Here is what you’ll find in this week’s newsletter!

1. Important links 🔗 - the best articles we found this week about the Medicare Market along with links to Jared’s recent LinkedIn posts.

2. Deep Dive 📚 - Supplemental Benefits in MA: Spending, Utilization, and What's Next

3. Sponsor Snapshot 🚀 - brought to you by Modivcare

4. Compliance Chatter 📢 - Several new regulations to review!

It’s only a 5 minute read, but it will make you 10x smarter.

DEEP DIVE 📚

Supplemental Benefits in MA: Spending, Utilization, and What's Next

A few months ago, we took a deep dive into the financial mechanics of providing supplemental benefits in Medicare Advantage (MA) plans and looked at types of benefits often offered.

In this week’s deep dive we are taking a look at a variety of sources reporting on supplemental benefits in MA. More specifically, the growth in funding, challenges in tracking utilization and cost, what we do know about utilization and cost, along with members perspective.

Growth in Supplemental Benefit Funding

The Medicare Payment Advisory Commission (MedPAC) recently issued a report to Congress, which included extensive commentary on supplemental benefits in Medicare Advantage plans. A few high-level points from this report:

• Medicare spending on rebates (the primary funding mechanism for supplemental benefits) increased from $21 billion in 2018 (roughly $1,160 per enrollee) to about $86 billion ($2,530 per enrollee) in 2025. Some of this growth is a natural result of Medicare expanding the types of supplemental benefits that can be offered.

• The 2025 spending breaks out this way according to MA plan projections:

  1. $39B on non-Medicare services (e.g., dental, vision).

  2. $27B to reduce enrollee cost sharing.

  3. $15B to enhance Part D (prescription drug) benefits and reduce Part D premiums.

  4. $5B to reduce Part B (outpatient services) premiums.

• In conventional MA plans, these rebates have actually decreased slightly in recent years. In special-needs plans, growth has decelerated a little since 2023, but still continues.

Challenges in Tracking Utilization and Cost

Comparing these projected costs against actual utilization and spending is more challenging.

While MA plans are required to submit encounter data for all services provided, encounter data for supplemental benefits to document service use are often incomplete or inconsistent. Current limiting factors:

• Dental services lacked encounter codes until 2024

• There is no standard method to tag services as supplemental

• Lack of clarity on requirements for reporting on optional vs. mandatory benefits

• Limited transparency into third-party vendors or vertically integrated providers

Recent changes in reporting requirements will address some of these issues and provide more data for analysis. Do note that this reporting is at the MA plan level as opposed to individual enrollee level. It’s a step towards better visibility into benefit utilization and actual costs.

What We Know About Utilization and Cost (So Far)

In the meantime, there have been attempts to get insight on both utilization and cost – one being a JAMA Network article that analyzed Medicare Expenditure Panel Survey (MEPS) and Medicare Current Beneficiary Survey (MCBS) data from 2017-2021 to take a look at dental, hearing and vision services. Some highlights:

• MA enrollees paid 9.0% less out-of-pocket (OOP) for eyeglasses.

• MA enrollees paid 9.3% less OOP for dental visits.

• No significant OOP savings observed for most other types of supplemental benefits compared with traditional Medicare.

This analysis does come before the most recent expansions of supplemental benefits allowed in MA plans, but it suggests that actual utilization of Vision and Hearing benefits are similar for MA and traditional (non-MA) beneficiaries:

It also showed that actual OOP expenditures (stemming only from those who actually used those services) for dental, vision, and hearing services were lower for Medicare Advantage enrollees. Emergency dental service cost differences exhibited the most significant difference in OOP costs.

Member Perspectives and Behavior

The Commonwealth Fund also conducted a survey to determine how often MA enrollees value and use the supplemental benefits embedded in their plans. Summarizing key takeaways from that report:

Importance of Supplemental Benefits

• 89% of MA enrollees said supplemental benefits are very or somewhat important. Compare that to traditional Medicare beneficiaries, who answered 74%.

 Utilization of Benefits

• Roughly 70% of MA enrollees reported using one or more supplemental benefits during the past year. Specifically:

  1. ~40% used dental or vision benefits.

  2. 7% used hearing benefits

  3. 46% used OTC medication benefits. Utilization of these benefits is especially common among low-income (<$50K) enrollees (55%).

• Use of supplemental benefits can vary significantly. Highest utilization was reported by:

  1. Enrollees who said benefits were important

  2. Those with lower incomes

  3. Black and Hispanic respondents

  4. Individuals with functional impairments

The Commonwealth Fund also issued a 2024 report in response to a request from CMS for MA utilization data. According to that report, among the ~30% of MA enrollees who didn’t use any benefits:

• 63% felt they simply did not need them

• 24% were uncertain about what was offered

• 9% encountered barriers to use

• 4% said they cost too much

Looking Ahead

At this point, we know that supplemental benefits influence MA plan purchases, hence the leaps in rebates covering these benefits. We also have some high-level indicators to help compare projected supplemental benefit costs in MA bids and actual utilization and costs.

Newer data submission requirements (and hopefully the public release of that data or analyses using it) will help fill in more blanks.

And as noted in a previous post, starting in 2026 MA plans will be required to issue a “Mid-Year Enrollee Notification of Unused Supplemental Benefits.”

With Carrier profitability struggling, will 2026 products include material changes to supplemental benefit mix and levels?

More insights yet to come!

If you’re ready, here are some ways we can help you:

• Newsletter Sponsorship opportunities: Promote your product or services to leaders in the Medicare space. Let’s discuss. (link)

• Market Research: Reports that help you wrap your arms around the Senior focused insurance markets. (link)

• Consulting: We can help you develop new insurance products for the Medicare market, appraise your books of business, and keep you compliant. Let’s discuss. (link)