Aetna's performance in the bonus program could have a sizeable impact on the payer's operating income.
CVS Health CEO Karen Lynch expressed confidence that Aetna's Medicare Advantage (MA) star ratings will improve for 2024, weeks ahead of CMS' release.
When CMS reveals star ratings results, the implications could be significant for MA insurers hoping to qualify for bonus payments—given to plans with at least four-star ratings.
Last year's release saw star ratings fall across the board, with the average rating dropping from 4.37 to 4.15 due to an adjustment in methodology to account for the pandemic winding down. CVS wasn't immune to the decline as it saw the ratings of its largest MA plan, Aetna National PPO, fall a full star from 4.5 to 3.5. That left the payer with only 21% of its MA members enrolled in plans with star ratings of at least four stars, compared to 87% in 2022.
Speaking at Morgan Stanley's healthcare conference this week, Lynch said she expects Aetna will improve on its star ratings for the coming year.
"I'm optimistic about where we will kind of land relative to our stars performance based on the kind of internal indicators I have," Lynch said.
Back in May, CVS announced that it expects the loss of bonus payments to affect its operating income in 2024 by $800 million to $1 billion.
In a call with investors after the release of the company's first quarter earnings, Lynch said she was "encouraged by what we're seeing on the internal metrics relative to our stars performance," pointing to contract diversification and investments to improve the clinical and member experience.
Following the release of its second-quarter earnings, CVS announced restricting and layoffs with the aim of reducing costs by up to $800 million in 2024. For the quarter, the payer experienced a 37% decline in net income year over year to $1.9 billion.
Jay Asser is an associate editor for HealthLeaders.
KEY TAKEAWAYS
Weeks before CMS unveils 2024 star ratings for Medicare Advantage plans, CVS Health CEO Karen Lynch said she was "optimistic" about Aetna's improvement.
CVS announced in May it expects to lose up to $1 billion in operating income due to the loss of bonus payments from star ratings declining.
The payer is coming off a second quarter in which it experienced a 37% decline in net income year over year and announced restructuring plans to trim down costs by up to $800 million.