JPM23: As the conference closes, here are the trends payers need to watch

SAN FRANCISCO—As a week packed with meetings, presentations and more than a few rainstorms comes to a close, several key trends have emerged as ones to watch for health insurers heading into 2023.

Top of the list for many major companies? The Biden administration's decision on the Medicare risk adjustment data validation (RADV) audit program is looming. The Centers for Medicare & Medicaid Services (CMS) has a Feb. 1 deadline to finalize the rule, which has been controversial with payers since its initial release in 2018.

Each health insurer with a stake in Medicare Advantage (MA) was asked about this at the J.P. Morgan Healthcare Conference this week, as it has significant implications about reimbursement and payment calculations in the program, which continues to grow. While final numbers from the annual enrollment period have not yet been released, it's expected for MA enrollment to include more than half of all Medicare beneficiaries.

Regardless of where CMS lands, major work is in store for MA plans as they adjust to the rule's new normal around risk adjustment, Humana Chief Financial Officer Susan Diamond said.

Here's more on what's at stake with the RADV rule as well as other trends to watch:

Keep the "fee-for-service adjuster"—or else

While the RADV rule poses a large hurdle for insurers however it ultimately shakes out, the executives speaking at JPM on the whole had a unified message for CMS: Keep the "fee-for-service adjuster" in place.

The adjuster tweaks RADV audit recoveries to ensure actuarial parity between traditional Medicare and MA, as there are often errors in claims data used in fee-for-service Medicare. In the proposed rule, CMS determined that this adjuster was no longer necessary in RADV calculations.

Should the Biden administration maintain that stance, expect legal action to quickly follow.

"If they take a position that an adjuster is not necessary, as they did in the proposed rule, it's likely to result in litigation from the industry," Diamond said.

Risk adjustment in MA has been under the microscope of late, and don't expect that to change as reports mount of health plans juicing their risk scores to secure higher payouts in the program.

CMS has been generous with MA rates, and that's likely to change

In the past couple of plan years, CMS has set rates that were above what MA insurers expected to see, and, overall, payer executives said they expect to see that change. Proposed rates for the 2024 plan year are set to release in short order.

Cigna CEO David Cordani says the rate-setting environment "ebbs and flows," representing periods where rates were a little more generous and periods where they were dialed back. The industry has been in a "flow" period for a while, so it's due for rates to ebb a bit, he said.

That ebb could come in 2024 or it could be farther out in 2025, Cordani said.

"We'll wait and see," he said.

Diamond added that Humana has been predicting for a couple of years that CMS would dial back its rate increases and that it's been incorrect on that prediction multiple times. However, the company is still planning to be conservative until it sees what's in store for the coming plan year, she said.

Medicaid redeterminations offer a challenge, and opportunity

For insurers in the Medicaid managed care space, the recently set timeline for redetermination kick-starts a process they've been weighing for more than a year as the public health emergency stretched on.

Flexibilities introduced during the pandemic allowed more people to secure coverage in Medicaid, and, with the redeterminations, many of these patients are likely to be booted out of the program. An analysis from the Urban Institute estimated that 18 million people could lose coverage during the redetermination process.

However, for payers with a presence on the Affordable Care Act's exchanges or those with large business in both the ACA and Medicaid, the redeterminations offer an opportunity to ensure continuity of care by helping the newly uninsured population secure coverage on the exchanges.

The enhanced premium subsidies have been extended for two years and make more affordable options available to more people. Centene CEO Sarah London said it's key to try to maintain continuity of care for these patients.

The improvements to affordability and choice on the exchanges have also made it easier for insurers to reach people who have been chronically uninsured or underinsured, she said.

"The marketplace subsidies taught the industry where to find those members," she said.