CVS OVERHAULING MEDICARE ADVANTAGE PLANS

CVS Health is preparing to make significant changes to its 2025 Medicare Advantage plans, which could potentially drive away 10 percent of its membership, the company’s chief financial officer said at an investment banking conference Tuesday. “The goal for next year is margin over membership,” CVS chief financial officer Tom Cowhey said at the conference, hosted by Bank of America. “Could we lose up to 10 percent of our existing Medicare members next year? That’s entirely possible. And that’s OK, because we need to get this business back on track.” CVS, through its Aetna subsidiary, is the third-largest Medicare Advantage insurer, with more than 4.2 million enrollees as of April, according to the latest federal data. That means next year CVS could push out up to 420,000 older adults and people with disabilities on its Medicare Advantage plans, forcing them to choose another plan. Over the last several years, health insurers have prioritized growing their Medicare Advantage membership rolls — often by advertising $0 premiums, dental, vision, and other new supplemental benefits — even if it has meant lower short-term profits. That strategy backfired most notably for Humana and now CVS. Wall Street punished CVS’s stock earlier this month after first-quarter profits came in a lot lower than predicted. In the quarter, CVS paid out $900 million more than it expected in medical costs, nearly all of which was attributed to the company’s Medicare Advantage population. CVS is pivoting to focus on increasing profits within its Medicare Advantage plans by cutting some of its benefits. By getting rid of some of the extra bells and whistles, CVS and other insurers eliminate the expenses tied to those benefits — and with that, drive away the people who needed or wanted to use them. — BOB HERMAN, STAT