Abstract

Lawmakers Make Efforts to End Surprise Medical Bills, Ultimate Impact Remains Unknown

July 3, 2019

The Senate Health, Education, Labor and Pensions (HELP) Committee on June 26 advanced wide-ranging bipartisan legislation aimed at lowering health care costs by protecting patients against surprise medical bills and targeting drug prices by clamping down on PBMs.

“This [Senate] bill seems to have strong momentum and will keep moving before the election,” says Caroline Pearson, a senior fellow at NORC at the University of Chicago. Still, “it’s impossible to know whether it will actually pass,” Pearson tells AIS Health.

By Jane Anderson

The Senate Health, Education, Labor and Pensions (HELP) Committee on June 26 advanced wide-ranging bipartisan legislation aimed at lowering health care costs by protecting patients against surprise medical bills and targeting drug prices by clamping down on PBMs.

“This [Senate] bill seems to have strong momentum and will keep moving before the election,” says Caroline Pearson, a senior fellow at NORC at the University of Chicago. Still, “it’s impossible to know whether it will actually pass,” Pearson tells AIS Health.

“The debate over surprise bills continues to be complicated, as health plans and providers do not agree on what the payment should be for out-of-network charges,” Pearson explains. “As the bill has progressed, providers and payers remain split on appropriate reimbursement.”

Generally speaking, providers favor an arbitration model to resolve the payment question, Pearson says, noting, “providers are concerned that any other fixed payment amount constitutes rate-setting.” Meanwhile, “for health plans, individual arbitration with many different providers has the potential to be very burdensome. These payers would prefer a fixed reimbursement benchmark.”

Overall, America’s Health Insurance Plans President and CEO Matt Eyles said in a statement that the bill would hinder competitive negotiations by stripping insurers and PBMs of leverage to lower costs “without addressing the root cause: high drug prices set and controlled by manufacturers who enjoy government-granted monopolies through the patent system.”

It’s too soon to tell how the bill’s provisions might affect consumers, Pearson says. “Efforts to increase transparency about which providers are in-network are helpful for consumers, but only if that information is easy to use,” she says. “The real consumer impact will depend on the final details of the bill and how it is implemented through regulation.”

Employers Appreciate Increased Flexibility in New HRA Rule

July 2, 2019

The Trump administration touts its recent release of final regulations expanding employers’ flexibility in offering health reimbursement arrangements (HRAs) to their employees as promoting more consumer choice and likely to cover more uninsured workers.

Under the regulations, starting on Jan. 1, 2020, employers will be able to offer stand-alone HRAs to help certain employees buy individual health insurance policies. Or they may offer “excepted-benefit” HRAs to reimburse employees for certain medical expenses with annual employer contributions of up to $1,800.

By Judy Packer-Tursman

The Trump administration touts its recent release of final regulations expanding employers’ flexibility in offering health reimbursement arrangements (HRAs) to their employees as promoting more consumer choice and likely to cover more uninsured workers.

Under the regulations, starting on Jan. 1, 2020, employers will be able to offer stand-alone HRAs to help certain employees buy individual health insurance policies. Or they may offer “excepted-benefit” HRAs to reimburse employees for certain medical expenses with annual employer contributions of up to $1,800.

“Philosophically, it’s a big change, giving employees flexibility to go out on the [individual] market and find coverage,” says Nicole Tapay, principal at Avalere Health. “I think in the near term you’ll see most likely the small employers will be giving it a closer look, [deciding] whether they want to use this flexibility to give them more predictability on costs.” Insurers offering coverage in the individual market “may see it as an opportunity,” she says, while those offering group plans may want to tweak their offerings over time to anticipate employer shifts.

The HRA regulations come with guardrails to protect the individual market. “Opponents will say [these regulations] will cause employers to dump their older and sicker workers onto the individual market,” says Dorian Smith, national practice leader for Mercer’s law and policy group, “while proponents will say there are guardrails.”

Smith notes Mercer’s clients generally are larger employers, most of whom have already decided on their 2020 offerings and would need to provide 90-day notice of changes for calendar year plans.

But for mid-2020 or calendar year 2021, “they might consider [HRAs] for certain employees, like part-time workers not eligible for the group health plan….It still provides a way to offer something different from the employer across the street.”

New York Bill Targets Pricing Transparency from PBMs

July 1, 2019

Lawmakers in New York this month approved wide-ranging legislation designed to require pricing transparency from PBMs and to eliminate key PBM practices. But the bill could potentially limit plans’ ability to respond to pricing moves by manufacturers, one consultant says.

The New York bill (S.B. 6531) would require that PBMs disclose key pricing and rebate information and pass through all rebates and discounts to the plans and payers, and that they act in the best interests of the covered individual and the health plan or provider.

By Jane Anderson

Lawmakers in New York this month approved wide-ranging legislation designed to require pricing transparency from PBMs and to eliminate key PBM practices. But the bill could potentially limit plans’ ability to respond to pricing moves by manufacturers, one consultant says.

The New York bill (S.B. 6531) would require that PBMs disclose key pricing and rebate information and pass through all rebates and discounts to the plans and payers, and that they act in the best interests of the covered individual and the health plan or provider.

The New York Health Plan Association, which did not support the legislation, is particularly concerned with the “best interests” section, which imposes a fiduciary relationship on PBMs “in all but name,” says Ashley Stuart, director of government affairs for the association.

The legislation also would prohibit mid-year formulary changes and drug substitutions, and it would require PBMs operating in the state to be licensed beginning next year.

Josh Golden at Arthur J. Gallagher & Co.’s Solid Benefit Guidance says, “formulary strategies are designed to help keep drug costs in check. In moving forward with this legislation, the state potentially limits the ability of health plans to apply pricing pressure on pharmaceutical manufacturers throughout the year.”

More generally, the legislation will lead to higher health insurance premiums for employers and consumers, warned New York Health Plan Association President and CEO Eric Linzer in a statement.

The legislation comes at a time when several states are considering efforts to rein in PBMs. “At least four or five states are looking at the impact of Medicaid [pharmacy benefit] price transparency,” says Alex Shekhdar, founder of Sycamore Creek Healthcare Advisors. “It goes back to the larger fundamental conversation of what states should be looking at — they recognize there’s money under the table, especially in the PBM space.”

Centene Looks to Expand MA Market, Invests in Data Analytics

June 27, 2019

Centene Corp. is well-positioned to expand in the Medicare Advantage market while continuing strong performance in Medicaid managed care as it works to close its acquisition of WellCare Health Plans, Inc.

That’s the takeaway from analysts who took a close look at the company following its most recent investor day, held June 14. Analysts remain unabashedly bullish on Centene’s ability to outperform the market, particularly with the pending WellCare acquisition, which received its first state approval — from Kentucky — on June 14. The company expects the acquisition to close during the first half of 2020.

By Jane Anderson

Centene Corp. is well-positioned to expand in the Medicare Advantage market while continuing strong performance in Medicaid managed care as it works to close its acquisition of WellCare Health Plans, Inc.

That’s the takeaway from analysts who took a close look at the company following its most recent investor day, held June 14. Analysts remain unabashedly bullish on Centene’s ability to outperform the market, particularly with the pending WellCare acquisition, which received its first state approval — from Kentucky — on June 14. The company expects the acquisition to close during the first half of 2020.

“While Medicaid remains core, the greatest incremental opportunity is in the MA segment, which the company is looking to expand,” said Citi analyst Ralph Giacobbe. Still, he added in an investor note, Centene appears confident about its chances of winning Medicaid bids in three upcoming requests for proposal: Texas, Louisiana and Oregon.

Centene CEO Michael Neidorff, who was the highest earning health plan CEO last year, will have built the company “into a $100 billion government health benefits powerhouse” once the WellCare transaction closes, said SVB Leerink analyst Ana Gupte.

Gupte highlighted Centene’s transition away from pharmacy benefit manager CVS Health Corp. to PBM RxAdvance. The investment in RxAdvance, coupled with similar investments in data analytics firm Interpreta — Centene increased its ownership stake to 80% in Interpreta last year — have helped to make technology Centene’s “core competency accelerating growth and innovation while improving and sustaining margins,” Gupte said.

Troy Medicare Aims to Launch Pharmacist-Centered Model in NC

June 26, 2019

Troy Medicare, a small Medicare Advantage plan start-up, aims to shake up the North Carolina MA marketplace during the coming fall open enrollment by offering a pharmacist-centered delivery model that will pay local, independent pharmacists directly for enhanced care management services to seniors.

“We will go live on Jan. 1, 2020,” in a five-county, “semi-rural” service area around Charlotte, N.C., Troy CEO Flaviu Simihaian tells AIS Health.

By Judy Packer-Tursman

Troy Medicare, a small Medicare Advantage plan start-up, aims to shake up the North Carolina MA marketplace during the coming fall open enrollment by offering a pharmacist-centered delivery model that will pay local, independent pharmacists directly for enhanced care management services to seniors.

“We will go live on Jan. 1, 2020,” in a five-county, “semi-rural” service area around Charlotte, N.C., Troy CEO Flaviu Simihaian tells AIS Health.

Under its model, Troy is working with Community Pharmacy Enhanced Services Network (CPESN). According to Simihaian, the new MA Prescription Drug (MA-PD) plan will contract with CPESN to provide reimbursement of $30 to $50 per member per month (PMPM), relying on participating pharmacists to document their services to determine reimbursement amounts.

Brian Anderson, a principal with Milliman, Inc., tells AIS Health that reimbursement is a key issue.

“It is an innovative model,” he says. “It’s been in the conversation for about 15 years, but the challenge has always been the reimbursement aspect and verifying the [pharmacist] consultations are occurring, and the pharmacist is actually spending time with the patient.”

“It hasn’t worked through the current NCPDP [National Council for Prescription Drug Plans] transaction processes” for Part D plans, Anderson says. “But if they’re just paying an administrative fee PMPM back to those pharmacists, that would be different than having the administrative fee paid through the claims payment system.”

Then there is the question of whether the benefit of pharmacist consultation is offsetting the potentially deeper prescription-drug discounts and higher rebates that large pharmacy chains or mail order pharmacy are able to give, as compared to small independent pharmacies, he says.

Provider-Sponsored I-SNPs Are Trendy but Risky

June 25, 2019

Since the creation of institutionalized Special Needs Plans (I-SNPs) with the Medicare Modernization Act of 2003, nursing homes have viewed I-SNPs as a potential reimbursement vehicle for the work they already do in avoiding acute events, transfers to the emergency room and hospital admissions, industry experts tell AIS Health. But the trend of provider-sponsored I-SNPs has only begun to gain traction in the last few years and is likely to pick up even more now that SNPs have been permanently authorized, sources observe.

By Lauren Flynn Kelly

Since the creation of institutionalized Special Needs Plans (I-SNPs) with the Medicare Modernization Act of 2003, nursing homes have viewed I-SNPs as a potential reimbursement vehicle for the work they already do in avoiding acute events, transfers to the emergency room and hospital admissions, industry experts tell AIS Health. But the trend of provider-sponsored I-SNPs has only begun to gain traction in the last few years and is likely to pick up even more now that SNPs have been permanently authorized, sources observe.

“There are many organizations that are considering or are entering this marketplace and one way or other finding the wherewithal to get the job done, but the challenges they face are greater than we anticipated,” observes Stephen Wood, a co-founder and partner with Clear View Solutions, LLC.

Within the small I-SNP market, five of the top 10 plans are sponsored by nursing home chains or other long-term care/skilled nursing providers. And providers that choose to sponsor I-SNPs can do so in several ways.

Of the companies that have consulted with Clear View on launching an I-SNP, about half have opted to work with so-called “aggregators,” or outside firms that may contribute private equity funding, share in the risk, handle licensing and other front-end pieces needed to launch a plan, or some combination of all three. Others opt to “go it alone,” says Wood.

Considering the upfront investment of starting an MA plan, the ongoing costs of operating one and the unknowns of reaching enrollment targets, potential I-SNP sponsors must look at this as a long-term investment, points out Wood. And the greatest financial challenges tend to fall on the administrative side, where plans are constrained by medical loss ratio requirements, adds actuary Kirk Twiss at Clear View. The biggest challenge, however, is getting enrollment, “and you need the economies of scale with bigger enrollment” to offset those costs, he points out.