KFF: Medicare Advantage enrollment reaches more than 28M in 2022, nearly half of total Medicare population

More than 28 million people are in a Medicare Advantage (MA) plan in 2022, with the program accounting for nearly half of all Medicare beneficiaries, a new analysis finds. 

The analysis, released Thursday by the Kaiser Family Foundation, also showed how spending on MA, especially on quality bonuses, has surged to take up more than half of all federal Medicare spending. The findings underscore the widespread interest in the insurance industry on the MA marketplace, which has grown more lucrative in recent years. 

“One of the things that appear to be driving enrollment is all the extra benefits: dental, vision, over-the-counter drug benefits, transportation and meals that more and more plans are offering,” said Meredith Freed, a senior policy analyst with KFF, in an interview with Fierce Healthcare. “We don’t know a whole lot about whether people are using them, how well they are working for people and if they are lowering healthcare costs for plans that were using taxpayer money to provide these benefits.”

The foundation looked at data from the Centers for Medicare & Medicaid Services (CMS) on enrollment and benefits in MA.

Kaiser found that the share of eligible Medicare beneficiaries who chose an MA plan has more than doubled since 2007, growing from 19% that year to 48% in 2022. An earlier projection from the Congressional Budget Office projected that the percentage of Medicare beneficiaries in MA will swell to 61% by 2032.

Most MA beneficiaries (66%) are in an individual plan chosen by general enrollment, while 18% are in an employer or union-sponsored plan and another 16% in a special needs plan. 

The number of special needs plans has grown slightly from 3.8 million in 2021 to 4.6 million this year.

Even though the MA market has seen greater interest from insurance companies, Kaiser’s analysis showed there were some heavily entrenched players. For instance, Humana and UnitedHealthcare together make up 46% of all MA enrollment. UnitedHealthcare has the largest market share with 7.9 million MA enrollment this year, making up 28% overall. Humana has 5 million enrollees, an 18% share. 

In nearly a third of counties, Humana and UHC account for 75% of MA enrollees, according to the study.

Blue Cross and Blue Shield affiliates make up 14%, and four companies—CVS Health, Cigna, Centene and Kaiser Permanente—make up another 24% of enrollment for this year. 

UnitedHealthcare’s enrollment in MA grew for the sixth year in a row, increasing by nearly 750,000 people from March 2021 through March 2022. Centene came in with the second-largest growth by adding 306,000 beneficiaries. 

With market power centered on just a few plans, smaller entrants may have to take extreme measures to break in.

“We have seen that some plans do try to offer maybe better benefits or lower cost-sharing and different incentives to get people to enroll,” Freed said.

She questioned, though, whether such moves would be enough to be sustainable, or “are those smaller startups going to have trouble in terms of their profitability?”

In addition, Kaiser found that nearly all MA enrollees are in a plan that requires prior authorization for some services. The finding comes as a federal watchdog has raised questions about the level of prior authorization denials that may fit within Medicare’s coverage requirements. 

Plans with high star ratings multiply

Kaiser found that, this year, 86% of MA enrollees are in a plan that has four or more stars, which is an increase from 73% in 2021. That is the highest share enrolled in a four-star or more plan since 2015. 

“Plans with 4 or more stars and plans without ratings are eligible to receive bonus payments for each enrollee the following plan year,” Kaiser said. 

The analysis gives several potential reasons for the major increase. For instance, star ratings are based on data from the previous year, but CMS has modified star rating calculations because of disruptions caused by the COVID-19 pandemic. 

“For some measures, if the rating on that measure was lower than the prior year, the ratings reverted back to the 2021 value to hold plans harmless,” Kaiser wrote. It added that these changes could be part of the reason for the increase in number of enrollees in high star rating plans. 

However, the Medicare Payment Advisory Commission and other experts have scrutinized risk adjustment practices under MA plans, questioning whether plans have used tactics such as chart reviews to inflate risk scores and get a better rating or quality bonus payment.

As payments to MA plans will continue to increase, information on service utilization and out-of-pocket spending is going to be vital to ensure MA is “meeting its goals in terms of value and quality,” the analysis said.