According to the Centers for Medicare & Medicaid Services (CMS), enrollment in Medicare Advantage (MA) plans is at an all-time high and access to plans remains strong, as 99 percent of people with Medicare have access to a plan. Next year the average MA premium will also remain stable at $32.60, down from $32.91 in 2015. At the same time, MA plan quality continues to improve—about 65 percent of people are currently enrolled in MA plans with four or more stars in 2016. The MA and Part D plan star ratings, created by the Affordable Care Act (ACA), help individuals compare plans based on the quality of the care provided. CMS determines star ratings on a scale of one to five. To receive the best rating of five, MA and Part D plans must have both high quality and high performance.

Since the ACA was enacted in 2010, seniors and people with disabilities have seen a plan market with lower average premiums, higher enrollment, and lower prescription drug costs. In 2016, the Part D doughnut hole will continue to close with coverage of generic drugs increasing to 42 percent of the cost of the drug in the doughnut hole, while coverage of brand name drugs will remain at 55 percent.

“The announcement that the Medicare Advantage and Medicare prescription drug plan market in 2016 will remain stable is welcome news to people with Medicare. Millions of older adults and people with disabilities will, by and large, continue to see affordable premiums and similar access to plans as they have in years past. As the ACA strengthens Medicare Advantage and Part D prescription drug plans, beneficiaries continue to be protected from significant increases in plan costs, benefits remain stable, and access to higher-quality plans is strong.” said Joe Baker, President of the Medicare Rights Center, in a recent press statement.

 

Many see competition in Medicare Advantage (MA) plan markets as necessary to keep premiums low, control spending, and expand benefits. With many health plans planning to consolidate, the Commonwealth Fund recently released a new brief examining how much competition exists in the MA plan market across the country.

According to the brief, 97 percent of MA plan markets in counties across the US “are highly concentrated and therefore lacking significant competition.” While rural areas have less competition than urban areas, in the 100 counties with the highest number of Medicare beneficiaries, 81 percent lack a competitive MA market. Nationwide, the plan market is centered on only three insurance companies in these 100 counties.

The Commonwealth Fund relied on the Herfindahl-Hirschman Index (HHI) to determine the level of concentration in individual markets by analyzing the number of MA insurance companies in a particular market and comparing that with the number of people enrolled. Markets with an HHI below 1,500 are considered nonconcentrated, those with an HHI between 1,500 and 2,500 are moderately concentrated, and markets above 2,500 are highly concentrated.

According to the findings, urban counties make up 95 percent of all MA enrollees and have an average HHI of 3,712 (highly concentrated) while rural counties have an average HHI of 5,245 (also highly concentrated). The national MA market has an average HHI of 3,783. While these results suggest that the MA market is not that competitive, it remains unclear what effect this has on Medicare costs and the quality of services offered.

This week, the Centers for Medicare & Medicaid Services (CMS) announced the Medicare Advantage Value-Based Insurance Design Model (MA-VBID), which will test whether giving Medicare Advantage plans flexibility to offer targeted extra supplemental benefits or reduced cost sharing can lead to higher-quality, lower-cost care.

According to CMS, the goals of the model are to improve health, reduce avoidable high-cost care, and reduce costs. The model focuses on beneficiaries with diabetes, congestive heart failure, chronic obstructive pulmonary disease (COPD), past stroke, hypertension, coronary artery disease, mood disorders, and combinations of these categories. It will begin January 1, 2017 and run for five years in Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania, and Tennessee.

Value-Based Insurance Design (VBID) generally refers to efforts to structure cost-sharing and plan design elements to encourage enrollees to use high-value services—those services that have the greatest potential to positively impact enrollee health at a lower cost than alternatives. “The Medicare Advantage Value-Based Insurance Design Model fills an immediate need for testing ways to improve care and reduce cost in Medicare Advantage Plans and offers the prospect of lower out-of-pocket costs and premiums along with better benefits for enrollees in Medicare Advantage,” said Patrick Conway, M.D., MSc, CMS deputy administrator and chief medical officer.

The Kaiser Family Foundation recently released an update on the Medicare Advantage (MA) plan market in 2015. According to the report, enrollment in MA plans continues to increase despite concerns that adjustments in payments to MA plans enacted by the Affordable Care Act (ACA) would stifle enrollment. These payment adjustments were put in place to reduce overpayments to MA plans and brings costs in-line with Traditional Medicare. Since the ACA passed in 2010, MA enrollment has increased by 5.6 million–a 50 percent increase.

Additionally, there are 16.8 million people enrolled in MA plans this year, which is about 31 percent of the Medicare population. Between 2014 and 2015, MA enrollment grew by over one million people (7 percent), continuing the trend of  rapid growth of enrollment since the introduction of the Part D prescription drug benefit in 2006.

Ultimately, according to the report, the MA marketplace is healthy.