Abstract

Anthem, UnitedHealth Could Be Contenders to Buy Struggling Magellan

March 12, 2019

Magellan Health Inc. — a company with behavioral health, Medicaid managed care and PBM assets — is striving to turn its business around after a challenging 2018 that has stirred speculation it’s primed for a sale.

In fact, on Feb. 22 the hedge fund Starboard Value — which owns approximately 9.8% of Magellan shares — sent an open letter to the company’s shareholders suggesting new candidates for its board of directors and urging Magellan management to explore selling all or part of the company.

By Leslie Small

Magellan Health Inc. — a company with behavioral health, Medicaid managed care and PBM assets — is striving to turn its business around after a challenging 2018 that has stirred speculation it’s primed for a sale.

In fact, on Feb. 22 the hedge fund Starboard Value — which owns approximately 9.8% of Magellan shares — sent an open letter to the company’s shareholders suggesting new candidates for its board of directors and urging Magellan management to explore selling all or part of the company.

If Magellan does end up getting sold, certain aspects of its business could greatly benefit whichever managed care company ends up being the highest bidder, industry experts say.

“[Magellan] has a unique mix of assets,” Jefferies analyst David Styblo wrote in a Feb. 20 research note, pointing out that “the insurance business includes some Managed Medicaid as well as radiology and behavioral benefits.” Magellan’s PBM, meanwhile, “could be sold as standalone,” which “could be interesting for companies wanting to enhance their medical pharmacy and clinical management capabilities,” Styblo wrote.

As for which companies might buy all or part of Magellan, Leerink analyst Ana Gupte advised investors that Anthem, Inc. and UnitedHealth Group could be the most likely strategic buyers, “in light of their synergies with Medicaid in Complete Care, and the PBM across IngenioRx and OptumRx.” Another possibility is that a private-equity firm could purchase Magellan, Gupte added.

MCOs Team Up with CBOs To Address SDOH

March 11, 2019

Medicaid plans around the country have formed innovative relationships with community-based organizations (CBOs) to address social determinants of health (SDOH) such as housing instability and food insecurity.

Starting small with a local partner, putting some metrics in place to track the outcomes and then scaling a program up to serve more people in the community is a series of steps AmeriHealth Caritas District of Columbia has taken to address social determinants, said Keith Maccannon, the insurer’s director of marketing, community relations and outreach, who spoke on an SDOH-focused panel at the 12th Annual Managed Medicaid Summit.

By Lauren Flynn Kelly

Medicaid plans around the country have formed innovative relationships with community-based organizations (CBOs) to address social determinants of health (SDOH) such as housing instability and food insecurity.

Starting small with a local partner, putting some metrics in place to track the outcomes and then scaling a program up to serve more people in the community is a series of steps AmeriHealth Caritas District of Columbia has taken to address social determinants, said Keith Maccannon, the insurer’s director of marketing, community relations and outreach, who spoke on an SDOH-focused panel at World Congress’ 12th Annual Medicaid Managed Care Summit.

But being subject to evaluation early on in a partnership may be difficult for some smaller “mom and pop” organizations, weighed in Erica Lindquist, senior director of business acumen with the National Association of States United for Aging and Disabilities.

Another challenge that MCOs and their CBO partners sometimes face is around claims submission and reimbursement. Maccannon said AmeriHealth frequently uses administrative dollars to pay for services when it sees the business case for it, but that “encounter submission [by the community partner] is quite often one of the barriers to scalability.”

Adam Zolotor, M.D., president and CEO of the North Carolina Institute of Medicine, said the state has formed a task force that is thinking about ways health systems and CBOs can partner to address SDOH under North Carolina’s upcoming transformation to managed Medicaid. The state is trying to determine the various services to address SDOH that will be reimbursable and the rates to the CBOs that will offer those services, he adds.

Premera Blue Cross, Other Blues Apply Artificial Intelligence to Guide Better Care

March 7, 2019

Premera Blue Cross has broadened its partnership with predictive health care analytics startup Cardinal Analytx Solutions with a view toward identifying why certain individuals have extreme escalations in medical treatment.

Cardinal Analytx’s machine learning models “can predict members with near-term care needs, accurately and consistently over time,” says Colt Courtright, director of corporate data and analytics at Premera.

By Jane Anderson

Premera Blue Cross has broadened its partnership with predictive health care analytics startup Cardinal Analytx Solutions with a view toward identifying why certain individuals have extreme escalations in medical treatment.

Cardinal Analytx’s machine learning models “can predict members with near-term care needs, accurately and consistently over time,” says Colt Courtright, director of corporate data and analytics at Premera. He adds that the Blues plan has found these members are willing to engage in care management support. This indicates the program both will help members and eventually show a population-level return on investment, he says.

Premera and Cardinal are exploring whether to provide primary care physicians with the information, says Nigam Shah, M.D., who founded Cardinal Analytx with lead investor Cardinal Partners. Ultimately, “we want to use AI to improve a patient’s health trajectory, empower the PCP with more information, and remove clinical and financial burdens on the patient,” Courtright says.

At BlueCross BlueShield of Western New York and BlueShield of Northeastern New York, data teams now are able to identify members who are pre-diabetic through predictive analytics, and then engage them to ensure a proper care plan is in place, says Adam Dunning, director of health care economics for the New York Blues plans.

Meanwhile, Health Care Service Corp. has focused on analytics for providers “to make it easier for providers to gain insight into their quality of care and close care gaps,” according to Gary Stanford, vice president and actuary, HCSC provider network analytics.

What Is Behind CVS Health’s LTC Woes?

March 6, 2019

Almost four years after CVS Health Corp. spent nearly $13 billion to acquire Omnicare, the long-term-care (LTC) pharmacy business attracted negative attention as a major contributor to “headwinds” in the company’s report on fourth quarter and full-year 2018 financial results.

For the quarter ended Dec. 31, CVS Health reported a net loss of $421 million on revenues that increased 12.5% to $54.4 billion year over year. Losses reflect $2.2 billion in quarterly and $6.1 billion in full-year 2018 “goodwill impairment charges” related to its LTC business, the company said.

By Judy Packer-Tursman

Almost four years after CVS Health Corp. spent nearly $13 billion to acquire Omnicare, the long-term-care (LTC) pharmacy business attracted negative attention as a major contributor to “headwinds” in the company’s report on fourth quarter and full-year 2018 financial results.

For the quarter ended Dec. 31, CVS Health reported a net loss of $421 million on revenues that increased 12.5% to $54.4 billion year over year. Losses reflect $2.2 billion in quarterly and $6.1 billion in full-year 2018 “goodwill impairment charges” related to its LTC business, the company said.

“The Omnicare deal made good strategic sense,” says Adam Fein, Ph.D., president of Pembroke Consulting, Inc. and CEO of Drug Channels Institute. “CVS gained a strong position in LTC [long-term care] while also augmenting its already significant specialty pharmacy business.”

“However,” Fein adds, “CVS Health has become a very complex and highly diverse organization. It has struggled against the smaller, nimble local competitors within the LTC industry.”
CVS Health blames “industrywide challenges” in LTC pharmacy as affecting its ability to grow the business at the rate originally estimated when it acquired Omnicare.

“These challenges include lower occupancy rates in skilled nursing facilities, significant deterioration in the financial health of numerous skilled nursing facility customers which resulted in a number of customer bankruptcies in 2018, and continued facility reimbursement pressures,” the company says.

As a result, a goodwill impairment charge of $3.9 billion was recorded during the second quarter of 2018, CVS Health said.

Insurers Work with Communities to Address Food Insecurity

March 5, 2019

As part of their efforts to address the social factors affecting members’ lives, some health insurers are deploying a variety of initiatives to improve access to healthy food. A common thread among insurers that AIS Health spoke to was the importance of working alongside community organizations — rather than trying to duplicate their efforts.

UCare, for example, is working with a group called Second Harvest Heartland on programs aimed at addressing food insecurity among its members, most of whom are Medicaid beneficiaries.

By Leslie Small

As part of their efforts to address the social factors affecting members’ lives, some health insurers are deploying a variety of initiatives to improve access to healthy food. A common thread among insurers that AIS Health spoke to was the importance of working alongside community organizations — rather than trying to duplicate their efforts.

UCare, for example, is working with a group called Second Harvest Heartland on programs aimed at addressing food insecurity among its members, most of whom are Medicaid beneficiaries.

One way the two organizations are collaborating is an effort to connect qualifying members to the federal Supplemental Nutrition Assistance Program and other community resources, says Nicole Lier, health promotion manager at UCare.

The insurer and Second Harvest also started a program called FoodRx, which focuses on members who have been diagnosed with high blood pressure. A nutritionist puts together boxes packed with food, educational materials and recipes, Lier says, and members involved in the program get one free box delivered to their home each month.

While UCare’s projects focus on adults, Cigna Corp. is working on tackling food insecurity in children.

The insurer in January kicked off a $25 million, five-year global initiative, called Healthier Kids for Our Future, with a one-day event in which its employees collaborated with the nonprofit Blessings in a Backpack to fill 16,500 backpacks with food for elementary school children who might otherwise go hungry on weekends. As part of the broader initiative, Cigna plans to work with school districts around the country to help fight childhood hunger.

Diplomat Pharmacy Postpones Earnings Release Amid PBM Struggles

March 4, 2019

Diplomat Pharmacy Inc.’s stock value plummeted recently after the company said it would delay the release of its fourth-quarter and full-year earnings results — primarily because of difficulties with its PBM business.

Diplomat entered the PBM space in 2017 when it acquired National Pharmaceutical Services and LDI Integrated Pharmacy Services. The company disclosed in a Feb. 22 press release that it anticipates writing down a “significant portion” of its PBM business’ approximately $630 million in assets.

By Leslie Small

Diplomat Pharmacy Inc.’s stock value plummeted recently after the company said it would delay the release of its fourth-quarter and full-year earnings results — primarily because of difficulties with its PBM business.

Diplomat entered the PBM space in 2017 when it acquired National Pharmaceutical Services and LDI Integrated Pharmacy Services. The company disclosed in a Feb. 22 press release that it anticipates writing down a “significant portion” of its PBM business’ approximately $630 million in assets. It also said it is withdrawing its preliminary 2019 full-year earnings outlook, in part because it’s seen “additional customer losses in its PBM business since early January,” which combined with a “softer outlook for client wins and other factors” has led to a lower-than-expected outlook for its PBM business in 2019.

Asked why Diplomat’s PBM may be losing customers, William Sullivan, principal consultant at Specialty Pharmacy Solutions LLC, says part of the issue may be that pharmaceutical manufacturers are unsure “how things may shake out” regarding the newly proposed changes to the drug-rebate system. That could mean they want to stick with the “big players who will have the most impact on helping steer potential changes,” he says.

Another factor is the consolidation in the PBM industry — with Cigna Corp. now owning Express Scripts, UnitedHealth Group having its PBM OptumRx, and CVS Health Corp. owning both a PBM and health insurer Aetna Inc.

That “gives them even greater purchasing power which, reciprocally, makes it much harder for the smaller players to cut deals that enable them to be competitive with the big guys,” Sullivan says.