London Market Monitor – 31 August 2022
Our August review of the markets and Solvency II discount rates.
In an increasingly competitive Medicare Advantage (MA) marketplace,1 supplemental benefits are one of the primary ways Medicare Advantage organizations (MAOs) can differentiate their plans from competitors’ plans. A supplemental benefit is an additional benefit MAOs cover for their beneficiaries, but which is not covered under traditional fee-for-service (FFS) Medicare. MAOs offer these benefits to attract Medicare-eligible individuals to their plans. Supplemental benefit coverage can either be mandatory, meaning all enrollees in a particular plan receive coverage, or optional, meaning all enrollees in a particular plan can elect to receive coverage for an additional premium.2 Due to recent Centers for Medicare and Medicaid Services (CMS) demonstration programs and expansions in supplemental benefit flexibilities,3,4,5 MAOs may also limit mandatory supplemental benefits to plan enrollees who meet certain conditions, such as having a diabetes diagnosis. These types of benefits are only offered to specific subsets of a plan’s population, and therefore are not part of this analysis. This analysis focuses on mandatory supplemental benefits offered by general enrollment plans from 2018 to 2022.
We utilized publicly available data from CMS for this analysis. The 2018 through 2021 membership is based on February plan enrollment, and the 2022 membership is based on January 2022 plan enrollment.6 Benefit data for all years was summarized from the plan benefit packages (PBPs) published by CMS for each year.7
Vision, hearing, and dental benefits are among the most common supplemental benefits historically offered by MA plans. Figure 1 shows the percentage of beneficiaries in general enrollment plans from 2018 to 2022 with coverage for these benefits.
An increasing percentage of beneficiaries enrolled in plans with these benefits from 2018 to 2022. Vision exams are available to almost all beneficiaries, while preventive and comprehensive dental coverage continue to increase in prevalence; in particular, comprehensive dental has realized double-digit increases in coverage each year since 2018. MAOs tend to offer dental and hearing aid benefits with some level of beneficiary cost sharing, while the hearing exam, vision exam, and vision hardware benefits tend to have little to no cost sharing. Across all of these benefits from 2018 to 2022, the average beneficiary copays have been decreasing, and plan coverage limits have been increasing, meaning that these benefit offerings have become richer while also covering a larger portion of general enrollment beneficiaries.
MAOs can offer numerous additional supplemental benefits beyond vision, hearing, and dental. Figure 2 shows the percentage of beneficiaries in general enrollment plans from 2018 to 2022 with coverage for other common supplemental benefits, including over-the-counter (OTC) drug cards, meals, podiatry services, transportation, visitor/travel benefits, and acupuncture.
OTC drug card and meal benefit coverage both grew about 40% to 50% from 2018 to 2022. Acupuncture coverage nearly doubled from 2021 to 2022, up from 24% to 45%, which is largely due to significant increases in coverage by a single carrier. Other benefits steadily increased with the exception of visitor/travel, which was relatively flat across the entire time period. The coverage of the visitor/travel benefit in 2022 at approximately 28% is due to a low rate of coverage by health maintenance organization (HMO) plans (10%) and a relatively high rate of coverage by preferred provider organization (PPO) plans (63%).
The average copay for podiatry decreased from 2018 to 2022 by about $6 in total, while acupuncture copays decreased by about $4 from 2018 to 2021 and then increased by about $10 from 2021 to 2022. The increase in cost sharing from 2021 to 2022 is again largely driven by a single carrier, due to significant increases in coverage coupled with copay levels that are above the market average. Meals, transportation, and visitor/travel benefits are typically offered without member cost sharing. The average OTC monthly drug card limit has increased from about $17 in 2018 to about $23 in 2022.
Multiple supplemental benefits fall under the 14c “Other Defined Supplemental Benefits" category in the PBP. Figure 3 shows the percentage of beneficiaries in general enrollment plans from 2018 to 2022 with coverage for some of the most prevalent 14c benefits: health education, fitness, remote access technologies (RAT) – nursing hotline, nutritional/dietary benefit, and smoking cessation.
Fitness coverage has steadily increased from 2018 to 2022 and is offered to 98% of beneficiaries in 2022, and both smoking cessation and nutritional/dietary benefits increased slightly from 2021 to 2022. All other benefits in Figure 3 have held steady or decreased in percentage of enrollment covered over this period. These benefits are most commonly offered without cost sharing.
The definition of “primarily health- related benefits” was expanded starting in the 2019 bid cycle to cover services used to:
This includes adult day care, home-based palliative care, in-home support services, support for caregivers, and therapeutic massage (for pain management). The percentages of beneficiaries in general enrollment plans with coverage for these expanded primarily health-related benefits in 2021 and 2022 are displayed in Figure 4.
Compared to other supplemental benefits discussed above, MAOs provide these services to a relatively low percentage of beneficiaries, with modest changes from 2021 to 2022. Exceptions are in-home support services, which grew from 7% to 12%, and adult day care, which decreased from 3% to 0.2%. These benefits are generally offered without beneficiary cost sharing.
In performing this analysis, we relied on the 2022 Milliman MACVAT®. The Milliman MACVAT contains MA plan details and benefit offerings for 2018 through 2022. The Milliman MACVAT uses publicly available data released by CMS, which is then compiled, sorted, and summarized into a user-friendly format. We used the February enrollment from each applicable year (2018 through 2021), with the exception of 2022, for which we used the January 2022 enrollment. This analysis includes general enrollment MA plans only.
Julia M. Friedman and Mary G. Yeh are consulting actuaries for Milliman, members of the American Academy of Actuaries, and meet the qualification standards of the Academy to render the actuarial opinion contained herein. To the best of our knowledge and belief, this information is complete and accurate and has been prepared in accordance with generally recognized and accepted actuarial principles and practices.
The material in this report represents the opinion of the authors and is not representative of the view of Milliman. As such, Milliman is not advocating for, or endorsing, any specific views contained in this report related to the Medicare Advantage program.
This report is intended to summarize supplemental benefits offered by MA plans from 2018 through 2022. This information may not be appropriate, and should not be used, for other purposes. We do not intend this information to benefit, and assume no duty of liability to, any third party that receives this work product. Any third-party recipient of this report that desires professional guidance should not rely upon Milliman’s work product, but should engage qualified professionals for advice appropriate to its specific needs.
The credibility of certain comparisons provided in this report may be limited, particularly where the number of plans in certain groupings is low. Some metrics may also be distorted by benefit changes in a few plans with particularly high enrollment.
In preparing our analysis, we relied upon public information from CMS, which we accepted without audit. However, we did review it for general reasonableness. If this information is inaccurate or incomplete, conclusions drawn from it may change.
1Friedman, J.M., Swanson, B.L., Yeh, M.G., & Cates, J. (February 2020). State of the 2020 Medicare Advantage Industry: As Strong as Ever. Milliman Research Report. Retrieved March 25, 2022, from https://us.milliman.com/en/insight/state-of-the-2020--medicare-advantage-industry-as-strong-as-ever.
2CMS (April 22, 2016). Medicare Managed Care Manual: Chapter 4: Benefits and Beneficiary Protections. Retrieved March 25, 2022, from https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/mc86c04.pdf.
3CMS. Medicare Advantage Value-Based Insurance Design Model. Retrieved March 25, 2022, from https://innovation.cms.gov/innovation-models/vbid.
4CMS (April 27, 2018). HPMS Memo. Retrieved March 25, 2022, from https://www.cms.gov/Research-Statistics-Data-and-Systems/Computer-Data-and-Systems/HPMS/HPMS-Memos-Archive-Weekly-Items/SysHPMS-Memo-2018-Week4-Apr-23-27.
5CMS (April 24, 2019). Implementing Supplemental Benefits for Chronically Ill Enrollees. Retrieved March 25, 2022, from https://www.cms.gov/Medicare/Health-Plans/HealthPlansGenInfo/Downloads/Supplemental_Benefits_Chronically_Ill_HPMS_042419.pdf.
6CMS. Monthly Enrollment by Contract/Plan/State/County. Retrieved March 25, 2022, from https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Monthly-Enrollment-by-Contract-Plan-State-County.
7CMS. Benefits Data. Retrieved March 25, 2022, from https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Benefits-Data.
8CMS (April 2, 2018). Announcement of Calendar Year (CY) 2019 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter. Retrieved March 25, 2022, from https://www.cms.gov/MEDICARE/HEALTH-PLANS/MEDICAREADVTGSPECRATESTATS/DOWNLOADS/ANNOUNCEMENT2019.PDF.