Abstract

As Payer M&A Slows Down, What’s Next?

September 17, 2020

The climate for payer mergers and acquisitions (M&A) has cooled substantially at a national level ever since the collapse of the proposed deals between Anthem, Inc. and Cigna Corp. and between Aetna Inc. and Humana Inc. However, consolidation in the provider sector has increased since the start of the COVID-19 pandemic as such firms grapple with the rapid collapse of fee-for-service revenue.

The breakdown of Anthem’s bid to acquire Cigna resulted in a public spat and dueling lawsuits over Cigna’s attempt to exit their agreement before exhausting the firms’ option to appeal a federal ruling against the transaction. On Aug. 31, the Delaware Court of Chancery ruled that neither firm had to pay damages to the other over the failed deal.

By Peter Johnson

The climate for payer mergers and acquisitions (M&A) has cooled substantially at a national level ever since the collapse of the proposed deals between Anthem, Inc. and Cigna Corp. and between Aetna Inc. and Humana Inc. However, consolidation in the provider sector has increased since the start of the COVID-19 pandemic as such firms grapple with the rapid collapse of fee-for-service revenue.

The breakdown of Anthem’s bid to acquire Cigna resulted in a public spat and dueling lawsuits over Cigna’s attempt to exit their agreement before exhausting the firms’ option to appeal a federal ruling against the transaction. On Aug. 31, the Delaware Court of Chancery ruled that neither firm had to pay damages to the other over the failed deal.

This failed deal was a catalyst for the slowing pace of health insurance consolidation at the national scale, according to antitrust lawyer and former Federal Trade Commission official David Balto.

Ashraf Shehata, KPMG national sector leader for health care and life sciences, says that Cigna’s acquisition of Express Scripts, a transaction that the firm pursued partly because of the failed Anthem merger, set a precedent of its own.

“I would say what that has spawned instead of the health plan integration, it’s spawned…the PBM integration. Rather than health plan to health plan, it was health plan plus PBM. And we saw that across the board with all the commercial entities,” he says.

Shehata says he sees three likely types of payer transactions and reorganizations going forward. The first is the PBM-payer integration. Second, Shehata says that horizontal coordination between regional payers, if not outright mergers, is likely to accelerate. Finally, he’s tracking the emerging model of “health plan plus retail plus PBM.”

Michael Abrams, co-founder and managing partner of consultancy Numerof & Associates, says that large regional hospital systems with healthy balance sheets are likely to speed up their vertical acquisition of independent hospitals or horizontal consolidation with local peers.

Abrams also points out that this wave of consolidation will compound or accelerate the rising cost of health care. He adds this continual rise in prices will eventually drain the generous margins that payers have enjoyed over the course of the pandemic.

Prime Therapeutics Introduces Real Time Benefit Tool

September 16, 2020

With the deadline approaching for Medicare Part D plans to implement a Real Time Benefit Tool (RTBT) — which informs prescribers when lower-cost alternative therapies are available under a beneficiary’s drug benefit — Prime Therapeutics, LLC said on Sept. 2 that it is rolling out a tool that will meet the new requirements.

In addition to showing a drug’s price, the Real Time Benefit Check tool displays lower-cost and therapeutically equivalent alternatives to any given drug, breaks down costs based on a member’s health plan formulary, and alerts a prescriber if a drug requires prior authorization.

By Leslie Small

With the deadline approaching for Medicare Part D plans to implement a Real Time Benefit Tool (RTBT) — which informs prescribers when lower-cost alternative therapies are available under a beneficiary’s drug benefit — Prime Therapeutics, LLC said on Sept. 2 that it is rolling out a tool that will meet the new requirements.

In addition to showing a drug’s price, the Real Time Benefit Check tool displays lower-cost and therapeutically equivalent alternatives to any given drug, breaks down costs based on a member’s health plan formulary, and alerts a prescriber if a drug requires prior authorization.

To develop its new tool, Prime conducted a 14-month pilot with multiple vendors, including DrFirst, which created the myBenefitCheck tool that the PBM decided to release first.

After processing 700,000 transactions among 25,000 prescribers, Prime calculated an average annual savings of $692 for each prescription that was changed as a result of using the tool. One Blues plan involved in the pilot “realized a total estimated savings due to alternate drug choices of $348,000 from April 2019 to March 2020,” stated a news release from the PBM.

Prime’s new Real Time Benefit Check tool will fulfill its obligations under the Medicare Advantage and Part D Drug Pricing Final Rule, which was issued in May 2019 and requires each Part D health plan to adopt one or more RTBTs that can integrate with at least one prescriber’s ePrescribing system or electronic health record system starting Jan. 1, 2021. In addition to Prime’s Part D members, the Real Time Benefit Check tool will also be available to the PBM’s commercial members.

Matt Kazan, a principal at Avalere Health, says that initially the new RTBT requirement was slated to go into effect in 2020, but CMS pushed back the deadline one year in response to some industry stakeholders’ concerns over readiness.

“Generally speaking, larger organizations had a system in place…and CMS is allowing them to utilize that,” says Kazan. “I think more of the concern was from maybe smaller, midsized organizations that didn’t have their own system ready to go.”

However, “time has lapsed since that final rule, so I’ve heard less about major concerns about the upcoming deadline,” he adds.

CMS Might Punt on Approving Georgia’s Revised Waiver Request

September 15, 2020

Georgia recently reaffirmed its proposal to make dramatic changes in its individual market, saying it plans to abandon the Affordable Care Act (ACA) marketplace in favor of a new state program despite the widespread disruptions in health care and health insurance brought by the coronavirus pandemic.

In its revised Section 1332 waiver request to CMS, Georgia said it wanted to push back the start date for part of its plan, meaning the proposal’s two parts wouldn’t take effect until 2022.

By Jane Anderson

Georgia recently reaffirmed its proposal to make dramatic changes in its individual market, saying it plans to abandon the Affordable Care Act (ACA) marketplace in favor of a new state program despite the widespread disruptions in health care and health insurance brought by the coronavirus pandemic.

In its revised Section 1332 waiver request to CMS, Georgia said it wanted to push back the start date for part of its plan, meaning the proposal’s two parts wouldn’t take effect until 2022.

The first part of the proposal, a reinsurance program, would help insurers pay high-cost claims with the goal of lowering premiums. According to Georgia’s calculations, the reinsurance program would reduce premiums for the individual market statewide by 10.2% and as a result would increase enrollment by 0.4% in 2022.

More controversially, the “Georgia Access Model” would make more drastic changes to the individual market, including directing consumers to buy coverage through private broker or insurer websites, rather than via HealthCare.gov.

Tara Straw, senior policy analyst at the left-leaning Center on Budget and Policy Priorities, warned in a Sept. 1 report that “evidence from past, far simpler transitions between federal and state marketplaces suggests that tens of thousands of Georgians might lose coverage simply because of the disruption from the state’s transition away from HealthCare.gov.”

The proposal also would “give insurers and brokers new opportunities to steer healthier consumers toward substandard plans that expose them to catastrophic costs if they get sick,” Straw wrote. “The resulting adverse selection could make comprehensive coverage more expensive for those who need it, reducing their enrollment as well.”

However, Joseph Antos, the Wilson H. Taylor Scholar in Health Care and Retirement Policy at the right-leaning American Enterprise Institute, says that it’s not clear whether CMS will move to approve Georgia’s revised proposal, or will wait to consider it until after the election. He thinks a long wait is more likely.

“It raises a political question in my mind: ‘Do you have CMS approve this thing?’ And then get into another court battle with the headline being, ‘Trump administration approves taking away good coverage for low-income people in Georgia,’” Antos says. “This doesn’t have the feel of a sure approval.”

Trump’s International Drug Pricing Order Is Still Missing; Rebate Order Draws Fire

September 14, 2020

A promised executive order that would tie drug prices to their costs in other countries has yet to emerge, although President Donald Trump has promoted the order as part of his re-election campaign. Meanwhile, payers and PBMs are continuing to push back against three executive orders the Trump administration issued in July with the intention of lowering drug prices, one of which would overhaul the Medicare Part D prescription drug rebate system.

“I think the purpose of these executive orders is to give the president some talking points going into the debates,” says Avalere Health founder Dan Mendelson. He adds that, regardless of their purpose, the orders will not make a difference in the real world any time soon.

By Peter Johnson

A promised executive order that would tie drug prices to their costs in other countries has yet to emerge, although President Donald Trump has promoted the order as part of his re-election campaign. Meanwhile, payers and PBMs are continuing to push back against three executive orders the Trump administration issued in July with the intention of lowering drug prices, one of which would overhaul the Medicare Part D prescription drug rebate system.

“I think the purpose of these executive orders is to give the president some talking points going into the debates,” says Avalere Health founder Dan Mendelson. He adds that, regardless of their purpose, the orders will not make a difference in the real world any time soon.

Administration officials indicated during the rollout of the executive orders on July 24 that the international pricing order would be released within 30 days of the debut of the other three drug pricing orders. Yet the deadline passed and the administration at press time had not released the promised order.

Meanwhile, the executive orders that actually have been released are being criticized from stakeholders across health care. The order that would remove safe harbor protections from the Anti-Kickback Statute for prescription drug rebates in Medicare Part D has been panned even by conservatives.

Alex Brill, a resident fellow at the American Enterprise Institute (AEI), penned a white paper sponsored by PBM trade group Pharmaceutical Care Management Association (PCMA) that concluded the executive order would “restrict an important tool for providing savings to the federal government and Medicare Part D beneficiaries. Moreover, net drug costs and drug company revenues would rise significantly if the Medicare Part D safe harbor for rebates is eliminated.”

Mendelson says that the pharmaceutical industry is beginning to realize that it will have to change its business model one way or another.

“The pharmaceutical industry is facing a real pivot point where there are going to have to be more innovative ways to price for these products,” Mendelson observes. “…it’s really important that the industry start to figure out ways to engage positively with payers. And the government is the biggest payer.”

Amazon Moves Further Into Health Care Data, Sharp Deal Shows

September 10, 2020

Health care industry insiders say that Amazon.com Inc.’s Aug. 27 deal to provide Halo fitness trackers to Sharp HealthCare indicates the retail and tech giant will make big bets on clinical and actuarial data analytics.

Sharp Chief Information and Innovation Officer Michael Reagin says that Amazon will provide the San Diego-based integrated plan and provider with about 500 of the wearable fitness trackers.

By Peter Johnson

Health care industry insiders say that Amazon.com Inc.’s Aug. 27 deal to provide Halo fitness trackers to Sharp HealthCare indicates the retail and tech giant will make big bets on clinical and actuarial data analytics.

Sharp Chief Information and Innovation Officer Michael Reagin says that Amazon will provide the San Diego-based integrated plan and provider with about 500 of the wearable fitness trackers.

Sharp will use the devices in two pilot programs, Reagin says. The company will give “about 100” Halos to clinicians, who will wear them in order to track staff performance and prevent burnout. Reagin says the Halo’s much-discussed voice monitoring technology is an essential element of the clinician-focused effort.

The rest of the devices will go to Sharp Health Plan members for remote monitoring purposes.

Michael Abrams, co-founder and managing partner of health care consultancy Numerof & Associates, says that member engagement will be essential to the pilot program’s success. He says that remote monitoring can be stifled if patients don’t fully buy in.

Since the Halo will continually monitor members without any action in their part, Abrams is optimistic that the program will enjoy better adherence than other remote monitoring efforts.

“If plans can get member adoption and perseverance, this could be a great tool for seeing high-level, aggregated community trends and identifying specific interventions,” says Rajshri Ravi, the head of product and technology at ConsejoSano. “Population health management is all about data: the more, the better. It depends on how they use the data. Propensity modeling could predict member behavior and offer insights to increase retention.”

Friso van Reesema, a senior account executive for Eliza, Elli and Essette Solutions, says that Amazon is uniquely well-positioned to offer health plans technology and services that will process that data.

“In the next three years, we’re going to see some really exciting artificial intelligence and improvement of these platforms that are leveraging these devices to power the platform and be able to roll out exciting algorithms, whether they’re retrospective, prospective, prescriptive,” van Reesema says.

He adds that the deal is likely an attempt by the tech giant to start training its AIs on population health models using data gathered from the Halo pilot.

Insurers Seek Ways to Reduce ER Visits Post-Pandemic

September 9, 2020

Emergency room visits have plummeted since the onset of the COVID-19 pandemic, leading some health plans to consider how to capitalize on this trend to redirect non-emergent care away from the ER permanently, insiders say. Increased use of telemedicine and smart digital tools to provide real-time site-of-care options are on the table.

However, some analysts warn that fear of contracting the virus from a health care facility could lead some people to forgo necessary care, which ultimately could increase costs and lead to poorer health outcomes.

By Jane Anderson

Emergency room visits have plummeted since the onset of the COVID-19 pandemic, leading some health plans to consider how to capitalize on this trend to redirect non-emergent care away from the ER permanently, insiders say. Increased use of telemedicine and smart digital tools to provide real-time site-of-care options are on the table.

However, some analysts warn that fear of contracting the virus from a health care facility could lead some people to forgo necessary care, which ultimately could increase costs and lead to poorer health outcomes.

“It’s important to ensure that your utilization is appropriate, but scaring people away from the ER is not the right way to do it,” says Dan Mendelson, founder of consulting firm Avalere Health.

A JAMA Internal Medicine study published in August looked at 24 emergency departments in five states and found decreases in ER visits between January and April ranging from 41.5% in Colorado to 63.5% in New York.

David Schriger, M.D., a professor of emergency medicine at UCLA who wrote a commentary in JAMA to accompany the study, says that the COVID-19 pandemic overrode the incentives that drove patients to the ER, and as a result, many avoided ER treatment. In addition, health systems are realizing that they’re better off having patients use telehealth when possible, Schriger says.

Insurers need to have tools in place to address the demand for emergency services before the member actually enters the ER, Mendelson says. “Use of telemedicine for primary care could certainly address some aspects of this, be more efficient, and be better for both the patient and health system.”

Ashraf Shehata, KPMG national sector leader for health care and life sciences, says insurers are brainstorming how to use the pandemic-driven reduction in ER visits on a long-term basis. Plans can use network design to incentivize members to use telemedicine and non-ER-based urgent care services via reduced copays, he says. Insurers also can implement smart digital technology for their websites, apps and call centers, according to Shehata.

Finally, “let’s reduce the friction of patient access,” he says. “Part of the ED visit volume is based on frustration of not being able to access the patient care systems when they want it.”