Tag Archives: supplemental benefits

Supplemental benefit considerations in a COVID-19 world

Medicare Advantage (MA) plans must cover all benefits offered by original Medicare. MA plans may offer extra benefits such as dental and vision, called “supplemental benefits,” that are tailored to improve the health of existing members, appeal to prospective members, or provide the benefit of group purchasing power.

With the widespread nature of COVID-19, social distancing measures have become a daily practice that affects most Americans right now and have the potential to affect seniors for a longer duration. Some supplemental benefits like a fitness benefit, which are intended to keep seniors active, may not achieve their intended goals when gyms are closed or discouraged for high-risk individuals.

In this brief, Milliman’s John Rogers, Annie Man, and Kyle Hutmaker examine how MA plans might think about offering supplemental benefits for 2021. While no one knows what will happen with COVID-19 in 2021, in the absence of a vaccine or other curative treatment, MA plans should consider the possible effects of the disease well into the future.

Supplemental health benefits considerations for small insurers

Supplemental health products have experienced consistent market growth over the years, most noticeably since the implementation of the Patient Protection and Affordable Care Act (ACA). This growth has been especially strong for hospital indemnity, critical illness, and accident products. There has been a significant increase in the number of insurance companies selling these products. Small companies in this market need to understand the unique challenges these products present in order to compete effectively.

Understanding the market landscape and the assumptions that are required in order to develop premium rates for supplemental health products is important. Three areas that create rate challenges for insurers in supplemental health markets are (1) states with high minimum loss ratio requirements, (2) ongoing monitoring requirements, and (3) the need for rate flexibility. Insurers also need to be aware of the volatile regulatory environment and need to consider issues regarding product flexibility and distribution.

This article by Milliman’s Jennifer Howard and Stacy Koron goes into more detail on the challenges that supplemental products can present.

Benefit changes can drive Medicare Advantage enrollment

In a new analysis, Milliman’s Chris Kunkel and Jordan Pettibon found that Medicare Advantage (MA) members’ behavior is related to benefits that appear on detailed plan summaries and that members take into account more than what they initially see when selecting a plan on the Medicare Plan Finder. While the impact of supplemental benefits on enrollment is not as strong as the impact of the primary driver benefits like PCP copay, Medicare Advantage organizations should be aware of the effect of changing benefits when trying to optimize the most visible ones.

Expanded definition of primarily health-related benefits alters the Medicare Advantage marketplace

In April 2018, the Centers for Medicare and Medicaid Services (CMS) published a revised definition of “primarily health related” (PHR) benefits as applicable to Medicare Advantage (MA) organizations. CMS expanded the definition of a primarily health-related service starting in calendar year (CY) 2019 as one that is “… used to diagnose, compensate for physical impairments, acts to ameliorate the functional/psychological impact of injuries or health conditions, or reduces avoidable emergency and healthcare utilization.” These services are often used by individuals with chronic conditions in need of long-term services and support (LTSS). Many of these services are the same ones that private long-term care (LTC) insurance covers and reimburses.

CMS’s April 27, 2018, guidance letter presented nine possible supplemental benefits that could be offered starting in CY 2019 under the expanded “primarily health-related” definition. Many plans are offering some of these supplemental benefits in 2019. Six of the nine supplemental benefits mentioned in the memorandum are:

1. Adult day care services
2. Home-based palliative care
3. In-home support services
4. Support for caregivers
5. Medically approved non-opioid pain management
6. Standalone memory fitness

In addition to CMS’s list of nine potential new benefits under the revised PHR definition, there are additional “other supplemental benefits” for 2019 that appear to qualify under the expanded PHR definition:

1. Activity tracker/fitness tracker
2. Alzheimer/dementia bracelet: Wandering support service
3. Backup support for medical equipment
4. Housekeeping
5. Non-skilled home health
6. Personal care/personal care services/personal home care
7. Restorative care benefit
8. Social worker line
9. Therapeutic massage
10. Vial of Life program

In this article, Milliman’s Pedro Alcocer, Robert Eaton, and Pamela Laboy address in more depth how the MA marketplace responded in 2019 to CMS’s expanded definition of primarily health-related benefits, including which supplemental benefits plans are offering and where these benefits are offered.