Payers see growth opportunities in Medicare Advantage
The biggest Medicare Advantage (MA) payer UnitedHealth Group believes that eventually half of Medicare beneficiaries will be covered by MA.
UnitedHealth is benefiting from the program and saw its revenue from Medicare increase by 17.2 % in the second quarter to $2.5 billion.
- In other MA news, Humana plans to add 500 employees to handle MA applications during the open enrollment period, which starts on October 15.
Payers view the MA market favorably because of the monthly risk adjustment payments for each enrolled beneficiary — based partly on each member’s health status — and the aging population. About one-third of Medicare beneficiaries are on MA plans and payers expect that number will grow as more Baby Boomers head into retirement age.
It could be argued that the MA market has been more stable than the Affordable Care Act (ACA) exchanges. While the ACA exchanges have seen more than 20% premium increases over the past year, the average MA premiums are $36 per month in 2017, which is a dollar less than last year.
The MA market is largely contained to a handful of payers. UnitedHealth, Humana and Blue Cross Blue Shield affiliates make up 57% of Medicare Advantage enrollment. The top eight payers in Medicare Advantage comprise about three-quarters of the market, according to the Kaiser Family Foundation (KFF).
UnitedHealth picked up more than 800,000 MA beneficiaries over the past year as its market share increased from 21% to 24%. The payer is a major player in the MA markets in 42 states and the District of Columbia, according to KFF.
Meanwhile, the second biggest payer in MA, Humana, is also looking to expand MA offerings after dropping out of the ACA exchanges market in 2018.
Though payers are increasingly showing interest in MA, federal investigators are also looking into how much MA is paying insurers. UnitedHealth is involved in two whistleblower lawsuits alleging that MA overpaid the insurer by billions. The Department of Justice (DOJ) joined the lawsuits, which allege that UnitedHealth changed diagnosis codes to make patients seem sicker, which resulted in higher reimbursements to the insurer.
The DOJ said UnitedHealth “knowingly disregarded information about beneficiaries’ medical conditions” and “ignored information about invalid diagnoses from healthcare providers with financial incentives to furnish such diagnoses.”
UnitedHealth recently asked a federal court to drop one of the lawsuits. The payer alleged that the suit “fails properly to plead two elemental aspects of its claims: That United knowingly submitted false attestations, and that the government would have refused to pay United’s claims if it had known the truth.”
UnitedHealth isn’t the only payer in DOJ’s crosshairs. The agency is also investigating payments to other insurance companies involved with MA. The CMS estimated that it overpaid $14.1 billion in 2013 to MA organizations. Medicare Advantage payers received about $160 billion in 2014. The CMS estimated about 9.5% of those payments were improper.
The overpayment issue is one to watch in MA. Another matter to pay attention to is whether other payers enter the market or expand their offerings to break up the market dominance by a small number of payers. KFF said 17 states only have one company offering plans to more than half of MA beneficiaries, which doesn’t make for a competitive market.
However, as UnitedHealth, Humana and other payers continue to find success in the MA market, expect more payers to devote efforts to expand their offerings and test the MA market themselves.