Elevance projects flat Medicare Advantage membership in 2024

Elevance Health is not expecting its Medicare Advantage membership to grow in 2024. 

On a Jan. 24 call with investors, Elevance Health CEO Gail Boudreaux said the company had "greater than expected" attrition in some markets, and it expects its MA membership numbers to remain roughly the same in 2024. Elevance does expect to improve its earnings in the market, however. 

"Unfortunately, pockets of the Medicare Advantage market have remained hypercompetitive despite a more challenging funding environment," Ms. Boudreaux said. 

CMS is phasing in Medicare Advantage risk adjustment changes over three years beginning in 2024, which insurers say amounts to a pay cut for the program. 

According to an analysis of recent enrollment data from CMS, Elevance Health's Medicare Advantage membership declined by 20,712 members during the annual enrollment period, a 1% decrease from the previous year. 

The company exited markets that had underperformed for years for 2024, Felicia Norwood, president of Elevance Health's government business, said, representing a decline of around 84,000 members. Elevance also reduced its supplemental benefit offerings in Puerto Rico, leading to a decline in membership on the island. 

The company had a strong annual enrollment period and would have grown without the planned market exits, Ms. Norwood said. 

"Our net mainland Medicare Advantage membership would be on track to grow by high single digits this year, despite encountering greater disenrollment in certain markets due to very aggressive offerings by select competitors," she said. 

Elevance Health's total Medicare membership is 2 million, according to its fourth-quarter earnings report, published Jan. 24. Total revenues in the fourth quarter were $42.6 billion, a 6.8% increase year over year. In 2023, revenue totaled $171.3 billion, up 9.4%. Net income was $856 million in the fourth quarter, down 1% from the same period last year. In 2023, the company posted a net income of nearly $6 billion, up 1.6%.

The insurance division reported a total operating revenue of $36.5 billion in the fourth quarter, up 4.4% year over year. Total operating revenue in 2023 was $170.2 billion, up 9.3%. The division's operating margin was 4.6% in 2023.

Elevance is also facing headwinds from drops in its Medicare Advantage star ratings. The company is expecting to lose $500 million in revenue in 2025 from fewer quality bonus payments from CMS. The percentage of Elevance members enrolled in contracts rated at four stars or higher declined from 64% in 2023 to 34% in 2024. 

Elevance is suing CMS over the star ratings, arguing the agency made arbitrary and unlawful changes to its rating system. 

Ms. Boudreaux said the company is making progress toward improving its customer satisfaction, which hurt its star ratings from CMS. 

Other payers have reported mixed Medicare Advantage growth. Humana reported it grew its Medicare Advantage membership by 1.8% during the annual enrollment period, lower than its estimates. 

CVS Health said it grew its Medicare Advantage membership at a higher rate than anticipated (15%) and projected it would gain 800,000 members in 2024. 

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