Medicare Advantage Vendors Brace for Supplemental Benefits Cuts

Modern Healthcare | By Lauren Berryman

Companies that have profited from the largesse of Medicare Advantage insurers seeking to lure customers with generous perks are looking ahead to a tough 2025.

Humana and CVS Health subsidiary Aetna are among those signaling that curtailing supplemental benefits such as transportation, fitness memberships, in-home support services, and vision, dental and hearing coverage will be a key part of their strategies to restore margins in a business troubled by high costs and a more restrictive regulatory environment.

Related: What insurers got wrong about Medicare Advantage costs

Take Modivcare, which provides remote patient monitoring and non-emergency medical transportation for Medicare Advantage members. The publicly traded company, which also contracts with states and Medicaid insurers, relies on Medicare Advantage for about one-fifth of its revenue, said Seth Ravine, chief commercial officer. But that could change next year as insurers reevaluate supplemental benefits.

“The reality for the MA plans is they can't do everything for everyone with fixed financial constraints or on a fixed budget,” Ravine said.

If the company's insurer clients pull back from covering transportation, that would leave patients who can't get to their medical appointments in the lurch, he said.

Aetna and Humana confirmed on their most recent earnings calls that they’ve taken actions to trim benefits next year. UnitedHealth Group and Elevance Health told investors that financial challenges have them scrutinizing which benefits that go beyond fee-for-service Medicare will remain next year.

“Those are putting a lot of financial pressure on plans’ margins and, as such, they just don't have as much money to invest in supplemental benefits in their bids this year as they have had in the past,” said Alexis Levy, senior partner at HealthScape Advisors, which is part of the Chartis Group, a consulting company.

That spells bad news for companies on the receiving end of the supplemental benefits boom, Levy said. “It could definitely be a financial headwind for vendors if they're starting to see some of their customers cut back,” she said.

Medicare Advantage insurers have had a challenging 18 months, leading some to misforecast expenses and overpromise to investors. Higher medical costs and utilization, changes to the Star Ratings program and risk-adjustment programs, and a small rate cut for 2025 have pushed the major for-profit carriers to take hard looks at their offerings and geographic footprints…