I have been in and around national health policy and politics for 20 years. For over a decade, I have watched Medicare Advantage (MA) up close here in Washington, DC. For most of that time - whether representing consumers, insurers, policy thought leaders or doctors - I’ve regularly engaged with Congress and CMS regarding MA. But what is happening right now is sort of unprecedented. First, in order to navigate where we are going, it is necessary to know a bit of critical decade-old MA history:
- In what now seems like ancient history, the Affordable Care ACT (ACA) required parity between Traditional Medicare payment and MA. Those of us old enough to remember this debate might recall that during the 2012 presidential campaign, Republicans argued Medicare was being cut by over $700 billion. According to the Commonwealth Fund
, the ACA reduced payments to MA plans by about $136 billion, which was part of that $700 billion number. The policy reason behind this, however, was sound - to bring MA payments to insurers in-line with those in Traditional Medicare.?
- During this time, MA insurers feared
these decreases would lead to reductions in MA enrollment. In fact, quite the opposite happened, as MA enrollment greatly accelerated and now sits at more than half
of the entire Medicare population.?
- The Kaiser Family Foundation says
this acceleration occurred because of:The attraction of extra benefits offered by most plans, such as vision, hearing, and dental services
The potential for lower out-of-pocket spending, particularly compared to traditional Medicare without supplemental coverage; and?The simplicity of one-stop shopping, in that enrollees do not need a separate Part D prescription drug plan or supplemental coverage
**Extra Thought Bubble: I also think the idea that baby boomers are comfortable with the concept of managed care has helped this trend - they spent a lifetime in employer sponsored insurance
and are familiar with the concepts and brand names available in MA. Of course, marketing prowess
, increasingly scrutinized
by regulators, likely also plays a role. Side note: CMS rejected
almost 1 in 3 MA commercials this open enrollment period, wow.**?
7 Big - And Sometimes Opposing - Crosscurrents Happening Right Now
While there is a lot more in MA policy that occurred over the past decade, I wanted readers to appreciate some of these past actions in order to understand what is happening right now in MA…which is a lot. The MA market is changing more rapidly than at any other point in the decade-plus I’ve been watching it up close. Some, but not all, of the catalysts forcing this change include:
- The v28 risk adjustment changes
finalized last year. This is a deliberate CMS policy aimed both at reducing payments to insurers and reconstituting codes used for risk adjustment which CMS thinks
have been abused by “upcoding,” or the process of some insurers and providers being accused of inflating the sickness of their patients in order to glean additional payments. And CMS seems to not be holding back, as the most recently released MA payment notice
, as proposed, will reduce base payments
in 2025 by .16%.?
- The documented - even if disputed - gap
between spending on MA versus Traditional Medicare. MedPAC recently said 2023 MA payments were $88 billion more than Traditional Medicare. On some level, this is unfair as the two programs generate their payments in totally different ways. Traditional Medicare providers are paid for services rendered and MA is paid based upon risk adjustment, patient complexity, and, increasingly, by taking on the financial risk for the health of their patients. That’s one reason why CMS released their recent Request for Information on MA data and transparency - (my analysis here
) - they want to be able to compare the two programs more perfectly.?
- Bipartisan
and administration-led
efforts at increasing MA transparency are rising, augmented by pressure towards a Democratic led CMS via advocacy from progressive
Members of Congress and their interest groups
.?
- The rise in utilization
affecting the public insurers and a forecasted decline
in MA profitability as put forward by Moody’s. As Q4 2023 earnings calls have happened, insurers have been explicit
in saying this is all going to hurt their bottom line
.
- CMS’ 2030 value-based care goal
, in which the agency wants as many Medicare beneficiaries in an accountable relationship as possible, has juiced the value-based care market. CMS is in a bit of a catch-22 here because it’s challenging to put forward this goal while also appearing to want to shrink the MA market. MA is, of course, the primary place value-based care happens in Medicare.?
- Regulation and intense debate about prior authorization
has hurt the standing of MA in Washington on a bipartisan basis; just this week the Finance Committee held a hearing on artificial intelligence in healthcare where Chairman Ron Wyden (D-OR) raised concerns about the tool being used to deny care
. While we can argue the merits of Traditional Medicare mostly being untethered to quality, we can’t argue the fact that if you’re on it, you can see any Medicare-accepting doctor at any time, for any reason, while MA beneficiaries are, in fact, managed.???
- Finally, hospitals dropping
MA plans is a fascinating development. Are they doing it because primary care provider value-based arrangements are keeping people healthier and out of the emergency room? Are they doing it because they are unable to negotiate rates higher than what the Physician Fee Schedule allows for Traditional Medicare? Are they doing it for political reasons to weaken the hand of insurers in Washington? Maybe parts of each, but when Members of Congress see their constituents with the greatest propensity to vote unable to go to the local hospital, they’re going to care…a lot.
Let’s be clear, the insurers and the MA industry are not without agency. On January 26, 2024, immediately prior to the release of the 2025 rate notice, 61% of the United States Senate wrote a bipartisan letter
to CMS expressing support for the MA program. Getting 61 U.S. Senators to do anything together is a challenge, so this letter matters.?
Putting all this together, however, there is a new and fascinating mixing bowl of both MA public policy headwinds and advantages (see what I did there?) being stirred. Add in a push towards full risk
, vertical integration
, consolidation, market saturation, and the fact that MA is now the dominant
form of Medicare coverage for people of color, and you see these are just a sample of the stimulants forcing change that should inform how organizations think about MA advocacy. In the immediate term, if this year’s rate notice is finalized as is, I suspect we will also see fewer $0 premium plans in 2025 and may notice a reduction both in the number of offerings in certain markets as well as available supplemental benefits.?
While I do not at all doubt the staying power of MA, the market is in flux now more than I have ever seen. Knowing the situation is one thing, but what to do about it is another. Platform Government Strategies is an expert in helping organizations navigate these choppy waters which will continue for the foreseeable future.??
If you or your teams have questions, or want to explore other areas of government health policy, messaging and advocacy, consider visiting our website, Platform Government Strategies
, and the services
we offer. You can also email [email protected]
.
Previous Platform Government Strategies Products
