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Anthem, Centene Report Improved Medicaid Results

November 4, 2019

During their recent third-quarter earnings calls, Centene Corp. and Anthem, Inc. sought to assure investors and analysts that they have a handle on the Medicaid payment rate issue that has dogged some insurers this year.

On Centene’s Oct. 22 call, CEO Michael Neidorff touted the firm’s new Medicaid contracts in Iowa, New Mexico and Pennsylvania, saying “our new business more than offset the enrollment and revenue headwinds caused by ongoing eligibility redeterminations in certain states.”

By Leslie Small

During their recent third-quarter earnings calls, Centene Corp. and Anthem, Inc. sought to assure investors and analysts that they have a handle on the Medicaid payment rate issue that has dogged some insurers this year.

On Centene’s Oct. 22 call, CEO Michael Neidorff touted the firm’s new Medicaid contracts in Iowa, New Mexico and Pennsylvania, saying “our new business more than offset the enrollment and revenue headwinds caused by ongoing eligibility redeterminations in certain states.”

The redetermination process can result in a Medicaid population with a higher risk profile, Neidorff explained, but he noted that the company views it as a “temporary issue as we continue to work with our state partners to appropriately adjust our rates.”

During Anthem’s Oct. 23 call, CEO Gail Boudreaux noted that “Medicaid results improved this quarter, but at a slower rate than previously anticipated.” Elevated medical cost trend in the insurer’s Medicaid business was the primary culprit behind Anthem’s heightened medical loss ratio (MLR) in the second quarter, the company reported this summer.

To Oppenheimer analysts, Centene’s results “overcame a slight impact from the Medicaid re-determination process, which appears to be merely a time-lag as the states are adjusting rates accordingly,” Michael Wiederhorn and Matt Nirenberg advised investors in a research note.

For Anthem, Medicaid is “still a drag” on the company’s MLR results, Jefferies analyst David Windley concluded. The insurer “continues to negotiate rates with states that match the changing risk pool when redeterminations take healthy members off the rolls,” he added. “Like [Centene’s] description, the shortfall is a continuation of the rate mismatch issue that is well-known by the market, not higher utilization.”

Overall in the quarter, Centene reported adjusted earnings per share of 96 cents. Its MLR was 88.2%. Anthem’s adjusted net income was $4.87 per share, and its second-quarter MLR was 87.2%.

UnitedHealth, Anthem Steer Patients to Less Costly Sites of Care

October 31, 2019

Insurers, led by UnitedHealth Group and Anthem, Inc., are clamping down on sites of care for services such as outpatient surgery, imaging, infusions and colonoscopies in an effort to cut costs by utilizing cheaper free-standing facilities instead of hospital-based outpatient departments.

UnitedHealth CEO Dirk McMahon said during a recent earnings conference call that United sees “considerable excess spending” on care delivered at “sub-optimal high cost settings.” On United’s commercial side, McMahon said, the insurer sees an opportunity to shift more than 20% of medical spend to what it terms “more effective sites.”

By Jane Anderson

Insurers, led by UnitedHealth Group and Anthem, Inc., are clamping down on sites of care for services such as outpatient surgery, imaging, infusions and colonoscopies in an effort to cut costs by utilizing cheaper free-standing facilities instead of hospital-based outpatient departments.

UnitedHealth CEO Dirk McMahon said during a recent earnings conference call that United sees “considerable excess spending” on care delivered at “sub-optimal high cost settings.” On United’s commercial side, McMahon said, the insurer sees an opportunity to shift more than 20% of medical spend to what it terms “more effective sites.”

Anthem, meanwhile, continues to enforce a controversial policy first implemented in 2017 to deny coverage for some emergency room visits it considers “non-emergency,” and also has restricted coverage on hospital-based outpatient imaging.

UnitedHealth and Anthem are far from alone, says Timothy Epple, a principal at Avalere Health. “I think it’s safe to say just about every insurer we’ve spoken to or work with is addressing site of care optimization and steerage in some way,” he tells AIS Health.

Ashraf Shehata, a principal in KPMG’s health care life sciences advisory practice, says these types of limits — with plans steering care to less-expensive settings — could still gain significant traction in certain markets. “I think in major metro markets we could see it shift a lot of care,” Shehata says. “We could see the plan making it very attractive to compete on unit costs.”

As this trend takes hold, hospitals might consider rolling up competition by buying ambulatory surgery centers and associated physician practices, Shehata says.

CMS Updates Medicare Plan Finder Amid Advocates’ Concerns

October 30, 2019

Having already rolled out a major redesign of the Medicare Plan Finder in August, CMS recently revealed additional updates it made before the start of Medicare open enrollment on Oct. 15 — including a feature that advocates have said is critical to helping people find the best Part D plan.

In an Oct. 11 email, a CMS spokesperson said the agency “added a feature that allows Medicare Plan Finder users to sort plans by the total cost of estimated annual drug costs plus premiums.”

By Leslie Small

Having already rolled out a major redesign of the Medicare Plan Finder in August, CMS recently revealed additional updates it made before the start of Medicare open enrollment on Oct. 15 — including a feature that advocates have said is critical to helping people find the best Part D plan.

In an Oct. 11 email, a CMS spokesperson said the agency “added a feature that allows Medicare Plan Finder users to sort plans by the total cost of estimated annual drug costs plus premiums.”

So did CMS’s plan finder update ease Medicare beneficiary advocacy organizations’ concerns about the redesigned tool? Partially, says Ann Kayrish, the National Council on Aging’s senior program manager for Medicare. She says while it’s good that the sort function is back, the total-cost feature is not available on the plan-comparison page — which makes comparing plans more complicated than it was before.

“In general, the opening week of open enrollment has been rocky as some of the basic information like extra help subsidy levels and copay have been inaccurate, [and] pharmacy status and cost information inconsistent,” she adds. “To increase confidence in plan selections, counselors are spending time contacting the plan or Medicare to confirm coverage information.”

In its Oct. 11 email, CMS noted that it also implemented several other changes to the Medicare Plan Finder prior to open enrollment, including:

✦ The ability to display drug tier costs;
✦ A footnote for excluded drugs;
✦ An option to add mail order on the pharmacy selection page;
✦ A note about over-the-counter drugs on the drug lookup page; and
✦ An option to compare a third retail pharmacy when mail order isn’t selected.

States Experiment With Health Care Rate Setting

October 29, 2019

As Congress tries to tackle the issue of surprise medical bills and as Medicare for All proposals remain a hot topic during the Democratic presidential debates, a common concept unites the two issues: limiting how much health care providers get paid. But in addition to what’s being discussed at the federal level, providers are increasingly finding themselves fending off rate-setting efforts taken up by states.

“Hospital consolidation pushed prices up, and for all the attention on drug prices, hospital prices are a much bigger driver of health care cost growth,” says Larry Levitt, executive vice president for health policy at the Kaiser Family Foundation. “The national debate over Medicare for All or a public option has created a fertile political environment for states to go after hospital prices in their own ways.”

By Leslie Small

As Congress tries to tackle the issue of surprise medical bills and as Medicare for All proposals remain a hot topic during the Democratic presidential debates, a common concept unites the two issues: limiting how much health care providers get paid. But in addition to what’s being discussed at the federal level, providers are increasingly finding themselves fending off rate-setting efforts taken up by states.

“Hospital consolidation pushed prices up, and for all the attention on drug prices, hospital prices are a much bigger driver of health care cost growth,” says Larry Levitt, executive vice president for health policy at the Kaiser Family Foundation. “The national debate over Medicare for All or a public option has created a fertile political environment for states to go after hospital prices in their own ways.”

A recent example comes from North Carolina, where State Treasurer Dale Folwell (R) led an effort to move the state employee health plan to a reference-based pricing model that ties payments for health care services to Medicare rates. But less than a year after debuting the project, Folwell revealed that most hospitals in the state refused to join his newly created network.

In Connecticut, Democratic Gov. Ned Lamont’s budget proposed to establish a maximum price — set at a percentage of Medicare — that the state employee health plan will pay for health care services, according to the National Academy for State Health Policy. Both Connecticut’s and North Carolina’s efforts come in the wake of Montana’s successful implementation of a reference-pricing program for its state employee health plan, NASHP noted in an issue brief.

Rate setting is also a feature of “public option” plans for individual insurance markets in states such as Washington, which implemented such a program, and Colorado, which is planning to.

But according to Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy, “all of these state proposals to date are sort of tiptoeing into rate setting, restraining from pushing too hard on the status quo, still allowing quite high hospital payment rates relative to Medicare rates or the cost of providing that care.”

Walgreens Joins Centene in Pact With Cloud-Based PBM RxAdvance

October 28, 2019

A recently announced partnership between Centene Corp., Walgreen Co. and the technology-focused PBM RxAdvance promises “an innovative model for pharmacy management that aims to increase transparency, enhance customer experience and ultimately result in better health outcomes at lower costs.”

While retail pharmacy-PBM-insurer combinations are “going to be par for the course” now, what makes this move unique is the fact that Centene is taking that model beyond the commercial space and into Medicaid, says Ashraf Shehata, a principal in KPMG’s health care life sciences advisory practice and the firm’s Global Healthcare Center of Excellence.

By Leslie Small

A recently announced partnership between Centene Corp., Walgreen Co. and the technology-focused PBM RxAdvance promises “an innovative model for pharmacy management that aims to increase transparency, enhance customer experience and ultimately result in better health outcomes at lower costs.”

While retail pharmacy-PBM-insurer combinations are “going to be par for the course” now, what makes this move unique is the fact that Centene is taking that model beyond the commercial space and into Medicaid, says Ashraf Shehata, a principal in KPMG’s health care life sciences advisory practice and the firm’s Global Healthcare Center of Excellence.

In Shehata’s view, the cloud-based PBM platform that all three organizations will use is key to the alliance, since it eventually will allow advanced point-of-care capabilities for pharmacists.

“The idea would be to use that platform to evolve it even further. This is an area where we’re going to start to see more and more technological enhancements,” he says, which is key to “getting to a patient-centered, member-centered design.”

The new partnership builds on Centene’s initial investment in RxAdvance back in 2018. The insurer has now increased its stake in RxAdvance, and Walgreens has “made a small investment” in the firm.

Centene Chairman and CEO Michael Neidorff said during the insurer’s third-quarter earnings call on Oct. 22 that his company chose to deepen its existing partnership with Walgreens because its business niche aligns well with Centene’s.

“Walgreens has done a particularly good job in urban areas and is recognized for it in the inner cities, where we have a large population,” he said.

Asked which payers might be interested in such a model, Shehata points to Blue Cross Blue Shield plans that don’t contract with the Blues-owned PBM Prime Therapeutics, LLC. The products emerging from the partnership also could be of interest to provider-owned health plans, he notes.

Executive Order Encourages Rulemaking Around Medicare Medical Savings Accounts

October 24, 2019

In an executive order, President Trump laid out several directives for the HHS secretary aimed at protecting Medicare for seniors while strengthening the Medicare Advantage program and providing more plan choices. The Oct. 3 order directed the agency to promote choice through actions that “encourage innovative MA benefit structures and plan designs, including through changes in regulations and guidance that reduce barriers to obtaining Medicare Medical Savings Accounts and that promote innovations in supplemental benefits and telehealth services.”

By Lauren Flynn Kelly

In an executive order, President Trump laid out several directives for the HHS secretary aimed at protecting Medicare for seniors while strengthening the Medicare Advantage program and providing more plan choices. The Oct. 3 order directed the agency to promote choice through actions that “encourage innovative MA benefit structures and plan designs, including through changes in regulations and guidance that reduce barriers to obtaining Medicare Medical Savings Accounts and that promote innovations in supplemental benefits and telehealth services.”

Out of the 22.4 million enrollees currently in an MA plan, about 6,800 are enrolled in a Medicare MSA, which is an MA plan bundled with a tax-free savings account. The number of insurance companies offering them currently stands at four.

Although MSAs are technically MA products, they work more like Original Medicare in that they have no network and must be accepted by all Medicare-participating providers, which are paid the lesser of billed charges or 100% of the Medicare allowable rate.

Regarding the limited availability of such plans, MSA provider Lasso Healthcare Insurance Co.’s President and Founder Jim Handlan explains that an MSA may not be an ideal addition to an established carrier’s portfolio for several reasons. One is that the provider network is often an insurer’s primary asset, whereas an MSA has no network. Second, it may be difficult for insurers with multiple Medicare products to sell something that is so different from an HMO or a PPO, he suggests. But Handlan says that’s a “surmountable problem,” while the bigger challenge lies with reimbursement and risk.

MSA enrollees tend to be on the healthier side and have lower-than-average risk scores, generating less risk-adjusted revenue than what an HMO or PPO typically receives. “By definition you’re going to get better selective risk with an MSA, but that doesn’t mean you’re not going to have catastrophic burden,” Handlan adds.