With the Medicare Annual Enrollment Period on the horizon (starting October 15th), Medicare Advantage plans are beginning to announce some of the changes they are implementing for 2025. Changes include benefit and service area reductions, which insurance companies are trying to blame on anything other than their own business decisions. At the same time, UnitedHealth, the largest MA plan, is under increased scrutiny for, among other suspect practices, inappropriate billing practices that have inflated their already massive profits.
Humana, Aetna and Centene/WellCare Latest Medicare Advantage Plans to Signal Shedding Members in 2025
As highlighted by the Center this May, insurance companies offering Medicare Advantage (MA) plans “are signaling that for a variety of reasons, plan benefit packages in 2025 might be reduced from this year” – see CMA Alert, “Medicare Advantage Industry Will Focus on Profits Over Benefits in 2025” (May 23, 2024). In addition to reducing benefits, some plan sponsors are announcing that they are pulling out of certain markets altogether. For example, according to a Fierce Healthcare article titled “Centene Medicare Advantage subsidiary WellCare to retreat from 6 states in 2025” by Noah Tong (Aug 7, 2024), “Centene is exiting six states through its WellCare Medicare Advantage (MA) subsidiary next year” impacting 37,300 members in Alabama, Massachusetts, New Hampshire, New Mexico, Rhode Island, and Vermont.
Similarly, an article posted by Think Advisor titled “Aetna May Let Medicare Plan Enrollment Fall 10% in 2025” by Allison Bell (Aug 8, 2024) quotes executives of CVS Health, parent company to Aetna, warning securities analysts in a recent call that “many of its 2025 Medicare Advantage plans will be a lot leaner than the 2024 plans” and that enrollment may fall because the insurer is pulling out of certain counties. The article quotes the CVS executive as predicting that “[w]hen Aetna tries to persuade current enrollees to sign up for the new, leaner plans, ‘those resells are going to happen at a much lower rate than what we have historically experienced.’”
An even larger shedding of members was announced by the second-largest MA insurer Humana, which, according to Newsweek, “is preparing to lose several hundred thousand members next year as Medicare Advantage benefits shrink under higher prices” – see article titled“Second-Largest Medicare Advantage Insurer Prepares to Lose Over 200K People” by Suzanne Blake (Aug. 2, 2024). According to Newsweek, Humana’s CEO indicated that the “majority of the lost members will be from those who lose plan coverage in an unprofitable market […]”
Similarly, according to Healthcare Dive in an article titled “Humana expects to lose ‘few hundred thousand’ Medicare Advantage members next year” by Rebecca Pifer (July 31, 2024), the insurer expects to lose a “‘few hundred thousand’ members … after seriously shrinking its benefits and exiting markets for 2025 in a bid to boost profits.” The article continues: “MA margins should improve as a result, setting Humana on the path to a long-term target of at least 3%, management told investors on a call.”
The article notes that Humana’s individual and group MA plans make up 38% of its members, but 86% of its premium revenue. The article continues: “That gamble started to backfire last year, as seniors in MA began using significantly more medical care than insurers had planned, and regulators in Washington began cracking down on profiteering in the popular insurance program.”
As the Center noted in our CMA Alert cited above:
Despite insurance industry hand-wringing about more people using more health care services, if people who need health care are able to access it through their MA plans despite widespread and onerous prior authorization restrictions – isn’t that a desirable outcome? From a societal standpoint, but apparently not for purposes of MA plan profits.
The Healthcare Dive article cited above further states: “Humana slashed its plan presence and benefits for next year to try and improve profits, citing utilization headwinds and a weak payment update from the government.”
As outlined in a recent Center for Medicare Advocacy “Special Report: The Real Impact of Medicare Advantage for Beneficiaries and Medicare Funding” (July 18, 2024), MA plans are already significantly overpaid. For example, according to the Medicare Payment Advisory Commission (MedPAC), upcoding (see below) and favorable selection (meaning MA enrollees are, on average, healthier than those in traditional Medicare) in 2024 alone will lead to $83 billion more in payments to MA plans than what Medicare would have paid if MA enrollees where in traditional Medicare. And earlier this year, CMS announced a further rate increase for 2025 – just not as much as the industry had hoped (see, e.g., CMA Alert “Wall Street Journal Editorial Board’s Love Letter to Medicare Advantage Ignores Wasteful Overpayments” (May 2, 2024)).
UnitedHealth and Other Insurance Companies Under Scrutiny
As discussed in our recent CMA Special Report (July 18, 2024), the Wall Street Journal published an investigation in July 2024 finding that MA “insurers received nearly $50 billion in payments from 2019 to 2021 due to diagnoses they added themselves for conditions that no doctor or hospital treated.” Among other things, the article highlighted that UnitedHealth, the largest MA insurer, “added diagnoses at a far higher rate than other major insurers.”
A follow-up report notes that that “[t]he diagnoses added after home visits accounted for about 30% of that total.” In a Wall Street Journal article titled “The One-Hour Nurse Visits That Let Insurers Collect $15 Billion From Medicare” by Anna Wilde Mathews, Christopher Weaver, Tom McGinty and Mark Maremont (Aug 4, 2024), the reporters document the phenomenon of insurance companies sending nurses to the homes of plan enrollees to “gather […] new diagnoses that entitle private Medicare Advantage insurers to collect extra money from the federal government.” As summarized in the article:
A Wall Street Journal investigation of insurer home visits found the companies pushed nurses to run screening tests and add unusual diagnoses, turning the roughly hourlong stops in patients’ homes into an extra $1,818 per visit, on average, from 2019 to 2021. Those payments added up to about $15 billion during that period, according to a Journal analysis of Medicare data.
The article interviews nurses who used to perform such visits and describe using testing devices they did not trust to arrive at new, profitable diagnoses to record for purposes of risk-adjusted payment to MA plans. Some reported that the diagnoses that home-visit companies they worked for “encouraged them to make wouldn’t otherwise have occurred to them, and in many cases were unwarranted.”
The article again highlighted UnitedHealth, noting that for the company:
each home visit was worth about $2,735 in extra Medicare payments during the three years covered by the data, the Journal analysis found. That’s nearly three times the average for all other Medicare Advantage insurers.
The article goes on to quote UnitedHealth’s chief physician who “attributed the disparity to what he said was UnitedHealth’s sicker patient population and its nurse practitioners being so effective at their jobs.”
Generating additional diagnoses through in-home visits is an area ripe for action by policymakers. As noted in the Journal article:
The Medicare Payment Advisory Commission, a nonpartisan agency that advises Congress, has recommended that diagnoses from home visits shouldn’t count toward extra payments to Medicare insurers. The inspector general that oversees the Medicare agency has said it should reconsider the use of such diagnoses.
Evidence of improper payments to MA plans continues to grow. STAT News has followed up a series of articles about UnitedHealth’s use of algorithmic software from Navihealth to make coverage decisions in their Medicare Advantage plans called “Denied by AI” (see, e.g. this CMA Alert, November 16, 2023) with a new investigative series called “Health Care’s Colossus” and described as a “periodic series about how UnitedHealth Group wields its unrivaled physician empire to boost its profits and expand its influence.” The first story titled “How UnitedHealth harnesses its physician empire to squeeze profits out of patients” by Bob Herman, Tara Bannow, Casey Ross and Lizzy Lawrence (July 25, 2024) describes how their investigation:
reveals the untold story of how the company has gobbled up multiple pieces of the health care industry and exploited its growing power to milk the system for profit. UnitedHealth’s tactics have transformed medicine in communities across the country into an assembly line that treats millions of patients as products to be monetized.
Central to these tactics is UnitedHealth’s unrivaled leverage over physicians, whose diagnoses help determine how much private insurers get paid for covering older adults. […] Through these efforts, and by adeptly navigating the Medicare Advantage payment system, UnitedHealth has squeezed potentially tens of billions of extra dollars from taxpayers over the past decade, according to STAT estimations based on federal data.
STAT’s second article in the series titled “How UnitedHealth turned a questionable artery-screening program into a gold mine” by Casey Ross, Lizzy Lawrence, Bob Herman and Tara Bannow (Aug 7, 2024) describes how “[t]he nation’s largest health care company pressed thousands of its clinicians to use a thinly tested medical device to screen people for artery disease, dramatically boosting payments from the federal government for years even though many of the patients were not sick”. The article notes that this year CMS removed the diagnosis code from the payment formula that allowed UnitedHealth and other plans to get extra payment for peripheral artery disease and, “[i]n the following months, diagnoses of the condition began to decline.”
Meanwhile, UnitedHealth is suing to retain access to its profit streams in the Medicaid program. According to the Minnesota Star Tribune, in an article titled “UnitedHealthcare sues Minnesota over ban on for-profit HMOs in Medicaid” by Christopher Snowbeck (Aug 5, 2024), the “health insurance giant is the first and only for-profit managed care plan in the state programs for lower-income residents.” UnitedHealth has filed a lawsuit challenging a new state law in its home state of Minnesota that bars for-profit HMOs from running Medicaid health plans. The article notes that the state Medicaid program “for decades was reserved by state lawmakers for nonprofit health plans until an earlier for-profit ban was dropped in 2017.” Snowbeck states:
Critics contend that for-profit insurers have clear incentives to stint on coverage in order to bolster financial returns. The lawsuit, however, quotes a recent state report that found “little to no data are available to assess whether differences across for-profit and non-profit HMOs exist.”
The article also notes that according to the insurer, the new state law “blocks UnitedHealthcare from offering two health plans it runs for people dually eligible for Medicaid as well as Medicare, which primarily covers seniors.”
Conclusion
In a report titled “Health Insurer Financial Performance in 2023” (July 2, 2024), KFF documents that among multiple markets, including MA, Medicaid managed care, individual and employer markets, health insurers’ “per enrollee gross margins were highest in the Medicare Advantage market […]” The report states:
Through the end of 2023, gross margins in the Medicare Advantage market averaged $1,982 per enrollee, which was similar to 2022 ($1,977), despite reports by the largest Medicare Advantage insurers of higher-than-expected utilization at the end of 2023. Potentially spurred by the prospect of strong financial returns, the Medicare Advantage market has grown substantially in the last decade, with more than 50% of eligible beneficiaries enrolled in a Medicare Advantage plan in 2023 [emphasis added].
Health insurance companies are making substantial profits from the Medicare program, including through improper manipulation of the risk-adjusted payment system, as recently documented by the Wall Street Journal and STAT News. Despite these overpayments and substantial profits, insurers are complaining about their payment being “cut” (when in fact they got a raise for 2025), and that they have had to provide more care to their enrollees than they had planned. As a result, plans are trimming members and benefits in order to maintain desired profit margins. Plans spend considerable effort and expense trying to entice prospective enrollees through extensive marketing and promotion of extra benefits (while downplaying limited provider networks and onerous prior authorization requirements). These same plans appear to have no qualms about shedding members when they happen to live in an “unprofitable market.”
So, as we approach the fall enrollment period, remember: when plans pull out of certain markets, and/or reduce benefits, these are business decisions. Don’t let them get away with arguing otherwise.