Medicare Advantage

More PFFS, SNPs, High-Priced Products Seen for Medicare Advantage in 2008

Reprinted from the June 14, 2007, issue of MEDICARE ADVANTAGE NEWS, biweekly news and analysis on the Medicare (and Medicaid) managed care programs.

New entrants to the 2008 Medicare Advantage (MA) marketplace will offer the increasingly popular private-fee-for-service (PFFS) and Special Needs Plan (SNP) products, but Medical Savings Accounts (MSAs), which got off to a slow start this year, likely won't gain much ground, industry consultants who helped prepare thousands of 2008 bids tell MAN. And even though a two-year federal moratorium is lifting, local MA PPOs aren't likely to enter the market in large numbers — but the product may "take off" in 2009, consultants say. Bids for 2008 had to be submitted to CMS by June 4.

"More community organizations are going into Special Needs Plans..But new and jazzy plans, like MSAs, are not taking off. There is no huge movement in that direction because people are risk averse [due to] what's happening in Congress.and the possibility of payment cuts," says Stephen Wood, a principal in the Chicago office of actuarial consulting firm Reden & Anders, Ltd. "There might be more MSAs, but not a land rush." Local PPOs? "A few more, not many," he says, adding that there is "still not much regional activity."

PFFS "will win hands down for enrollment [in 2008], but the local PPO might take off in 2009," Wood says. "The trouble with local PPOs is getting a local [provider] network, and that's not easy." Noting that there also is "a lot of interest" in chronic care SNPs, Wood adds: "We're a little concerned, because if they're not done right, they may not be particularly successful."

Pat Dunks, a principal and consulting actuary with the Milwaukee office of Milliman, Inc., says there also will be additional 2008 SNPs for people dually eligible for Medicare and Medicaid, and more SNPs next year for institutionalized beneficiaries. "I don't know about chronic care. I heard not a lot more, but a bit more," he says.

Next year there also is likely to be an expansion of products for existing MA players, Dunks says. "Some local PPOs are branching out into PFFS, maybe largely to take advantage of the employer waiver and go nationwide," he says. He adds, "Carriers are offering a more diverse portfolio of product choices at different premium levels. I'm seeing more high-premium products with richer benefits."

Dunks says that he hasn't seen a lot of interest in MSAs or regional MA plans for 2008. But, similar to Wood, he says he expects PFFS will probably still make the largest gains, generally going after the Medicare supplemental insurance market. "I know there are more entrants in PFFS," he asserts. "Some regional players are doing it.…There will definitely be more activity." Dunks says that he couldn't comment further on national or regional players interested in adding PFFS products without disclosing company identities.

As for geographic expansion in the 2008 MA market, Health Net, Inc. issued a June 6 press release to announce that it intends to expand its MA service areas for 2008, subject to CMS approval. Health Net now has MA HMOs and PPOs, both of which have MA-only options; a point-of-service plan; two SNPs, one of which is for members with high cholesterol; and PFFS plans in nine states. Health Net also offers a stand-alone Prescription Drug Plan (PDP) nationwide. Company officials said Health Net intends to stay in all of its current MA markets, again subject to CMS approval. Health Net did not go into specifics on service areas for 2008, nor did it indicate any anticipated MA product-specific changes.

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