More hot days mean more hot research! This month we read about the growing divergence between Medicare Advantage bids and payments, the impact of enhanced premium tax credits by race and ethnicity, and about how narrow or broad ACA marketplace physician networks really are.

Growing divergence between Medicare Advantage plan bids and payments to plans

Grace McCormack and Erin Trish. University of Southern California, Price School of Public Policy, Schaeffer Center. August 2024. Available here.

Researchers from the Schaeffer Center at the University of Southern California evaluated market and policy factors that affect payments to Medicare Advantage (MA) plans to characterize how these factors impact payment trends. They analyzed benchmarks, bids and payments to MA plans compared to Traditional Medicare (TM) costs using data published annually by MedPAC. For their analysis of nominal benchmarks, bids, and payments, they used Plan Payment and Plan Benefits Package files from 2010 to 2021 matched to enrollment and benchmark data from the CMS Landscape and ratebook files.

What it Finds

• In 2023, MedPAC estimated that MA plans were paid up to 6% more per enrollee than they would have had the beneficiary been enrolled in TM. However, since 2010, bids for MA plans have been decreasing, averaging 17% less than TM costs in 2023.
• Under MA, baseline payments and rebates are risk-adjusted to more accurately indicate the health status of a beneficiary. This financially incentivizes plans to document conditions and health events more aggressively than in TM.
• Between 2012 and 2021, the average beneficiary was enrolled in a plan consistently receiving between 3% to 5% in quality bonus payments (QBPs) and by 2021, 81.9% of MA enrollees were in a plan eligible to receive a 5% QBP benchmark increase.
• Risk-adjusted plan bids increased between 2015 and 2021, resulting in average monthly rebates growing from $82 per enrollee in 2015 to $142 per enrollee in 2021.

Why it Matters

Risk-adjusted MA bids have decreased relative to risk-adjusted TM spending since 2010, but total payments to MA plans have increased since 2015. This difference in trends can be attributed in part to the increasing influence of adjustments to MA payments such as quality bonuses. At this time, plans can bid below the benchmark and still receive payments higher than what the Centers for Medicare and Medicaid Services (CMS) pays for the average TM beneficiary. The authors’ findings suggest that MA plans being paid more per enrollee than TM is at least partially the result of the payment policy itself. MA bids are increasingly lower than TM spending, but instead of reducing payments to MA plans, and to the federal government overall, this difference has resulted in increased rebates to plans and more generous supplemental benefits.

The Impact of Enhanced Premium Tax Credits on Coverage by Race and Ethnicity

Jessica Banthin, Michael Simpson, and Mohammed Akel. Urban Institute. August 2024. Available here.

In March of 2021, as part of the American Rescue Plan Act, Congress passed enhanced premium tax credits (PTCs) and later extended them through 2025 in the Inflation Reduction Act. In this report, Urban Institute researchers estimated coverage of the nonelderly population in 2025 with and without enhanced premium tax credits by race and ethnicity to project the impact of more generous credits.

What it Finds

• With enhanced PTCs, enrollment increases among Black and Hispanic people (79% and 61%, respectively) are greater than enrollment increases among White people (42%).
• In Medicaid expansion states, 40% more Black people are projected to enroll in the nongroup market with enhanced PTCs compared to Hispanic and White people (25% and 24% respectively).
• In states that did not expand Medicaid, enrollment for Black and Hispanic people is projected to more than double at 116% and 104% increases. White people are also projected to increase enrollment but at a lower rate of 78%.
• In Medicaid expansion states, the authors predict that enhanced PTCs will have a narrow impact on the uninsured rates by race and ethnicity in 2025. Conversely, they project that enhanced PTCs will dramatically reduce uninsurance rates in nonexpansion states by over 4 percentage points for Black and Hispanic populations.

Why it Matters

If Congress does not act in a timely manner to extend the ARPA/IRA enhanced premium tax credits, they will expire at the end of 2025, reversing several years of coverage gains. Enhanced premium tax credits have contributed to a lower uninsured population regardless of race or ethnicity, but the differences for Black and Hispanic populations are greater than for White populations. For Black and Hispanic people, uninsured rates are consistently about 2 percentage points lower with enhanced PTCs. Looking forward, if the enhanced PTCs are extended, Black and Hispanic people will see more noticeable reductions in the percent of uninsured people relative to White people, reducing historic racial and ethnic disparities in health insurance coverage.

How Narrow or Broad Are ACA Marketplace Physician Networks?

Matthew Rae, Karen Pollitz, Kaye Pestaina, Michelle Long, Justin Lo, and Cynthia Cox. Kaiser Family Foundation (KFF). August 2024. Available here.

Researchers at KFF estimated the share of physicians included in individual Marketplace plans in 2021 by examining data from CMS and the National Plan and Provider Enumeration System (NPPES).

What it Finds

• One in five consumers with Marketplace plans reported that in the past year, a provider they needed was not covered by their insurance and about one in four said a covered provider they needed to see did not have appointments available. Enrollees with Marketplace coverage were more likely than those with employer sponsored insurance (ESI) to face these challenges.
• Marketplace enrollees, on average, had access to 40% of the doctors near their home through their network, with only 4% of enrollees in a plan that included more than three quarters of their area doctors in their network.
• Some of the most narrow network plans were found in large metro counties, where, on average, enrollees had access to 34% of doctors through their plan networks. Plans in rural counties tended to include a larger share of the doctors in the area, but this is not surprising as rural counties overall have fewer doctors relative to the population when compared to large metro counties.
  • Most Marketplace enrollees lived in either a metro county (48%) or a large metro county (38%).
• While there is no formal definition of a “narrow network plan,” researchers have labeled plans covering fewer than 25% of the physicians in an area as narrow. Following this definition, 23% of Marketplace enrollees were in a narrow network plan in 2021.
• The 30 counties with the highest enrollment in the Marketplaces, predominantly urban and disproportionately in states that have not expanded Medicaid under the ACA, represented 34% of all Marketplace enrollees and 21% of the U.S. population.

Why it Matters

People enrolled in a plan with a narrow provider network are more likely to receive care out-of-network care, exposing them to higher cost sharing and balance billing. Out of adults with Marketplace coverage, 20% said that in the past year, a particular doctor or hospital they needed was not covered by their insurance. Among Marketplace enrollees who experienced this problem, 34% said necessary care was delayed, 34% said they were unable to get needed care, and 25% reported experiencing a decline in their health status. While the Biden administration has worked to improve Marketplace network adequacy through expanded federal rules, there remain strong incentives for insurers to keep their networks narrow. Further, insurers and providers are not held sufficiently accountable for inaccurate and out-of-date provider directories. Policymakers will need to continue to monitor consumers’ access to health care services and ensure adequate enforcement of federal and state standards.