The Medicare Advantage market has been under the microscope of late, and a new study from Brookings adds more fuel to the fire that major insurers may be taking advantage of their size to pad their bottom lines.
The analysis finds that the majority (67%) of MA beneficiaries are concentrated among five big insurers: UnitedHealthcare, Humana, Aetna, Kaiser Permanente and Anthem, now Elevance Health. These firms are also broad, integrated businesses that can keep a number of member services in-house.
Brookings notes that profits earned by related businesses are not subject to medical loss ratio (MLR) requirements, and that suggests items that appear as costs to the MA plan are actually still profits to the insurer.
How much MA plans spend on related businesses can range from about 20% of total spending to a whopping 71%, according to the report.
"The implication is that for the health plans serving most MA beneficiaries, related businesses offer an opportunity for pricing practices within the parent firm umbrella that can shield profits from the terms of MLR regulations," the authors wrote. "The extent to which parent companies engage in such practices is yet unknown."
'The potential to engage in such practices puts smaller plans without related businesses at a competitive disadvantage," according to the analysis.
The authors note that while the extent of this behavior is still unclear, what is known is that the Center for Medicare & Medicaid Services' guidance on...
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