Medicare Advantage Faces Sicker Population, Lower Payments in 2021

Medicare Advantage plans may face a sicker population and lower payments in 2021, a recent Avalere report warned.

Avalere used Medicare Advantage claims from 2020 through June 2020 to assess the potential impact on Medicare Advantage risk scores.

As expected, the data revealed a sharp drop in claims across March and April 2020. Only about half of the beneficiaries who reported at least a single claim in April 2019 (47 percent) reported a claim in April 2020.

As shutdown restrictions began to ease toward the end of April 2020, the number of claims began to inch back toward 2019 levels.

However, by June 2020, the number of claims were still 34 percent lower than they had been in 2019.

The total number of claims dropped 66 percent in April 2020 as opposed to April 2019, with less than 1.5 million claims in April 2020 and nearly 4.0 million claims in April 2019.

The main factor that prevented a more severe decline was telehealth. Telehealth claims made up 21 percent of all claims in April 2020, 17 percent of all claims in May 2020, and 13 percent in June 2020. This was up from only five percent of claims across April, May, and June 2019.

Telehealth waivers from CMS bolstered telehealth access and utilization.

According to a separate study, CMS COVID-19 waivers significantly improved Medicare Advantage plan telehealth access. Nine in ten seniors who leveraged telehealth during the shutdown reported a positive experience.

“Because diagnoses from 2020 claims are used as an input to determine 2021 risk scores, fewer claims in 2020 could mean lower risk scores, even though the health status of enrollees has not changed. Consequently, risk scores may not fully reflect the cost of care,” the Avalere report explained.

The report considered three ways in which utilization might impact Medicare Advantage risk scores based on projected utilization for the remainder of 2020.

In one scenario, the researchers considered what might occur if there was low impact from the coronavirus pandemic during July to December 2020. In this scenario, the last six months of 2020 saw a slight increase in activity after June 2020.

If this happened, it would lead to a decrease in the midyear 2021 risk score of 6.4 percent. This would result in 4.2 percent drop in midyear 2021 risk score payments.

In the second scenario, the utilization rate would remain around the same level as it was in June 2020 through the end of the year.

If utilization remains about the same, then midyear 2021 risk scores would drop by 7.7 percent and payment would fall 5.05 percent.

In the final scenario, utilization dropped below June 2020 levels. Experts have been considering this option given the possibility of a second wave. Some have argued that the nation is already seeing its third wave of the pandemic.

In this case, risk scores could decline by 9.6 percent leading to a 6.14 percent drop in payment.

Additionally, the population of Medicare Advantage beneficiaries without a number of chronic conditions would grow, regardless of the risk score impact. Meanwhile, in the high impact scenario, the number of individuals with four or more chronic conditions would fall from 31 percent to 22 percent.

“This decrease in the number of HCCs recorded likely does not reflect that enrollees’ health improved but could mean that those who are at highest risk if they contract COVID-19 (i.e., those with multiple pre-existing conditions) may be the most likely to defer care,” the report explained. “Consequently, their actual health status is not being accurately captured for risk-adjustment calculations.”

Patients who do not access chronic disease management support due to the coronavirus pandemic could require acute care later on and contribute to higher costs overall. Meanwhile, payers will receive less payment from CMS to cover these higher costs.

“Plans will need to continue to adjust their strategies to account for the longer-term implications of deferred care and use telehealth and other flexibilities to mitigate the impacts,” the researchers suggested.