As Medicare Advantage turns 25 years old in 2022, the Centers for Medicare & Medicaid Services expects there to be 29.5 million enrollees in MA plans this year—up from 26.9 million in 2021. That’s 47% of the Medicare-eligible population, although enrollment varies at the state and county levels. Given the program’s popularity, provider organizations can expect to see more opportunity to contract with Medicare Advantage for seniors and possibly other populations, too.
Medicare Advantage is one of the most significant programs offered through Medicare and certainly among its most visible. In the latest annual election period that ended Dec. 7, advertising of MA plans to potential enrollees was ubiquitous. It’s understandable: The MA market is highly competitive and differentiation among the plans is challenging. In 2022, enrollees have an average of 38 plans to choose from out of 3,800 offered nationwide, and every MA plan is required to cover everything that Medicare Fee-for-Service covers (except for hospice care), including emergency and urgent care.
Further complicating the spectrum of choices available are the benefits included with MA plans and different types of managed care models. Ninety percent of plans include prescription drug coverage (Medicare Advantage prescription drug plans) along with other popular benefits (see chart on this page), 58% of the plans operate a health maintenance organization plan, 29% offer a preferred provider organization plan and the rest are hybrids. Five companies control 77% of the MA marketplace, with investor-owned sponsors providing coverage of 71% of enrollees. New venture capital-backed startups account for 241,000 lives (1% of national enrollment).
Benefits Included in Medicare Advantage Plans
Enrollment Variation
Enrollment in Medicare Advantage plans is forecast to reach 50% of the entire Medicare population by 2029 or before, according to the Congressional Budget Office; however, enrollment varies widely around the country. For example, Medicare Advantage grew 9.6% from 2020 to 2021 at the same time enrollment in original Medicare fell 2.6%. Enrollment in MA plans has more than doubled since 2011. And, in 2021, 60% of MA enrollees paid no supplemental premium (other than the Part B premium): 5% paid less than $20 per month, 17% paid $20–$49 per month, 12% paid $50–$99 per month and 6% paid more than $100 per month.
Additionally, 19% of enrollees are in group MA plans offered by employers and unions for their retirees, representing a disproportionately large share of MA enrollees in nine states: Alaska (100%), Michigan (49%), West Virginia (44%), New Jersey (40%), Wyoming (36%), Illinois (35%), Maryland (35%), Kentucky (34%) and Delaware (31%).
Overall, enrollment varies widely by state, ranging from 1% in Alaska and Wyoming to over 40% in 19 states (Alabama, Arizona, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Louisiana, Michigan, Minnesota, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Wisconsin) and Puerto Rico. (These overall state enrollment percentages include the enrollees in group MA plans mentioned in the preceding paragraph.)
Enrollment also varies widely by county from less than 1% to more than 70%: In 117 mostly urban counties, which account for 5% of the Medicare population, more than 60% of all Medicare beneficiaries are enrolled in Medicare Advantage. In comparison, in 508 mostly rural counties, which account for 3% of Medicare beneficiaries nationwide, fewer than 10% of beneficiaries are enrolled in Medicare private plans.
Regulatory Oversight
In 2022, regulatory oversight of Medicare Advantage is likely to increase in the following three areas:
Overpayments. Regulators are taking a close look at systemic upcoding, which the Office of Inspector General in the Department of Health and Human Services estimates cost Medicare $140 billion in excess payments to 142 plans in the last decade. The Five-Star Quality Rating System methodology used by Medicare to award bonuses to plans is likely to change as a result: Last year, 81% of all plans received a four- or five-star rating, making them eligible for a bonus, versus only 5% that received one or two stars.
Supplemental coverage. CMS is monitoring access to and the efficacy of the supplemental benefits enrollees receive to ensure equitable access and clinical benefit. A particular focus is the special supplemental benefits for chronically ill enrollees.
Competition in the MA market. Officials in the Department of Justice and the Federal Trade Commission are monitoring consolidation in the MA market and emergence of private equity-backed startups.
Beyond these, Medicare funding is the bigger issue. The HHS Office of the Actuary predicts a funding shortfall in the Medicare Part A (hospital) program beginning in 2026, and CMS has concluded its alternative payment models have had limited success in slowing Medicare spending (See “The Agenda for Value-Based Care” in the July/August 2021 issue of Healthcare Executive). How Medicare Advantage plays into Medicare’s funding narrative will be a prominent focus for regulators this year.
What’s Ahead?
For hospitals, health systems, physician organizations and long-term care providers, monitoring changes to the Medicare Advantage program is vital to planning. There are two immediate opportunities for these providers to participate in MA plans afforded by the growing popularity of the program.
Platform for senior health. Providers can approach MA contracting as an opportunity to innovate their senior health programs, leveraging facilities, digital connectivity and care coordination around a “whole person care” model for patient relationships. Contracts with MA plans require clinically integrated provider networks, wherein primary and preventive health services are intensified, social determinants of health are addressed, and referrals to needed specialty care are closely monitored for medical necessity and cost effectiveness.
Special needs populations. There are also opportunities for providers to contract with MA plans for services needed by enrollees in residential care facilities. These services include adult day programs, in-home personal care services, over-the-counter therapies, home safety modifications, wheelchair ramps and stair rails, meal delivery, transportation, and palliative and hospice care. Notably, 4% of MA enrollees live in residential care facilities where CMS designates Special Needs Plans for people with specific diseases, e.g., diabetes, for certain healthcare such as renal disease or limited incomes (dual-eligibles). MA sponsors are required to offer services included in Medicare Fee-for-Service for SNPs and often include additional services targeted to each population, which is a focus of increased differentiation for MA plans.
Medicare Advantage is managed care for seniors and potentially a template for other populations. It’s certain to play a central role in the U.S. health system’s future.
Paul H. Keckley, PhD, is managing editor of The Keckley Report (pkeckley@paulkeckley.com).