Medicare Advantage premiums steady as membership grows

Dive Brief:

• In its “Medicare Advantage 2017 Spotlight: Enrollment Market Update,” the Kaiser Family Foundation (KFF) reported that enrollment in Medicare Advantage plans is 33% (or 19 million) of Medicare beneficiaries this year.
• UnitedHealth and Humana combined to account for 41% of enrollment. KFF said 17 states have one company offering plans to more than half of Medicare Advantage (MA) enrollees, which is “an indicator that these markets may not be very competitive.”
• Average Medicare Advantage premiums are stable at $36 per month in 2017, which is a dollar less than the previous year.

·      Dive Insight:

·         Medicare Advantage (MA) has bipartisan support and is popular with members. KFF estimated membership could rise to 41% of Medicare beneficiaries over the next decade as the federal government welcomes more private payers to take a larger role in Medicare.  

·         “As Medicare Advantage takes on an even larger presence in the Medicare program, careful stewardship and oversight by policymakers is needed to make sure that plans provide value to the Medicare program,” according to KFF.

·         As MA has become a more popular option for seniors, there has also been greater interest in the program. Ten groups, including the American Medical Association, the Medical Group Management Association and the American College of Surgeons, recently sent a letter to CMS Administrator Seema Verma asking that CMS add MA as an alternative payment model under MACRA starting in 2019. Currently, clinicians with MA contracts won’t “get credit for their efforts until 2021,” the groups wrote.

·         The federal government, though, has been watching the MA program for fraud cases. The Department of Justice (DOJ) is investigating alleged overbilling and fraud. The biggest cases involve Medicare Advantage’s largest payer, UnitedHealth. The DOJ alleges in a $1 billion overbilling case that UnitedHealth changed diagnosis codes to make patients seem sicker, and officials performing these deceptions collected bonuses. The federal government also alleged that the “data-mining projects” could raise MA reimbursements to UnitedHealth by nearly $3,000 for every new diagnosis.

·         KFF found that in six states (California, Florida, Hawaii, Minnesota, Oregon and Pennsylvania), at least 40% of Medicare beneficiaries are in Medicare Advantage plans. There are 13 states with less than 20% of Medicare beneficiaries in Medicare Advantage.  

·         A small number of large payers dominate the Medicare Advantage market. UnitedHealth, Humana and Blue Cross Blue Shield affiliates make up 57% of Medicare Advantage enrollment. The top eight payers in Medicare Advantage make up about three-quarters of the market, according to KFF.

·         UnitedHealth’s plans grew by more than 800,000 beneficiaries over the past year and its market share increased from 21% to 24%. UHG is a “major player” in the MA markets in 42 states and the District of Columbia, according to KFF.

·         The average monthly premium is $36, but there is wide variety by state. The monthly charges range from Florida ($6) to Minnesota ($131), which has cost plans rather than risk-based plans. The average monthly premiums are more than $70 in six states: Hawaii, Massachusetts, Michigan, Minnesota, North Dakota and Pennsylvania.

·         There are also cost fluctuations within states. For instance, in California, Medicare Advantage beneficiaries pay $4 per month in Los Angeles County, but $66 per month in San Francisco County.

·         KFF found the average out-of-pocket limit was $5,219, which was $4 less than 2016, but much higher than the $4,313 average in 2011.

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