Medicare Advantage, consolidation drove healthcare insurer trends in 2021


COVID-19 continued to affect the industry, which has plowed forward with expanded offerings, digital transformation and other bold moves.

It was difficult to predict trend lines for the payer and health insurance industry in 2021, largely because of persistent uncertainties due to the COVID-19 pandemic. Consumer behavior has become more unpredictable, care models and offerings are changing and payers are adapting to a world that’s evolving rapidly and in unexpected ways.

One factor that has been rendered extremely unpredictable by the virus is the financial health of the nation’s major insurers, which soared during the initial waves of the pandemic in 2020 but then settled back down to earth toward the end of that year. In 2021, insurers still posted mostly substantial profits, but they were far from the heights seen the previous year.

Over the course of the year a few general themes started to emerge. Insurers are plowing forward with digital transformation initiatives, including the expansion of telehealth and virtual health. Artificial intelligence and machine learning have worked their way into the mix and half of payers now have innovation labs in the belief that digital innovation will be the key to the future.

Insurers also continued to consolidate in 2021, resulting in highly concentrated markets that have drawn the attention of the federal government, which seeks to curb consolidation in a bid to empower consumers.

And then there’s Medicare Advantage, which continues to grow; it’s estimated MA plans will cover more people in 2022 than original Medicare. Several major insurers have taken notice, expanding their MA offerings in an effort to capture more of the market.

It’s been a wildly different year in the payer space, but the way it has played out suggests many of these trend lines may continue into 2022 … and beyond.


COVID-19 continues to affect every facet of American life and the healthcare industry, and it’s driving trends in the payer world as well. At the HIMSS State of Healthcare event in June, Shreesh Tiwari, principal at ZS, said the coronavirus has led to an increase in payer adoption of technology and innovation.

Sixty-four percent of health insurance executives report an accelerated adoption of digital health initiatives such as virtual health. Another 53% report an acceleration in adoption of artificial intelligence and machine learning practices, while 42% said COVID-19 has helped facilitate the adoption of value-based care arrangements, according to State of Healthcare research by HIMSS, the parent company of Healthcare Finance News.

COVID-19 has helped to drive changes not just in technology, but in attitude, Tiwari said. The mental and cultural barriers in terms of adoption are no longer being seen as issues.

Around half of payers have an innovation lab and believe AI and machine learning will drive innovation forward. But 53% believe healthcare startups will lead the way in driving big technology innovation, Tiwari said.

The government also plays a key role. Forty-six percent of payers think current policies and regulations will facilitate innovation.

“Payers have tasted the fruits of innovation in the past few months,” Tiwari said at the time. “Interoperability is being seen as a key driver in terms of managing issues coming out of the technology infrastructure, data infrastructure issues we have, closely followed by data privacy and data security.”

Not all of insurers’ digital efforts are going flawlessly, however. Health plans are revamping their digital offerings in a bid to please consumers, but these efforts are complicated, a Deloitte survey found in June. Many plans are struggling to properly prioritize projects, suggesting a lack of clear vision.

In fact, about half of the 35 technology leaders surveyed identified this lack of vision as an impediment to these ongoing digital transformation initiatives.

Consumers are the ones largely affected, as consumer-facing platforms have made the least progress. A little over half of respondents, 57%, said they’re still in the process of advancing these programs, while the remainder haven’t yet started but say they’ll do so within the next two years.

There are other areas that are lagging as well. The survey focused on modernization efforts of five technology platforms – administrative, analytics, clinical, core, customer service and engagement – and only two respondents said they had modernized one of those platforms.

Those surveyed identified cyber and information security as the number two investment priority after business intelligence. But they warned it could be expensive to correct cyber-related mistakes, particularly ones having to do with cloud configuration. Baking in cybersecurity in DevOps from the outset could make for a more efficient and resilient process.

The findings speak to the broader problem of patient engagement, which has been an ongoing issue for health plans and insurers. A J.D. Power 2020 U.S. Commercial Member Health Plan study found that 60% of privately insured U.S. health plan members said they had not been contacted by their health plan with guidance or information related to COVID-19, and nearly half (48%) said their health plan has not shown concern for their health since the pandemic began.

Health plans have not gained customer centricity, as just 36% of commercial health plan members said their health plan acts in their best interest “always” or “most of the time,” and just 25% said they view their health plan as a trusted partner in their health and wellness.

This lack of customer-centric positioning resulted in an overall satisfaction score last year for commercial health plans of 719 on a 1,000-point scale, among the lowest of all industries evaluated, according to J.D. Power.


Medicare Advantage enrollment continued to increase and several major insurers expanded their MA footprints. It’s become a hot market for insurers heading into the new year.

The Centers for Medicare and Medicaid Services said that in 2022, MA is projected to reach 29.5 million people compared to 26.9 million enrolled in a Medicare Advantage plan in 2021.

For many seniors, MA is the preferred health insurance because of its low upfront monthly costs and added benefits. Medicare Advantage plans will continue to offer a wide range of supplemental benefits in 2022, including eyewear, hearing aids, both preventive and comprehensive dental benefits, access to meals (for a limited duration), over-the-counter items, fitness benefits and worldwide emergency/urgent coverage.

In addition, the percentage of plans offering special supplemental benefits for chronically ill individuals will increase from 19% to 25%.

An increasing number of Medicare Advantage dual eligible special needs plans cover both Medicare and Medicaid services for people who are dually eligible. In 2022, 295 plans (compared to 256 in 2021), will cover all Medicare services, plus Medicaid-covered behavioral health treatment or long-term services.

CMS will continue to test the Part D Senior Savings Model for insulin for seniors in more than 2,100 plans in 2022. This year, over 500 new Medicare Advantage and Part D prescription drug plans, as well as two new pharmaceutical manufacturers of insulin, are joining the model that reduces out-of-pocket spending.

Additionally, more than 1,000 Medicare Advantage plans will participate in the CMS Innovation Center’s Medicare Advantage Value-Based Insurance Design Model in 2022, which tests the effect of offering a projected 3.7 million people customized benefits designed to better manage their diseases and address social needs from food insecurity to social isolation.

The VBID Model’s Hospice Benefit Component, now in its second year, will also be offered by 115 Medicare Advantage plans in portions of 22 states and U.S. territories. It provides enrollees increased access to palliative and integrated hospice care.


To help with their Medicare costs, low-income seniors and adults with disabilities may qualify to receive financial assistance from the Medicare Savings Programs. Only about half of eligible people are enrolled, CMS said.

Cigna is getting on on the act by expanding its MA plans, growing into 108 new counties and three new states – Connecticut, Oregon and Washington – which will increase its geographic presence by nearly 30%, the insurer said in October.

As part of the expansion, Cigna said most current customers will pay the same or lower premiums, and promised that every market will have at least one $0 premium plan. Other benefits will include a social connection program to combat loneliness, customized plans for people with diabetes and incentives for annual wellness exams and other preventive care.

Cigna has increased its geographic presence in MA by 80% since 2019, the insurer said. The company now offers plans in 477 counties across 26 states and the District of Columbia.

Centene, meanwhile, said this year it will be broadening its reach in the Medicare Advantage space in 2022, expanding into 327 new counties and three new states: Massachusetts, Nebraska and Oklahoma.

In all, this represents a 26% expansion of Centene’s MA footprint, with the offering available to a potential 48 million beneficiaries across 36 states. Currently, Centene serves more than 1.1 million MA members across 33 states.

In September, Centene also announced it would consolidate its current Medicare brands, including Allwell, Health Net, Fidelis Care, Trillium Advantage, ‘Ohana Health Plan and TexanPlus, under one unified brand dubbed Wellcare.


Meanwhile, UnitedHealthcare, which already has significant market control with its Medicare Advantage plans, will strengthen its foothold in the space by expanding its MA plans in 2022, adding a potential 3.1 million members and reaching 94% of Medicare-eligible consumers in the U.S.

Currently, more than 7.3 million people are already enrolled in UnitedHealthcare’s Medicare Advantage plans. The insurer said the expansion will focus on lowering prescription drug costs, and improving benefits and the member experience.

But while UnitedHealthcare has a massive foothold in the Medicare Advantage space, it underwent scrutiny from the federal government earlier this month, when the Centers for Medicare and Medicaid Services blocked four Medicare Advantage plans from enrolling new members in 2022 because they didn’t spend the minimum threshold on medical benefits. Three UnitedHealthcare plans and one Anthem plan failed to hit the required 85% mark three years in a row.

Medicare Advantage plans are required to spend a minimum of 85% of premium dollars on medical expenses; failure to do so for three consecutive years triggers the sanctions.

For UHC, the penalties apply to its MA plans in Arkansas, New Mexico and the Midwest, which encompasses Missouri, Kansas, Nebraska and Iowa. UHC plans cover about 83,000 members, and the Anthem plan covers about 1,200 members. They cannot offer select plans to members until 2023, assuming they hit the 85% threshold next year – what’s called the medical loss ratio (MLR). If they fail to hit the threshold for five years in a row, the government will terminate the contracts.

UHC representatives told Bloomberg that it missed the 85% benchmark in certain markets in part because of patients deferring medical care due to the COVID-19 pandemic.

Humana also announced it would debut a new Medicare Advantage PPO plan in 37 rural counties in North Carolina in response to market demand in the eastern part of the state.


Health insurer consolidation has been another ongoing trend – and one the current administration would like to see with tighter reigns.

An executive order issued by President Joe Biden in July cracked down on hospital and health insurance consolidations and other actions it said decreases competition and drives up prices. The four areas of healthcare targeted are: prescription drugs, hospital consolidation, health insurance consolidations and hearing aids.

Consolidation in the health insurance industry has meant that many consumers have little choice when it comes to selecting insurers, the order said.

Biden directed the Department of Health and Human Services to standardize plan options in the health insurance marketplace so people can comparison shop more easily. Plans offered on the exchanges are complicated by the various services offered and differences in deductibles, the order said.

Rick Pollack, president and CEO of the American Hospital Association, urged federal agencies at the time to focus on policies that address competition among commercial health insurers.

“In fact, with commercial health insurance plans, nearly three out of four markets were highly concentrated in 2019 and the top five largest insurers alone control nearly 50% of the market. Studies have found that when an insurance market is highly concentrated, insurers reduce provider payments and do not pass savings along to the consumer.”

The effects of consolidation in 2021 also extended to prescription drugs. Consolidation among standalone Medicare Part D prescription drug plans was the root cause of a 23% decline in offerings for 2022, according to findings published last month by the Kaiser Family Foundation.

The average Medicare beneficiary will have a choice of 23 stand-alone prescription drug plans (PDPs) in 2022, seven fewer PDP options than in 2021, the data showed. Although the number of PDP options in 2022 is far lower than the peak in 2007 – when there were 56 such options, on average – there are still numerous standalone drug plan options, according to KFF.

The relatively large decrease in the number of PDPs for 2022 is primarily the result of consolidations of plan offerings sponsored by Cigna and Centene, resulting in the market exit of three national PDPs from each firm in each region: all three of Cigna’s Express Scripts PDPs and three of Centene’s six Wellcare PDPs. Part D sponsors are limited to offering no more than three PDPs in each region.

This accounts for just over 200 PDPs offered in 2021 that will no longer be offered in 2022. Enrollees in these consolidated plans will be automatically switched to other plans offered by the same plan sponsor, although they can choose to switch into a different plan during the annual open enrollment period.

The number of firms sponsoring stand-alone drug plans has declined steadily over time, from more than 40 firms in 2010 and earlier years, dropping below 25 firms beginning in 2015, and at 16 firms in 2022. That’s lower than in any other year since Part D started.

PDP enrollment is expected to be concentrated in a small number of firms in 2022, as it has been every year. Based on August 2021 enrollment, eight out of 10 enrollees in 2022 are projected to be in PDPs operated by just four firms: CVS Health, Centene, UnitedHealth and Humana. All four firms offer PDPs in all 34 regions next year.

Despite these year-to-year changes in plan coverage and costs, as well as changes in beneficiaries’ health needs, a previous KFF analysis found that most Medicare beneficiaries did not compare plans during a recent open enrollment period, and most Part D enrollees did not compare the coverage offered by their drug plan to other drug plans.

The numbers are similar across both Medicare Advantage and traditional Medicare, with 68% of MA beneficiaries saying they don’t compare medical plans, and 73% of those in traditional Medicare claiming the same.

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