Retiree health coverage is an important component of the benefit packages that employers and unions offer their workers. Yet, today, only 25 percent of employers with 200 or more employees offer health benefits for their retirees — a decrease from 40 percent in 1999 and 66 percent in 1988.
The employers that continue to provide coverage are increasingly seeking innovative ways to manage costs while offering high-quality retiree benefits. Medicare Advantage Employer Group Waiver Plans (MA-EGWPs) are proving to be an increasingly attractive option.
MA-EGWPs provide employers the opportunity to fulfill their promise to maintain consistent coverage for their former employees. EGWP Preferred Provider Organizations (PPOs) allow employers to maintain this commitment, regardless of where their former employees choose to live in retirement. While the individual Medicare Advantage market is comprised mostly of local health maintenance organization (HMO) plans, over 70 percent of MA-EGWPs are PPO plans, tailored to serve retirees living in widespread areas.
As part of the 2019 Medicare Advantage (MA) and Part D Advance Notice, however, CMS is proposing to cut payments to these EGWP plans. CMS is proposing to fully transition in 2019 to using only individual market plan bids to set payments for MA-EGWPs. Given the differences in the composition of the EGWP and individual MA markets, using bids that mostly reflect HMO structures to set payments for plans that mostly offer PPO structures could cause unintentional coverage disruption for retirees.
As CMS seeks to finalize this policy, Aetna is urging the agency to take into account the dynamics of the employer retiree market and determine payments to this market accordingly. Specifically, to maintain predictability and stability, CMS should implement an adjustment that takes into account the difference in the benefit structure of HMOs vs. PPOs, even within the EGWP market. In doing so, CMS would ensure that EGWP HMOs are not over-paid and EGWP PPOs are not under-paid. We are also asking that CMS phase-in any final payment changes to this program over the next two years rather than one year.
Millions of people depend on MA for quality, patient-centered health care. With over 3.4 million MA-EGWP enrollees today, it is important CMS take steps to minimize disruption to this program and help employers maintain this seamless form of coverage to their former employees.
For more information, see a recent analysis conducted by Avalere, “The Future of the Medicare Advantage Employer Group Waiver Plan Market.”