May 8, 2008	Print this brief
Ohio Medicare Advantage Competition Gets a New Leader

When the Ohio Public Employees Retirement System (OPERS) decided to move its Medicare Supplement members into managed care plans, it turned the state’s Medicare Advantage (MA) competition inside out. The transition contributed heavily to a jump in MA penetration of the state’s 1.8 million Medicare eligibles, from 17% in December 2007 to 24% on March 1, 2008. This increase, of 125,160 beneficiaries enrolled in managed Medicare plans, helped propel Aetna into the No. 1 spot among MA competitors in Ohio.

In transitioning to the new arrangement, OPERS members covered by original Medicare and Aetna Medicare Supplement insurance were automatically switched into Aetna’s private-fee-for-service (PFFS) plan at the beginning of 2008. This switch contributed to a dramatic change in the market mix of Ohio MA plans. PFFS plans nearly doubled their market share, from 21% in December 2007 to 40% in March 2008. Health maintenance organizations (HMOs) remain the most popular type of MA plan in Ohio with 48%, although they lost a quarter of their previous market share to PFFS plans.

A total of 26 MA companies now sponsor plans in Ohio. By comparison 33 companies offer MA plans in Illinois, which has roughly the same number of Medicare eligibles. In Pennsylvania, which is closest in land area to Ohio, 32 MA companies compete for the business of approximately 2.2 million eligibles. The five leading MA companies nationwide (UnitedHealth, Humana, Kaiser, WellPoint, and Aetna) are among the market leaders in Ohio, with two-thirds of Ohio’s MA enrollees insured by four of these organizations.

This brief is based on an analysis of CMS data released in December 2007 and March 2008, covering MA enrollment as of November 8, 2007, and February 8, 2008, respectively. Of the 25 companies filing reports showing Ohio enrollment in March, three are new to the state’s MA market this year. One company that began reporting members in a Special Needs Plan in April 2008 is not included in this analysis.

Aetna: Leaps to MA Champion of Ohio

Aetna’s OPERS contract helped the company capture the No. 1 spot among Ohio MA competitors previously held by WellPoint, parent company of Anthem Blue Cross and Blue Shield of Ohio. OPERS reported that more than 63,000 of its Medicare beneficiaries are enrolled in the Aetna PFFS plan. Even without the OPERS contract, Aetna added about 30,000 members in Ohio, making it the fastest-growing MA company in the state.

Aetna also spread its reach, reporting enrollment in each of Ohio’s 88 counties in March 2008 – up from 41 counties in December 2007. About half the gains were in four large metropolitan areas – Cincinnati, Cleveland, Columbus, and Toledo. Gary Thomas, Midwest Region general manager for Aetna’s Consumer Segment, reported that individual sales also helped boost the company’s enrollment, with 200% growth in Ohio around those four cities.

Thomas attributed Aetna’s gains to the success of its provider recruitment efforts. When marketing to individual and group customers in Ohio, he said, “There is not a huge amount of differentiation from a price or a product standpoint, so we differentiate ourselves by stressing the access to care management, wellness and fitness programs, and access to a strong provider network.”

Strong Growth in Other Companies

Despite WellPoint’s loss of the No. 1 spot among Ohio MA companies, “Anthem maintains its position as the largest health insurer in the state, with more than 3 million members,” according to Mark Isett, the company’s regional vice president for Senior Services. Anthem grew its MA membership by 9% from December 1, 2007, to March 1, 2008, adding 7,891 net new members across all plan types. The company’s PPO plans grew the most, accounting for 47% of the additional enrollment. Its PFFS plan grew the fastest at 158%, reporting 2,521 members in March. The bulk of Anthem’s Ohio members are enrolled in HMOs, which comprise 83% of the company’s market share in the state.

Humana’s growth was mostly in PPO plans (82%), and most of its PPO growth was in and around Cincinnati (64%) and Columbus (33%). Three-quarters of its members are covered by PFFS plans, which also increased enrollment by 5% between December and March.

Another strong competitor was Medical Mutual of Ohio (MMO), which also administers Medicare coverage for OPERS members. However, OPERS’s arrangement with MMO did not affect its MA gains because that contract covers administration of Medicare benefits and self-funded Medicare Supplement insurance rather than managed Medicare plans. Most of MMO’s growth was in a new PFFS plan sold primarily to group customers. The company’s Medicare HMOs also increased enrollment by 67%, which MMO attributed to a combination of group and individual clients.

Ohio MA companies’ experience during the 2007-2008 open enrollment period shows how one large group can affect competition, particularly in a state where market participants are entrenched and neither product offerings nor prices differentiate the players. While OPERS’s switch to a group waiver program doesn’t tell the whole story, we can expect transitions of large state-sponsored organizations to play a role in Medicare Advantage competition in other states over the next few years.

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