CVS Health predicts insurance revenue will drop by as much as $1 billion next year after its largest Medicare Advantage plan reported a massive drop in star ratings, the company revealed in a Securities and Exchange Commission filing. Stocks and Trading on Thursday.
Insurance subsidiary Aetna enrolled 21% of its Medicare Advantage members in plans rated at least four stars by 2023, down from 87% the year before. Medicare Advantage plans must score four or five stars to earn the maximum payout bonus. Health insurance companies rely on these additional payments to provide additional benefits or charge no premium.
Aetna attributed the drop to the one-star drop in its largest policy, Aetna National PPO, which covers 59 percent of the insurance company’s 3.2 million subscribers. The company has worked to allocate its members to multiple plans, with approval from the Centers for Medicare and Medicaid Services, CVS Health wrote in the SEC filing. The company declined an interview request.
The company reported a Net income fell 8.7% to $2.1 billion in the first quarter, due to costs associated with acquisitions technology company Signify Health and based in Chicago Oak Street Health primary care chain. CVS Health then lower profit forecast for this year. Chief Executive Officer Karen Lynch told investors this month that internal metrics show star ratings will improve next year.
Aetna reported second biggest drop among the major insurers among members signed up for four- and five-star plans this year. Centene experienced the biggest drop, with less than 2% of Medicare Advantage members signing up for the highly rated policies this year. Insurers attribute the industry-wide rating slide to CMS continuing to stricter assessments after easing them during the COVID-19 pandemic and the growing importance of consumer experience in providing score.
CMS plans to halve the weighting of member experiences in the future and replace the “reward factor,” which provides additional rewards for consistently high-ranking programs, with a public metric. by health to advance efforts to address disparities.