Medicare Advantage (MA) continues to evolve, and as we step into 2024, there are notable trends, particularly in the benefit designs that health plans are offering. These trends reflect a broader shift toward a more patient-centric and holistic approach to health care within the Medicare Advantage landscape, but also come with a trade-off of greater use of cost management tools such as prior authorization, step therapy, and more restrictive provider networks for plans to be able to afford the enhancements.

According to a November 2023 Kaiser Family Foundation analysis, nearly 31 million Medicare beneficiaries (51% of the eligible population) are enrolled in a Medicare Advantage plan. The analysis also showed that the number of Medicare Advantage plans available to seniors jumped 8% between 2022 and 2021, and that seniors have the largest number of plans to choose from compared to previous enrollment years. In 2024, the average Medicare eligible shopper will have a choice of 43 plans, and fierce competition between health plans to capture this market share will be apparent through extra benefit offerings for no additional premium. With the start of the 2025 Medicare bid season around the corner, health plans will be strategizing to maintain profit margins, grow, and invest in richer benefits all while taking on more cost shifts due to the Inflation Reduction Act (IRA) transitional changes to the Part D benefit design.

As Medicare Advantage (MA) health plans pivot to creating their product and formulary strategies, there are several items to look out for. With plans taking on increased liability in Part D in 2025, more restrictive formulary design will become increasingly important to keep their products financially sound and competitive. Strategy development will continue through the spring as CMS releases the Advance Notice and the Final Announcement, and further 2025 guidance to solidify the nuances of the IRA benefit changes. In the CY24 Medicare Advantage and Part D final rule, CMS made several announcements impacting Medicare Advantage health plans. CMS finalized a health equity index reward beginning with 2027 Star ratings, which will replace the existing reward factor. As proposed, contracts are only eligible for the full reward if the percentage of membership that is dual-eligible, low-income subsidy or disabled is equal to or greater than the national median. CMS finalized its proposals to require MA plans follow applicable Original Medicare coverage criteria in covering items and services and clarifies that plans may apply internal coverage criteria when such Original Medicare criteria are not “fully established,” so long as the internal criteria are publicly available and based on widely used treatment guidelines and clinical literature. This solidifies a common place practice where MA plans have used their own medical policy for utilization management (prior authorization and step therapy) for services, including drugs. CMS also noted that when an enrollee is granted prior authorization approval it will remain valid for the full course of treatment, which is clarified to mean as long as medically reasonable and necessary to avoid disruptions in care in accordance with applicable coverage criteria, the patient’s medical history, and the treating provider’s recommendation. In addition, CMS is now requiring plans to provide a minimum 90-day transition period when an enrollee currently undergoing treatment switches to a new MA plan, during which the new MA plan may not require prior authorization for the active course of treatment.

With Medicare Advantage plans offering extra benefits such as vision and hearing, dental, telehealth and digital enhancements they will continue to use and increase cost containment measures to maintain profitability. Additionally, 2024 sees a rise in the incorporation of digital health tools for medication adherence. Medication non-adherence remains a prevalent issue, leading to complications and increased health care costs. To address this challenge, MA plans are leveraging technology such as mobile apps and smart pill dispensers to remind and assist beneficiaries in adhering to their prescribed medication schedules. These tools not only enhance patient engagement but also provide valuable data to health care providers. A notable trend in 2024 is the growing integration of telemedicine services for medication management. The convenience and accessibility of telehealth have become increasingly apparent, especially for seniors who may face challenges with mobility. Medication consultations, prescription renewals, and follow-up appointments can now be conducted seamlessly through virtual platforms, promoting better medication adherence.

Furthermore, there is a heightened focus on addressing the social determinants of health in medication management. Medicare Advantage plans are recognizing that factors such as socioeconomic status, housing stability, and access to transportation can significantly impact a person’s ability to manage their medications effectively. In response to CMS requirements, health plans are implementing holistic care models that encompass not only drug prescriptions but also support services to address these social determinants, ensuring a more comprehensive approach to quality health care.

The trends in Medicare Advantage for 2024 reflect a commitment to innovation and patient care to remain competitive and remain in compliance with the CMS expectations. From the adoption of digital health tools to assist in medication adherence and social determinants of health to a rising percentage of dual Medicare and Medicaid enrollees with low income, MA plans are positioning themselves to evolve. Moving forward, pharmaceutical companies need to remain vigilant around changes in Medicare Advantage and can consider strategies to mitigate any impact on their portfolio, including:

  1. Aligning to aid health plans in identifying and reaching members with contributing factors of health inequalities
  2. Providing access to digital health tools to streamline member engagement
  3. Closely monitoring formulary and utilization management changes around the fall of 2024 ahead of the 2025 plan year, as this is expected to be an impactful year for MA plans.

As the landscape and CMS proposals continues to require improved health outcomes and enhanced overall well-being, MA plans will invest in tools to help move towards parity for their enrollees and advancing whole-person care.