McKinsey’s Center for US Health System Reform recently completed independent research on the options available to consumers selecting Medicare Advantage plans this fall, based on public use data files from the Centers for Medicare & Medicaid Services (CMS).

1. Insights into the 2020
Medicare Advantage
market
Center for US Health System Reform
November 2019

2. Medicare Advantage-Prescription
Drug (MA-PD) options
Average number of MA-PD plans per county1 2 3
1
Unique plan defined based on Contract ID - Plan ID - Segment ID
2
Includes only HMO, local PPO, regional PPO, and PFFS plans offering Part D drug coverage
3
Based on counties offering MA-PD plans
Landscape and Product Design
1. Many Medicare beneficiaries
will have more options in 2020
2019
23
26
+15%
2020
Source: Analysis of CMS Medicare Advantage Landscape files 2019 and 2020
2 Insights into 2020 Medicare Advantage carrier offerings

3. 4
At least one more plan or carrier
Counties with additional MA-PD choice
Percent of US counties and county equivalents1 2 3
64%
Counties with increased
number of plans4
Counties with increased
number of payers4 31%
3Insights into 2020 Medicare Advantage carrier offerings

4. 1
Unique plan defined based on Contract ID - Plan ID - Segment ID
2
Includes only HMO, local PPO, regional PPO, and PFFS plans offering Part D drug coverage
2. Many enrollees will have
greater access to lower cost plans
Availability of $0 premium plans
Total number of $0 premium MA-PD plans1 2
2019
Percent of all MA-PD
plans that are zero-
premium
1,185
1,504
+27%
2020
44% 48%
Source: Analysis of CMS Medicare Advantage Landscape files 2019 and 2020
4 Insights into 2020 Medicare Advantage carrier offerings

5. Trend in out-of-pocket (OOP) maximum
Average in-network OOP maximum limit for $0 premium MA-PD plans1 2
2019
$5,165
-4%
2020
$4,982
5Insights into 2020 Medicare Advantage carrier offerings

6. 3. Prevalence of Part B “giveback”
plans varies, from 23% in
Florida to 0% in 8 states
Percentage of MA plans offering
Part B reduction 23%0%
~7%of MA plans nationally offer a partial refund or “giveback” of the $135.50 that seniors pay each
month to participate in the Medicare program
Part B giveback plans are most prevalent in states with very competitive MA markets (e.g., Florida) and/or
lower per capita income (e.g., Mississippi)
Several medium to large MA markets have no Part B giveback products (e.g., Massachusetts), creating a
potential opportunity for early movers
Source: Analysis of CMS Medicare Advantage Landscape file (2020) and 2020 Plan Finder Database. Note that Alaska is not pictured as MA is
not available
6 Insights into 2020 Medicare Advantage carrier offerings
McKinsey Global Institute

7. 4. Carriers are continuing
to offer new health-related
supplement benefits in 2020¹
1
New supplemental benefits were identified by comparing 2017 and 2018 benefit names to 2019 and 2020 offerings. Analysis only includes a
subsect of non-EGWP MA plans with new supplemental benefits and does not include new chronic specific supplemental benefits due to data
limitations
2 Benefit categories may not be new but the underlying benefits were identified as such
3 Analysis excludes total non-EGHP Medicare Advantage plans
4 Represents expansion of underlying benefit category (analysis addresses only a subsect of plans since its unclear how to differentiae the
expanded benefit from the original benefit offering)
5 All plans that offer a new supplemental benefit in calendar year; numbers may not sum due to some plans offering multiple new benefits
31%
142%
1433%
103%
(71)%
257%
80%
27%
Nicotine Replacement
Therapy
1,653
2,162
101
244
14
216
80
162
429
125
21
75
25
45
1,919
2,443
Non-Opioid Pain
Management
Community Navigator
Caregiver Support
Ancillary Equipment Fitness
Trackers4
Ambulance Stabilization Non-
transport4
Plans offering a new
supplemental benefit5
In-Home Support
Summary of new benefits offered² ³
Number of plans
Growth Rate
Percent change
2019-20
Source: CMS Plan Benefit Package (2017, 2018, Q2 2019, Q1 2020), CMS Call Letter (2019, 2020), Medicare Advantage Landscape file (2020)
2020
2019
NON-EXHAUSTIVE
7Insights into 2020 Medicare Advantage carrier offerings

8. Star Ratings
5. Enrollment-weighted average
Star Rating and the proportion
of enrollees in 4+ plans
have continued to rise
Enrollment-weighted average
Star Rating for MA-PD plans
Source: CMS Star Ratings data (2011-2020) and June enrollment data (2011-2019) – note that enrollment weighted Stars Ratings may differ
slightly from CMS reports due to enrollment data used in analysis
Proportion of
enrollees in 4+
Star plans
37% 52% 65% 72% 70% 76% 82%78%
3.57
3.71
3.87 3.96 4.05 4.01 4.07 4.08 4.17
​2014​2013
​5
​2011 ​2012 ​2015 ​2020​2016 ​2017 ​2018 ​2019
​1
​2
​3
4
​3.18
8 Insights into 2020 Medicare Advantage carrier offerings

9. 6. Star Rating increase from 2019-
20 was driven by improvement
in carrier measure performance
The domains (quality metric groupings) which most affected Star Ratings in 2019 and 2020 were:
— HD2: Managing Chronic (Long Term) Conditions
— DD4: Drug Safety and Accuracy of Drug Pricing
— HD1: Staying Healthy: Screenings, Tests and Vaccines
Change in Stars performance
from 2019 to 2020
Enrollment weighted-average Star Rating1
2019 average
Changes due to CMS cut
point changes
Changes due to other2
2020 projected average
Changes due to carrier
improvements
1
Based on McKinsey analysis, may differ from CMS published averages due to enrollment data used
2 Other changes may be due to incomplete measure data reporting for C30, D06, D10, D11, D12, D13, changes to the Categorical Adjustment
Index for socio-demographics and disability adjustment, weighting changes for some measures (including removal and addition of measures),
and addition/deletion of contracts
Source: Analysis of CMS Medicare Star Ratings data (2019-2020), CMS June enrollment files (2018-2019)
4.08
0.16
0.02
0.05
4.17
9Insights into 2020 Medicare Advantage carrier offerings

10. 7: All plan types have improved
Star Ratings since 2013, with local
PPO and HMO plans experiencing
the largest increase in Star Rating
Enrollment-weighted average Star Rating
Percent of
enrollees in 4+
Star plan
Source: Analysis of CMS Star Ratings data (2013-2020)
HMO Local PPO Regional PPO PFFS
41%
4.17
3.72
3.53
4.13
3.23
3.61
3.22
3.46
84% 34% 88% 2% 23% 0% 0%
+12%
+17%
+12%
+7%
Projected
2020
2013
10 Insights into 2020 Medicare Advantage carrier offerings

11. 8. Enrollment growth favors
plans retaining 4+ Star Rating
Change in enrollment 2016-
2019 by Star status¹
Percent change in enrollment, 2016-2019
Obtained 4+ Star
Rating
21
Retained 4+ Star
Rating
59
Lost 4+ Star Rating
41
Retained <4 Star
Rating
-9
1
Change in overall Star Ratings 2016-2019
Source: Analysis of CMS Medicare Star Ratings data (2016-2019), CMS October enrollment files (2016-2019)
11Insights into 2020 Medicare Advantage carrier offerings

12. 9. The vast majority of
plans that left the market
scored below 4 Stars
Contract survivorship
% of 2015 contracts remaining in market1
100%
2015
89%
16
84%
17
79%
18
75%
2019
For plans that left
market2 2015-2016 2016-2017 2017-2018 2018-2019
Percentage rated
below 4 Stars (in prior
year)3
1
Defined as having enrollment over zero
2 Includes contracts that were consolidated or terminated
3 Excludes plans which left but had no applicable Star Rating
Source: Analysis of CMS Medicare Star Ratings data (2015- 2019), CMS June enrollment files (2015-2019)
94% 87% 96% 94%
12 Insights into 2020 Medicare Advantage carrier offerings

13. Program Cost Comparison
10. Over the last 10
years, MA plans have
improved their efficiency in
delivering A+B benefits
Average MA bids, benchmarks, and
payments as a percent of FFS spending¹ ² ³
1
MedPAC analysis of CMS data (plan bids, enrollment, benchmarks, and fee-for-service expenditures)
2 Values are risk adjusted and reflect quality bonuses; do not include adjustments for coding intensity differences between MA and FFS
exceeding statutory minimum adjustment (per MedPAC, fully reflecting coding intensity would increase values by ~1-2%)
3 Note that data may be affected by changes the Patient Protection and Affordable Care Act (PPACA) made to benchmark, payment, and rebate
methodology, first taking effect in plan year 2012
Source: Medicare Payment Advisory Commission (MedPAC) Report to Congress – Medicare Payment Policy (2009-2019)
110
95
115
0
​90
100
105
120
1412 18
Plan bids on A+B
2009 1710 11 13 15 16 2019
Benchmarks
Average payments
13Insights into 2020 Medicare Advantage carrier offerings

14. Methodology
Landscape and Product Design - plan availabity,
premium and out of pocket analyses
— Based on analysis of CMS MA Landscape
files (2019 and 2020) and 2020 Plan Finder
Database
— Unique plan identified using Contract ID - Plan
ID - Segment ID
— Includes HMO, local PPO, regional PPO, and
PFFS plans that offer Part D drug coverage (i.e.,
Medicare Advantage-Prescription Drug)
— Analysis excludes PACE, Special Needs Plans,
Part B Only Plans, Employer sponsored (EGWP),
cost, and MSA plans
— Maximum out-of-pocket limit on enrollee
spending includes costs for all in-network Part A
and Part B Services
Landscape and Product Design – plan Part B
premium reduction
— Based on analysis of CMS MA Landscape
files (2019 and 2020) and 2020 Plan Finder
Database
— Analysis on the number of MA plans offering
any kind of Part B premium reduction as a
percentage of MA plans offered in state
— Includes HMO, local PPO, regional PPO, PFFS,
and cost plans
Landscape and Product Design – plan
supplemental benefits
— Based on analysis of CMS Plan Benefit
Package (PBP) file (2017, 2018, 2019 and 2020),
specifically the b13_other_services and b14_
preventeive documents
— New benefits were identified by comparing 2017
and 2018 supplemental benefits to 2019 and
2020 benefits
— If a supplemental benefit was not found in 2017
or 2018 but found in 2019 or 2020, the benefit
was identified as new
— Analysis excludes non-EGHP Medicare
Advantage plans
— Due to no formalized, longitudinal supplemental
benefits taxonomy from CMS, benefit-level may
be over or under-represented
Star Ratings
— Based on analysis of CMS Medicare Advantage
Star Ratings data (2011-2020) and CMS June
Medicare Advantage enrollment data (2011-
2019)
— All analysis is at the contract ID level and does
not account for contract consolidation or change
in ownership
— Enrollment-weighted averages calculated by
weighting the Star Rating for each contract in
a given year by the total number of enrollees
in contracts for that year (using CMS June
enrollment files); exception in 2020, where June
2019 enrollment data is used to weight 2020
Star Ratings due to data availability
— Enrollment-weighted averages may differ
slightly from CMS published averages due to
enrollment data used in this analysis
14 Insights into 2020 Medicare Advantage carrier offerings

15. — Impact of cut points on year over year change
in Star Rating average estimated by comparing
the 2019 measure performance data against
2019 measure cut points and 2020 measure cut
points
— Impact of improvements on year over year
change in Star Rating average estimated by
evaluating 2020 measure performance against
2019 cut points
— Additional shifts in performance are attributed
to the “Other” bucket.
Program Cost Comparison
— Based on Medicare Payment Advisory
Commission’s analysis of CMS data in annual
Report to Congress on Medicare Payment Policy
(years 2009-2019)
— Values are risk adjusted and reflect quality
bonuses
— Values do not include adjustments for coding
intensity differences between MA and FFS
exceeding statutory minimum adjustment
— MedPAC estimates all values would increase (~1-
2%) if coding intensity were reflected fully
15Insights into 2020 Medicare Advantage carrier offerings