Between now and Oct. 15, when open enrollment begins for Medicare Advantage, health insurers are likely to drop some of their MA plans. Last month, MVP Health Care in Schenectady, N.Y., dropped two of its five MA plans, saying it could no longer afford to offer them.
When health insurers drop these plans, they are likely to leave questions unanswered, as MVP did. Gretchen Jacobson, an associate director with the Kaiser Family Foundation’s Program on Medicare Policy, suggests some questions health care journalists might want to pursue, such as:
- What are the quality scores (called star ratings) for the plans being dropped?
- In which counties do MA plan members live?
- How did the negotiations go with physicians, hospitals, and other providers serving members in the plans being dropped?
Cuts in federal reimbursement for MA plans have dropped payment from an average of 114 percent of Medicare fee for service rates to an average of 106 percent of FFS rates starting on Jan. 1 for the 2015 plan year, Jacobson said. By 2017, the federal Centers for Medicare & Medicaid Services plans to cut reimbursement rates to 101 percent of Medicare fee for service payment.
Depending on which counties they serve, some plans will receive a bit more than 106 percent next year and some will get a bit less. That’s why it’s important to ask about which counties are involved. If a particular county has a large number of high-cost patients, meaning those with chronic and costly health conditions, then the plan may want to leave that county, Jacobson said. MVP Health Care said it would continue to offer MA plans in every county currently served.
Star ratings are another factor affecting MA plan revenue. CMS ranks plans from one to five stars based on the quality of care they deliver. In 2015, only plans with four or five stars will get bonus payments; any plans with three or fewer stars will not get a financial bonus.
The third factor likely to affect an insurer’s thinking about MA plans is how much the plans need to pay physicians, hospitals and other providers. If the providers asked for steep rate increases, the insurer may find it difficult to continue to offer its plans, Jacobson said.
Open enrollment for MA plans runs from Oct. 15 through Dec. 7. Therefore any insurers dropping MA plans will need to notify members in the next two weeks to give them a chance to find new plans, Jacobson said. After MVP announced on Sept. 16 that it was dropping two of its five MA plans, it sent letters to its affected members: 17,000 seniors in Rochester, N.Y.; 1,500 in Albany, N.Y.; and about 210 members in Vermont, MVP said.
A nonprofit health plan, MVP expects to run a deficit in 2015, as Patti Singer reported in the Democrat & Chronicle.
Some of the coverage of MVP’s decision focused on what MVP identified as the problem: cuts in federal payment for MA plans and the increased costs MVP faces because of a two percent tax on net premiums under the Affordable Care Act.
It’s not unusual, however, for health insurers to drop and add MA plans each year. “We will see plans exiting markets, and plans will enter the markets as well, but you don’t usually get announcements of new entrants as much as you get announcements of exits,” Jacobson explained.
In 2013, health insurers offered 2,074 MA plans, dropping 349 plans while adding 289 new ones, leaving 2,014 operating this year, according to a report by the Kaiser Family Foundation, “Medicare Advantage 2014 Spotlight Plan Availability And Premiums.” A similar report for 2015 will be released this fall, Jacobson said.
“We don’t expect to see any drastic differences in how many plans are offered next year,” Jacobson commented.
“Medicare Advantage plans are still doing well even after the recent cuts,” said Ariel Gonzalez, a director in government affairs for AARP. “What’s going on is that as Medicare Advantage plans feel the effects of the cuts in payment, some will pass those cuts through to beneficiaries in the form of premium increases.”
It’s important to note that because MA plans still get 106 percent of what Medicare pays for traditional fee for service care, those members in fee for service plans are subsidizing members in Medicare Advantage plans, Gonzalez added. “The changes that Congress put in place to cut what MA plans are paid are designed to reduce this disparity over a number of years,” he said. “And we support bringing these payments inline because most beneficiaries are in traditional fee for service Medicare and they make only $23,000 a year or less. Also, they tend to be older and may be sicker than the younger and healthier members who are just out of the workforce and who make up much of the membership in Medicare Advantage plans.”
Two days after MVP Health Care’s announcement, CMS projected that enrollment in MA plans would reach an all-time high and that health plan premiums would increase by $2.94 per month to $33.90 per month. The average premium will rise by only $1.30, however, because beneficiaries likely will enroll in lower cost plans, CMS said. MVP Health Care said its MA premiums will rise by $29 to $64.50 monthly, or about 45 percent on average.
One important point to remember about MA plans is that some health policy experts believe they are overpaid. A report in 2012 from the Commonwealth Fund showed that MA plans have consistently been more costly than traditional Medicare while the quality of care isn’t any better.
Earlier this year, a report from the federal Department of Health and Human Services showed that many MA plans have overbilled the government for years. The report did not name any plans suspected of overbilling, according to an article by Fred Schulte, a senior reporter for the Center for Public Integrity.
In June, Schulte, along with the center’s David Donald and Erin Durkin, reported that MA plans were wasting billions of dollars annually by manipulating Medicare’s risk score to inflate the level of illness among plan members. In July, Schulte wrote about how the center’s team did the reporting for its MA project in an article for AHCJ.
(Editor’s note: This post was updated to add quotes from the AARP representative.)