Medicare Advantage has been held up as a source of solid growth for health insurers. Humana's reach and expertise in the market attracted Aetna's $37 billion buyout bid. But not all Advantage plans are benefiting from the enrollment wave.
In fact, many companies have seen steep declines in their Medicare membership in the past year. Local market dynamics and changes in plan designs because of federal rate cuts have played a role.
There were 17.6 million people enrolled in an Advantage plan as of August. The program has grown by more than 8% annually on average since 2010, even though the Affordable Care Act has reduced federal payments to Advantage plans.
But eight insurance companies lost at least 10,000 Medicare Advantage members between August 2014 and August 2015, according to a Modern Healthcare analysis of government data. Two dozen insurers had a deficit of more than 1,000 seniors.
No insurer lost more members in the past year than Highmark Health, the parent company of a Blue Cross and Blue Shield affiliate, as well as Allegheny Health Network, a provider system. More than 43,000 Advantage enrollees left Pittsburgh-based Highmark in large part because of higher plan prices, Highmark spokesman Aaron Billger said.
Another factor is the ongoing feud between Highmark and in-town rival UPMC. The two health systems have been fighting over contracts and networks, and many Medicare members in western Pennsylvania were uncertain about the status of their UPMC doctors in Highmark's Advantage networks.
UPMC's provider network won out. It has gained more than 20,400 Advantage members year over year, a 16% gain.
Four of the 10 insurers with the largest net Medicare enrollment declines—EmblemHealth, HealthNow New York, Lifetime Healthcare and MVP Health Care—are based in New York, according to the analysis. Executives cited Advantage reimbursement cuts under the ACA and higher regional medical costs as the primary factors.
Advantage membership at HealthNow, the parent of two Blue Cross and Blue Shield companies, dropped 30% in the past year, equating to almost 18,700 enrollees. Steve Swift, HealthNow's chief financial officer, said the insurer's Medicare medical-loss ratio was above 100% last year. Medicare revenue totaled $731 million, but HealthNow spent $740 million on healthcare services.
Beyond the high medical claims, HealthNow paid more for prescription drugs. And it went “well beyond” the high prices of hepatitis C drugs, Swift said. Multiple sclerosis, cystic fibrosis and oncology drugs ate heavily into HealthNow's Medicare premiums as well.
Consequently, HealthNow made several changes in its Medicare products that ultimately drove away patients. Its Blues products no longer have $0 premiums, and the company offered a narrow-network plan with limited hospital choices. Several other insurers that have lost scores of members, including the North Carolina Blues and MVP Health Care, have similarly discontinued plans that were losing money, executives said.
HealthNow is making further changes to reverse its financial troubles. The insurer is investing in more home-care providers and is encouraging physicians to be more thorough in how they code patient conditions, Swift said. More detailed descriptions of high-risk patients lead to higher Medicare payments.
Swift added, however, that there is a “very clear line that we distinguish with our physicians” to not upcode. Over the past few years, many providers and insurers have been accused of upcoding—fraudulently billing the government for more expensive medical codes when less intensive codes should be applied.
Membership also fell at some plans that faced CMS penalties. SummaCare, an insurer owned by Summa Health System in Akron, Ohio, lost 20% of its membership in the past year, and is down to 26,500 members. Last August, the CMS slapped SummaCare with an enrollment sanction stemming from violations involving pharmacy benefits and the appeals process for members. The penalty prevented the insurer from gaining new signups during Medicare's annual enrollment period in the fall. The CMS lifted SummaCare's sanction in March.
Bryan Cote, a managing director covering managed care at Berkeley Research Group, said plans usually lose Medicare members when they do a poor job with customer service or don't have a tightly integrated network. But most are still usually able to turn a profit. The average margin of an Advantage plan in 2012 was 5%, and 91% of Advantage enrollees were in a plan that had a positive margin, according to data from the Medicare Payment Advisory Commission.
Now that the ACA's cuts to Advantage plans are in the past, plans that have lost members are bullish they can rebound. Experts say companies will have to be more proactive about reducing unnecessary services and hospital stays. “Profitability is increasingly going to have to be about how you manage your membership and work with your providers around incentives,” Cote said.
—Data research by Art Golab