HMSA revamping Medicare Advantage plans

Hawaii's largest health insurer is overhauling its Medicare Advantage plans for 2027 due to financial challenges.

The Hawaii Medical Service Association is closing two of its higher-option Medicare Advantage Plans at the end of the year, leaving about 16,000 of its members disenrolled on Dec. 31 unless they opt to get coverage from another carrier or choose new higher-option plans HMSA is offering at higher premiums.

HMSA, an independent licensee of Blue Cross Blue Shield, began sending certified letters to affected members Thursday informing them that their existing Medicare plan - specifically Akamai Advantage Complete Plus and Standard Plus, which are both preferred provider organization, or PPO, plans - will not be offered in 2027.

The annual open enrollment period runs from Oct. 15 to Dec. 7.

HMSA said members who do not enroll in another plan will automatically return to the federal government's original Medicare plan Jan. 1, which does not include coverage for prescription drugs.

"It was a hard decision," said HMSA CEO Mark Mugiishi. "It wasn't something that was made easily or lightly."

The changes, he said, were driven by rising healthcare costs, compounded by other challenges to the industry overall. They also come at a time when major national insurers are scaling back their Medicare Advantage offerings or pulling out of markets altogether.

HMSA does not plan to pull out of the market, he said, but had to revamp its offerings to remain sustainable.

The initial response from some Hawaii members who received the notice has been shock and confusion. Hilo resident Marla Malinski, 72, said she felt completely blindsided when she got the letter Thursday.

The two-year lung cancer survivor, who had a recent CT scan that yielded concerning results, said she "was in tears" after getting the letter saying her coverage was ending and that basically all rates would be going up.

"I read it over several times, hoping I read it wrong or missed something," Malinski said.

She is still trying to figure out what her options are and is bracing for what her out-of-pocket costs would be for continuing needed care and treatments.

Malinski says she pays almost $400 per month out of her Social Security check for Medicare Advantage coverage and has been contributing toward the benefits for nearly her entire life.

"I have worked and paid into my Social Security and Medicare since I was 15 and a half years old," she wrote in an email. "This is not a handout."

Malinski and her husband switched to HMSA a few years ago after coverage from their former insurer was no longer available. Year after year, she said, they have dealt with incremental out-of-pocket costs while losing coverage.

"We feel like we're paying more and getting less," she said.

Approximately 316,000 Hawaii residents are enrolled in Medicare, a federal program that primarily covers people ages 65 and older, and some younger people with disabilities.

The U.S. Centers for Medicare & Medicaid Services offers fee-for-service coverage for qualified citizens, often referred to as "original Medicare," which requires a separate Medicare prescription drug plan.

CMS also works with commercial insurers to offer Medicare Advantage plans, which often include prescription drug coverage, along with vision, hearing and dental services not covered by original Medicare.

Hawaii residents can choose from plans offered by HMSA, Kaiser Permanente, AlohaCare and Devoted Health, among others.

CMS encourages seniors to compare all their options, review their health needs for the upcoming year and determine if they would benefit from changing coverage during the open enrollment period.

Increases vary

HMSA is closing two of its current higher-option plans, which are among its most comprehensive.

The current Akamai Advantage Complete Plus and Standard Plus plans will end Dec. 31 but will be launched under the very same names in 2027 with similar comprehensive benefits but with substantially higher rates.

Monthly premiums for both will increase to $240 per month in 2027, up from roughly $150 to $160 per month currently.

On the other end of the spectrum, HMSA in 2027 is rolling out a cheaper HMO, or health maintenance organization, plan with a limited network. The HMSA Akamai Advantage Select Plus plan, which will be available only on Oahu, will cost $45 a month and still includes dental, hearing and vision benefits.

Some existing plans, such as the Complete PPO, will see higher monthly rates of $55 versus $20, based on HMSA comparison charts for 2027 and 2026.

Rising healthcare costs are among the top concerns for Hawaii kupuna, according to AARP Hawaii State Director Keali‘i Lopez.

"One of the most concerning costs beyond rent and utilities are the costs for prescription drugs and healthcare," Lopez said. "Doctor visits and hospital visits are the highest out-of-pocket expense anyone can have. For kupuna on a fixed income, any increase is going to be a significant hit."

Mugiishi explained that providing healthcare today also costs more.

"A hospital admission costs more," he said. "A pharmaceutical costs more. Advanced therapies cost more. All of those things cost more, and more of it is being used."

Additionally, due to Hawaii's aging population and delays in seeking care during the COVID-19 pandemic, patients today have more complex healthcare needs and chronic diseases. Thus, utilization is up, according to Mugiishi.

At the same time, federal funding for Medicare Advantage is decreasing as the costs are rising.

On top of it all, HMSA's rating in a federal incentive program that measures performance has fallen from 4 to 3.5 stars in recent years. Dropping below 4 stars resulted in the loss of significant bonuses amounting to tens of thousands of dollars annually.

"There really wasn't a way where we could continue to keep the plans at the current price with the current benefits," Mugiishi said.

He noted that UnitedHealthcare recently announced it would stop offering PPO options on Hawaii Island. Other Blue Cross Blue Shield groups have pulled out of the Medicare Advantage market completely in four states.

"We don't want to do that," Mugiishi said. "That would not be consistent with our mission. We want to take care of our kupuna, so we have to make changes to our program so that we can be sustainable into the future."

HMSA anticipates affected members will have many questions and is stepping up outreach efforts in coming weeks, according to Kimberly Takata Endo, HMSA's vice president of Medicare.

In addition to sending out follow-up information packets with an enrollment form, members also may call HMSA or visit one of its neighborhood centers.

Changing landscape

Lopez of AARP Hawaii said navigating Medicare coverage today is very confusing, but it is critical that seniors and their caregivers review their options.

"There are so many different scenarios, depending on your health situation," she said. "The needs of every individual vary, and so it's important to find that plan that works for you."

The type of coverage needed will depend on prescription drug needs, chronic conditions and the number of doctor's visits and hospitalizations.

Seniors who go with higher options pay more per month but less out-of-pocket, and can see out-of-network specialists, which makes sense for those who need to see doctors often. A healthy senior, on the other hand, might go with plans that have lower monthly premiums.

"Don't pay more than you should be," Lopez said, "because you want to have resources for other things like taking care of your house or your groceries, or hopefully, being able to enjoy life."

AARP will co-host free workshops statewide in upcoming weeks to help seniors navigate Medicare options.

Nationally, major health insurers such as UnitedHealthcare, Humana and Aetna, a CVS Health subsidiary, have been scaling back their offerings within the Medicare Advantage market to preserve their profits. Some 4.6 million Medicare Advantage beneficiaries experienced disruptions to their health plans in 2026, according to the Alliance of Community Health Plans.

In a recent brief, the alliance said there has been a 10% drop in plan count for the third straight year, resulting in fewer choices for seniors.

CMS, however, said in its own news release that Medicare Advantage programs were expected to remain stable in 2027, with broad access to plans.

In its fact sheet for Hawaii, CMS said the average monthly Medicare Advantage premium will be about the same, at $53 in 2027. Additionally, 46 plans will be available in 2027, up from 44 in 2026.

HMSA also has made major policy changes for its healthcare providers, mandating all switch to the fee-for-service model by Jan. 1.

At the start of this year, HMSA announced plans to vertically integrate with Hawai‘i Pacific Health under a new nonprofit entity to be called One Health Hawai‘i. The integration is still under regulatory review by the U.S. Department of Justice and state agencies.

Distributed by Newsbank, inc.