Leveraging market landscape data for 2021 bid preparation

The Medicare Advantage (MA) bid process is a function of the overall product strategy that a health plan organization wants to put in place over a multi-year time frame in the marketplace. When preparing bids, several entities of each health plan in an organization are needed such as: executive, finance, marketing, sales and operations. During the bid preparation process, all these entities have to work cohesively to achieve the overall outcomes that health plans need to succeed in their markets.

The Annual Open Enrollment period for the 2020 calendar year has kicked off and 2021 planning is upon us. Randy Fitzpatrick and Alex Balmes of Optum Advisory Services discussed all things Medicare Advantage related to 2021 bid preparation, during the monthly webinar series, “The Path to Risk and Quality Success.”

Four items to keep in mind

  1. For 2020 and 2021, members will have difficulty comparing plans in the same manner they have in the past. Plans should have a clear strategy to WIN.
  2. Benefit design changes are always required from year to year and should be discussed early and often in the bid preparation process.
  3. Retention versus acquisition strategy and risks should be clearly identified throughout the product design and pricing process.
  4. Plans should clearly tie benefit design changes to member acquisition/retention strategy to support the potential margin impact.

Current Medicare Advantage landscape

MA is growing at a tremendous rate and creating a tremendous market. From 2013 to 2018, MA enrollment grew by more than 7.5% per year compared to 0.5% in Original Medicare. In 2020, MA enrollment growth is estimated to be 5%. The growth each year is a reflection of the value members see in having an MA plan.

The value of benefits MA health plans offers will continue in 2020, creating additional pressure on member retention and acquisition. In 2020, more than 50% of local Medicare Advantage Prescription Drug (MAPD) plans will have a $0 premium. In addition, health plans are expanding their supplemental benefit offerings because of the Centers for Medicare & Medicaid Services (CMS) regulatory change to allow coverage for “non-primarily health related” benefits.

Health plans need to have a clear vision of the current MA landscape and member purchasing habits to ensure they are appropriately positioned for member retention and acquisition.

2020 Medicare Plan Finder

The Medicare Plan Finder (MPF) was redesigned for 2020 by the CMS. MPF is a tool members use to compare plan options in the marketplace. It was not designed to change the overall mission or core values that a corporate health plan represents. Every health plan has its own mission. For example, at Optum, our mission is to help people live healthier lives. Since the MPF is neutral, prospective members will not see the health plan mission statement because CMS doesn’t put a health plan’s logo and mission statement on the MPF to help health plans market themselves. Health plans have made significant investments in understanding how members navigate MPF to maximize member acquisition. The changes implemented by CMS will change how members are able to perceive the value each plan is offering.

Prior to 2020, health plans were ranked within a market based on the member’s estimated out-of-pocket costs. Starting in 2020, when a member or agent goes on the MPF, they sign up, and then they can sort options for their buying decision by:

  • Lowest yearly drug deductible
  • Lowest health plan deductible
  • Lowest premum and retail drug cost
  • Lowest monthly premium

Members will no longer be able to sort plans by estimated out-of-pocket costs. MPF is also used to compare health plans based on certain supplemental benefit offerings (e.g., vision, dental, fitness), but only indicates the plan offers coverage and not the value of the coverage offered. For a clear comparison of the differences across plans, members will need to dig several layers into MPF for each plan.

Available data sources for market landscape

The data available to analyze the market landscape will help a client look at competitors and trends or other happenings in the marketplace. Here are some of the main sources (but certainly not all) that Optum uses specifically when we do our analytics:

  • Landscape files — Published by CMS in late September, this informs stakeholders of the marketed plans by county. Data includes basic information on each plan (e.g., premium, plan type, service area, out-of-pocket costs). It’s split between MA plans, prescription drug plans (PDP), Special Needs Plans (SNP) and plans that offer Part D coverage.
  • Enrollment — Various enrollment reports are published monthly. The most comprehensive report shows total enrollment by state, county, plan and contract. When you link landscape files with enrollment files, you get a sense for which plans are growing, shrinking, new or no longer available in your marketplace.
  • Plan crosswalk — This information highlights new plans, deleted plans and formal crosswalks between plans.
  • Plan benefits — CMS publishes benefit plan data for all health plans across the country. There’s a lot of good information but it takes a bit of time to know how to use and access that information.
  • Part D benefits, pricing and formulary — Public use files are available for purchase monthly or quarterly, and include National Drug Code (NDC)-level detail, including tier placement, utilization management criteria, average cost per script. This information gives a good indication of how competitive your prescription drug pricing is across plans as well as those prescription drugs that are covered and not covered on the formulary.

Leverage market landscape data

Plans should be using landscape data to help them understand what’s happening in the market. It’s important to think about what will “move the needle” when designing products and bid preparation strategy. Understanding member satisfaction, member engagement and member buying behaviors plays an important role. Look at benefit options in the marketplace to understand which buyers are buying what type of products. Using this information, plans can determine whether their product (bid) strategy will be successful in the markets over time.

On-demand and upcoming webinars

If you were unable to attend the webinar on 2021 MA bid preparation or one of our other webinars in the series, you may watch on demand.

Please visit our “Path to Risk and Quality Success” webinar series page to explore upcoming topics, register for the next monthly webinar or watch one of our other webinars in this series on demand.


About the authors

Randy FitzpatrickRandall Fitzpatrick, FSA, MAAA
Vice President, Optum Actuarial Services

Randall Fitzpatrick is a vice president with Optum Advisory Services. He provides consulting services to health insurers, Medicare Advantage organizations, managed care organizations and health care providers. His expertise includes pricing and filing of Medicare Advantage Part C and Part D bids, reserving, provider contract analytics and strategic market analyses for Medicare Advantage. Randall also provided actuarial services to CMS for the review and audit of its bid pricing tools.

He has been providing actuarial services for more than 16 years. Prior to joining Optum, Randall was a principal with Oliver Wyman.


Alex BalmesAlex Balmes, BBA
Senior Director, Optum Actuarial Services

Alex Balmes is a senior director within Optum Advisory Services, focusing on Medicare Advantage, Medicaid and ACA lines of business. He has provided actuarial services for 16 years within Optum Advisory Services supporting the needs of health plan clients across all lines of business.

He brings 20 years of experience in the health care industry, including Medicare Advantage and Part D bid development, reserving, provider contracting, risk adjustment valuation, mergers and acquisition management, actuarial recruiting and analytical systems development.

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