Medicare Advantage Plans Offering Expanded Supplemental Benefits: A Look at Availability and Enrollment

Abstract

• Issue: Since 2019, Medicare Advantage (MA) plans have had the flexibility to address enrollees’ unmet needs by targeting benefits to beneficiaries with chronic illnesses and offering a wider array of “primarily health-related” benefits. As of 2020, plans can also offer Special Supplemental Benefits for the Chronically Ill (SSBCI) — nonmedical services such as pest control.
• Goals: To assess the availability of and enrollment in MA plans offering new types of supplemental benefits in 2019 and 2020.
• Methods: Analysis of 2018–2020 Plan Benefit Package and MA enrollment data from the Centers for Medicare and Medicaid Services.
• Key Findings: Adoption of SSBCI was relatively limited in the first year: only 6 percent of MA plans offered these benefits in 2020. However, plans offering additional, primarily health-related supplemental benefits increased substantially between 2018 and 2020, including meal provision (20% of plans to 46% of plans), transportation (19% to 35%), in-home support services (8% to 16%), and acupuncture (11% to 20%).
• Conclusion: The relatively small percentage of plans offering SSBCI in 2020 may be due in part to operational and logistic challenges. But based on initial insight into 2021 plan benefit offerings, the trend toward more benefits that address social determinants of health will continue.

Introduction

Research shows that when medical care is delivered alongside nonmedical services that affect health, patients, caregivers, and the health care system overall are better off.¹ Social services not traditionally considered medical services, such as transportation and nutrition, are particularly crucial for meeting the needs of high-need, high-cost Medicare beneficiaries; in addition to improving health outcomes, they may also lower costs.²

Medicare Advantage (MA) plans are seeing increasing numbers of enrollees who have social risk factors and complex medical needs.³ Recently, both Congress and the Centers for Medicare and Medicaid Services (CMS) have granted these plans new flexibilities in designing benefits, with the goal of improving outcomes and lowering costs, particularly for enrollees with chronic conditions (Exhibit 1). In 2017, CMS began allowing MA plans participating in the Value-Based Insurance Design (VBID) model — a Center for Medicare and Medicaid Innovation demonstration program — the ability to offer benefit designs tailored to specific diseases, such as reduced cost sharing and deductibles for certain specialist visits or prescription drugs. Then, in 2019, CMS extended to all MA plans the ability to offer disease-tailored benefit designs.

CMS also expanded the types of benefits that plans can offer. While MA plans have long been able to offer “primarily health-related” supplemental benefits not covered by fee-for-service Medicare, such as vision and dental coverage, these benefits until recently were narrowly defined by CMS to cover only medical services and had to be available to all plan enrollees. Starting in plan year 2019, CMS expanded primarily health-related to include nonmedical services. Under this new definition, plans can offer a wider array of supplemental benefits as long as these benefits are intended to “diagnose, prevent, or treat an illness or injury, compensate for physical impairments, act to ameliorate the functional/psychological impact of injuries or health conditions, or reduce avoidable emergency and health care utilization to all beneficiaries.”⁴ In practice, this interpretation allows plans to offer nonmedical benefits, such as broader use of transportation or meal delivery, in addition to the previously allowed medical benefits (Exhibit 2).⁵

Meanwhile, with the passage of the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act, plans, as of 2020, can offer Special Supplemental Benefits for the Chronically Ill (SSBCI). Plans may choose to offer these benefits to enrollees with certain chronic conditions, and the benefits do not have to be primarily health-related, as long as the item or service can reasonably improve or maintain health or function of the enrollee.⁶ As a result, insurers can now tailor both medical and nonmedical benefits to certain enrollees (Exhibit 3).

This issue brief provides an overview of MA supplemental benefit offerings from 2018 to 2020. We examine how MA plans have responded to increased flexibilities as well as the extent to which plans offer these new, nonmedical benefits alongside traditional medical benefit offerings. Notably, the 2020 data included in these analyses reflect pre-COVID-19 plan offerings and enrollment.

Key Findings

A Majority of Medicare Advantage Plans Provide “Traditional” Supplemental Benefits

Nearly all plans provided traditional medical supplemental benefits such as vision, dental, hearing, and fitness services in 2020 (see Exhibit 3). In addition, a substantial and growing number of plans offer over-the-counter (OTC) benefits, which cover the purchases of certain nonprescription items such as first aid supplies and sunscreen. As shown in Exhibit 4, these benefits were common before CMS expanded its definition of primarily health-related benefits. Supplemental benefits such as dental, vision, and hearing have long been popular with plans and enrollees.

Access to Broader Supplemental Benefits Is Growing but Still Not Widespread

With its expanded definition of primarily health-related, CMS aimed to encourage plans to broaden their offerings and consider how they could use supplemental benefits to better address enrollees’ needs. As a result, the number of plans offering certain nonmedical benefits — including meals, transportation, in-home support services, and acupuncture — doubled between 2018 and 2020 (Exhibit 5).

Offerings of nonmedical benefits that cover other social support services, however, have expanded more gradually. For example, between 2018 and 2020, the percentage of plans offering home-based palliative care was relatively unchanged (0.09% to 2.00%), and only 1 percent of plans offered adult day care in 2020.

Notably, the share of plans offering support for caregivers of enrollees increased from 0 percent in 2018 to 14 percent in 2019, but then decreased to 2 percent in 2020. This reduction was associated with one large insurer that offered the service in 2019 but did not offer it in 2020. In this sense, the trend for caregiver support shown in Exhibit 4 is a bit of an anomaly relative to the other benefits.

While there was a large increase in plans offering telehealth as a primarily health-related benefit, much of this increase stemmed from a change in CMS’s reporting tool for 2020. As such, the increase shown for telehealth should be interpreted with caution. In addition, with the passage of the CHRONIC Care Act,⁷ plans could offer telehealth as part of the basic benefit package starting in 2020.

An initial analysis of MA plan benefit offerings in 2021 suggests that many of these trends are continuing. Plans are starting to expand their offerings of supplemental benefits permitted under the new definition while continuing to make benefits such as vision, dental, and hearing care more broadly available. Moreover, MA plans continue to increase offerings of other, non-primarily health-related benefits, such as meal services, which 57 percent of plans will offer in 2021, an increase from 46 percent in 2020.⁸

While MA plans have long offered more traditional, medical supplemental benefits, for some plans the newer, nonmedical benefits may require additional investments in planning and infrastructure. Increases in 2021 offerings suggest that plans are beginning to make these investments.

So Far, Relatively Few Plans Offer Special Supplemental Benefits for the Chronically Ill

Supplemental benefits may be particularly helpful for plans as they develop strategies to better manage the care of high-cost, high-need beneficiaries, including those with chronic diseases. Plans now have the flexibility to offer a combination of primarily health-related supplemental benefits and SSBCI to certain enrollees (for example, transportation to medical appointments as well as transportation to grocery stores). However, a relatively small number of plans offered SSBCI in the first year these services were permitted (Exhibit 6).

Because 2020 was the first year SSBCI were offered, beneficiaries may have had limited knowledge of them; as a result, enrollment in plans providing SSBCI was relatively low. While plans can notify enrollees of these benefits’ availability, marketing materials must note that they are not guaranteed to everyone, as only beneficiaries with certain chronic conditions can access them.

A slightly higher percentage of beneficiaries were enrolled in Special Needs Plans (SNPs) providing SSBCI. Therefore, compared to typical MA plans, a greater portion of beneficiaries in SNPs may have unmet needs that could be addressed through SSBCI. See the boxes below to learn more about SNPs’ meal and transportation supplement benefits.

While initial uptake of SSBCI has been slow, some plans may have prioritized other strategies for targeting services for beneficiaries with chronic conditions. These include differential benefit design or cost sharing, through the MA-VBID demonstration, or uniform benefit flexibility, which allows plans to target benefit design for all similarly situated enrollees (Exhibit 7). Notably, VBID status as a temporary demonstration could contribute to few plans participating in the model.

However, only 11 percent of MA plans are pursuing these approaches in 2020, and availability varies substantially by condition. This suggests that many beneficiaries with chronic conditions do not have access to either type of targeted benefit design to help them better manage their conditions.

In addition, of the plans that are offering targeted benefit designs either through VBID or uniform benefit flexibility, most targeted benefits for physical chronic conditions, such as chronic heart failure and diabetes, rather than mental health conditions, such as dementia. Tailored benefits are more often targeted toward illnesses where lifestyle modifications are widely recognized as having a direct impact on outcomes (such as diabetes and hypertension), rather than conditions such as cancer or end-stage renal disease, for which treatment is considered to have a greater impact on outcomes compared to lifestyle modifications.

Implications

While the new flexibilities permitted to MA plans could be a promising tool for addressing unmet beneficiary needs and social risk factors, particularly for those with chronic illnesses, plan adoption appears to be varied. Some plans may use a combination of these to address beneficiaries’ needs. Other plans are continuing to focus most of their resources on providing traditional supplemental benefits. Overall, access to supplemental benefits has increased among MA beneficiaries, though it is unclear to what extent the range of flexibilities CMS offers is addressing unmet needs.

Numerous plans began providing new supplemental benefits under the expanded definition of primarily health-related in 2019 and 2020. In addition, preliminary analysis of data on MA plans’ primarily health-related supplemental benefit offerings for 2021 indicates that plans are continuing to increase supplemental benefit offerings, including benefits specific to COVID-19.

By contrast, as of 2020, only a limited number are targeting their benefit designs to better meet the needs of beneficiaries with certain chronic illness. However, while comparatively few plans offered SSBCI in 2020, initial analysis of 2021 SSBCI offerings indicate steady growth — 16 percent of nonemployer MA plans are offering SSBCI in 2021 vs. 6 percent in 2020.

Because these flexibilities are relatively new, additional assessments of plan offerings in later years could help determine whether relatively low SSBCI and other condition-specific benefit design offerings in 2020 and 2021 are lagging as plans invest in capabilities or if there are other barriers preventing plans from offering these benefits.

Preliminary research has explored why MA plans have not made these services more widely available.⁹ Some plans may not offer these additional benefits in the early years because of a lack of evidence on these benefits’ impact on health outcomes. In addition, as plans assess where to allocate resources, specifically plan rebates and premiums, they may be less likely to adopt benefits that require additional up-front investments, such as vendor identification and the development of infrastructure to support the service.¹⁰ As plans gain more experience and continue to invest in the infrastructure required to offer such benefits, it is possible that supplemental benefits may become more readily available to MA beneficiaries.¹¹

However, some plans may be hesitant to offer benefits that attract high-need, high-cost beneficiaries if payment is inadequate. More work is needed to understand current obstacles and potential solutions to meet the comprehensive needs of high-need, high-cost beneficiaries who make up an increasingly high percentage of the MA population.¹²

Additionally, some of the new flexibilities could be important in addressing an increased need for certain services in light of the COVID-19 pandemic. For example, as financial hardships and social-distancing restrictions make it harder for some people to access food, transportation, pharmacies, and other important services, supplemental benefits could play a role in addressing these needs. In fact, a preliminary review of plan benefit offerings in 2021 found that one in three plans will begin offering supplemental benefits related to the pandemic, such as care packages or personal protection equipment.¹³

Looking ahead, it will be important to better understand the impact of COVID-19 on supplemental benefits in MA, as well as how these benefits can help drive positive health outcomes for members.