Competition drives Medicare Advantage plans to offer special benefits in 2022

A quarter of Medicare Advantage plans now offer chronically ill beneficiaries healthy food, transportation and other special supplemental benefits in 2022, representing a nearly 40% year-over-year increase in carrier uptake of these unconventional services, a new study found.

The report, released by consultancy ATI Advisory on Wednesday, found that 1,292 Medicare Advantage plans offered special supplemental benefits this year, up 383.8% from 267 carriers in 2020, the first year plans were able to offer chronically ill patients these benefits, the report said. Greater understanding of how the social determinants of health can impact individual conditions and competition in the Medicare Advantage market is driving carrier adoption of these unique products, said Tyler Cromer, a partner at ATI and co-author of the report.

"We saw really significant growth in Medicare Advantage enrollment from 2021 to 2022 and, within that growing pie, there are a lot of folks that are competing," Cromer said. "Plans see these benefits as a way to differentiate themselves to both new members and to current members. They're hugely important."

Introduction of these benefits came in 2018 after Congress passed the CHRONIC Care Act, bringing legislation allowing Medicare Advantage plans to offer special supplemental benefits for the chronically ill to the table. These benefits initially had to be primarily health related, including items such as in-home care, therapeutic massage and support for caregivers. After 2019, authorities granted plans authority to offer such non-medical items to enrollees as food and transportation. Insurers finance these items through premiums and rebates and they can count toward patients' medical costs, allowing payers to lower their medical loss ratio.

2020 represented the first year that plans could offer enrollees these benefits, and early adopters included Centene and Anthem, Cromer said. As consumers deferred care during the COVID-19 pandemic, these benefits grew in popularity, with plans increasingly looking to add new kinds of benefits to avoid returning excess profits to the federal government. CMS has proposed required Medicare Advantage plans to report the amount they spend on these supplemental benefits.

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This year, the most common non-medical special supplemental benefit insurers offered was food, with 763 plans across 42 states and Puerto Rico adopting the product, representing a 121% year-over-year increase in the number of carriers, the report said. The number of plans offering transportation services and general support for living likewise more than doubled from 2021.

Humana, in particular, doubled down on offering general support for living as a benefit for enrollees in 2022, helping to pay beneficiaries' rent, utilities or secure a place in an assisted living community, said Elexa Rallos, an analyst and co-author of the report.

"Plans definitely view these as a way to hopefully kind of attract beneficiaries. But I think we should put a point that it is still early and plans are still learning how to appropriately market these benefits," Rallos said. "We do find some challenges around marketing because these benefits are limited to those who have a chronic illness. While they see opportunity, I think they're still kind of navigating what's the right path to making these available, and making the marketing clear to their beneficiaries."

The number of beneficiary complaints related to Medicare Advantage companies' third-party marketing organizations more than doubled year-over-year to 39,617 in 2021, according to the Centers for Medicare and Medicaid Services. The agency has proposed tighter marketing guidelines for these groups.

Rallos said insurers' staff, care managers and agents are generally responsible for alerting beneficiaries about these prospective benefits. Although she has not done an analysis of how these services impact consumer premiums, Rallos guessed that many of these benefits are available to members enrolled in plans with no copays.

Going forward, she expected to see more plans adopt flexible benefits structures, where they give members a fixed sum, say $1,000, and allow them to choose how they spend the money toward a package of benefits, rather than a single service. Growth in this area is spurring innovation in digital health startups and providers, who are looking at what benefits Medicare Advantage plans are now able to offer and creating new companies focused on these services, she said.

"We're definitely seeing new players and new providers shift into this space, as they're realizing that there's an opportunity to partner with plans and deliver these benefits," Rallos said.