Sarah Jagger, JD, MPH
Former Vice President of Operations
The Medicare Open Enrollment period (Oct. 15 – Dec. 7) is once again upon us and the Centers for Medicare and Medicaid Services (CMS) is projecting significant enrollment growth and premium reductions for the 2020 Medicare Advantage (private managed care) market. Medicare is now the fastest-growing segment of the health insurance market with 10,000 baby boomers aging into the program every day. This is critical to insurers as their traditional business selling health plans to employers and individuals slows. While only one-third of Medicare beneficiaries are enrolled in Medicare Advantage (MA), MA enrollment has grown on average about 8 percent a year and CMS’ projection for 2020 indicates growth over the previous year will increase to 10 percent. The increased growth (2 percent) for 2020 represents over 2 million lives that are up for grabs during this year’s open enrollment period. Suffice to say, these trends are creating significant competition among the health plans that wish to enroll those lives into their MA plans.
Political Reaction to MA Growth
This growth is also fueling a political fire that has candidates at nearly every level of the ballot focused heavily on Medicare. Some Democratic presidential hopefuls are strongly advocating for Medicare for All or universal coverage. Medicare for All would replace the current health system that they say “puts profits over people” with a federal plan that would cover everyone, effectively ending private insurance.
And the Trump Administration is fighting back. HHS Secretary Alex Azar points to a projected 14 percent reduction in the average 2020 monthly MA Plan premium and a 32 percent increase in the number of MA plan choices over last year as evidence that the Administration is delivering on its promise to improve Medicare Advantage. Under a recent Executive Order (EO), Protecting & Improving Medicare for Our Nation’s Seniors, President Trump sought to draw a sharp distinction from universal coverage and many of the other plans supported by Democrats. The EO requires CMS to implement regulatory programmatic changes that promote market-based approaches the Administration believes will further increase competition and protect beneficiary choice. Changes include but are not limited to the following:
- Designing innovative MA plan and benefit structures
- Expanding supplemental benefits and telehealth
- Developing payment models that allow beneficiaries to share in the savings
- Adjusting network adequacy requirements
- Eliminating regulatory requirements that create an administrative burden for providers
- Increasing service and product innovation by reducing regulatory requirements
- Increasing beneficiary access to quality data
Early Experience with Supplemental Benefits Highlights Challenges
Many of these changes will take time to design, plan, and implement, so it is difficult to assess (based on the scant details of the EO) whether these proposed changes will, in fact, move the system in the right direction. However, as we discussed last fall in our article Medicare Advantage: Seeing the Value in Addressing the Social Determinants of Health, beginning in 2019, insurers were given the authority to provide beneficiaries with expanded supplemental benefits. Utilizing rebates, plans can offer beneficiaries flexible benefits that fall into two categories: 1) Reduced cost-sharing for services “medically related” to the treatment of certain health conditions and 2) Supplemental benefits that assist in managing care.
Early experience with these expanded benefits and reduced cost-sharing may provide some insight into how market-based approaches to health care reform will impact both the system and those it is designed to serve.
With the new benefit year upon us, plans have revealed their 2020 offerings which include a broad range of supplemental benefits including transportation, meal delivery, alternative medicine (e.g., massage therapy, acupuncture), adult daycare, nutritional counseling, home delivery of food staples, pest control, carpet shampooing, air quality devices, home safety improvements, and support for service animals, as well as disease-specific targeted services such as diabetes special health coaching.
Most of these offerings reflect an expansion beyond the limited benefits that were provided in 2019 (i.e., transportation, meal delivery, personal care). Initial research on MA plan supplemental benefits for 2019 found that few plans offered options under the new flexibility. Most plans that tested the waters with new benefits only did so in select areas. Of those that did, 55 percent of the offerings were for reduced cost-sharing and 44 percent represented new supplemental benefits.
A recent Robert Wood Johnson Foundation report written by the Urban Institute included summaries of findings from stakeholder interviews that assessed how health plans were responding to CMS’ new flexibilities in offering supplemental benefits for 2019 and 2020. Interviewees, which included MA insurers, industry experts, and stakeholders, largely attributed the lack of uptake in 2019 to the short time MA plans had to respond to CMS’ new regulations. They generally viewed the new supplemental benefit flexibility as a positive step; however, they also felt it is currently insufficient to spur big changes in the market. The following reasons were identified as barriers or challenges to a broader implementation of the opportunity that supplemental benefits offer:
No new funding. CMS did not provide new funding to support the addition of supplemental benefits. Benefits must be financed through existing rebates that plans had already fully committed to other priorities before 2019. Rebate amounts vary widely across the nation and are small, averaging $107 per member per month in 2019. Therefore, most plans cannot develop a national approach to offering new benefits.
Lack of experience addressing social needs. Industry experts noted that MA insurers seldom have experience addressing social needs and must learn how to do so. Those plans that also have a Medicaid book of business may have a leg up on the rest of the competition. However, even Medicaid health plans have limited experience given the brief exposure most Medicaid programs have with Managed Long-Term Services and Supports. Additionally, MA insurers expressed that, for benefits addressing unmet social needs to be scalable, considerable technical assistance is needed to prepare the service provider community. MA plans must identify providers and negotiate contracts by county making implementation on a larger scale challenging for health plans.
CMS’ limit on targeting. Current rules only allow insurers to target benefits based on clinical criteria, specific chronic conditions such as diabetes and chronic heart failure, rather than social needs. Interviewees expressed interest in an expansion of the current rules which would allow insurers to target based on social needs (i.e., homelessness, food insecurity) or other criteria that are often correlated to high-risk for hospitalization (i.e., frequent utilization of the emergency room). While research has shown that the calls for targeting and addressing social needs and other non-medical criteria are sound, there are long-standing legal barriers in place that would require significant changes to allow federal funding to pay for non-medical services. These changes would go well beyond today’s discussion on supplemental benefits in Medicare; ultimately requiring CMS to make changes to the laws and regulations that govern both the Medicare and Medicaid programs.
Trade-offs and return on investment. Insurers expressed concern about investing in benefits that only reach a small number of their enrollees because, in MA, supplemental benefits are used to attract enrollees and can confer a competitive advantage. When rebates are limited, insurers must decide how to spend these resources, assessing trade-offs between investing in lower-cost benefits that may broadly attract more enrollees and investing in higher-cost benefits that reduce spending on very high–cost patients. As a result of the limited funding available, these benefits’ potential to address unmet social needs may be limited for the foreseeable future.
Estimates for 2020 Supplemental Benefit Offerings
Despite these challenges, industry experts expect to see more use of the MA benefit flexibility in 2020, including scaling up the geographic reach of some benefits introduced in 2019 as insurers gain more experience. CMS estimates that about 500 plans will offer about 2.6 million enrollees health-related supplemental benefits such as adult day programs or caregiver supports. About 250 plans will offer non-medical supplemental benefits to about 1.2 million enrollees.
What does this mean for Medicare beneficiaries today?
If projections come to fruition, Medicare beneficiaries may have many choices to make for the plan year 2020. The initial decision is whether to choose traditional Medicare or Medicare Advantage. And if Medicare Advantage is their choice, they will likely have several plans and benefit structures to choose from. These choices can be confusing even to those of us who work in the health care industry.
Medicare.gov provides beneficiaries access to a Plan Finder tool to compare choices and aid in the Open Enrollment process. There are also protections in place for Medicare beneficiaries. Beneficiaries who select an MA plan during open enrollment have a 90-day window to switch to another MA plan or to original Medicare and a stand-alone prescription plan if they determine their original selection is not a good fit.
However, when it comes to new supplemental benefits Medicare beneficiaries need to be careful and read the fine print. Not all benefits are available to everyone who enrolls in the particular plan offering them. Some may only be extended to people with certain chronic illnesses or conditions and even then, the plan will only assess an individual’s eligibility once enrolled. Therefore, advocates strongly urge beneficiaries not to make their selection solely on the marketing of supplemental benefits.
Where can beneficiaries obtain assistance?
In addition to the information available on the Medicare Plan Finder Tool or via the telephone at 1-800-MEDICARE, beneficiaries can access enrollment counseling through a variety of local, state, and national Medicare advocacy organizations.
The Administration for Community Living, Office of Healthcare Information and Counseling manages the State Health Insurance Assistance Program (SHIP) grant. The SHIP mission is to empower, educate, and assist Medicare-eligible individuals, their families, and caregivers through objective outreach, counseling, and training, to make informed health insurance decisions that optimize access to care and benefits. The SHIP vision is to be the known and trusted community resource for Medicare information.
All states receive a SHIP grant to provide free, counseling services that help seniors understand their Medicare, Medicare Advantage, Medigap (Medicare Supplemental Insurance), and Medicaid benefits. Individuals with Medicare-related questions may call a SHIP counselor whether or not they are enrolled in Medicare. Each state has a toll-free telephone number. Some states use abbreviations other than SHIP, including SHIIP, SHINE, HICAP, and SHIBA.
What does this mean for providers and community-based organizations?
As insurers significantly expand their MA products across new markets and larger portions of the Medicare population enroll in these plans, providers across the country must be prepared to make investments in their contracting and billing departments to ensure they have the resources available to manage these processes.
This is especially true for social services providers and community-based organizations that have not yet participated in the private health care space.
Prior to engaging in any effort to pursue a new line of business or expand one’s footprint in the market, Atromitos advises providers to take steps to understand the marketplace. With an informed perspective of the marketplace, an organizational assessment can be conducted to assess the readiness of the organization to contract with the plans and deliver services. Finally, organization leadership should conduct a strategic planning session to ensure that expanding into the Medicare market aligns with its mission and vision. Once a strategic plan is laid out, the results of the assessment can be leveraged to develop an implementation plan that executes the strategy.
Where can providers obtain assistance?
Atromitos is a one-stop shop for providers and community-based organizations who seek to navigate the rapidly evolving healthcare landscape.
We work with our health care partners to develop a strategic path forward guided by data and intel derived from market assessments. We also understand that health care is a highly regulated industry. Our health policy experts can help you stay on top of legislative and regulatory changes, as well as help you advocate for policies and regulations that allow you to meet the needs of the patients and communities you serve. As we shift to a value-based care system, and eventually, to a system focused on achieving wellbeing, partnerships and strategic relationships are critical.
Nonprofits and Community-Based Organizations (CBOs) play critical roles in the communities you serve. Whether providing free healthy meals; adult literacy and education; safe, affordable housing; or something else entirely, nonprofits and CBOs provide the support that millions of people rely on. To assure you can raise the funds and awareness you need to focus on the programs you deliver, Atrómitos works hand-in-hand with you to assure that you have the necessary business capabilities, such as thoughtful business and strategic plans that support efficient operations and long-term growth.
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