Avalere offers the following observations on key trends in the MA and Part D programs that are likely to influence the 2017 market.

“CMS introduced changes to the risk adjustment payment models for 2017,” said Tom Kornfield, vice president at Avalere. “For 2017, we will be watching premiums and benefits closely to see how these payment changes could affect beneficiaries.”

“The number of enhanced Part D plans decreased considerably in 2016.” said Kelly Brantley, vice president at Avalere. “Looking ahead, it will be important to analyze trends for enhanced PDPs and assess the potential impact these differences may have on patients.”

Data from Landscape Files from previous years have shown the following trends:

MA Market

• MA Premiums: The percentage of Medicare beneficiaries with access to a zero-premium MA plan increased from 78% in 2015 to 81% in 2016. These zero premium plans were newly available in 102 counties in 2016. Because zero-premium plans can only be offered by plans that bid sufficiently below the fee-for-service (FFS) benchmark, this trend reflects the success of MA plans in competing with FFS Medicare.
• Maximum Out-of-Pocket Limits (OOP): From 2013 to 2016, plans OOP limits have risen. In 2013, 58 percent of MA plans had an OOP limit of under $4,000, whereas in 2016 only 30 percent had an OOP limit of less than $4,000. This trend may be an effort by plans to offset to reductions in reimbursement while maintaining a zero premium.
• Provider Sponsored Plans: In a previous Avalere analysis, in 2016 providers represented 58% of new MA organizations entering the program. In total, 70 provider-sponsored parent organizations offered 403 MA plans in 41 states.

Part D Market

• Enhanced Part D Plans (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 2016, the number of enhanced standalone Part D plans slightly exceeded the number of basic PDPs. 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 increase only slightly in 2017. Some plans may increase premiums, while others may change benefit designs (e.g., increase deductibles) to account for underlying costs.
• Market Stability: Though Part D beneficiaries continue to have multiple plan options available, there were 886 PDPs offered in the U.S. in 2016, an 11.5% drop from 2015 and the lowest amount since the inception of the Part D program. It is unclear whether this trend will continue in 2017.