Medicare Advantage shifts focus to quality

Medicare Advantage plans face pressure to be profitable, so carriers are shifting their focus to quality.

“The entire MA ecosystem is for the benefit of seniors and we must remember that,” said Steve Kaplan, chief legal, compliance and privacy officer at HealthPlanOne. Kaplan gave his view of the MA environment during the National Association of Insurance and Financial Advisors’ recent Medicare Collective Impact Day.

“The carriers’ part of the ecosystem is being pinched, and that is part of the pain we are feeling as brokers,” he said.

MA carriers “don’t have a lot of levers to push to ensure they are profitable,” Kaplan said. “Seniors need to be healthier – that’s one lever to push. If the insured cohort of seniors is healthier, then that drives profit margin.”

Kaplan said the U.S. is on the tail end of the “silver tsunami,” a demographic phenomenon that saw record numbers of Americans turning 65 and becoming eligible for Medicare.

“Nobody fully planned for the disruption to the industry caused by the volume of seniors entering the program and what care they would use,” he said.

Having seniors pay high premiums for MA plans “is antithetical to the core,” he said.

“Seniors are on MA plans because they are not able to pay high premiums. MA carriers can’t pass that downstream through high premiums.”

Major pressures impacting Medicare Advantage, he said, include:

• The Inflation Reduction Act increased plan liability for Part D prescription drug costs through benefit redesign and risk reallocation.
• A decline in Star Ratings led to reduced quality bonus payments and rebate revenue.
• Rising Medical Loss Ratios means a higher percentage of premium revenue is being consumed by medical expenses. This reduces the margin available for administration, profits and reinvestments.

As a result, health plans must increase their focus on health outcomes, appropriate utilization, preventive care and chronic condition management. These are core elements the industry defines as quality.

Kaplan said that although many aspects of MA feel as though they are out of brokers’ control, brokers must focus on what they can control.

“What can the broker do on a day-to-day basis to change the ecosystem? It comes down to quality. How we can deliver better quality will benefit everyone.”

Brokers add value to the MA ecosystem

MA brokers enter the value stream early in the system, said Darwin Hale, CEO and founder of Advocate Health Advisors. Brokers unlock access to benefits and have knowledge of prescription drugs, provider networks and other concerns that clients have when choosing a plan.

Like other industry participants, broker quality varies, he said. He listed the leading indicators of broker quality:

• Networking and experience
• Beneficiary education and marketing
• Pre-enrollment planning.
• Actions at the point of sale
• Actions confirming enrollment and receipt of services.
• Service and support
• Retention and referrals
• Annual Notice of Change

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at susan.rupe@innfeedback.com.