignment Healthcare has remained solely committed to the MA population since it was founded and has spent the last several years building a “connected care model” that relies on technology to help improve senior care.

For example, the proprietary artificial intelligence (AI)-powered “command center,” Alignment Virtual Application (AVA), aggregates data from disparate sources every 30 minutes to catch key health indicators and triage members.

Alignment on Aug. 20 unveiled plans to double its geographic footprint and the number of plans it offers in Northern California this coming Annual Election Period.

Meanwhile, new entrant Zing Health aims to launch a physician-led MA plan in Cook County, Ill., with a focus on underserved populations and using local resources and technology to impact social determinants of health.

Zing is also working on ways to digitally support its community-based “local field care teams” that will be embedded at partner hospitals, community health centers and other locations where members receive care.

Aetna Inc. and Humana Inc. in recent weeks posted second-quarter 2019 earnings that were aided by substantial growth in their Medicare Advantage segments, while Cigna Corp. expressed confidence in its ability to grow that business in 2020.

CVS Health Corp. on Aug. 7 reported a 55% year-over-year increase in consolidated adjusted operating income to $4 billion, which it mainly attributed to the November 2018 addition of Aetna Inc. and growth of the pharmacy benefit manager.

By Lauren Flynn Kelly

Aetna Inc. and Humana Inc. in recent weeks posted second-quarter 2019 earnings that were aided by substantial growth in their Medicare Advantage segments, while Cigna Corp. expressed confidence in its ability to grow that business in 2020.

CVS Health Corp. on Aug. 7 reported a 55% year-over-year increase in consolidated adjusted operating income to $4 billion, which it mainly attributed to the November 2018 addition of Aetna Inc. and growth of the pharmacy benefit manager.

Aetna this year embarked on its largest MA service area expansion ever, and enrollment in its MA products increased by roughly 33,000 lives from the first quarter of 2019 to 2.26 million members as of June 30. That’s an increase of 30% from 1.73 million MA lives it reported in the year-ago quarter.

Meanwhile, Humana Inc. on July 31 said enrollment in its individual MA plans grew 15.1% from the year-ago quarter to 3.48 million lives as of June 30, 2019, and projected full-year enrollment growth of 16% for the highest individual MA membership increase in a decade.

Humana also updated its projection for an anticipated enrollment decline in its Prescription Drug Plan segment, and said it now expects to lose 700,000 members in 2019 compared to a previous estimate of 700,000 to 750,000 enrollees.

Cigna Corp. on Aug. 1 raised its full-year EPS guidance by 25 cents to 35 cents to a range of $16.60 to $16.90 per share, representing growth of 17% to 19% over 2018. Cigna Corp. President and CEO David Cordani during an Aug. 1 conference call highlighted the “tremendous growth opportunity” in MA for 2020 and said the company expects to achieve between 10% and 15% average annual growth in its MA membership.

CMS’s newly updated Medicare Communications and Marketing Guidelines (MCMG) contain multiple flexibilities that were previously unavailable to plan sponsors. These include a loosening of rules around co-branding, educational events and marketing of rewards and incentives programs (RI programs), as well as the ability to operate a call center dedicated to prospective enrollees.

By Lauren Flynn Kelly

CMS’s newly updated Medicare Communications and Marketing Guidelines (MCMG) contain multiple flexibilities that were previously unavailable to plan sponsors. These include a loosening of rules around co-branding, educational events and marketing of rewards and incentives programs (RI programs), as well as the ability to operate a call center dedicated to prospective enrollees.

Although CMS at press time hadn’t posted a redlined version of the complete 2020 document, an Aug. 6 memorandum from the CMS Medicare Drug & Health Plan Contract Administration Group highlighted the various updates, including the deletions from 2019, and urged plans to cross-reference the memo with the existing MCMG.

“The deletions are more important than the insertions,” says Michael Adelberg, a principal with Faegre Baker Daniels Consulting and a former top CMS MA official. “Probably the most important deletion concerns the prohibition on holding back-to-back educational and marketing events. This seems to open the door to piggybacking marketing sessions on educational events.”

Last year’s MCMG expanded what can happen at educational events by allowing plan representatives to set up future marketing appointments and hand out business cards and contact information for beneficiaries to initiate communications. But by deleting the word “future” and the stipulation that representatives “may not conduct a marketing/sales event immediately following an educational event in the same general location,” it appears that CMS may allow plans to set up marketing appointments immediately after an educational event, says Kelli Back, a health care attorney in Washington, D.C.

Another example of important “deletions” is around RI programs, for which marketing no longer has to be done “in conjunction with information about plan benefits,” nor does it have to include information about all RI programs offered by the MA plan.

Select publicly traded insurers that reported second-quarter 2019 earnings in late July were tracking elevated medical loss ratios (MLRs) that were partly if not solely driven by their Medicaid businesses, while seeing growth in other areas.

Second quarter earnings per share for Anthem, Inc. came in slightly ahead of Wall Street expectations at $4.64, driven by growth in its fully insured business, but analysts appeared concerned with an increased MLR that the company said was mainly due to “elevated medical costs” in its Medicaid segment. At 86.7%, that MLR was 330 basis points higher than the 83.4% it reported in the year-ago quarter.

By Lauren Flynn Kelly

Select publicly traded insurers that reported second-quarter 2019 earnings in late July were tracking elevated medical loss ratios (MLRs) that were partly if not solely driven by their Medicaid businesses, while seeing growth in other areas.

Second quarter earnings per share for Anthem, Inc. came in slightly ahead of Wall Street expectations at $4.64, driven by growth in its fully insured business, but analysts appeared concerned with an increased MLR that the company said was mainly due to “elevated medical costs” in its Medicaid segment. At 86.7%, that MLR was 330 basis points higher than the 83.4% it reported in the year-ago quarter.

Centene Corp. on July 23 reported an elevated MLR of 86.7%, up 100 basis points from the second quarter of 2018 and from the first quarter of 2019. The company said the MLR increase largely stemmed from a “normalization” of its Affordable Care Act (ACA) marketplace business, as well as the ACA health insurer fee holiday and the company’s mid-2018 acquisition of Fidelis Care.

But as a recent Milliman report on Medicaid managed care financials observed, MLRs are prone to fluctuation and reflect the uniqueness of a state’s individual Medicaid program and the managed care organization’s reporting metrics.

According to the report tracking key financial metrics for 174 managed Medicaid companies, insurers in 2018 had an average MLR of 87.3%, compared with 86% in 2014 and 88.2% in 2017.

The report also serves as a reminder of the “interesting dynamics” going on in each state, and shows that while MLR has “changed incrementally from previous years, it now starts to document a decrease in managed care rates that we’ve seen for the expansion populations in states that have already expanded,” observes Alex Shekhdar, founder of Sycamore Creek Healthcare Advisors.

Managed care experts speaking at the Medicare Advantage Summit 2019, hosted by the Better Medicare Alliance in Washington, D.C., expressed great enthusiasm for new benefit flexibilities and models being offered by CMS, but agreed that there are numerous challenges and unknowns that may complicate MA organizations’ ability to fully embrace such innovations at this time.

New flexibility around supplemental benefits was by far the most discussed topic, but it presents implementation challenges and a need for more research, observed Robert Saunders, research director with the Duke-Margolis Center for Health Policy.

By Lauren Flynn Kelly

Managed care experts speaking at the Medicare Advantage Summit 2019, hosted by the Better Medicare Alliance in Washington, D.C., expressed great enthusiasm for new benefit flexibilities and models being offered by CMS, but agreed that there are numerous challenges and unknowns that may complicate MA organizations’ ability to fully embrace such innovations at this time.

New flexibility around supplemental benefits was by far the most discussed topic, but it presents implementation challenges and a need for more research, observed Robert Saunders, research director with the Duke-Margolis Center for Health Policy.

Emerging benefits such as meal delivery may require contracting with multiple community-based organizations. For a statewide or national plan, “that can mean several [full-time employees] just to manage the contracting, let alone actually delivering the services,” he said.

Moreover, plans aren’t working with a “whole new pot of money” but instead must consider how to use existing dollars more effectively to offer new supplemental benefits and therefore “probably won’t end up offering more than a handful at a time.”

That’s why experimentation as this stage is imperative, weighed in Jennifer Callahan, head of Medicare product development with Aetna Inc. The insurer last year piloted a nutrition benefit that empowers trained Meals on Wheels volunteers to make critical observations while in a patient’s home and report changes in condition through an app.

Meanwhile, CMS in reinterpreting the definition of health-related supplemental benefits also gave a new take on MA benefit uniformity requirements, allowing MA plans to offer targeted benefits to certain enrollees starting in 2019. And the 2020 Call Letter established a category of Special Supplemental Benefits for the Chronically Ill (SSBCI) through which MAOs may offer a “non-primarily health related” item or service to chronically ill enrollees.

But Nicholas Johnson, a principal and consulting actuary with Milliman, pointed out that “the SSBCI is specifically supposed to be targeted toward members with chronic conditions, so already you’re limiting yourself and you have to define those chronic conditions beforehand.”