The 2011 Medicare Advantage and Part D selling season was shorter than ever this year, but it certainly wasn't any less eventful. We witnessed carriers leaving the market (CIGNA), mergers (Bravo and HealthSpring), CMS sanctions (Aetna, Arcadian and Universal American) and some very aggressive moves by the largest carriers (Humana and United Healthcare).
With all of this maneuvering, what were the results? Now that the dust has settled, it's time to take a look back and see which carriers grew enrollment and which carriers saw membership decline.
Part D membership
Let's start with Part D plans. According to data released recently by CMS, Part D enrollments grew for the top 20 carriers by 668,000 in 2011, for a total PDP membership of 17.5 million. Roughly 93 percent of the membership in PDP falls under individual plans, and group plans now represent only 7 percent of the top players' totals. Here is how the top seven PDP carriers performed for the latest selling period:
The seven carriers in the chart represent 75 percent of the market. CVS/Caremark's pending purchase of Universal American's PDP business will leapfrog them to more than 3 million members, making CVS/Caremark No. 2 in terms of enrollment.
Looking one step higher, the big winner is no surprise. Humana's program with Wal-Mart paired with their low premiums garnered significant gains in terms of enrollments by both agent-sold and auto-assigned dual-eligible business. As many of us expected, they will be the name to beat in 2012.
The fascinating aspect of the PDP business is how carriers place themselves for the auto-assigned business. Carriers position themselves to be below the benchmark premium in selected states. A miscalculation by an actuary can result in gains or losses of tens of thousands of dual-eligible clients.
Medicare Advantage membership
For Medicare Advantage business, the industry grew despite a shortened selling season. Membership in MA-PD plans for the top 20 carriers now stands at 8.4 million, up from 8.1 million a year ago. Additional regulation, increased premiums and co-pays slowed the growth of Medicare Advantage plans, but did not decrease the size of the market. Let's take a look at how the top carriers performed.
With the exception of Aetna, which was under CMS sanctions, the top carriers saw membership growth for Medicare Advantage plans. UnitedHealth continued to be the industry leader, although they saw less growth than Humana, which had an increase of more than 100,000 members. The big losers in terms of membership were Universal American (down 109,000) and, of course, CIGNA, which exited the PFFS market without a network-based plan. (For more details, see chart at right.)
Perhaps the real winner last year was Medicare Supplement. With the introduction of modernized Med Supp plans, including the popular Plan N, and the service area reductions by Medicare Advantage carriers, Medicare Supplement carriers saw a significant spike in enrollments during the enrollment period.
Looking ahead
Looking forward, 2012 promises more change for agents in the Medicare market. The CMS Quality Stars ratings will benefit some carriers at the expense of others. The highest-rated carriers will be able to sell year-round, while those with Quality Stars below 4.5 will be limited to the election periods as we know them today.
Furthermore, CMS recently announced a 1.6 percent increase in funding for Medicare Advantage plans for 2012, with most of the additional reimbursement going to those carriers that achieve the highest Quality Stars ratings. This means that you can expect to see carriers vigorously promoting their Quality Stars ratings, which are due to come out in the early fall.
Another change is timing: This year's Annual Election Period begins October 15th and ends December 7th, so agents will have time to shop for the holidays this year. Expect another Special Election Period for plan closures and service area reductions, which could jump start sales in mid-September. Whatever happens, 2012 is sure to be another adventure.
Dwane McFerrin is vice president of Medicare solutions for Senior Market Sales Inc. He can be reached at dwane@seniormarketsales.com.
