HomeHealthCVS expects $1B hit from Medicare Advantage star ratings dip

CVS expects $1B hit from Medicare Advantage star ratings dip

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CVS Health anticipates insurance revenue will decline up to $1 billion next year after its largest Medicare Advantage plan reported a big drop in star ratings, the company disclosed in a Securities and Exchange Commission filing Thursday.

The Aetna insurance subsidiary enrolled 21% of its Medicare Advantage members in plans rated at least four stars in 2023, down from 87% the prior year. Medicare Advantage plans must achieve four0 or five-star scores to earn maximum payment bonuses. Health insurance companies rely on these extra payments to offer supplemental benefits or to charge no premiums.

Aetna attributed the decline to a one-star decrease in its largest contract, the Aetna National PPO, which covers 59% of the insurer’s 3.2 million enrollees. The company has been working to spread its members among multiple plans, with approval from the Centers for Medicare and Medicaid Services, CVS Health wrote in the SEC filing. The company declined an interview request.

The company reported an 8.7% drop in net income to $2.1 billion during the first quarter, driven by costs related to its acquisitions of technology company Signify Health and Chicago-based primary care chain Oak Street Health. CVS Health subsequently reduced profit projections for this year. CEO Karen Lynch told investors this month that internal metrics suggest star ratings will improve next year.

Aetna reported the second-largest drop among large insurers in members enrolled in four- and five-star plans this year. Centene experienced the largest decline, with fewer than 2% of its Medicare Advantage members enrolled in highly rated policies this year. Insurance companies attributed the industrywide ratings slide to CMS resuming more stringent evaluations after relaxing them during the COVID-19 pandemic and to the increased importance of consumer experience in calculating scores.

CMS plans to halve the weight placed on member experience in the future and to replace the “reward factor,” which gives extra bonuses to plans with consistently high ratings, with a health equity index to promote efforts to address disparities.

Source : Modern Healthcare

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news7.asia CVS expects $1B hit from Medicare Advantage star ratings dip