The CEOs of the six largest for-profit insurers have different perspectives on Medicare Advantage.
In the past year, insurers have faced rising medical costs in the MA population and a new risk adjustment model from CMS. Insurers say this model amounts to a payment cut.
UnitedHealth Group maintains that it is well prepared to handle rising costs and lowered CMS reimbursement, while Centene, Humana and CVS Health are all planning to exit markets and cut back on benefits in 2025 to accommodate the costs.
Cigna, meanwhile, is still planning to exit the Medicare Advantage business next year.
Here is what six insurer CEOs had to say on second-quarter earnings calls about the state of Medicare Advantage:
UnitedHealth Group CEO Andrew Witty touted the value of Medicare Advantage and the outcomes of UnitedHealth's home care business.
Medicare Advantage can save older adults $2,000 annually on average through lower out-of-pocket costs and dental, vision and hearing benefits not included in original Medicare, he said.
"That means a lot to the majority of the people Medicare Advantage serves who have limited economic resources and otherwise would lack access to such services," Mr. Witty said on a July 16 investor call.
In 2023, UnitedHealth's home visit business identified 300,000 Medicare Advantage members with emergent health needs and connected more than 500,000 members to food, transportation and financial resources, Mr. Witty said.
A Wall Street Journal investigation alleged UnitedHealth and other insurers made billions from diagnoses added to Medicare Advantage beneficiaries' charts during home visits. UnitedHealth Group said the Journal investigation "fundamentally misrepresents" its HouseCalls business.
Mr. Witty said the company remains confident it is prepared to weather reimbursement changes from CMS.
The entire company is shifting to offset the effects of the rate environment on its Medicare Advantage and Optum Health businesses, he said.
"The entire corporation is engaged in how it manages itself better, reduces cost across the company, leverages technology, and accelerates our consumer agenda. It's all designed to play our part across the board in how we offset the pressure that's been inflicted on those two important businesses. It's why we're confident we can navigate this," he said.
Elevance Health CEO Gail Boudreaux said the company was pleased it picked up revised star ratings after challenging in court the methodology CMS used to calculate its ratings.
The increased bonus payments Elevance will receive from CMS as a result of the revised rating will offset coding changes from CMS, she said.
Elevance remained "disciplined" in its 2025 Medicare Advantage bids, Ms. Boudreaux said.
"We will be offering highly valued and competitive benefits as we seek to balance growth and margins and remain focused on building an attractive and sustainable Medicare Advantage business for the long term," she said on a July 17 earnings call.
Felicia Norwood, president of Elevance Health's government business, said it is too early to say how much the company expects its Medicare Advantage business to grow in 2025.
"We feel encouraged by commentary from peers that everybody is going to price rationally and have benefit rationalization as we head into 2025, but we still have to wait and see what emerges once we have greater information from our competitors," she said July 17.
Centene CEO Sarah London said the company is continuing to face "well-documented" headwinds from its Medicare Advantage plan star ratings.
Centene has been working to recover its Medicare Advantage star ratings since 2022, when the percentage of Centene members with four-star or higher plans dropped from 48% to 3%.
Centene is on track to improve its star ratings when CMS publishes new ratings in the fall and picked up a small boost from recalculated ratings, Ms. London said.
"As we sit here today, we are pleased with the progress against our internal expectations and expect [October] ratings to be a meaningful step toward our ultimate goal," she said July 27.
The company also plans to exit six Medicare Advantage markets in 2023. Ms. London said the moves are designed to align with the company's longer-term strategy to focus on individuals eligible for Medicare and Medicaid.
"[We're] being thoughtful about how to streamline that [Medicare Advantage] book in further alignment with our Medicaid footprint, because that's where the puck is going," she said.
Humana CEO James Rechtin said Medicare Advantage outpaced the company's growth expectations for the year, but inpatient costs crept up higher than expected in the second quarter.
Executives said the two-midnight rule is likely the cause of the rising costs. Mr. Rechtin said the rising costs in its MA business can "ultimately be mitigated" with the right measures.
"For example, we're continuing to ensure clinical appropriateness of admissions, especially in light of the two-midnight rule," Mr. Rechtin said Aug. 1. "We are enhancing claims audits and we are negotiating with provider partners to achieve better clinical and contractual alignment."
Humana CFO Susan Diamond said the company expects to lose a few hundred thousand Medicare Advantage members due to market exits.
Mr. Rechtin said in most areas where Humana discontinues some plans, members will have access to a different Humana MA plan.
"There's very few geographies we will fully exit," he said.
Cigna CEO David Cordani said the company is on track to get out of the Medicare Advantage business.
"We continue to make great progress regarding the sale of this business, and I'm pleased that we remain on track to close in the first quarter of 2025 as planned," he said Aug. 1.
In January, Cigna announced a deal to sell its Medicare Advantage, Medicare Supplement and Part D plans to Health Care Service Corp. for $3.3 billion. In February, Mr. Cordani said Cigna will remain involved in the MA market after it sells its insurance business through Evernorth, its health services arm.
CVS Health CEO Karen Lynch said the company expects to lose MA members in 2024 as it tries to recover margins in its business.
CVS executives said costs in Medicare Advantage picked up at the end of the second quarter.
Ms. Lynch said she is "very confident" the company caught rising trends in time to account for the spending in its 2025 plan bids.
CVS Health CFO Tom Cowhey said the company may have to dip into its reserves to cover the cost of claims if inpatient Medicare Advantage costs keep rising.
Unlike Humana, CVS executives said the two-midnight rule is likely not what is to blame for rising costs.
"We don't believe that this is an increase in two-midnight. It's just that we're seeing broad-based inpatient pressures," Mr. Cowhey said Aug. 7.