Life Cycle of a Medicare Advantage (MA) Plan Design

Written by Rachel Brammeier

The following article is based on a video originally posted within our web series, Medicare Industry Insider with Rachel Brammeier and Chalen Jackson. Click here to watch the original recording on our YouTube page.

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As we start to get a closer look at the plans available for the coming year, it’s important to know how plans are developed, what data is available, and when information will be released. While it can feel daunting to not know what plans will look like until September or October, there is data out there that an agent can speculate on and work with to help make informed decisions.

Carriers have a very long runway in developing plans. It takes 18 months to build a Medicare Advantage (MA) plan. They are using past data to make future decisions and anticipating care needs well before the plan launches. If agents know what things to look for, they can read between the lines to better prepare their business for the future.

What are MA carriers looking for to build or maintain a plan?

A competitive network
- A great network often starts with a healthy amount of negotiation as well as regional research to see what hospitals are necessary to be competitive.
The number of beneficiaries
- Carriers need to research the beneficiaries in that region to determine if there are enough people to cause a tipping point of enrollment into that plan.
Enhancing or adding new plans
- If a current plan is already in place within that market, carriers will determine whether it is beneficial to invest in that plan or to create a new one.
Extra incentive
- Another key factor is making sure there are enough extra resources to drive the plan to success (i.e., ensuring a healthy dental provider network for dental benefits).

What roles do Star Ratings play in plan design?

Star Ratings are a system used to evaluate and report the quality of care provided by MA and Part D plans.
MA plans are evaluated based on up to 38 unique measures of quality and performance.
The higher the Star Rating, the more money the plan will receive to develop a better product in the following year.
Click here for more facts on Star Ratings!

Timeline

Carriers must submit for bid and formulary submission for the next calendar year (CY) on June 5.
After June 5, agents get a peek behind the curtain with carrier rollouts in July and August.
Around the middle of July, typically the National Average Monthly Bid Amount (NAMBA) will be released. This prompts the carriers to begin to create their rebids with a filing deadline that varies from year to year.

However, what most don’t realize is that those plans had been in development for 18 months before decisions were officially finalized.

Click here for an overview of this timeline!

Strategically pulling a plan

Carriers have a few reasons as to why they pull a plan. Sometimes it is due to not having a sustainable block, their loss ratio may be too high, or government requirements may demand it’s removal. Regardless of the reasoning, carriers must be strategic in order to maintain competitiveness in the market.

Common strategies when plan pulling include:

Sanctioning
- CMS will sanction a plan for not meeting certain requirements. This causes the plan to suspend all new enrollments.
Investing
- A carrier may choose to invest heavily in a new plan, resulting in less improvements to an older version. This lack of improvement encourages clients to swap to the new one.
Commissions
- They may choose to pull commission to discourage agents from enrolling new clients in a certain plan.
Provider or hospital network
- The carrier may shut down a network with the desire to reduce members on a plan.
Service Area Reduction (SAR)
- This is done if the carrier wishes to pull the plan from a specific county.
Crosswalk
- A “crosswalk” is when an enrollee on one plan is transferred to another, while still maintaining their membership with the carrier.
- In this process, the enrollee from one plan or plan benefit package (PBP), changes their enrollment from the first plan (or PBP) to the second.
- For more about Crosswalking and the rules associated, click here.

Hopefully this guide will help you to make informed decisions regarding MA plans, without waiting on a carrier for official confirmation. To strengthen your knowledge further, please check out some of the resources listed below.