Consolidation, vertical integration on the rise in Medicare Advantage: MedPAC

Medicare Advantage insurers are increasingly becoming providers too, according to the Medicare Payment and Advisory Commission's 2024 status report. 

The commission laid out its annual review of the MA program at a Jan. 12 meeting. 

Commission staff found the percentage of expenses plans expect to receive from an organization run by the same parent company has increased since 2022 among the five largest insurers and provider-run plans. Plans owned by provider organizations had the highest share of vertical integration, according to the commission's report. 

The rise of vertical integration could make it more difficult to interpret the plan's profitability, commission staff said. Medicare Advantage plans only report the profit margins for their plans — but the organization as a whole could have a different financial picture, staff said. 

At the national level, the Medicare Advantage market is becoming more concentrated, though concentration at the local level has declined some since 2010, the commission found. UnitedHealthcare, CVS and Humana accounted for 58% of Medicare Advantage enrollment in 2023, up from 32% in 2008. 

At the local level, most markets are considered "highly concentrated" as defined by the Federal Trade Commission, with the three largest insurers accounting for 83% of the market on average. 

Concentration on the local level is a concern for the commission because it can limit benefits Medicare members see from competition, such as improved quality, lower premiums or more supplemental benefits, according to the report. 

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