People on the Move

January 15, 2021

National Health Care Expenditures Grew Steadily in 2019

January 15, 2021

by Jinghong Chen

Total U.S. health care spending increased 4.6% to reach $3.8 trillion in 2019, according to CMS’s Office of the Actuary. Medicare spending experienced a higher growth rate in 2019 than in 2018, increasing by 6.7% compared with 6.3%. Meanwhile, private health insurance spending growth slowed from 5.6% in 2018 to 3.7% in 2019. The relatively stable rise in overall health care expenditures reflected faster growth in spending for hospital care, physician and clinical services, and retail prescription drugs, which was offset by a decline in the net cost of health insurance due to a suspension of the health insurance tax in 2019.

by Jinghong Chen

Total U.S. health care spending increased 4.6% to reach $3.8 trillion in 2019, according to CMS’s Office of the Actuary. Medicare spending experienced a higher growth rate in 2019 than in 2018, increasing by 6.7% compared with 6.3%. Meanwhile, private health insurance spending growth slowed from 5.6% in 2018 to 3.7% in 2019. The relatively stable rise in overall health care expenditures reflected faster growth in spending for hospital care, physician and clinical services, and retail prescription drugs, which was offset by a decline in the net cost of health insurance due to a suspension of the health insurance tax in 2019.

NOTE: “Other Health Insurance Programs” include Children’s Health Insurance Program (Titles XIX and XXI), Department of Defense and Department of Veterans Affairs. Dollar amounts shown are in current dollars. Percent changes are calculated from unrounded data.

SOURCE: CMS, Office of the Actuary, National Health Statistics Group. Visit https://go.cms.gov/395B6bO.

Vaccines and Masks: Biden Plan Aims to Break Pandemic Cycle

January 14, 2021

The coronavirus action plan President Joe Biden is unveiling Thursday aims to bring new urgency to the nation’s vaccination campaign coupled with another round of economic relief for hunkered-down Americans.

The Biden plan comes as a divided nation remains caught in the grip of the pandemic’s most dangerous wave yet. So far, more than 385,000 have died in the U.S. And government numbers out Thursday reported a jump in weekly unemployment claims, to 965,000, a sign that rising infections are forcing businesses to cut back and lay off workers.

The coronavirus action plan President Joe Biden is unveiling Thursday aims to bring new urgency to the nation’s vaccination campaign coupled with another round of economic relief for hunkered-down Americans.

The Biden plan comes as a divided nation remains caught in the grip of the pandemic’s most dangerous wave yet. So far, more than 385,000 have died in the U.S. And government numbers out Thursday reported a jump in weekly unemployment claims, to 965,000, a sign that rising infections are forcing businesses to cut back and lay off workers.

Biden hopes his multipronged strategy, to be detailed in a Thursday evening speech, will put the country on the path to recovery by the end of his first 100 days. “It’s going to be hard,” Biden said Monday after he got his second vaccine shot. “It’s not going to be easy. But we can get it done….”

Read the full The Associated Press article

Datapoint: BCBS Michigan Selects OptumRx as New PBM

January 14, 2021

Blue Cross Blue Shield of Michigan last week said it has selected OptumRx as its new pharmacy benefits manager, ending its current partnership with Cigna Corp.’s Express Scripts. The switch will take effect in January 2022 for commercial members, and January 2023 for Medicare Advantage members. The Blues affiliate is the largest insurer in Michigan, serving 4,512,710 lives, or 44.4% of the state’s market.

Blue Cross Blue Shield of Michigan last week said it has selected OptumRx as its new pharmacy benefits manager, ending its current partnership with Cigna Corp.’s Express Scripts. The switch will take effect in January 2022 for commercial members, and January 2023 for Medicare Advantage members. The Blues affiliate is the largest insurer in Michigan, serving 4,512,710 lives, or 44.4% of the state’s market.

Source: AIS’s Directory of Health Plans

Johnson & Johnson Expects Vaccine Results Soon but Lags in Production

January 14, 2021

Johnson & Johnson expects to release critical results from its Covid-19 vaccine trial in as little as two weeks — a potential boon in the effort to protect Americans from the coronavirus — but most likely won’t be able to provide as many doses this spring as it promised the federal government because of unanticipated manufacturing delays.

If the vaccine can strongly protect people against Covid-19, as some outside scientists expect, it would offer big advantages over the two vaccines authorized in the United States. Unlike those products, which require two doses, Johnson & Johnson’s could need just one, greatly simplifying logistics for local health departments and clinics struggling to get shots in arms. What’s more, its vaccine can stay stable in a refrigerator for months, whereas the others have to be frozen.

Johnson & Johnson expects to release critical results from its Covid-19 vaccine trial in as little as two weeks — a potential boon in the effort to protect Americans from the coronavirus — but most likely won’t be able to provide as many doses this spring as it promised the federal government because of unanticipated manufacturing delays.

If the vaccine can strongly protect people against Covid-19, as some outside scientists expect, it would offer big advantages over the two vaccines authorized in the United States. Unlike those products, which require two doses, Johnson & Johnson’s could need just one, greatly simplifying logistics for local health departments and clinics struggling to get shots in arms. What’s more, its vaccine can stay stable in a refrigerator for months, whereas the others have to be frozen.

But the encouraging prospect of a third effective vaccine is tempered by apparent lags in the company’s production. In the company’s $1 billion contract signed with the federal government in August, Johnson & Johnson pledged to have 12 million doses of its vaccine ready by the end of February, ramping up to a total of 100 million doses by the end of June….

Read the full The New York Times article

Data Fuel Debate Over Whether J&J’s One-Dose Covid Vaccine Will Measure Up

January 14, 2021

Johnson & Johnson published updated early data on its Covid-19 vaccine Wednesday, showing that it provided participants in a clinical trial with at least some immunity after one dose.

The data, published in the New England Journal of Medicine, offer only hints to a tantalizing question: Could the vaccine, given as a single shot, perform as well as the vaccines that U.S. regulators have already authorized, which are given as two?

Johnson & Johnson published updated early data on its Covid-19 vaccine Wednesday, showing that it provided participants in a clinical trial with at least some immunity after one dose.

The data, published in the New England Journal of Medicine, offer only hints to a tantalizing question: Could the vaccine, given as a single shot, perform as well as the vaccines that U.S. regulators have already authorized, which are given as two?

In the study, participants had neutralizing antibodies, measured in a unit called a geometric mean titer, of 224 to 354, on day 29 after their first vaccine dose; those levels reached 288 to 488 by day 57. These levels could be enough to produce immunity. But there was a big benefit to giving the participants a booster dose. It doubled or tripled their levels of neutralizing antibodies. The question is whether the antibody levels induced by the first dose are indeed enough, or if there are other types of immunity spurred by the vaccine that lead to protection….

Read the full Stat article

Analysis of N.J. Arbitration System Sheds Light on Federal Fix for Surprise Billing

January 14, 2021

An arbitration system that New Jersey uses to resolve payment disputes between insurers and out-of-network providers over surprise medical bills has resulted in payments that are much higher than prevailing in-network rates for the same services, according to a new study.

The study, published in the January issue of Health Affairs, found that New Jersey’s final-offer arbitration system “appears likely to increase health care costs relative to other surprise billing solutions and perversely incentivizes providers to inflate their charges over time,” the authors wrote.

By Jane Anderson

An arbitration system that New Jersey uses to resolve payment disputes between insurers and out-of-network providers over surprise medical bills has resulted in payments that are much higher than prevailing in-network rates for the same services, according to a new study.

The study, published in the January issue of Health Affairs, found that New Jersey’s final-offer arbitration system “appears likely to increase health care costs relative to other surprise billing solutions and perversely incentivizes providers to inflate their charges over time,” the authors wrote.

The study has significant implications now that Congress has approved legislation mandating a similar nationwide system of binding arbitration, says Dan Mendelson, founder of consulting firm Avalere Health. “The central finding — that the median arbitrator decision awarded an out-of-network payment of 5.7 times the prevailing median in-network rates — shows that the process favors providers and pushes costs to payers, and thus to consumers,” he says.

The study compared provider bids, plan bids and arbitration decisions with Medicare payment rates, median in-network prices, and the 80th percentile of charges for the same service or services. The mean arbitration award was $7,222 and the median award was $4,354. Providers won 59% of decisions, and health plans prevailed in the remaining 41%.

In addition, nearly one-third of cases decided for amounts that were more than 10 times the median in-network price, the study found. Both health plans and providers tended to bid above in-network rates, but providers bid far higher than plans: the median health plan bid was 1.6 times the median in-network price for the same set of services, whereas the median provider bid was 10.1 times the median in-network price.

In the new federal legislation, Congress stipulated that arbitrators may consider the median in-network rate paid by the insurer, says lead author Benjamin Chartock, a Ph.D. student in the Health Care Management Department at the University of Pennsylvania. “It will be interesting to see the results of the federal rule-making process,” he tells AIS Health. “It’s become clear, given our research on New Jersey, that the intricacies of the arbitration system have a meaningful impact on the outcome of disputes.”

Mendelson says the clout of providers in New Jersey makes it unsurprising that the state adopted a provider-friendly process. “I expect the same with the federal regulations,” he says.

Datapoint: Molina Completes Magellan Complete Care Deal

January 13, 2021

Molina Healthcare last week completed its acquisition of Magellan Health’s Magellan Complete Care. Magellan’s specialty Medicaid products currently serve 145,432 members in Arizona, Florida and Virginia. The insurer also offers long-term care plans for seniors in Massachusetts and New York. The move expands Molina’s Medicaid footprint into Arizona and Virginia, and boosts its Florida business. Molina is currently the fifth-largest managed Medicaid insurer in the U.S., serving 3,017,109 lives.

Molina Healthcare last week completed its acquisition of Magellan Health’s Magellan Complete Care. Magellan’s specialty Medicaid products currently serve 145,432 members in Arizona, Florida and Virginia. The insurer also offers long-term care plans for seniors in Massachusetts and New York. The move expands Molina’s Medicaid footprint into Arizona and Virginia, and boosts its Florida business. Molina is currently the fifth-largest managed Medicaid insurer in the U.S., serving 3,017,109 lives.

Source: AIS’s Directory of Health Plans

Centene, UnitedHealth Ring in New Year With M&A

January 13, 2021

Although 2021 has just begun, major health insurers appear to be wasting no time when it comes to spending the influx of cash that they’ve collected as a result of lower routine health care utilization during the COVID-19 pandemic.

On Jan. 4, Centene Corp. revealed that it struck a deal to purchase Magellan Health, Inc. for $2.2 billion, a transaction that promises to augment the insurer’s existing behavioral health, specialty health care and pharmacy management assets. Two days later, UnitedHealth Group said it plans to purchase the technology company Change Healthcare for approximately $13 billion in a deal that will bolster its analytics and advisory arm, OptumInsight.

By Leslie Small

Although 2021 has just begun, major health insurers appear to be wasting no time when it comes to spending the influx of cash that they’ve collected as a result of lower routine health care utilization during the COVID-19 pandemic.

On Jan. 4, Centene Corp. revealed that it struck a deal to purchase Magellan Health, Inc. for $2.2 billion, a transaction that promises to augment the insurer’s existing behavioral health, specialty health care and pharmacy management assets. Two days later, UnitedHealth Group said it plans to purchase the technology company Change Healthcare for approximately $13 billion in a deal that will bolster its analytics and advisory arm, OptumInsight.

Taken together, Centene and UnitedHealth’s moves are “really interesting and sizable transactions to kick off the new year given that the buyers were clearly going through [due] diligence during a volatile election cycle and pandemic,” observes Timothy Epple, a principal at Avalere Health.

Centene’s latest acquisition is especially timely given the news that Democrats will have control of the White House and the House of Representatives, plus a narrow majority in the Senate, Epple suggests. The election results “suddenly make that deal look even more attractive given the probable stability and growth tailwinds for government and [Affordable Care Act] markets,” he says.

Further, “while the Change transaction is riding analytic tailwinds that are somewhat party-agnostic, reduced volatility in the near-term policy outlook is a positive for M&A activity across the health care ecosystem,” Epple adds.

Wall Street analysts say the deals make strategic sense for the acquiring organizations, which have been aggressive about inorganic growth.

“We see this transaction as complementary as it builds on [UnitedHealth’s] focus and expansion of Optum, with Change’s data and analytics platform augmenting offerings within OptumInsight,” Citi analyst Ralph Giacobbe wrote in a note to investors. “We expect continued M&A from [UnitedHealth] in its efforts to continue to grow and scale its Optum segments, as we have seen over the years,” he added.

Regarding the Centene/Magellan tie-up, Oppenheimer’s Michael Wiederhorn offered an optimistic take. “Overall, we believe this deal continues Centene’s efforts to strengthen its capabilities in serving the highly complex portion of the government population,” he advised investors.

Datapoint: CMS Approves Tennessee Medicaid Block Grant

January 12, 2021

With just days remaining in the Trump administration, CMS last week approved Tennessee’s waiver request to convert its traditional Medicaid funding to a block grant. Block grants, a conservative reform approach opposed by the incoming Biden administration, cap federal spending at a fixed dollar amount while allowing states more freedom in what services are covered under Medicaid, and who can apply for benefits. Tennessee currently serves 1,503,839 Medicaid beneficiaries. The state has not expanded Medicaid under the Affordable Care Act.

With just days remaining in the Trump administration, CMS last week approved Tennessee’s waiver request to convert its traditional Medicaid funding to a block grant. Block grants, a conservative reform approach opposed by the incoming Biden administration, cap federal spending at a fixed dollar amount while allowing states more freedom in what services are covered under Medicaid, and who can apply for benefits. Tennessee currently serves 1,503,839 Medicaid beneficiaries. The state has not expanded Medicaid under the Affordable Care Act.

Source: AIS’s Directory of Health Plans