Blue KC exiting Medicare Advantage market by 2025 due to 'regulatory demands'

Blue Cross and Blue Shield of Kansas City is leaving the Medicare Advantage (MA) market at the end of 2024, the insurer announced recently.

The company blamed “heightened regulatory demands and rising market and financial pressures” for the decision but said it is still focused on employer-sponsored health plans, Medicare supplement and Affordable Care Act plans in the state.

“We explored every alternative path for our MA members and are disappointed we must exit this line of business,” said Erin Stucky, Blue KC President and CEO, in a statement. “We value our MA members and are committed to providing uninterrupted, quality service to our current MA membership through the end of 2024.”

Blue KC said the insurer cannot economically compete at scale because of the plan’s small MA membership.

In March, Centers for Medicare & Medicaid Services (CMS) announced it would follow through with decreasing benchmark payments by 0.16%, though the agency maintains average payments to insurers will increase by 3.7% in 2025.

Most insurers are not shy in voicing their opposition to recent regulations, making sure to mention during investor conferences and earnings calls that regulatory pressures are headwinds to their bottom line.

“Between the new regulations and the rising MLR, MA is going to be a tough business to win in for subscale contenders,” said Sam Melamed, CEO of NCD, a dental and vision insurance company, in a LinkedIn post. “This exit can't be blamed entirely on regulations, but it would be foolish to not think that the aggressive regulatory movement does not have anything to do with it.”

Oscar Health, an insurtech, eliminated its MA plans in New York and Texas for the 2023 plan year. Similar to Blue KC, Oscar’s MA membership was low in comparison to its other plan offerings. Blue KC’s membership represented about 30,000 individuals, the payer said.

Other insurers chose to ditch MA as well, though many plans remain in each of the 50 states, according to a KFF report from November.