Big insurers — from Humana to Cigna — are shying away from Medicare Advantage, exiting “unprofitable” markets, axing commission payments and even selling their businesses entirely.
Now, other insurance companies have a chance to step up and gain market share, especially as MA enrollment continued to grow this year.
But the opportunity is not without its risks — among them, the potential strain of utilization and supplemental benefits. CMS has been tightening MA rules, as well.
“It’s obviously not popular,” said Karen Schulte, president of Medicare at the regional insurer SCAN Group, about the regulations.
Smaller or regional insurers are not immune to these challenges, but some spot the opportunity. Health Care Service Corp. recently went big, sharing that it will run new MA plans in 30 states. AmeriHealth Caritas also shared it is expanding its MA dual-eligible offerings. A Sept. 30 ATI Advisory webinar confirmed how CMS data points to regional insurers expanding their MA footprint.
While health systems have historically struggled with securing MA market share, some hospital-owned health plans, like Peak Health, are getting in on the action.
“The nationals have not necessarily done the best job in promoting consumer experience or in reducing the cost of healthcare. Provider-sponsored Medicare Advantage plans are in a unique position to do things that look a little bit different,” CEO of WVU Medicine’s Peak Health, Ben Gerber, said. “When you hear some of the negative press the nationals have gotten, we view that more as an opportunity.”
Even for plans that are not provider-sponsored, provider collaboration can help smaller insurers differentiate.
“We enter into 5- to 10-year arrangements with providers. That allows for that focus,” said Ms. Schulte. “We’re intentional about making sure that the economics work for both us and the provider, as well as the delineation of responsibility … When you don’t have that collaboration and the working together, that’s where you don’t have the sustainability.”
Nonprofit organizations, including SCAN, may also have less to worry about.
“As a nonprofit, we’re responsible to our members, not to shareholders,” Ms. Schulte said.
A nonprofit model’s expectations for profit margins are not always as demanding, giving more leeway to stay afloat in MA markets. For-profits often want at least 5% for their shareholders, which can affect the end consumer’s experience, Ms. Schulte said. But SCAN aims for a 1% profit margin, with flexibility if there is revenue compression.
“I do think this will be a year of advancement for nonprofits and regional players,” she said. “It’s up to us then to make sure that we’re finding a way to continue that going forward.”
