How CMS Changes Have Altered the Landscape of Medicare Advantage Supplemental Benefits

Supplemental benefits have long been a differentiator with Medicare Advantage plans. Today we have an incredibly diverse, innovative environment, where companies can develop customized benefits to meet the wants and needs of consumers. But it hasn’t always been this way.

The last five years, in particular, have led to an increasing number of options for supplemental benefits, driving even stronger membership growth for the industry and increasingly rich plans for enrollees. The Centers for Medicare and Medicaid Services (CMS) implemented various changes to the regulatory environment that have increased flexibility for innovation, expanding the breadth of supplemental benefits and creating potential for more customization.

A brief bit of history for those who are new to the industry: Prior to 2017, supplemental benefits were restricted to “primarily health-related” services such as dental, vision and hearing. Then CMS introduced the Medicare Advantage Value-Based Insurance Design model in seven states, testing reduced cost sharing and additional benefits for various chronic conditions. The following year, in 2018, CMS allowed plans to begin offering particular benefits for members with certain disease states under the Uniformity Flexibility (UF) benefit option. Then in 2020, CMS permitted plans to offer supplemental benefits that are not primarily health-related to chronically ill enrollees on a non-uniform basis. These Supplemental Benefits for the Chronically Ill could include benefits like adult day health services, home and bathroom safety devices and modifications and in-home support services.

By 2022, most individual Medicare Advantage enrollees were in plans that provided access to eye exams and/or glasses (more than 99%), hearing exams and/or aids (98%), a fitness benefit (98%), telehealth services (98%), and dental care (96%), according to a Kaiser Family Foundation analysis. In addition, 69% of Medicare Advantage enrollees in 2022 were in plans with $0 monthly premiums, making access to these supplemental benefits cost effective for members.

 Companies - like Humana - are now able to tailor plans with innovative benefits that help members address their personal wants and needs. In addition to health care coverage, plans for eligible beneficiaries may include options designed to assist members with environmental and social challenges that could have a negative effect on their health, such as living conditions, access to healthy food and transportation, and social isolation.  

Because of CMS’ regulatory changes over the last several years, several key trends and their implications are worth noting:

• Increased regulatory flexibility has expanded the breadth of supplemental benefit offerings and created the potential for member-level versus plan-level customization. This gives us the opportunity for innovation and differentiation, with an industry emphasis on benefits that can positively address social challenges that may impact health outcomes. It also places importance on research and test and learns to understand needs and prioritization.
• There is an increasing supplemental benefit prevalence, coupled with significant industry-wide investment. This means common supplemental benefits, like dental, vision and hearing, are now essentially minimum requirements, as they are offered on most plans, making differentiation more challenging.
• There is an increasing emphasis on allowance style benefits, affording consumers greater choice and flexibility. This makes simplicity, ease of use, and a seamless member experience increasingly important. Spending allowances are now a key basis of competition among Dual-Eligible Special Needs Plans (DSNPs), causing rapid expansion and investment in spending allowances for dual-eligible individuals - i.e. food cards and over-the-counter allowances.
• Dental has a growing prevalence of richer, broader, allowance-style benefits, as this is a highly important supplemental benefit for both dual-eligible individuals and non-duals. This is a key source of supplemental benefit differentiation with choice and flexibility becoming increasingly important.

Every year, Medicare Advantage plans evolve and innovate to deliver accountable, high-quality, consumer-centric health care. The industry continues to generate strong membership growth, driven by a compelling consumer value proposition, demographic trends and intensifying competition.

To continually improve at helping our members improve their health, it’s imperative that we stay deeply connected to our members and remain thoughtful about designing benefits that are helpful as well as simple to use and understand.