Each Medicare Advantage (MA) plan has an associated “value added,” defined as the value of benefits provided to a specific plan’s beneficiaries above traditional Medicare that are not funded through member premiums. This report by Milliman actuaries Julia Friedman and Brett Swanson highlights key changes in beneficiary premiums and benefits for the 2018 MA market. The report also examines the reasons for, and the magnitude of, the decrease in value added within the MA market between 2014 and 2016 as well as the increases in value added in 2017 and 2018. The report aims to assist Medicare Advantage organizations in making strategic decisions during 2019 bid preparations.
In this research report, Milliman’s Brett Swanson, Ari Kramer, and Julia Friedman highlight key changes in beneficiary premiums and benefits for the 2016 Medicare Advantage (MA) market as well as the reasons for and the magnitude of the decrease of value-add within the MA market between 2013 and 2016, with a more detailed look at changes between 2015 and 2016. It also summarizes the components of the Patient Protection and Affordable Care Act (ACA) and subsequent legislated actions driving the downward payments to Medicare Advantage organizations (MAOs). This report also aims to assist MAOs in making strategic decisions during 2017 bid preparations.
The Centers for Medicare and Medicaid Services (CMS) requires all Medicare Advantage organizations (MAOs) to submit a bid by the first Monday in June that estimates the cost to provide traditional Medicare benefits to an “average risk” Medicare beneficiary for the coming year. A portion of any savings generated by the MAO (the savings defined as the difference between the bid and the benchmark rate) is returned to the plan as a rebate, which can be used by the plans to provide benefits above and beyond traditional Medicare.
As MAOs prepare to submit these bids each year, they must take into account historical costs, CMS revenue levels, anticipated market changes, and membership characteristics, which all impact how a plan’s costs and benefits will change in the coming year. As the Medicare Advantage (MA) market continues to evolve through the Patient Protection and Affordable Care Act (ACA), it is important to analyze how the landscape of this program is changing in the coming year.
This report highlights key changes in beneficiary premiums and benefits for the 2014 MA market and aims to assist MAOs in making strategic decisions during 2015 bid preparations.
How will pending changes in the published Blue Book Average Wholesale Prices (AWP) affect your business? Consulting actuary Brett Swanson’s article in the latest issue of Health Perspectives looks at the effects of recent AWP legislation on pharmacy benefit manager (PBM) contract holders. PBMs are working to ensure these changes are cost-neutral for those involved, though the various approaches being used have unique advantages and disadvantages. The article examines these approaches and weighs their implications.