Medicare Advantage Plans Could See Payments Drop in 2021 Due To Covid-19, Analysis Finds

Medicare Advantage Plans

The COVID-19 outbreak appears to have impacted claims patterns for Medicare Advantage enrollees, according to a new analysis by Avalere Health. Even though seniors are historically the most vulnerable population health-wise, their claims were down dramatically during the month of April.

The survey suggests it could impact risk score factors for MA plans in 2021, driving them down by at least several percentage points. As a result, some MA health plans could wind up getting paid less for their enrollees than projected in 2021, which could impact their overall profitability as well as their medical loss ratios.

Avalere recommends that MA health plan managers carefully analyze their own claims data patterns and potential impact in order to be better prepared for a turbulent 2021.

Dive Insight:

Medicare Advantage has been a huge success story for commercial insurers, as tens of millions of American seniors receive their healthcare coverage from Medicare Payment plans, receiving more benefits and often better coordinated care.

For the most part, MA insurers have been able to make fairly sound actuarial projections for each new year prior to autumn open enrollment. But COVID-19 has tossed most reliable modeling practices on its ear.

According to Avalere’s analysis of April claims data, only 4% of MA enrollees had at least one claim in April. That compares to 23% in April 2019. Claims with 15 or more diagnoses in April were half of what they were in March of this year.

Considering that COVID-19 appears not to be going anywhere soon, Avalere projects that claims in May and June and perhaps for the remainder of 2020 will also be lower than projected. As a result, it ran numerous scenarios and concluded MA risk scoring for 2021 based on current claims could drop between 3% and 7% from baseline.

An MA insurer expecting to get a payment of $900 per member per month to cover their cost of care, could see that payment drop anywhere from $28 to $66 per month — a potential loss of revenue totaling hundreds of millions of dollars for a larger insurer.

Moreover, Avalere found that fee-for-service pre-adjudicated claims for chronic obstructive pulmonary disease and heart failure were down 48% and 45%, respectively, in April compared to April 2019. That puts insurers at risks for being hit with higher claims costs due to deferred care for its sickest enrollees. Yet MA insurers also face the risk of their MLRs dropping below 85% in 2021, meaning they could get payments recouped from CMS.

Avalere recommended that MA plans conduct analytics to project their 2021 payments, as well as improve quality of care and address social risk factors for its enrollees.

For More Information: