“Availability of zero premium MA plans has been widespread, in spite of reimbursement changes under the Affordable Care Act,” said Tom Kornfield, vice president at Avalere. “For 2016, we will be watching premiums closely to see if this trend continues.”
- MA Premiums: According to Avalere analysis, 79 percent of Medicare beneficiaries have access to a zero-premium MA plan in 2015 and 48 percent of MA members are enrolled in a zero-premium plan. Since zero-premium plans can only be offered by carriers that bid sufficiently below the fee-for-service (FFS) benchmark, this trend reflects the success of MA plans in competing with FFS Medicare.
- Star Ratings: Previous Avalere analysis found that the proportion of Medicare Advantage (MA) beneficiaries enrolled in plans with 4 or more stars climbed from 38 percent in 2014 to 60 percent in 2015. In response to this shift, MA sponsors may make changes to plan offerings in 2016, potentially discontinuing plans that received low star ratings in previous years. This may be a particularly common strategy for plans that have consistently received fewer than 3 stars, as CMS has pledged to terminate such plans in 2016.
- MMP and SNP Offerings: Beginning in 2014, a select set of states began implementing financial alignment demonstrations (FAD) for dual-eligibles – beneficiaries enrolled in both Medicare and Medicaid. The Medicare-Medicaid plans (MMPs) available under these demonstrations were designed to improve care coordination for these vulnerable patients. If MMPs take hold in FAD states, plan sponsors may offer fewer special needs plans (SNPs) in those areas, since SNPs are primarily competing for the same dual-eligible enrollees.
Part D Market:
“The market for enhanced Part D plans (PDPs) has grown significantly in recent years, at the expense of the market for basic plans,” said Colin Shannon, senior manager at Avalere. “Looking ahead, it will be important to compare and contrast these options and assess the potential impact these differences may have on patients.”
- Enhanced PDPs: Part D plans are permitted to offer two types of plans: basic and enhanced. Enhanced plans offer additional benefits beyond what is required, typically at a higher premium. However, Part D beneficiaries who receive low-income subsidies (LIS) may only receive full premium subsidies if enrolled in certain basic plans. In 2015, the number of enhanced standalone Part D plans (PDPs) surpassed the number of basic PDPs for the first time. This trend was driven in particular by Part D beneficiaries who do not receive the LIS enrolling in enhanced benefit designs. The growing bifurcation of LIS and non-LIS enrollment into different plan types has raised concerns among policymakers about potentially diminished access for low-income beneficiaries.
- Premiums and Benefit Design: Despite growing Part D spending, CMS anticipates premiums in the program will remain steady in 2016. Nevertheless, some plans may increase premiums, while others may change benefit designs (i.e. increase deductibles) to account for underlying drug costs.
- Market Stability: Though Part D beneficiaries continue to have multiple plan options available, the PDP market observed a 15 percent decline in total offerings in 2015. It is unclear whether this trend will continue in 2016.
Avalere will continue to offer key insights on key Part D and MA changes as they become available and will release new analyses of the 2016 Medicare landscape files in the coming days. If you would like to talk to an expert at Avalere, please contact Amy Martin Vogt at firstname.lastname@example.org or 202-745-5052.