Centene will not be allowed to expand Medicare Advantage’s reach in certain regions next year after its plans consistently received poor scores in federal quality ratings.
According to an analysis by HealthMine, a firm that advises health insurers, the insurer won’t be able to expand nine out of 108 policies by 2024. About 84,000, or 5%, of 1, Centene’s 5 million Medicare Advantage members with Part D prescription drug coverage are enrolled in nine plan, which includes counties in Ohio, North Carolina, Arizona, Connecticut, and Nevada.
The freeze could affect Centene’s future in Medicare Advantage, as geographic expansion is a key way for insurers to capture market share in a lucrative and fast-growing plan. The company declined to specify how the stars’ performance will affect their operations in 2024.
“The plan year 2023 star rating assesses the work Centene has completed in previous years,” a Centene spokesperson wrote in an email. “As we have publicly stated this year, the new Centene management team has identified the rating issues and has been actively implementing the operational changes that we expect will bring the star rating to the fore. improve in the coming years.”
The company’s geographic growth freeze stems from a technical update the Centers for Medicare and Medicaid Services released in its final rule in May. Any contract operated by a Medicare Advantage plan that receives 2.5 stars or less for two consecutive years will be denied service area expansion for the next year. A “underperforming” contract freezes geographic growth for any contract operated by the relevant entity.
Medicare Advantage insurers typically hold one legal entity for each state in which they operate. But since insurers often move members from lower-rated policies to higher-rated policies as a way to maximize star plan-related bonuses, a single legal entity may include products offered in multiple states.
Centene isn’t the only company banned in 2024 from expanding Medicare Advantage operations. Growth by small insurers Imperial Health Plan of California and Zing Health will also be limited. A total of 14,100 patients were enrolled in the two plans. Neither Zing Health nor Imperial Health Plan of California responded to requests for interviews.
Among the major insurers, Centene was ranked the worst in this year’s rating program. According to analysts at Cowen, only 3% of members signing up for plans meet the 4-star quality bonus threshold for 2023, down from 54% last year. Health insurers rely on quality rewards to add additional benefits and no-cost plans that differentiate their services in the crowded Medicare Advantage market.
“Centene has just been through a perfect storm of operational and industrial ethos that makes it so easy to get caught up in, in a fashion,” said Melissa Smith, executive vice president of consulting and professional services at HealthMine. very high risk.
In 2018, Centene bought government nonprofit insurance company Fidelis Care for $3.75 billion. Two years later, Centene completed the $17.3 billion acquisition of Medicare Advantage carrier Wellcare. And in January, it paid $2.2 billion to Magellan Health, an insurer, behavioral health provider and pharmaceutical benefits manager. Centene dropped out of Magellan Health’s pharmacy services after facing accusations from multiple states that the company’s former pharmacy benefits manager overcharged Medicaid programs for prescription drugs.
“They’ve had a lot of mergers and acquisitions, and a lot of integration work. Their organic properties and climate are ripe for them to soak, which is compounded by the terrible false sense of security that all 2021 star ratings and 2022 star ratings ‘relieve COVID’ passed on to them. ”
CMS calculates about 50 clinical outcomes and patient experiences to determine the insurer’s overall star score. The agency has relaxed how it calculates star ratings over the past two years as part of its COVID-19 pandemic relief program, resulting in a record number of insurers scoring in the five-point program. This year, a return to pre-pandemic standards, as well as changes in formula weighting for customer experience, have led to an industry-wide drop in star ratings. According to a September analysis by consulting firm McKinsey & Co., the changes to methodology are expected to drain $800 million from a Medicare Advantage plan by 2023.
Centene and other insurers’ 2023 star scores could also affect their 2025 expansion plans.
Insurers that received a rating of 2.5 or below this year have three months to improve their scores, Smith said. Otherwise, they could be barred from expanding in 2025. UnitedHealthcare, Humana, Cigna, CVS Health’s Aetna and Molina Healthcare each received at least one contract with a 2.5-star rating or lower during the year. now.
Molina Healthcare and UnitedHealthcare declined to comment. Aetna did not respond to a request for an interview.
One of Humana’s 47 contracts received 2.5 stars or less this year, a spokesperson wrote in an email. He said 96 percent of Humana’s Medicare Advantage members are enrolled in plans rated four or more stars.
Cigna’s underrated plans are in newer areas for the insurer, where their small membership numbers make them ineligible for certain star measures, a spokesperson wrote. in an email. Three of the company’s 16 contracts, 9% of its 543,000 Medicare Advantage members, are at risk of being frozen by 2025.
“Given the freshness of ratings for the two new geographies, we do not anticipate any impact on our expansion,” the spokesperson said.
Of the major insurers, Centene faces the highest risk for 2025. Sixty-two of the company’s policies will be frozen if it doesn’t improve its score, according to analysis by HealthMine. . About 1.1 million, or 74% of the company’s members, have participated in the plans.
This year, Centene’s Wellcare Medicare Advantage business announced it will expand into 209 new counties.
Last year, the insurer expanded its coverage to 327 new counties in three other states. The company also moved to consolidate its various brands under Wellcare brand, and named Hall of Fame defender Joe Montana as its spokesperson.
All of these moves have helped Centene grow its membership at the fastest rate of any major Medicare Advantage insurer by 2022, at nearly 13%, compared to the industry average of 3. ,5%.. Centene holds nearly 4% of the total Medicare Advantage market.
CMS may not necessarily constrain the insurer’s growth following its performance on this year’s star show.
Jack Hoadley, a research professor emeritus at the health policy institute at Georgetown University’s McCourt School of Public Policy, said the agency can give a regulatory grant to a company and not enforce it. their requirements to the fullest extent.
“Sometimes they look at situations and find reasons not to penalize individual organizations as much as they can,” Hoadley said. “But plans that earn 2.5 or 2 stars are far below the norm. That should not be taken lightly.”
CMS did not respond to requests for interviews.
