skip to Main Content

Health Plans And Their Members Win in Medicare Advantage and Part D

Health Plans And Their Members Win In Medicare Advantage And Part D

With uncertainty over the state of Medicaid in the long term and the looming collapse of the Exchanges, health plans are seeking refuge to meet financial goals and membership growth in the Medicare Advantage (MA) and standalone Part D (PDP) programs.

Rates in the MA program were realigned with the passage of the Affordable Care Act (ACA) in 2010, but MA and PDP plans remain significant moneymakers for health plans large and small.

The Centers for Medicare and Medicaid Services (CMS) recently released data showing how vital and important MA and PDP are to health plans and the members they serve.

Some key facts:

  • Enrollment in MA plans is projected to be at an all-time high in 2018. An expected 20.4 million Medicare beneficiaries will be enrolled in MA. This is a 1.7 million (9 percent increase) from 18.7 million in 2017.
  • MA-Part D (MA-PD) plans (the most popular plan type where one plan serves all medical and drug needs for a member) will increase from 363 in 2017 to an expected 384 in 2018.
  • About 99 percent of Medicare beneficiaries will have access to at least one MA health plan in their area.
  • The average number of Medicare Advantage plan choices per county will increase by 2 plans – up to approximately 29 plan choices per county.
  • More than 85 percent of Medicare beneficiaries will have access to ten or more Medicare Advantage plans in 2018.
  • All Medicare beneficiaries will have access to at least one PDP plan.
  • About two-thirds of plans are network Health Maintenance Organizations (HMOs), which offers plans the ability to tightly control spending through authorizations as well as choosing providers wisely. But the Preferred Provider Organization (PPO) MA model, a much looser plan and network offering, will grow by about 25 percent as well.
  • While Medicaid’s future is cloudy, health plans are still increasing their services to dual eligibles, those who have primary Medicare coverage by virtue of age or disability and have secondary Medicaid coverage usually by virtue of low income. The risk on these individuals is higher, but the premium and potential margin are worth the gamble. In addition, plans are serving other vulnerable populations in greater numbers. In 2018, there will be about a 13 percent increase and 20 percent increase in Dual Eligible Special Needs Plans (D-SNPs) and Institutional SNPs (I-SNPs), respectively. The latter are plans that usually have a large number of dual eligibles and serve those in nursing homes and similar settings or at risk of institutionalization.

Medicare beneficiaries do well in private plans because the rate-setting process targets revenue to enhanced member benefits compared with the traditional program. The MA rate-setting process encourages plans to find ways to reduce overall costs of the basic Medicare benefit, which often is very easy as rates are set against an inefficient and fraud-, waste- and abuse-ridden fee-for-service program. A portion of the difference between the base Medicare bid and the benchmark rate in the county is saved by the federal government and the rest is passed through by plans to members as enhanced benefits — reduced deductibles and cost-sharing, inpatient days and overall out-of-pocket-cost protections, and additional benefits. Four Star and above plans get an additional 5% quality bonus to pass on to member benefits.

Thus, enrolling in MA provides significant advantages for members and the savings is significant:

  • About 39 percent of all plans charge no additional premium despite enhanced benefits.
  • Overall, premium costs will go down next year by almost 2 percent to $30 per month.
  • Over the past three years, the average monthly premiums in MA have decreased, from almost $33 per month in 2015.
  • Approximately 77 percent of MA enrollees in 2017 will have the same or lower premium in 2018 if they continue in the same plan.
  • The average monthly premium for a basic Medicare prescription drug plan in 2018 is projected to decrease by $1.20 to an estimated $33.50 per month (a rough 2 percent reduction).
  • The basic premium for an average Medicare prescription drug plan is projected to decline for the first time since 2012.

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

Back To Top