Overview
In an increasingly competitive Medicare Advantage (MA) marketplace,1 supplemental benefits are one of the primary ways Medicare Advantage organizations (MAOs) can differentiate their plans from competitors’ plans. A supplemental benefit is an additional benefit MAOs cover for their beneficiaries, but which is not covered under traditional fee-for-service (FFS) Medicare. MAOs offer these benefits to attract Medicare-eligible individuals to their plans. Supplemental benefit coverage can either be mandatory, meaning all enrollees in a particular plan receive coverage, or optional, meaning all enrollees in a particular plan can elect to receive coverage for an additional premium.2 Due to recent Centers for Medicare and Medicaid Services (CMS) demonstration programs and expansions in supplemental benefit flexibilities,3,4,5 MAOs may also limit mandatory supplemental benefits to plan enrollees who meet certain conditions, such as having a diabetes diagnosis. These types of benefits are only offered to specific subsets of a plan’s population, and therefore are not part of this analysis. This analysis focuses on mandatory supplemental benefits offered by general enrollment plans from 2019 to 2023.
Analysis
We utilized publicly available data from CMS for this analysis. The 2019 through 2022 membership is based on February plan enrollment, and the 2023 membership is based on January 2023 plan enrollment.6 Benefit data for all years was summarized from the plan benefit packages (PBPs) published by CMS for each year.7 Supplemental benefits offered as part of nonuniform benefit packages—Value-Based Insurance Design (VBID), Uniformity Flexibility (UF), and Special Supplemental Benefits for the Chronically Ill (SSBCI)—are not included in this analysis. Milliman has authored other papers discussing these benefits.8,9 This analysis does not consider whether supplemental benefits were offered as part of a combined benefit package or not. Milliman has authored a separate paper on combined benefit packages in the MA market.10
Vision, hearing, and dental benefits are among the most common supplemental benefits historically offered by MA plans. Figure 1 shows the percentage of beneficiaries in general enrollment plans from 2019 to 2023 with coverage for these benefits.
Figure 1: Percentage of beneficiaries with benefit coverage of the most common supplemental benefits, 2019-2023
The trend of plans increasing coverage for these benefits continues into 2023. Figure 1 shows each of these benefits has over 90% prevalence among general enrollment beneficiaries in 2023:
- While vision and hearing supplemental benefits have been more prevalent in the past five years, dental, particularly comprehensive dental, has shown tremendous growth. The growth in comprehensive dental prevalence indicates the continued popularity of this benefit among beneficiaries in the MA market.
- The average limit for dental benefits increased over 50% for both comprehensive and preventive from 2019 to 2023, resulting in an average annual preventive dental limit of about $1,670 and an average annual comprehensive dental limit of about $1,800 across general enrollment plans in 2023. This includes plans with shared limits across preventive and comprehensive dental.
- The average copay for vision exams, vision hardware, and hearing exams reduced by more than 70% from 2019 to 2023; all are under $2 on average in 2023, indicating the majority of plans offer these benefits with $0 cost sharing.
MAOs can offer numerous additional supplemental benefits beyond vision, hearing, and dental. These benefits are becoming more of a distinguishing factor, as Figure 1 shows dental, vision, and hearing benefits are now offered by nearly all general enrollment plans. Figure 2 shows the percentage of beneficiaries in general enrollment plans from 2019 to 2023 with coverage for other common supplemental benefits, including over-the-counter (OTC) benefit cards, meals (post-acute), podiatry services, transportation, visitor/travel benefits, and acupuncture.
Figure 2: Percentage of beneficiaries with benefit coverage of various other supplemental benefits
The takeaways on these benefits offered by general enrollment plans, and shown in Figure 2, include:
- Fitness benefits are offered by nearly all plans in the market, with 99% prevalence in 2023, and are generally offered with no cost sharing.
- OTC benefit card and meal benefit coverage also distinguish themselves compared to coverage of other common supplemental benefits, with OTC benefit card and meal benefit coverage at 90% and 78%, respectively, in 2023.
- The increase in coverage for OTC benefit cards is paired with higher average limits for beneficiaries. The average monthly limit for an OTC benefit card increased from $21 in 2019 to $25 in 2023, with over half of the increase coming from the change in limit from 2022 to 2023.
- Acupuncture increased significantly from 2021 to 2022 but held steady into 2023, mainly because its 2022 growth was driven by a large carrier offering coverage and not overall market changes. The large carrier’s market entry also significantly impacted the average acupuncture copay, which jumped from $8 to $18 from 2021 to 2022 and is $16 in 2023.
- Podiatry services saw modest gains in prevalence over the five-year span, starting at 39% and ending at 49%. The average podiatry services copay has steadily decreased from 2019 to 2023, starting at $27 and ending at $21.
The prevalence of transportation, acupuncture, and visitor/travel benefits is heavily impacted by differences in coverage between plan types. In 2023, visitor/travel benefits are covered for 20% of beneficiaries in health maintenance organization (HMO) plans, and 63% of beneficiaries in preferred provider organization (PPO) plans. The prevalence of transportation and acupuncture is higher for beneficiaries in HMOs than PPOs, with 56% versus 23% covered for transportation, and 48% versus 25% covered for acupuncture.
Multiple supplemental benefits fall under the 14c “Other Defined Supplemental Benefits" category in the PBP. These benefits are most commonly offered without cost sharing. Fitness is by far the most common 14c benefit and is displayed in Figure 2 as a result. The most common other 14c benefits are health education, nutritional/dietary benefit, smoking cessation, and remote access technologies (RAT) – nursing hotline. These benefits have maintained their prevalence rate with little change over the last five years, with RAT – nursing hotline at 70% and the other three benefits around 20% to 30% in 2023.
Combined benefit structures give plans flexibility to combine multiple benefits under a single maximum plan benefit limit, a single visit limit, or varying allowances by benefit within the package. A combined limit across preventive and comprehensive dental is by far the most common combined benefit limit, and has been offered with a high prevalence in the market for years. Non-dental-only combined benefits, such as a combined limit across dental, vision, and hearing, for example, have been increasing in market prevalence in recent years.11 Plans can also design their combined benefits to allow members to use the allowances on member cost sharing. This is similar to the reduction in cost-sharing (RICS) benefit, which is specifically a dollar allowance that beneficiaries can use to cover their cost sharing on benefits included in the RICS package. Figure 3 shows the change in prevalence for combined benefits and RICS benefits from 2022 to 2023. The combined benefit figures exclude dental-only combined benefit packages.
Figure 3: Percentage of beneficiaries with combined benefits and RICS benefits in 2022 and 2023
Figure 3 shows that combined benefits doubled in prevalence from 2022 to 2023, while the RICS benefit grew by a smaller amount. The reason for higher growth in combined rather than RICS benefits may be that combined benefit packages can be used to cover member cost sharing, similar to RICS, while allowing greater flexibility than RICS benefits provide.
The definition of “primarily health-related benefits”12 was expanded starting in the 2019 bid cycle to cover services used to:
- Diagnose
- Compensate for physical impairments
- Ameliorate the functional/psychological impact of injuries or health conditions
- Reduce avoidable emergency and healthcare utilization
This includes adult day care, home-based palliative care, in-home support services, support for caregivers, and therapeutic massage (for pain management). The percentages of beneficiaries in general enrollment plans with coverage for these expanded primarily health-related benefits in 2022 and 2023 are displayed in Figure 4.
Figure 4: Percentage of beneficiaries with expanded primarily health-related benefit coverage, comparison of 2022 to 2023
Compared to other supplemental benefits discussed above, general enrollment MAOs provide these services to a relatively low percentage of beneficiaries, with modest changes from 2022 to 2023. Exceptions are in-home support services, which grew from 12% to 17%, resulting in a 5% increase for the second year in a row, and support for caregivers, which increased from 4% to 6%. These benefits are generally offered without beneficiary cost sharing.
Methodology
In performing this analysis, we relied on the 2023 Milliman MACVAT®. The Milliman MACVAT contains MA plan details and benefit offerings for 2019 through 2023. The Milliman MACVAT uses publicly available data released by CMS, which is then compiled, sorted, and summarized into a user-friendly format. We used the February enrollment from each applicable year (2019 through 2022), with the exception of 2023, for which we used the January 2023 enrollment. This analysis includes general enrollment MA plans only.
Caveats and limitations
Jordan T. Laktas, Mary G. Yeh, and Julia M. Friedman are consulting actuaries for Milliman, members of the American Academy of Actuaries, and meet the qualification standards of the Academy to render the actuarial opinion contained herein. To the best of our knowledge and belief, this information is complete and accurate and has been prepared in accordance with generally recognized and accepted actuarial principles and practices.
The material in this report represents the opinion of the authors and is not representative of the view of Milliman. As such, Milliman is not advocating for, or endorsing, any specific views contained in this report related to the Medicare Advantage program.
This report is intended to summarize supplemental benefits offered by MA plans from 2019 through 2023. This information may not be appropriate, and should not be used, for other purposes. We do not intend this information to benefit, and assume no duty of liability to, any third party that receives this work product. Any third-party recipient of this report that desires professional guidance should not rely upon Milliman’s work product, but should engage qualified professionals for advice appropriate to its specific needs.
The credibility of certain comparisons provided in this report may be limited, particularly where the number of plans in certain groupings is low. Some metrics may also be distorted by benefit changes in a few plans with particularly high enrollment.
In preparing our analysis, we relied upon public information from CMS, which we accepted without audit. However, we did review it for general reasonableness. If this information is inaccurate or incomplete, conclusions drawn from it may change.
1 Friedman, J.M., Swanson, B.L., Yeh, M.G., & Cates, J. (February 2020). State of the 2020 Medicare Advantage Industry: As Strong as Ever. Milliman Research Report. Retrieved March 17, 2023, from https://www.milliman.com/en/insight/state-of-the-2020--medicare-advantage-industry-as-strong-as-ever.
2 CMS (April 22, 2016). Medicare Managed Care Manual: Chapter 4: Benefits and Beneficiary Protections. Retrieved March 17, 2023, from https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/mc86c04.pdf.
3 CMS. Medicare Advantage Value-Based Insurance Design Model. Retrieved March 17, 2023, from https://innovation.cms.gov/innovation-models/vbid.
4 CMS (April 27, 2018). HPMS Memo. Retrieved March 17, 2023, from https://www.cms.gov/Research-Statistics-Data-and-Systems/Computer-Data-and-Systems/HPMS/HPMS-Memos-Archive-Weekly-Items/SysHPMS-Memo-2018-Week4-Apr-23-27.
5 CMS (April 24, 2019). Implementing Supplemental Benefits for Chronically Ill Enrollees. Retrieved March 17, 2023, from https://www.cms.gov/Medicare/Health-Plans/HealthPlansGenInfo/Downloads/Supplemental_Benefits_Chronically_Ill_HPMS_042419.pdf.
6 CMS. Monthly Enrollment by Contract/Plan/State/County. Retrieved March 17, 2023, from https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Monthly-Enrollment-by-Contract-Plan-State-County.
7 CMS. Benefits Data. Retrieved March 17, 2023, from https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Benefits-Data.
8 Murphy-Barron, C., Buzby E., & Pittinger, S. (March 21, 2022). Overview of Medicare Advantage supplemental healthcare benefits and review of Contract Year 2022 offerings. Retrieved on March 20, 2023 from https://www.milliman.com/en/insight/overview-of-ma-supplemental-healthcare-benefits-review-2022-offerings .
9 Murphy-Barron, C., Pelizzari, P.M., & Regan, B. (February 2019). The Medicare Advantage Value-Based Insurance Design Model: Overview and Considerations. Retrieved March 17, 2023, from https://www.milliman.com/en/insight/the-medicare-advantage-value-based-insurance-design-model-overview-and-considerations.
10 Friedman, J.M., Yeh, M.G., & Yen, I. (January 2023). 2023 Combined Benefits in Medicare Advantage – Tracking Benefit Strategy and Options. Retrieved March 17, 2023, from https://www.milliman.com/en/insight/2023-combined-benefits-in-medicare-advantage-tracking-benefit-strategy.
11 Friedman, J.M., Yeh, M.G., & Yen, I. (January 2023), op cit.
12 CMS (April 2, 2018). Announcement of Calendar Year (CY) 2019 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter. Retrieved March 17, 2023, from https://www.cms.gov/MEDICARE/HEALTH-PLANS/MEDICAREADVTGSPECRATESTATS/DOWNLOADS/ANNOUNCEMENT2019.PDF.