Medicare Advantage insurers are increasingly worried about how their ability to capture members' risk scores will impact their profits in the coming years.
With capitation bids for 2022 due in just a few months, analysts expect insurers to make up for the corresponding loss in profits by increasing their premiums, slicing into their benefits or, simply swallowing the loss.
During the fourth quarter of 2020, Humana reported a 15% decline in Medicare members' physician visits. The Louisville, Ky.-based insurer expects the drop to translate into trouble billing CMS for these patients' conditions in 2021. Anthem likewise expects failure to collect enrollees' risk scores in 2020 to cut up to $0.70 from its earnings per share this year. Molina Healthcare CEO Joe Zubretsky projected that the Long Beach, Calif.-based insurer's lack of member risk scores last year could slash up to $1 from its earnings per share price in 2021.
"Last year was an interesting year. Seniors didn't access healthcare and so interacting with them, getting the right codes to attain the risk scores was a challenge, not just for us but for many of our competitors," Zubretsky said during the company's fourth quarter earnings call on Feb. 11. "Next year, we will either attain the risk scores because they'll be getting services. Or if we aren't satisfied that we can, we can include that in our bids."
Because health plans' bids for 2021 were due in the early months of the pandemic in 2020, insurers had a hard time modeling members' risk scores, according to Cabe Chadwick, president of Lewis & Ellis. He expects this to lead to a decline in risk-adjusted revenue in 2021. As the pandemic continues to percolate across the U.S., and with insurers' bids for 2022 due in just a few months, Chadwick said payers are again scratching their heads over how to assess members' risk, given that utilization is still below normal levels—he expects Medicare Advantage insurers to be squeezed when it comes to profits and administrative expenses next year.
"The feds have never not fixed things. Here's what's going to happen: Sometime after 2021 is finished, the feds are going to go back and true up and go, 'How bad was it? How much in 2021 did your covered senior citizens use the hospital?'" Chadwick said. "So it will be fixed. It's just a delayed fix."
In the coming months, Chadwick expects CMS to issue guidance for plans about how to think about risk scores for next year. After 2021, he predicts the federal agency will offer to prop up some of the plans hit particularly hard by declining utilization.
CMS has already relaxed policies around risk-scoring for telehealth during the pandemic—allowing payers to capture risk scores from virtual patient-provider encounters—and extended the amount of time that insurers have to submit their risk scores from by at least a year, to August 2022. This will give plans more time to review physicians' charts to make sure that every diagnosis listed was coded and ensure that their electronic files are error-free, according to Deana Bell, a principal actuary at Milliman.
The agency also allowed plans to change their benefits structure during the middle of the year, which led some payers to get creative with how they encouraged members to seek healthcare, Bell said. She pointed to SCAN Health Plan in California, which set up a technology support line to teach their Medicare Advantage members how to access their doctor electronically. Humana launched two Atlanta area plans that pay for members cellular data service to make sure they can see their provider, she added.
But Humana CEO Bruce Broussard noted in the company's fourth-quarter earnings call that telehealth is not the final solution for insurers looking to collect risk scores since it "creates greater uncertainty around the type and volume of diagnosis codes collected."
Bell agreed that not every service can be performed via telehealth and that it will leave some conditions undiagnosed, leading to lower risk scores compared to years past.
"We're concerned about 2021 already, but that ship has sailed because the bids were certified and submitted. But potentially, actuaries are projecting not as high risk scores as in the past, and that has a ripple effect and that entire budgeting process," Bell said. "Either plans will absorb the loss and keep their benefits stable, increase premiums or reduce benefits. They've got those three levers."
Anthem and Molina declined to comment, and Humana did not respond to an interview request.
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