As more Medicare Advantage (MA) plans prepare to roll out new home care benefits in 2020, premiums are expected to drop 23% next year, the Trump administration announced Tuesday.
The news comes as more and more entrants continue to break into the market — and as the Centers for Medicare & Medicaid Services (CMS) prepares to give MA plans the most flexibility they’ve ever had in terms of covering non-medical in-home supplemental benefits.
Specifically, there will be about 1,200 more Medicare Advantage plans operating in 2020 than in 2018, the Trump administration said in a press release. Many of the new MA players were lured in by the promise of increased flexibility, according to Patrick Phillips, CEO of Cavulus.
“New permitted benefit designs are really opening up doors for plans that are creative enough to leverage some of these new regulations in their benefit design,” Phillips previously told Home Health Care News. “That’s what we’re seeing a lot of the new startups grab hold of.”
Hilton Head, South Carolina-based Cavulus is a technology firm that caters specifically to the Medicare Advantage industry, providing plans solutions for marketing, sales, compliance and more.
The drop in premiums — which reached the lowest average monthly cost they’ve seen in since 2007 — came as no surprise to Anne Tumlinson, founder of Washington, D.C.-based research and advisory services firm Anne Tumlinson Innovations.
“This is very consistent with what we expected,” Tumlinson told HHCN. “It’s a very competitive marketplace. Top priority for plans is to use their rebate dollars to lower plan premiums.”
On top of pricing, a growing number of plans are moving to offer new supplemental benefits such as in-home care, transportation, meal delivery and adult care services.
In 2020, 500 plans will offer up to 2.6 million MA beneficiaries supplemental benefits tailored to their needs to help them maintain their health, the Trump administration said. CMS first allowed the supplemental benefits — which include home care and adult day care — to be offered in the 2019 plan year. But in 2019, only 3% of plans offered such non-medical, in-home care benefits.
In 2020, CMS opened the door even further, allowing plans to offer benefits that “have a reasonable expectation of improving or maintaining the health or overall function” of beneficiaries with chronic conditions.
About 250 plans will take advantage of those new flexibilities in 2020, the Trump administration said, equating to an estimated 1.2 million beneficiaries reached.
Overall, Medicare Advantage enrollment is projected to reach an all-time high of 24.4 million beneficiaries in 2020.
“New supplemental [benefits] are much lower priority, and so we see a small but growing number offering them — most likely the data will show that it’s happening among the most innovative plans, in markets with high CMS benchmarks or both,” Tumlinson said. “Overall, I’m encouraged and excited to see as much activity as we are seeing.”
Tumlinson isn’t the only one with her eyes on innovation. Many believe innovative new plans fueled by the promise of offering non-medical, in-home benefits are positioned to disrupt the MA industry all together.
“The redesign of a benefit program is a Herculean effort for the actuaries and underwriters of a health plan,” Phillips previously said. “These new plans can read the tea leaves and create a benefit design that strikes a chord with those that are shopping this year.”
Additionally, while designing benefits programs is complex from an actuarial standpoint, a great deal of confusion exists among payers as to what home health and home care services actually look like.
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