beneficiaries with ESRD are not allowed to enroll in MA plans except in limited
situations such as enrolling in an ESRD special needs plan or remaining on the
MA plan providing coverage prior to being diagnosed with ESRD. This results in
a higher proportion of ESRD individuals receiving coverage through traditional
Medicare (59%) relative to Medicare Advantage (14%).
starting in 2021, the distribution of ESRD individuals by coverage type may
change. Section 17006 of the 21st Century Cures Act allows
Medicare-eligible individuals with ESRD to enroll in MA plans as of January 1,
2021. This change in MA eligibility could shift a portion of ESRD individuals
currently covered by traditional Medicare to an MA plan.
MAOs could experience significant impacts to their overall financial results as the behavior, claim costs, and revenue payments for ESRD beneficiaries can vary greatly from non-ESRD beneficiaries. ESRD beneficiaries make up only 1% of Medicare enrollment and account for 7% of Medicare fee-for-service costs.
In this paper, Milliman consultants provide an overview of the upcoming ESRD MA eligibility change and key questions each MAO should consider when planning for 2021.
Profitability is critical for long-term sustainability in
the Medicare Advantage (MA) market and a major consideration for new and
established Medicare Advantage organizations (MAOs). While there are many paths
to increase profitability, increasing revenue is often a first consideration
MAOs receive funding from the Centers for Medicaid and
Medicare Services (CMS), and, in some cases, from their enrolled beneficiaries.
Total revenue can be categorized into two groups: Part C and Part D.
Part C revenue from CMS depends on the county benchmark
rate, which CMS sets as the maximum funding it will provide to cover
traditional fee-for-service Medicare benefits for an average beneficiary. Each
year, an MAO estimates a bid amount for each of its plan offerings, indicating
the estimated cost to cover its expected population. As for Part D, CMS funds a
portion of it through the direct subsidy, calculated as the difference between
the national average bid amount and the national average member premium. In
addition to the revenue from CMS, MAOs must balance the offered benefits,
profitability, and the resulting member premium.
In this paper, Milliman consultants Kelly Backes, Greg Herrle, and Douglas Rodrigues discuss the various components of MA revenue, avenues MAOs may explore to increase their Part C and Part D revenue, and key considerations for each approach.