Private Medicare Insurers Pressed for Details on Added Benefits

Medicare is moving to solve the mystery of how much the program’s managed care plans actually spend to provide supplemental benefits that are partially funded by, but not available to, beneficiaries in traditional Medicare.

Private Medicare Advantage plans, which now cover more than half of eligible beneficiaries, this year are expected to receive $83 billion in government payments, or “rebates,” that fund a variety of supplemental benefits, according to the Medicare Payment Advisory Commission.

These benefits typically include hearing, vision, dental, and other medical services. They can also include nonmedical assistance like food, transportation and housing support services. Often offered at no cost to Medicare Advantage plan enrollees, supplemental benefits vary by plan and can provide a competitive advantage for MA insurers looking to boost enrollment during the signup period for 2025 Medicare coverage that ends Dec. 7.

But the rebate payments, which also help reduce premiums for MA enrollees, have more than doubled since 2018 and are expected to reach $500 billion over five years beginning in 2026.

That spending growth, fueled in part by Medicare’s looming baby boomer enrollment bubble, makes it “increasingly important for policymakers to fully understand” how supplemental benefits are used, but there’s no complete data “about MA enrollees’ use of the benefits and how much it costs for plans to provide them,” said Stuart Hammond, a commission senior analyst, at the panel’s October meeting.

“The lack of reliable data makes it impossible to answer many important questions,” Hammond said. “For example, we do not know how much plans spend on each type of benefit, which enrollees used each benefit, or whether service use differs by factors such as age, sex, race, disability status, or geographic area.

“Without this information, it is difficult to assess the potential value of the benefits to MA enrollees and the taxpayers who fund them,” Hammond said.

The Centers for Medicare & Medicaid Services has taken steps to address the problem through guidance and rulemaking designed to ensure that, by 2025, the agency “has data needed to answer key policy questions related to supplemental benefits, including what is being offered, what plans are spending, which enrollees use which services, the cost to enrollees, and plan-level utilization.”

New Reporting Requirements

A host of new supplemental benefit reporting requirements this year are designed to help the agency reach its goal.

But a “general problem with these new requirements that are coming online is that it takes years for the data to come in, and then for CMS to have a look at it, and then for researchers, perhaps, to get a look at it after that. So there’s just a lot of time lag involved,” said Rachel Schmidt, a research professor at Georgetown University’s McCourt School of Public Policy.

Medicare Advantage plans are a major revenue source for insurers like Humana Inc., UnitedHealth Group Inc., Centene Corp., and CVS Health Corp.

In 2023, the CMS reinstated a requirement for MA plans to provide more detailed medical loss ratio reporting for supplemental benefits. But the contract-level reporting requirements didn’t allow for analysis of how spending varied across plans offering different combinations of supplemental benefits, said Jeannie Fuglesten Biniek, associate director of the KFF Program on Medicare Policy.

A Government Accountability Office report the same year noted confusion between the CMS and Medicare Advantage plans about the data that was required when reporting on the use of supplemental benefits.

In response, the CMS issued additional guidance in February 2024 that said, when feasible, MA plans should “should use the guiding principle that a record of utilization should be submitted for every individual instance when an enrollee actually uses” a supplemental benefit.

This year, the CMS requires that MA plan-level reporting of supplemental benefits include: the number of enrollees eligible for the benefit and those who used the benefit at least once; total instances of use among eligible enrollees; and the amount incurred to offer a benefit.

Total out-of-pocket cost per use for enrollees is also required, said Carrie Graham, director of the Medicare Policy Initiative at Georgetown’s Center on Health Insurance Reforms. The more thorough requirements should help the CMS better evaluate what taxpayers are getting for their rebate dollars, Graham said.

‘An Important Step’

Biniek applauded the plan-level specificity of the 2024 reporting requirements but said she wants to see what the enhanced reporting actually produces.

“It definitely represents an important step towards understanding how a growing share of the Medicare Advantage payments are being spent, and the degree to which enrollees are utilizing and benefiting from the services” that the funding is “supposed to be paying for,” Biniek said.

Next year, MA plans retain relevant research or other data that show their special supplemental benefits for the chronically ill (SSBCI) meet legal requirements of having a “reasonable expectation of improving the health or overall function of chronically ill enrollees,” a CMS fact sheet said.

In 2026, the CMS will require MA plans to annually notify beneficiaries midyear about what supplemental benefits they’re eligible for but haven’t accessed. “Because we have heard that maybe these benefits are actually more for marketing than actually for being utilized to improve patient health,” CMS Deputy Administrator Meena Seshamani said recently at the Milken Institute’s 2024 Future of Health Summit.

Pending GOP control of Congress and the White House won’t likely stop the push for greater transparency, Claire S. Ernst, director of government relations and public policy at Hooper, Lundy & Bookman PC, said in a statement. She said an audit of MA supplemental benefits by the HHS Office of Inspector General is already in the works.

The incoming “Trump Administration will likely have to respond to OIG audits and those who scrutinize the cost of the ever-growing” MA program, Ernst said. There are still a lot of moving pieces as it pertains to who will influence MA reform in the new Administration, but we will be able to surmise more as these pieces move into place in the coming weeks.”