The Medicare Advantage market continues to grow at a rapid pace. A recent analysis from Kaiser Family Foundation found that 3,834 plans were available for the 2022 plan year in MA, the highest number in more than a decade. The average Medicare beneficiary has access to 39 Medicare Advantage plans, more than double the number of plans per person in 2017.
CareFirst BlueCross BlueShield, the largest health plan in the mid-Atlantic region, is one of the many organizations investing in the increased MA market. The company entered the Group Medicare Advantage market at the start of 2022. The entry to the group MA market (those with 51 employees and more) follows CareFirst’s entry into the individual MA market at the start of 2021.
“The government programs market is growing when you look at Medicare and Medicaid. The commercial group market is flat, but we see clear growth in Medicare and Medicaid over the next 3-5 years. It’s a combination of the aging population and increased government funding over the last two decades,” says David J. Corkum, Chief Growth Officer of CareFirst.
Health Evolution Summit 2022, April 6-8, Laguna Niguel, CA: Apply to Attend
Corkum spoke with Health Evolution about why the timing is right for the MA market, how the pandemic has changed membership expectations, and what kinds of challenges he expects when scaling up the MA population.
Why is the timing right for CareFirst to expand your MA offerings?
It was good timing for us in terms of market conditions given that the role of government in health care is going to continue to grow. We’ve got a lot of experience in terms of working with the federal government. It fits with our orientation on public-private partnership. It’s a philosophy that our CEO definitely has, as it relates to any number of problems and solutions. It’s something that CareFirst has been doing for a while now—fostering public-private partnership. We’re the largest provider of benefits to the federal workforce through the federal employee program.
In addition to that, I would say, maybe the government has been the primary driver of the transition from volume/fee-for-service reimbursement to paying for value. That’s another thing that is core in our strategy. In our commercial group business, we’re driving that transition to value-based reimbursement and working collaboratively with providers to do that. Within Medicare Advantage and group Medicare Advantage, value-based reimbursement is essential. There’s just a lot of alignment.
And more than that, we thought we could build on the launch last year of the individual MA market by following up with a group MA offering. It’s a combination of a lot of things that all point in the same direction. This is good timing and a good opportunity for the organization to bring more value to members that are in transition from active to retiree but still covered under their employer sponsored offering.
The Medicare Advantage market has been on the upswing. Nationally, what kinds of entities have you observed or talked with in this space that made you feel it was a good time?
We were looking at the trends nationally and seeing what has been happening in other parts of the country. The mid-Atlantic is a little bit less penetrated from a Medicare Advantage perspective. It may be that the federal government employment factor partially contributes to that. I’m not certain as to the reasons why, but when you look at the uptake on Medicare Advantage in the Mid-Atlantic it’s less than the uptake nationally.
But it’s not going stay that way. And that was the conclusion we drew. As economic pressure continues to grow and as the absolute dollars of what it takes to provide medical benefit coverages continue to go up…employers are going to need to find a better way to serve members and an easier way from a financial perspective to do that. So, we were looking at the national trends and we were looking at the experiences of some of the other health plans both in other regions as well as the mid-Atlantic. That was all part of what lead us to this decision. It was that and our early experiences with the individual Medicare Advantage market and just wanting to build on that. We talked with experts and consultants in the space, and so there was a lot of research that was done externally to the organization, as well as internally that helped us down this path.
Consumers want a better and easier experience. The experience is not high out-of-pocket costs, claim filings, and retrospective reimbursement. It’s low out of pocket costs, no medical or drug deductibles, and an array of services beyond the traditional.
David Corkum, CareFirst
Coming out of the pandemic, what kinds of changes do members expect from their health plan?
The pandemic perhaps certainly heightened or accelerated the changes these members expect, but it isn’t necessarily a different direction. Consumers want a better and easier experience. The experience is not high out-of-pocket costs, claim filings, and retrospective reimbursement. It’s low out of pocket costs, no medical or drug deductibles, and an array of services beyond the traditional. They are looking at value-added benefits and stuff outside of the core medical services that Medicare covers, or employers can cover through Medicare Advantage. Those are more valuable to the individual. If it can be offered in a more seamless, easier-to-understand, more easily administered fashion, that’s value. That’s the consumer expectation and that’s been the expectation for years. The pandemic has just accelerated it.
What are the challenges in scaling up a MA population?
We are selling to the large group market. It’s commercial employers and public sector employers. We’re in a good position from the standpoint of relationships with that market. We’re the market leader in our region. We already have relationships with many of these employers. As we’re having interactions with these customers, we can bring this forward as an option. I think we’ve got good ability to create and participate in the opportunity. The flip side of that is some employers have gotten out of group retiree coverage—they exited that market entirely. And the ones who are still offering that, how long are they going to stay in the game? There is a financial savings going from Medicare supplement to covering that Medicare population for active employees and converting it to Medicare Advantage. That’s one of the primary advantages to the employer, but it’s a still a cost. So how important is offering retiree coverage in their overall value proposition in attracting and maintaining a workforce?
When someone chooses to work for an employer, benefits are a big consideration. If it’s an employer offering retiree coverage, that’s huge value. The market opportunity we think is huge, but there is a question of at what point do employers exit? We want to make sure we’re covering both ends of the spectrum. To the extent that employers exit, people are eligible for individual MA plans. This gives us the chance to serve those employers who stay in the game.
As far as how can we scale? It’s not going to be an influx of people day one, but I will say we launched the first day of 2022 with four large group employers on board. We’re going to continue to grow from there. This is not something we decided to do in August and September of 2021. The build for this started in the third and fourth quarter of 2020. We’ve been preparing for this for a while.
What will success look like this time next year?
I am not going to put a membership number on it but if you think about four employers, we expect a multiple of that next year at this time. And then over time, what we’ll be looking at is our market share. Depending on which market segment you’re talking about—small group versus mid or large size employers—we’re in the 45 to 50 percent market share range. We’re starting from scratch in terms of this Medicare Advantage launch in Maryland and DC, so we’re not at 40-50 percent. There are more entrants and competitors in the MA market in Maryland than there is in the commercial group of population, so it’s not going to be 40-50 percent. But we’re going to be looking closely at market share relative to competitors and making sure that we have a meaningful market share, relative to the competitors and overall, between our commercial and Medicare Advantage populations. What is important to us is that we represent a meaningful share in terms of patients to the providers. It’s important we work effectively with providers and the value that we bring to them.
