Centene is not going to be allowed to increase its Medicare Benefit footprint in sure geographies subsequent 12 months after its plans persistently obtained poor scores within the federal high quality rankings program.
The insurer shall be unable to increase 9 of its 108 contracts in 2024, in accordance with an evaluation by HealthMine, a consultancy for medical insurance corporations. About 84,000, or 5%, of Centene’s 1.5 million Medicare Benefit members with Half D prescription drug protection are enrolled within the 9 plans, which cowl counties in Ohio, North Carolina, Arizona, Connecticut and Nevada.
The freeze might have an effect on Centene’s future in Medicare Benefit, since geographic enlargement has been insurers’ main means of capturing market share within the profitable, fast-growing program. The corporate declined to quantify how its stars efficiency this 12 months will have an effect on its operations in 2024.
“The 2023 plan 12 months star rankings consider Centene’s work carried out in prior years,” a Centene spokesperson wrote in an e-mail. “As we now have said publicly this 12 months, Centene’s new administration crew recognized score points and has aggressively applied operational adjustments which we anticipate will ship improved stars rankings in future years.”
The freeze on the corporate’s geographic progress stems from a technical replace the Facilities for Medicare and Medicaid Providers launched in its closing rule in Might. Any contract operated by a Medicare Benefit plan that receives 2.5 stars or fewer for 2 consecutive years shall be denied service space enlargement for the approaching 12 months. A single “poor performing” contract will freeze geographic progress for each contract operated underneath the related authorized entity.
Medicare Benefit insurers usually maintain one authorized entity for every state during which they function. However as a result of insurers typically shift members from lower-rated contracts to higher-rated ones as a means of maximizing the bonuses related to the celebs program, a single authorized entity can embody merchandise supplied in a number of states.
Centene isn’t the one firm barred in 2024 from increasing its Medicare Benefit footprint. Small insurers Imperial Well being Plan of California and Zing Well being’s progress will even be restricted. A complete of 14,100 sufferers are enrolled within the two plans. Neither Zing Well being nor Imperial Well being Plan of California responded to interview requests.
Amongst massive insurers, Centene fared the worst within the rankings program this 12 months. Simply 3% of its members are enrolled in plans that meet the four-star high quality bonus threshold for 2023, down from 54% final 12 months, in accordance with analysts at Cowen. Medical health insurance corporations depend on the standard bonuses so as to add supplemental advantages and zero-premium plans, which assist differentiate their choices within the crowded Medicare Benefit market.
“Centene simply had an ideal storm of business and operational traits that’s gotten them caught very flat-footed, in a really high-risk trend,” mentioned Melissa Smith, government vice chairman of consulting {and professional} companies at HealthMine.
In 2018, Centene bought not-for-profit authorities insurer Fidelis Look after $3.75 billion. Two years later, Centene accomplished its $17.3 billion acquisition of rival Medicare Benefit provider Wellcare. And in January, it oaid $2.2 billion for Magellan Well being, an insurer, behavioral well being supplier and pharmacy profit supervisor. Centene shed Magellan Well being’s pharmacy companies after dealing with accusations from a number of states that the corporate’s former pharmacy profit supervisor overcharged Medicaid applications for prescribed drugs.
“They’d immense volumes of mergers and acquisitions, and immense quantities of integration work. Their natural traits and the local weather was ripe for them to have a dip, which was compounded by the horrible false sense of safety that all the 2021 star rankings and 2022 star rankings’ COVID aid infused for them.”
CMS tallies roughly 50 scientific consequence and affected person expertise measures to find out an insurer’s total star rating. The company relaxed how star rankings have been calculated in the course of the previous two years as a part of its COVID-19 pandemic aid program, resulting in a file variety of insurers to obtain excessive scores within the five-point program. This 12 months’s resumption to pre-pandemic requirements, in addition to adjustments to the burden within the formulation for the client expertise, led to an industrywide drop in star rankings. The adjustments to the methodology have been anticipated to empty $800 million from the Medicare Benefit program in 2023, in accordance with a September evaluation by McKinsey & Co., a consultancy.
Centene and different insurers’ 2023 star scores might additionally have an effect on their 2025 enlargement plans.
Insurers that obtained rankings of two.5 or decrease this 12 months have three months to enhance their scores, Smith mentioned. In any other case, they might be barred from increasing in 2025. UnitedHealthcare, Humana, Cigna, CVS Well being’s Aetna and Molina Healthcare every obtained not less than one contract rated 2.5 stars or decrease this 12 months.
Molina Healthcare and UnitedHealthcare declined to remark. Aetna didn’t reply to an interview request.
Simply one in all Humana’s 47 contracts obtained 2.5 stars or fewer this 12 months, a spokesperson wrote in an e-mail. He mentioned 96% of Humana’s Medicare Benefit members are enrolled in plans rated 4 stars and above.
Cigna’s low-rated plans are situated in newer areas for the insurer the place their small membership makes them ineligible for sure stars measures, a spokesperson wrote in an e-mail. Three of the corporate’s 16 contracts, representing 9% of its 543,000 Medicare Benefit members, are at-risk of being frozen in 2025.
“Given the novelty of the score for the 2 new geographies, we don’t anticipate any impacts to our enlargement,” the spokesperson mentioned.
Amongst massive insurers, Centene faces probably the most threat for 2025. Sixty two of the corporate’s contracts shall be frozen if the corporate doesn’t enhance its scores, in accordance with the HealthMine evaluation. Some 1.1 million, or 74% of the corporate’s membership, are enrolled within the plans.
This 12 months, Centene’s Wellcare Medicare Benefit enterprise introduced it can increase into 209 new counties.
Final 12 months, the insurer expanded its attain into 327 new counties in three extra states. The corporate additionally moved to consolidate its disparate manufacturers underneath the Wellcare model, and named Corridor of Fame quarterback Joe Montana as its spokesperson.
All of the strikes helped Centene develop its membership on the quickest fee amongst massive Medicare Benefit insurers in 2022, at practically 13%, in contrast with an business common of three.5%. Centene holds practically 4% of the entire Medicare Benefit market.
CMS could not essentially transfer to curtail the insurer’s progress after its efficiency on this 12 months’s stars program.
The company might make a regulatory allowance for a corporation and fail to implement its necessities to the fullest extent, mentioned Jack Hoadley, analysis professor emeritus within the well being coverage institute of Georgetown College’s McCourt Faculty of Public Coverage.
“Typically they have a look at conditions and discover causes to not penalize particular person organizations to the complete extent that they’ll,” Hoadley mentioned. “However plans that earned 2.5 or 2 stars are nicely under the norm. That shouldn’t be taken flippantly.”
CMS didn’t reply to interview requests.