Digital Health

Staying Competitive in an Expanding Medicare Advantage Market

By Michael Pollio, Associate Solutions Consultant, MMIT

By the end of 2023, more than half of the total Medicare population is expected to be enrolled in Medicare Advantage (MA), which has climbed from 25.2 million members in 2020 to 31.5 million members today. Patients already have a surfeit of MA options, with the average beneficiary able to comparison shop between 43 MA plans.

To remain competitive in this high-growth environment, MA plans need an objective, normalized view of shifting market dynamics. With potential rate cuts on the horizon, MA plans will be under increasing pressure to make their product designs more cost-efficient while maintaining attractive benefits, including enhanced supplemental benefits to address health-related social needs.

Commercial insurers are also stepping up their game to curb costs and win market share, with payers increasing their reliance on medical benefit managers, alternate payment models, employer targeting, and strategic contracting services. Healthcare and IT vendors that serve payers and PBMs need accurate data on enrollment trends, network strength, coverage, and partnerships to help clients make informed decisions for growth.

Increased market diversification

Over the past year, the health plan landscape has seen significant enrollment shifts, especially within government-sponsored plans. According to MMIT’s Directory of Health Plans, the top 10 MA insurers accounted for 77.2% of the national market at the close of 2022. Nine of the top 10 organizations reported year-over-year growth ranging from 2.8% to 56.8%, with a cumulative average growth rate of 13.4%.

Supplemental prescription drug plan (PDP) enrollment for traditional Medicare has also shifted, with the number of beneficiaries enrolled in MA Part D (MA-PD) plans now surpassing the number enrolled in supplemental plans by 10%. In addition, members now have an additional 248 MA-PD plans to choose from, a figure that will only increase with payers’ planned expansions across new counties and states.

Over the past year, only two of the top eight payer and PBM organizations — which together represent 80% of covered lives — have decreased membership in their MA prescription drug plans. Across all managed care organizations, MA-PD membership has grown an average of 2% year over year. MA-PD plans now comprise 54% of the total membership for all Medicare payers as compared to 51% one year ago.

In the Medicaid space, both state and managed Medicaid plans saw steady membership growth throughout 2022, due in large part to the temporary pause on eligibility redeterminations. The return of redeterminations will likely result in substantially reduced enrollment over the next year. Meanwhile, enrollment in ACA exchange plans has been similarly boosted by the temporary expansion of premium subsidies, and now represents 15.8 million lives, an increase of 3.9 million lives since last year.

Vendors that serve Medicaid and ACA exchange plans will need to maintain an objective, normalized view of a rapidly changing market to understand how best to assist their clients.

Data accuracy and ACO alignment

In such a turbulent landscape, healthcare and IT vendors serving health plans, PBMs and pharma manufacturers must be careful to provide clients with validated enrollment data. Aggressive marketing from the major players has created a challenging environment for smaller plans in particular, which will need to be quite strategic in identifying potential areas for growth.

Payers and PBMs often overinflate their enrollment numbers, either purposefully or inadvertently double-counting lives. Leveraging third-party, unbiased sources for validated enrollment data provides an accurate picture of how lives are allocated by payer and plan, revealing unique areas of opportunity.

Granular health plan data can also illuminate the relationships between Medicare plans and accountable care organizations (ACOs), which can complicate everything from contracting decisions for manufacturers to expansion strategies for health plans. According to the National Association of Accountable Care Organizations, there are currently 483 Medicare ACOs serving more than 11 million beneficiaries. As CMS’s ACO REACH model gains momentum, new Medicare ACOs focused on health equity in underserved communities will likely follow.

For manufacturers and health plans alike, understanding the relationship between ACOs and Medicare plans is pivotal. Although prescription drug spending is exempt from shared savings and risk calculation, many Medicare ACOs seek to control costs by driving prescription patterns, such as decreasing the use of Part B therapies. As most provider-administered outpatient drugs are governed by the buy-and-bill distribution model, many ACO participants also have existing contracts with wholesale distributors, which can impact real-world drug coverage.

By arming payers, PBMs and manufacturers with validated enrollment data and transparent information on key medical groups, formularies, and ACOs, healthcare vendors can ensure their clients are making strategic decisions that will help them thrive in a volatile market.

To see how MMIT can help you analyze enrollment data and health plan activity, learn more about our Directory of Health Plans and Payer Landscape solutions.

The editorial staff had no role in this post's creation.