Major Industry Trends
The Medicare industry is constantly evolving and changing! Here are the top industry trends to keep an eye on in the coming year:
- High persistency and low churn
- Concentration of business among top players
- Big Seven controls 76.2% of MA/PDP market
- WellCare buys Universal American and Centene buys HealthNet
- Aetna/Humana merger is off
- Anthem/Cigna merger is on life support
- Continued focus on Medicare Supplement Plan G
- Validation and restrictions on Household discount
- Plans are seeing slightly higher utilization
- Increased market share with the top four carriers
- Part B deductible increases
- Increasing plans filed with a preferred pharmacy cost sharing tier
- Striking differences in cost-sharing
- Part D sponsors are struggling to manage costs and adhere to assigned LIS members, making the chooser or agent market more profitable and desirable.
Changes in Washington
With the election of Donald Trump, there has been a lot of confusion, disruption, and questions revolving around the future of health care and the Affordable Care Act (ACA). Here are some things to keep an eye on:
- Donald Trump promised to repeal and replace Obamacare. The question then is how will that affect Medicare? How will it affect the 20+ million that are currently covered by ACA?
- His campaign included promises not to touch Medicare and tax reform.
- Tom Price was confirmed as the Secretary of Health and Human Services on February 10. He’s a former physician and U.S. Representative from Georgia. HHS has a trillion-dollar budget and 80,000 employees.
- Price has no interest in tackling Medicare within the ACA Repeal and Replace initiative. He’s not interested in taking on drug companies, favors creating a market for health care, which shifts more responsibility onto the consumer, likes HSA-styled plans with deductibles and vouchers, wants to handle Medicaid with block grants, and drive down malpractice cases.
- Seema Verma is the current CMS Director nominee. She is the architect for the Healthy Indiana Plan for Medicaid, and she consulted with other states with waiver programs. She has not taken a position on the ACA Repeal and Replace initiative, plans to implement Congress’s decision on the matter, promotes more personal responsibility in health care, and is not in favor of Price’s idea for a voucher program for Medicare.
Since ACA changed a lot in regards to health care law and practices, there are a lot of moving parts that will be in question if the Repeal and Replace initiative moves forward. Things that will need to be considered are:
- Guarantee Issue, Enrollment Periods, SEP’s
- Employer Mandate and Individual Mandate
- Coverage for adult children up to 26
- Medicaid expansion
- Health care exchanges
- Minimum essential benefits
- Subsidies and cost sharing reductions
- Limitation on age rating
- Minimum medical loss ratio on MA, large group, individual, and small group
Here’s how the ACA impacted Medicare and MA:
- “Strengthened” Medicare Trust Fund
- Phase out of Coverage Gap (with the help from drug companies)
- First-dollar coverage for preventative care
- Reductions in Medicare advantage funding
- Minimum MLR for MA Plans
- Elimination of the OEP and introduction of MADP
In addition to changes in D.C., there are some regulations that are coming that you should know about:
- A draft of the Medicare Marketing Guidelines was released in January before the Trump administration took over HHS and CMS. It’s the first time we’ve ever seen a “draft” of the guidelines. It typically releases in June.
- Section 100.7 increases the focus on getting CMS approval for agent websites.
- Section 120.4.4 changes the methodology of how CMS would pay GA’s, MGA’s, SGA’s, and FMO’s.
- On December 12, 2016, President Obama signed the 21st Century Cures Act which would bring back OEP and end exclusion for ESRD.
- Earlier in February, the advance notice for 2018 Medicare Payments was released. It shows a 0.25% increase in reimbursement but it could be as high as 2.75% when accounting for impact on risk adjustment. Final notice comes out in early April.