MA market shake-up poses risky opportunities for small insurers

When UnitedHealthcare halved the number of Medicare Advantage plans it offers in New York City, it meant nearly 31,000 people had to choose new coverage for next year.

The UnitedHealth Group subsidiary's membership loss, as measured by the data analytics firm Deft Research, may be MetroPlusHealth’s gain. The NYC Health + Hospitals insurance division enriched its supplemental benefits and ramped up its marketing efforts to capture some of those customers, Chief Growth Officer Roger Milliner said.

Related: In a twist, Medicare Advantage insurers try to avoid selling plans

“I definitely think that consumers will shop around,” Milliner said.

That's the case in many parts of the country during the annual enrollment period for 2025, which ends Dec. 7, after major Medicare Advantage insurers such as UnitedHealthcare, CVS Health subsidiary Aetna and Humana fled underperforming geographic markets in response to shrinking profit margins that have investors on edge.

Nationally, about 2 million people, or 7% of Medicare Advantage enrollees, will need to secure new coverage because their carriers either discontinued their plans or left their counties completely, according to an analysis from the healthcare consulting company ATI Advisory. That compares with an average of 100,000 in previous years.

Regional health insurance companies could take MetroPlusHealth’s view that this disruption is a golden opportunity to gain market share previously held by deep-pocketed national rivals against which they have struggled to contend.

Yet insurers have cause to view this development with concern: The big companies pulled out because they struggled to make money in those places and on those members.

"It does keep me up at night,” said Nicholas Kraft, chief growth officer at Capital District Physicians Health Plan, which sells Medicare Advantage plans in New York state.

“It’s traditionally been pretty hard to compete against Humana and Aetna, but there's a reason they exited the geography, right?” said Alexis Levy, a senior partner at HealthScape Advisors who tracked which markets Medicare Advantage insurers exited. “If you're going to pick up membership, it's going to be pretty important to understand the characteristics of those members,” she said.

MetroPlusHealth is bullish, Milliner said, and aims to increase its Medicare Advantage membership by 8% to 13,000, or double the rate the Centers for Medicare and Medicaid Services anticipates the overall market to grow.

UnitedHealth, Aetna, Humana exits

Medicare Advantage insurers tinker with products and geographic footprints every year. But unexpectedly high medical costs, regulatory pressures and investor angst motivated more of them than ever before to contract.

Beneficiaries will have an average of 34 Medicare Advantage plans with prescription drug coverage from which to choose in 2025, down from 36 this year.

Most of those losing coverage have been Humana and Aetna members. The two companies made the largest plan cancelations and service area reductions, driving a combined 1 million people toward other companies or traditional Medicare for 2025, the Deft Research analysis of CMS data shows.

More than 277,000 Medicare Advantage customers in populous New York state, or 27%, will have to change plans because of market exits this enrollment period, according to Deft Research. That's the most of any state.

But the greatest proportion of Medicare Advantage members in need of new plans live in rural areas of states such as Vermont.

In Vermont, 67% of current Medicare Advantage enrollees, or 25,600 people, will have to replace their policies after Centene and MVP Health Care decided not to sell their anymore and UnitedHealthcare terminated several plans, Deft Research reported.

“In the face of necessary strategic change and given the knowledge that certain upcoming regulatory adjustments are inevitable, we find ourselves needing to narrow our focus,” MVP Health Care President Dr. Richard Dal Col said in a statement.

MVP Health Care had marketed a co-branded Medicare Advantage product with Burlington-based University of Vermont Health Network, a nonprofit academic health system.

Providers may benefit from these shake-ups if a significant portion of people losing their Medicare Advantage plans respond by enrolling in fee-for-service Medicare instead, Levy said. Providers have grown deeply frustrated with Medicare Advantage prior authorization requirements and payment delays, which aren't factors under traditional Medicare, she said.

Enrollees who drop Medicare Advantage usually have to subject themselves to underwriting to qualify for Medigap supplement plans that wrap around fee-for-service Medicare. But that rule doesn't apply when a beneficiary's carrier pulls out, which triggers a special enrollment period for Medigap.

Medicare beneficiaries who need the most care — and therefore are the least desirable to Medicare Advantage insurers — are the most likely to pursue this option, said Ruby Kirby, CEO of Bolivar General Hospital and Camden General Hospital, critical access hospitals affiliated with Jackson-based West Tennessee Healthcare.

This is a boon to providers because fee-for-service Medicare tends to pay better, and more reliably, than Medicare Advantage, Kirby said. But this means the cost to taxpayers will be higher because insurance companies don't want to bear the burden, she said.

“I frankly don’t feel that’s something we should be celebrating, because it’s gaming the system," Kirby said.

In upstate New York, people who need to replace their UnitedHealthcare, Aetna and Humana plans are signing up with Capital District Physicians Health Plan, Kraft said.

The nonprofit is struggling to steady growth after large national insurers eliminated plans from its service area, cut broker commissions and restricted how agents could enroll new members, Kraft said. Capital District Physicians Health Plan, or CDPHP, aims to maintain Medicare Advantage enrollment at 65,000 in 2025.

“All of this is to stifle growth. The biggest effect on us is that more of their members are moving to CDPHP,” Kraft said. “It’s something we have to think deeply about.”

Aetna, Centene, Humana and UnitedHealthcare did not respond to interview requests.