Medicare Advantage competitive positioning in 2018: Analyzing the market landscape and plan offerings

For the seventh year in a row, Medicare Advantage (MA) plan enrollment is projected to increase to a new, all-time high.1 In this growing market, in order to maintain favorable competitive position in the marketplace, MA plans need to compete on an increasingly complex array of product features and plan attributes including premiums, benefits, quality ratings and risk scores.

An essential step in the annual Medicare bidding process is a strategic analysis of plans’ current and projected market positioning. A comprehensive understanding of current trends in the MA marketplace can offer health plans a competitive advantage in 2018. From 2016 to 2017, the MA marketplace is expected to see an increase in MA enrollment compared to the total eligible population. Other significant changes in the 2017 market landscape include:2

  • Total of 2,781 MA plan offerings, including 584 new offerings
  • 510 Medicare Advantage and prescription-drug plans (MAPDs) offering $0 drug deductible with $0 premium plans, versus 502 in 2016
  • Average MA plan STARs rating decreased from 3.91 to 3.89
  • Prescription-drug plan offerings (PDPs) decline as market consolidation continues
  • Increased number of low premium plans achieved via vertical integration and manufacturer rebates
  • Increased number of bundled PDPs being achieved through horizontal integration
  • Anticipate continued lowering of the direct subsidy as enrollment continues to shift to low premium plans
  • Further shifting of brand to generic and substitution of less expensive therapies

Initial 2017 enrollment data will be available from CMS in March 2017 providing further insight on market direction. Along with the Advance Notice that will be released on February 1, 2017, MA plans have a lot to consider. View our comments on last year’s Advance Notice and Rate announcement here . More information regarding the Optum Viewpoints on the 2018 Advance Notice will be provided soon.

 

About the Author:

Rich Gamret, FSA, MAAA

Associate Director, Actuarial Consulting

Optum

Rich Gamret directs Medicare Advantage plan pricing and analysis, evaluation of new regulations, and ad hoc analyses depending on specific client needs. Rich has previously assisted clients by completing: individual and small group rate filings for federal and state exchanges; actuarial opinions; custom pricing model development; and benefit relativity analysis. He has extensive experience in the Florida marketplace. Rich has a BS in Actuarial Science from Florida State University, is a fellow of the Society of Actuaries, and a member of the American Academy of Actuaries. In addition, he serves in various roles on the group health examination committee of the Society of Actuaries.

1 Centers for Medicare and Medicaid Services. Medicare Advantage premiums remain stable in 2017; beneficiaries have saved over $23.5 billion on prescription drugs. Press release. Sept. 22, 2016. cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2016-Press-releases-items/2016-09-22.html

2 2017 Optum Medicare Advantage Landscape Analysis Tool.

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