Some Medicare Advantage plans say the turbulence facing the industry is not slowing them down.
Peter Kuipers, CFO of Clover Health, told Becker's risk adjustment changes from CMS and the two-midnight rule could have "very little impact" on the company.
Clover Health is able to avoid the pressures other plans are facing because of its technology and focus on PPO plans, executives say.
"We don't really have a direct competitor, or peer, the way we approach a health plan," Mr. Kuipers told Becker's. "We do, of course, have competition. But if you just look at a plan basis, the technology [we use] is not available."
Over, the last year, major MA carriers have reported increasing medical costs, driven by pent-up demand for care delayed during the COVID-19 pandemic.
In addition to rising medical utilization, plans are contending with new reimbursement models from CMS. 2024 is the first year of a three-year phase-in of risk-adjustment model changes. Payers have said the changes amount to a cut in funding.
Executives at Humana, the second-largest Medicare Advantage insurer, said the company has seen an increase in inpatient utilization because of the two-midnight rule. New CMS regulations took effect requiring Medicare Advantage plans to provide coverage for an inpatient admission, rather than observation, when the admitting physician expects the patient to require hospital care for at least two midnights.
Though Humana said the rule change was the largest factor behind increasing inpatient admission costs, other insurers said the rule did not have a large effect on costs.
A smaller, more nuanced member population has meant Clever Care has avoided rising utilization costs, CEO Karen Walker Johnson told Becker's.
"Our membership primarily consists of Asian Americans and Pacific Islanders, and their approach to healthcare tends to focus more on prevention," Ms. Johnson said. "They prefer, if possible, to avoid hospitalizations, so increased utilization isn’t our biggest challenge."
While some smaller payers say they are shrugging off headwinds, UnitedHealth Group, the largest Medicare Advantage carrier, says it is poised to navigate the challenges in Medicare Advantage well.
The convergence of rising costs and lower reimbursement from CMS has led several insurers to exit markets that are no longer profitable. Humana will exit 13 markets, affecting around 600,000 members.
Centene plans to exit six states, and CVS Health has projected it will lose up to 10% of its Medicare Advantage members.
Insurers that aren't planning large-scale market exits could pick up members from companies exiting markets and pulling back on benefits.
In May, UnitedHealthcare CEO Brian Thompson said medical costs were in line with the company's expectations.
"[I'm] really comfortable with what we'll put into the marketplace for next year, and pleased with how we're performing and what the opportunities are on the horizon for 2025," Mr. Thompson said.
Andrew Witty, CEO of UnitedHealth Group, cautioned it was too early to predict if the company would pick up growth from competitors' existing markets.
Elevance Health executives have also said they feel confident in the company's Medicare Advantage offerings. In June, Stephen Tanal, vice president of investor relations at Elevance, said he is comfortable predicting "market-plus" growth for the company's Medicare Advantage business in 2025.
"We're frankly somewhat encouraged by the commentary by some of our peers, competitors, around market rationalization and taking a hard look at that market," Mr. Tanal said. "I know others are potentially losing money this year."