How new strategies can help boost Medicare Advantage performance
Growth in this segment of Medicare is on the rise, and plans need to improve efforts in areas such as prior authorization and quality initiatives.
Medicare Advantage growth is on an upswing; 51 percent of eligible beneficiaries are currently enrolled in these plans, and trends indicate that this number will increase to 62 percent by 2033.
At the same time, Medicare Advantage (MA) is under increased scrutiny from Congress and the Centers for Medicare & Medicaid Services for rising costs, underscoring an urgent need for plans to lock down more market share and increase customer satisfaction to avoid cuts. Plans must know how to thrive in an MA environment and continue to refine their approaches to best meet current members’ needs while attracting new enrollees.
Optimizing member experience is key to succeeding in the MA landscape, and plans should take steps to ensure they offer competitive benefits and premiums. They should prioritize operational improvements that optimize prior authorization processes, implement strategies to improve Star ratings, meet risk adjustment program requirements and focus on quality initiatives.
Combine PA automation with gold carding
Reducing the number of needed prior authorizations would lower costs and increase satisfaction for both consumers and providers. Medicare Advantage organizations can reduce the number of customer service interactions for prior authorizations by combining automation with gold carding policies.
Several states have proposed gold carding policies to grant providers exemptions from prior authorization requirements if they had authorization approval rates above a threshold percentage (for example, 70 percent to 95 percent) for items and services approved in the last six to 12 months.
Automating prior authorization for items and services with a high likelihood of approval may increase accuracy and reduce turnaround times by decreasing the volume of member inquiries and dependency on human intervention.
To bring automation to reality, payers and providers will need to adopt standard APIs and technologies that integrate provider electronic medical records systems with payer systems. Implementing prior authorization automation may appear to be a large project, but when the scope of items and services can be limited to those outside of gold carding exemptions with a high likelihood of approval, this may involve a smaller set of items and services, translating to a project scope that can be managed without a large investment.
Payers can implement an initial project that may lead to a phased approach, building organizational confidence in tackling other portions of the prior authorization workflow, even those with more complicated policies that will test the reliability of automation.
Improving star ratings, focusing on quality
The 2024 Star Ratings were released on October 13 and resulted in just 48 percent of Medicare Advantage organizations achieving four stars or higher, which is down from 51 percent in 2023 and 68 percent in 2022.
This drop is related to several factors, including the removal of pandemic-era accommodations, new cut point methodology, and changes to the Stars measure sets for MA only and MA-Part D. Plans should expect to see this rating trend continue as CMS replaces the reward factor with the Health Equity Index, which is also expected to negatively impact overall ratings and associated bonuses.
When the 2024 advance notice was released, analysts began speculating that expected revenue projections could result in higher premiums or benefit reductions. In Humana’s second quarter 2023 earnings call, President and CEO Bruce Dale Broussard said, “Throughout the 2024 MA bid preparation process, we were conscious of the disruption in shopping that's likely to occur in the market due to the benefit reductions expected in the industry because of the negative rate environment and the stars headwind for the certain competitors.”
Achieving high Star Ratings helps plans appeal to more members and provides numerous MA enrollment advantages including:
Extended enrollment periods. In most cases, the annual enrollment period extends from October 15 to December 10, but MA plans with a five star rating are eligible for a special enrollment period December 8 to November 30 of the following year. This means five-star plans can attract new members throughout most of the year.
Quality bonuses. The Stars program incentivizes high-quality care based on a set of evidence-based measures compromised of HEDIS, PQA and member-survey responses. Plans that score well may collect bonus payments in the millions, which enables enrichment of benefit packages.
Medicare.gov advertising. Star Ratings for MA plans are displayed on the medicare.gov website, meaning beneficiaries shopping for health coverage can compare Star Ratings across plans available in their area.
Premiums. Plans with higher Star Ratings receive a positive adjustment to cost benchmarks, which offsets the consumer premiums. For many beneficiaries shopping for health coverage premiums, this is a primary decision-making factor.
Performing well on the coming years’ ratings isn’t a matter of complex initiatives – it’s a matter of tightly managing performance projections and getting back to the basics of high-quality care delivery. Plans should identify improvement opportunities, continue prioritizing member experience and implement initiatives to address health disparities.
Following risk adjustment regulatory changes
After reviewing stakeholder comments and incorporation of the Inflation Reduction Act regulations, CMS codified changes to MA programs and policies in the 2024 Final Rule, which walked back some proposed changes but barely softened the blow of reduced risk adjustment and quality revenue.
In January 2023, CMS released the Risk Adjustment Data Validation (RADV) Final Rule, which authorizes CMS to extrapolate fines across the entire population, meaning Medicare Advantage organizations will likely face much bigger fines. The Office of the Inspector General (OIG) has been busy making headlines to the tune of millions of RADV audit findings since the new methodology was codified.
Additionally, CMS has implemented a new risk adjustment model, which will phase in the 2023 V28 model during the next three years. Changes to condition categories, the removal of more than 2,000 ICD-9 codes, and associated risk adjustment score values reflected in V28 come from federal concerns that some coded conditions are not valid indicators of future costs.
CMS projects these changes to the risk adjustment program will result in a $4.7 billion savings over the next 10 years. The trickle-down effect to beneficiaries as risk adjustment revenue decreases could be reductions in benefits and potential premium increases over time as plans begin to absorb the financial impact. To avoid penalties, Medicare Advantage organizations need to review internal data integrity workflows and prioritize compliance checks.
The convergence of MA growth, cost reduction by way of risk and quality policy updates, and increased audit penalties may leave plans figuring out how to do more with less. Beneficiaries and members are also likely to feel these effects in benefits, cost-sharing and premiums in the years ahead.
To adapt to the new landscape, grow membership and ensure financial stability, Medicare Advantage organizations need to scrutinize operations, raise compliance awareness and seek opportunities to maximize member touch points.
Michael Gould is associate vice president of interoperability strategy and Cynthia Henry is director of population health informatics at ZeOmega.