Radar on Medicare Advantage

Care Deferrals Show Negative Impacts on MA Risk Adjustment Payments in 2021

March 2, 2021

Although many publicly traded insurers touted enrollment growth from the 2021 Medicare Annual Election Period (AEP) when reporting fourth-quarter and full-year 2020 earnings, some expressed the concern that care deferrals seen last year may have a negative impact on Medicare Advantage risk adjustment payments this year.

Humana Inc. on Feb. 3 posted a loss of $2.30 per share on an adjusted basis, which was driven by three main factors: (1) higher treatment and testing costs related to COVID-19 that were more than offset by a decline in non-COVID utilization, (2) ongoing pandemic relief efforts, and (3) increased expenses associated with the AEP. Humana ended the year with approximately 4.6 million total MA members, reflecting year-over-year growth of 11%, driving consolidated revenue growth of 90% in 2020.

NOTE: The abstract below is a shortened version of the RADAR on Medicare Advantage article “Care Deferrals Pose Headwinds For MA Risk Adjustment in ’21.”

By Lauren Flynn Kelly

Although many publicly traded insurers touted enrollment growth from the 2021 Medicare Annual Election Period (AEP) when reporting fourth-quarter and full-year 2020 earnings, some expressed the concern that care deferrals seen last year may have a negative impact on Medicare Advantage risk adjustment payments this year.

Humana Inc. on Feb. 3 posted a loss of $2.30 per share on an adjusted basis, which was driven by three main factors: (1) higher treatment and testing costs related to COVID-19 that were more than offset by a decline in non-COVID utilization, (2) ongoing pandemic relief efforts, and (3) increased expenses associated with the AEP. Humana ended the year with approximately 4.6 million total MA members, reflecting year-over-year growth of 11%, driving consolidated revenue growth of 90% in 2020.

Adjusted EPS for the full year was $18.75, and the Medicare-focused insurer expects to achieve $21.50 per share at the midpoint for 2021. That includes an estimated Medicare risk adjustment headwind of approximately $700 million to $1 billion, representing 1% to 1.5% of Medicare premium for the full year.

For the full year of 2020, Cigna Corp. reported adjusted EPS of $18.45, in line with expectations that included the “ongoing elevated cost of COVID-19-related services,” stated President and CEO David Cordani during a Feb. 4 earnings call.

For 2021, the company expects to achieve at least $20 adjusted EPS, which includes the “expected COVID-19 related headwind of approximately $1.25 per share,” said CFO Brian Evanko. He clarified that is related to Cigna’s limited ability to collect “all of the risk adjustment codes” that it would gather in a typical year “due to the unique nature of 2020 and the COVID-19 headwinds.”

Molina Healthcare, Inc. — which recorded a loss of $3.80 per share in the quarter — also said it expects its 2021 earnings to be impacted by care deferrals. For 2021, Molina anticipates adjusted EPS with a midpoint of $12.75, compared with the “normalized” EPS of $12.97 for 2020. That guidance, which includes the continuation of COVID risk-sharing corridors in Molina’s Medicaid programs, also reflects the challenge of lower-than-expected Medicare risk scores.

Lastly, CVS Health Corp. on Feb. 16 reported fourth-quarter adjusted EPS of $1.30 — beating Wall Street’s projections of $1.24 — and full-year EPS of $7.50. For 2021, the company said it is targeting an adjusted EPS range of $7.39 to $7.55.

Flex Benefits More Than Tripled, Show COVID Influence

February 22, 2021

Last year, Medicare Advantage plans for the first time were able to extend a variety of non-primarily health-related items and services to their chronically ill beneficiaries, but insurer adoption of these benefits was relatively small. In 2021, the availability of such benefits has more than tripled, suggesting carriers are becoming more comfortable with a variety of new supplemental benefits and the idea of incorporating cost offsets into their bids.

In the Jan. 27 report, An Early Look at 2021 Medicare Advantage Benefits: Part II, Faegre Drinker reported that Special Supplemental Benefits for the Chronically Ill (SSBCI) are featured in 831 plans (out of approximately 5,200 total plans) this year. That’s compared with only 245 plans in 2020. Meals was the most common offering, followed by food and produce, and social needs benefits.

NOTE: The abstract below is a shortened version of the RADAR on Medicare Advantage article “2021 Flex Benefits Show COVID Influence, Insurer Comfort.”

By Lauren Flynn Kelly

Last year, Medicare Advantage plans for the first time were able to extend a variety of non-primarily health-related items and services to their chronically ill beneficiaries, but insurer adoption of these benefits was relatively small. In 2021, the availability of such benefits has more than tripled, suggesting carriers are becoming more comfortable with a variety of new supplemental benefits and the idea of incorporating cost offsets into their bids.

In the Jan. 27 report, An Early Look at 2021 Medicare Advantage Benefits: Part II, Faegre Drinker reported that Special Supplemental Benefits for the Chronically Ill (SSBCI) are featured in 831 plans (out of approximately 5,200 total plans) this year. That’s compared with only 245 plans in 2020. Meals was the most common offering, followed by food and produce, and social needs benefits.

One likely reason for the increase is that CMS for 2021 allowed plans to offer SSBCI to individuals with conditions beyond the 15 diseases it originally outlined. But “the biggest single reason,” suggests Michael Adelberg, principal at Faegre Drinker and one of the report’s authors, is that “plans have an extra year to explore the opportunities, conduct the analysis and see what their competitors are doing.”

And with the ongoing COVID-19 pandemic that began in March 2020, MA insurers had a chance to test out some midyear benefit changes due to flexibility granted during the public health emergency. As a result, some benefits offered this year appear to be directly related to supporting seniors at home, such as virtual companion visits and grocery delivery coverage.

The firm also analyzed the landscape of condition-specific benefits. Diabetes remained the top condition tied to one of these benefits, followed by congestive heart failure and anxiety/depression/substance use disorder.

In a separate analysis from Avalere Health that excluded MA Employer Group Waiver Plans and incorporated January enrollment data from CMS, the firm estimated that more than 3 million MA beneficiaries are enrolled in plans providing SSBCI. Avalere’s totals included 787 MA plans offered by 44 parent organizations, compared with 239 plans offering SSBCI in 2020.

Although that represents just 16% of plans, the significant year-over-year increase “in the number of plans and enrollees in these plans indicates that plans are gaining more insight on the impact that SSBCI can have on beneficiary outcomes and costs,” wrote Avalere.

MAOs May Face More Aggressive CMS as Audits ‘Return to Normal’ in 2021

February 8, 2021

The Trump years were noticeably light on Medicare Parts C and D program enforcement, but as CMS resumes program audits and other oversight activities this year, Medicare compliance experts are advising plans to review key business functions.

CMS last March suspended scheduled program audits of Medicare Advantage organizations, Part D sponsors, Medicare-Medicaid Plans and Programs of All-Inclusive Care for the Elderly to shift its oversight focus more directly on assuring the delivery of care during the COVID-19 pandemic. The agency in July restarted program audits on a condensed basis and in a Dec. 23, 2020, memo said it expects to “conduct routine audit activities” for Parts C and D sponsors in 2021.

NOTE: The abstract below is a shortened version of the RADAR on Medicare Advantage article “2021 Outlook: As Audits ‘Return to Normal,’ MAOs Could Face Tougher CMS.”

By Lauren Flynn Kelly

The Trump years were noticeably light on Medicare Parts C and D program enforcement, but as CMS resumes program audits and other oversight activities this year, Medicare compliance experts are advising plans to review key business functions.

CMS last March suspended scheduled program audits of Medicare Advantage organizations, Part D sponsors, Medicare-Medicaid Plans and Programs of All-Inclusive Care for the Elderly to shift its oversight focus more directly on assuring the delivery of care during the COVID-19 pandemic. The agency in July restarted program audits on a condensed basis and in a Dec. 23, 2020, memo said it expects to “conduct routine audit activities” for Parts C and D sponsors in 2021.

In other words, CMS appears to be moving “back to normal…and our view is that a lot of plans are out of practice preparing for audits,” says Steve Arbaugh, CEO of ATTAC Consulting Group (ACG). On top of the fact that plans aren’t audited every year and many haven’t been audited for several years, “the fact that they were occupied with other issues during 2020 [raises the question of] whether they’ve maintained the rigorousness of testing their data, their performance and so on, so we would suggest they look at testing, preparing, and audit readiness.”

Amanda Brown, vice president of Compliance Solutions with ACG, says the firm’s audit work shows that plans continue to struggle with compliance in certain areas, including the appropriate classification of grievances and oversight of first-tier, downstream and related entities.

Regarding oversight of FDRs, one emerging area that is likely to face more scrutiny is telehealth. ACG notes that the Office of Inspector General has seen telehealth vendors use enrollee data inappropriately.

“Another area that is difficult for many plans to get their arms around is what we call plan-directed care issues,” which relates to how plans link authorizations in their claims systems, adds Arbaugh.

In a recent brief from the KPMG Center for Healthcare Regulatory Insight, the consulting firm suggested “it is likely that the Biden Administration will pick up where the Obama Administration left off and use its administrative authority to more aggressively monitor Medicare regulatory requirements on private plans, which could lead to more regulatory enforcement and civil monetary penalties (CMPs) to support program integrity in the Part C & D programs.”

Dual Plans Roll Out Efforts on SDOH, Telehealth in 2021

January 28, 2021

Amid the changes brought about by the COVID-19 pandemic, Medicare Advantage Special Needs Plans (SNPs) and others serving low-income dually eligible members are looking at ways to promote the use of telehealth and other technologies more broadly across their populations while continuing efforts to improve integration of Medicare and Medicaid benefits.

Cheryl Phillips, M.D., president and CEO of The SNP Alliance, says the association of SNPs and Medicare-Medicaid Plans (MMPs) expects the Biden administration to support improvements to the delivery of long-term services and supports and explore ways to support caregivers. “I think a new administration will do some work in helping them better understand how MA and particularly SNPs can be the best vehicle to align and serve high-risk, high-cost individuals, particularly those who are dually eligible,” she says.

NOTE: The abstract below is a shortened version of the RADAR on Medicare Advantage article “2021 Outlook: Duals Plans Double Down on SDOH, Telehealth Investments.”

By Lauren Flynn Kelly

Amid the changes brought about by the COVID-19 pandemic, Medicare Advantage Special Needs Plans (SNPs) and others serving low-income dually eligible members are looking at ways to promote the use of telehealth and other technologies more broadly across their populations while continuing efforts to improve integration of Medicare and Medicaid benefits.

Cheryl Phillips, M.D., president and CEO of The SNP Alliance, says the association of SNPs and Medicare-Medicaid Plans (MMPs) expects the Biden administration to support improvements to the delivery of long-term services and supports and explore ways to support caregivers. “I think a new administration will do some work in helping them better understand how MA and particularly SNPs can be the best vehicle to align and serve high-risk, high-cost individuals, particularly those who are dually eligible,” she says.

The SNP Alliance this year is focused on two main areas: promoting quality measures for individuals with social risk factors that are not captured by current quality measurement, and looking at how it can identify Medicare-Medicaid integration strategies for states.

California was moving toward aligned enrollment with its California Advancing and Innovating Medi-Cal (CalAIM) initiative but delayed that effort because of the pandemic.

According to an updated CalAIM proposal posted by the Dept. of Health Care Services on Jan. 8, the state intends to require all full- and partial-benefit dual eligibles to be in a managed care plan by January 2023, when it will transition Cal MediConnect members currently served by the Coordinated Care Initiative (CCI) duals demo to aligned D-SNPs and managed care plans operated by the same organization as their CMC product.

Yet the proposal does not include any requirements to operate Fully Integrated Dual-Eligible Special Needs Plans (FIDE-SNPs), points out SCAN Health Plan Senior Vice President of Healthcare Services Eve Gelb. SCAN is the only FIDE-SNP in California.

When CCI was implemented, it created some statutory limits on where FIDE-SNPs could operate, and SCAN is hoping to work with the department to eliminate those caps and allow the growth of FIDE-SNPs in non-CCI counties, adds Gelb.

Meanwhile, Boston-based Commonwealth Care Alliance (CCA) expects the rapid adoption of telehealth to continue. “The use of telehealth and other technologies like video visits, remote patient monitoring, AI-powered symptom checkers…will become an integral component of care delivery models post-COVID,” predicts Chris Palmieri, president and CEO of CCA.

CMS Boosts Medicare Advantage Rates, Cites COVID Costs

January 25, 2021

CMS on Jan. 15 released the 2022 Medicare Advantage and Part D Rate Announcement, indicating that MA organizations will see an average reimbursement increase of more than 4%. At the same time, CMS issued a 272-page rule finalizing several Part D policies that will largely apply to the 2022 plan year.

Although neither document contained anything “earth shattering,” the hefty pay increase is welcome news to plans as they face cost unknowns due to the ongoing COVID-19 pandemic, suggests Milliman Principal and Consulting Actuary Brad Piper.

NOTE: The abstract below is a shortened version of the RADAR on Medicare Advantage article “Rate Notice Cites COVID Costs, Leaves Some Issues Unresolved.”

By Lauren Flynn Kelly

CMS on Jan. 15 released the 2022 Medicare Advantage and Part D Rate Announcement, indicating that MA organizations will see an average reimbursement increase of more than 4%. At the same time, CMS issued a 272-page rule finalizing several Part D policies that will largely apply to the 2022 plan year.

Although neither document contained anything “earth shattering,” the hefty pay increase is welcome news to plans as they face cost unknowns due to the ongoing COVID-19 pandemic, suggests Milliman Principal and Consulting Actuary Brad Piper.

Two factors that appeared to contribute to the higher-than-anticipated payment increase are the fee-for-service (FFS) Medicare growth rate, which was estimated to be 4.55% in the Advance Notice and was 5.59% in the final rate notice, and a slightly smaller dent in reimbursement due to an average reduction in star ratings of 0.28%, compared with CMS’s original projection of 0.34%. All-in, the agency projected an average change in revenue of 4.08% for 2022.

The agency’s rate estimates also considered the impact of COVID-19 on health care costs. As the pandemic drags on, some of the care that patients put off in 2020 “is now assumed to be deferred until a later date, and that deferred care is now expected to be more intensive than was assumed in the Advance Notice,” CMS explained.

On the Part D side, CMS finalized the use of the updated RxHCC risk adjustment model, using diagnosis data from 2017 FFS claims and MA encounter data submissions, along with expenditure data from 2018 prescription drug events. With this update, “it looks like they decided to use four years of [claims/encounter] data and drop off 2015,” which is when CMS began mandating the use of ICD-10 in medical coding in Medicare, points out Shelly Brandel, who is also a principal and consulting actuary with Milliman.

Regarding risk adjustment in MA, however, CMS did not follow commenters’ suggestions to address the potential negative impact of the pandemic on risk scores.

Nevertheless, the rate increase is higher than those of the previous three years, serving to ease some concerns related to costs, as plans in 2022 can expect to pay for COVID-19 vaccines and the return of some deferred care, observes Piper.