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AHIP Tests Automated Prior Authorization Initiative

January 14, 2020

Health insurer trade group America’s Health Insurance Plans (AHIP) is partnering with six insurers to test systems and technology designed to automate parts of the prior authorization process in a bid to develop best practices.

The initiative, which AHIP calls the Fast Prior Authorization Technology Highway, or Fast PATH, will run for six months, during which AHIP and its partners will collect data to be used for an evaluation of the processes and technology used. The trade group will attempt to determine how much money and time an automated system saves providers and insurers.

Health insurer trade group America’s Health Insurance Plans (AHIP) is partnering with six insurers to test systems and technology designed to automate parts of the prior authorization process in a bid to develop best practices.

The initiative, which AHIP calls the Fast Prior Authorization Technology Highway, or Fast PATH, will run for six months, during which AHIP and its partners will collect data to be used for an evaluation of the processes and technology used. The trade group will attempt to determine how much money and time an automated system saves providers and insurers.

Both providers and insurers are affected by cumbersome manual prior authorization procedures, although they don’t necessarily agree on what will fix the problems. Insurers say prior authorization is necessary and promotes good patient care, while physicians maintain prior authorization leads to worse outcomes in many cases.

In a search for common ground, AHIP joined with other industry stakeholders, including providers, two years ago to produce a consensus statement that laid out core principles for addressing prior authorization issues. Federal lawmakers also have considered requiring electronic prior authorization.

As for AHIP’s pilot, “the effect will be marginal at best as the small scale of this effort means physicians won’t see a material impact,” says Joe Paduda, principal with Health Strategy Associates LLC. “However, it may earn some good will.”

The Fast PATH pilot will address two common but critical prior authorization processes: approval for certain prescription medications and approval for medical and surgery procedures. The initiative will use technology from Surescripts for the prescription component of the project and from Availity, LLC, for the medical and surgical procedures authorization piece.

The program will help to determine what types of automation solutions have the potential for widespread adoption, and how much they might improve practice workflow. Insurers participating in Fast PATH will include: Anthem, Inc., Blue Shield of California, Cambia Health Solutions’ affiliated health plans, Cigna Corp., Florida Blue and WellCare Health Plans, Inc.

2020 Could Be ‘Wild Year’ for Consolidated PBMs

January 13, 2020

Though the two major transactions that upended the PBM landscape — Cigna Corp. buying Express Scripts Holding Co. and CVS Health Corp. acquiring Aetna Inc. — have already taken place, that doesn’t mean the sector won’t see more changes this year, industry experts tell AIS Health.

“The market is evolving,” says Brian Anderson, a principal with Milliman, Inc. The year 2020 will be marked by a presidential election and significant price pressure on manufacturers, along with pharmacies trying to retain their margin, he adds, “so it’s going to be a really wild year.”

By Leslie Small

Though the two major transactions that upended the PBM landscape — Cigna Corp. buying Express Scripts Holding Co. and CVS Health Corp. acquiring Aetna Inc. — have already taken place, that doesn’t mean the sector won’t see more changes this year, industry experts tell AIS Health.

“The market is evolving,” says Brian Anderson, a principal with Milliman, Inc. The year 2020 will be marked by a presidential election and significant price pressure on manufacturers, along with pharmacies trying to retain their margin, he adds, “so it’s going to be a really wild year.”

Indeed, 2019 ended with Prime Therapeutics LLC and Express Scripts unveiling a three-year collaboration in which the latter PBM will negotiate with pharmaceutical manufacturers, on behalf of Prime’s members, for drugs covered on the pharmacy benefit, as well as provide services related to retail network contracting.

By teaming up with Prime, Express Scripts will be leading rebate negotiations and pharmacy network development for 103 million people, Adam Fein, Ph.D., CEO of Pembroke Consulting, Inc.’s Drug Channels Institute, wrote in a blog post. “This combined volume of Express Scripts and Prime will have enormous leverage with manufacturers and pharmacies,” he noted.

To Ashraf Shehata, KPMG national sector leader for health care and life sciences, the Prime/Express Scripts partnership is yet another example of “pure play” PBMs’ move toward consolidation. Given that trend, the opportunity to scale up both organizations’ purchasing power, and “the ability to kind of lock in Blue clients,” Shehata says, “I think it makes a lot of sense” for the two PBMs to team up.

Employers, meanwhile, are likely to press PBMs of all varieties for innovative solutions — not just deep drug-pricing discounts — during the selling season for 2021 contracts, Anderson says.

Therefore, “there’ll probably be a lot of new innovators in the market — people coming up with new products that maybe look and sound different,” he says. “But the question people are going to have to ask is, how different really is it? And is it really a differentiator in the marketplace?”

Health Care Deals May Slow in 2020, but Government Markets Remain Hot

January 9, 2020

The pace of health care mergers and acquisitions likely will cool slightly in 2020, some industry experts tell AIS Health. Still, insurers are likely to seek out companies with assets such as care management or information technology solutions, while provider consolidation will continue in certain markets.

By Jane Anderson

The pace of health care mergers and acquisitions likely will cool slightly in 2020, some industry experts tell AIS Health. Still, insurers are likely to seek out companies with assets such as care management or information technology solutions, while provider consolidation will continue in certain markets.

“We expect that payer M&A will continue into 2020, with a bias toward vertical rather than horizontal deals,” says Michael Abrams, managing partner of Numerof & Associates, Inc. “Payers will use such deals to expand into adjacent market spaces to differentiate their offerings as integrated platforms that can deliver superior value, customer experience and innovation.”

Joe Paduda, a principal with Health Strategy Associates, says he expects less M&A generally in 2020, for several reasons. “There aren’t as many assets to buy after the multiple deals done over the last few years; buyers are waiting to see results of the elections, which will drive their future strategy; and asset prices have edged even higher, making transactions more expensive and leaving less margin for error.”

Dan Mendelson, the founder of consulting firm Avalere Health, says he still sees plenty of potential targets for horizontal mergers, along with more targets for vertical deals.

“Health plans are in a transformative phase right now. There are three major areas of focus: government markets, care management, and the information technology needed to support quality improvement and cost reduction,” says Mendelson.

“In government markets, there are a range of quality assets that the larger plans could still acquire,” he adds. “There are also some non-profits that could engage in collaboration with for-profit organizations to expand their scope and reach.”

Medicare Advantage plans will be “a very strong target for M&A” in 2020, says Ashraf Shehata, KPMG’s national sector leader for health care and life sciences.

Shehata says he also expects insurers to “amass capabilities around their PBMs.” This, he says, could include bolstering their specialty pharmacy capabilities and building out technology.

Red States to Push for Medicaid Waivers in 2020

January 8, 2020

Conservative states are likely to push hard in 2020 for CMS approval of Medicaid waivers that will allow them to implement policies such as work requirements, while voters in some of the 14 states that have not yet expanded Medicaid could tee up referendums that would require expansion, Medicaid observers say.

By Jane Anderson

Conservative states are likely to push hard in 2020 for CMS approval of Medicaid waivers that will allow them to implement policies such as work requirements, while voters in some of the 14 states that have not yet expanded Medicaid could tee up referendums that would require expansion, Medicaid observers say.

“With the clock ticking on the [Trump] administration, they will want to get through as many waivers as possible with conservative principles [such as] work requirements and copayments, and things that discourage folks from staying on the rolls,” Jerry Vitti, founder and CEO of Healthcare Financial, Inc., says of red states.

Meanwhile, Medicaid expansion efforts in state legislatures may slow as the country approaches the 2020 election, notes Patricia Boozang, senior managing director at Manatt Health. Several states — such as Idaho, Utah and Nebraska — are in the process of expanding Medicaid in 2020 following successful ballot initiatives in the previous midterm elections.

States also are holding off on implementation of already-approved Medicaid work requirements as litigation surrounding those requirements works through the court system.

“I do think the litigation around work requirements is something that states and the administration are watching really closely,” Boozang says. “While we may see additional states seek approval, we may not see any implemented.”

Vitti adds: “If the courts say work requirements are fine, you’ll see the red states adopt them.”

Meanwhile, more than a dozen states are looking at conducting Medicaid managed care contract procurement in 2020, Boozang says. These states include: Georgia, Iowa, Indiana, Kentucky, Michigan, Missouri, Mississippi, Pennsylvania, Tennessee, Virginia, Washington, Wisconsin and West Virginia.

As states move through procurement, Boozang says she expects to see more value-based payment systems implemented, with health plans’ help. Plus, states increasingly are turning to Medicaid managed care programs to help them implement policy priorities, such as those surrounding social determinants of health, according to Boozang.

HealthCare.gov Enrollment Plateau Signals Stability for Insurers

January 7, 2020

Now that the open enrollment period has ended for the 38 states that use HealthCare.gov to enroll people in Affordable Care Act (ACA) marketplace plans, the preliminary sign-up numbers offer relatively reassuring news for the insurers that operate in the individual market.

From Nov. 1 to Dec. 17, 8.3 million people chose or were automatically re-enrolled in health plans on the federal exchange, CMS said on Dec. 20. That’s down just slightly compared with 2019, when total HealthCare.gov enrollment was 8.5 million.

By Leslie Small

Now that the open enrollment period has ended for the 38 states that use HealthCare.gov to enroll people in Affordable Care Act (ACA) marketplace plans, the preliminary sign-up numbers offer relatively reassuring news for the insurers that operate in the individual market.

From Nov. 1 to Dec. 17, 8.3 million people chose or were automatically re-enrolled in health plans on the federal exchange, CMS said on Dec. 20. That’s down just slightly compared with 2019, when total HealthCare.gov enrollment was 8.5 million.

Deep Banerjee, a health care sector analyst at Standard & Poor’s, tells AIS Health that the preliminary 2020 enrollment figures from HealthCare.gov didn’t come as a surprise.

One major reason is that the exchanges have become a heavily subsidized market, and for those receiving subsidies, “it’s highly likely they’ll sign up every year,” he says.

“On the other side, this is kind of the positive [effect] of continuous economic growth in the country — if less people are unemployed, which means they are getting their insurance from the group side, [they’re] less likely to sign up on the individual market,” Banerjee adds.

For insurers, the fact that ACA exchange enrollment has plateaued “is not necessarily positive,” he says, given that carriers would like the market to be growing. However, “flat is definitely better than declining,” Banerjee points out.

Cynthia Cox, vice president at the Kaiser Family Foundation and director for its program on the ACA, says “the Trump administration has had a mix of policies — some that were harmful and some that were helpful for the market.” In general, moves that some worried would have a large negative impact, such as the repeal of the individual mandate penalty, do not appear to have led to a huge decline in enrollment, she notes.

“People being priced out who don’t get a subsidy is still a concern, but generally speaking, the market has been pretty stable for the last couple of years, and it looks like it will continue to be going forward for at least another year,” she adds.

Navajo Nation, Molina Partner on Medicaid Managed Care in New Mexico

January 6, 2020

The business arm of the Navajo Nation plans to contract with Molina Healthcare, Inc., to offer Medicaid managed care as part of a partnership between New Mexico, tribal officials and the insurer.

The program would be the first-ever Medicaid managed care program dedicated solely to the health care, cultural needs and geographic needs of native populations living in the Navajo Nation, according to Molina.
The new managed care plan — which Navajo Nation-owned Naat’aanii Development Corporation hopes to launch in 2020 — could cover up to 75,000 Navajos who live in New Mexico.

By Jane Anderson

The business arm of the Navajo Nation plans to contract with Molina Healthcare, Inc., to offer Medicaid managed care as part of a partnership between New Mexico, tribal officials and the insurer.

The program would be the first-ever Medicaid managed care program dedicated solely to the health care, cultural needs and geographic needs of native populations living in the Navajo Nation, according to Molina.

The new managed care plan — which Navajo Nation-owned Naat’aanii Development Corporation hopes to launch in 2020 — could cover up to 75,000 Navajos who live in New Mexico.

“This is very much led by the Navajo Nation,” says Sandeep Wadhwa, M.D., chief health officer and senior vice president of government programs for Solera Health.

The deal appears to be the first between a managed care company and an organization that is owned by a Native entity, Wadhwa, who is not affiliated with Molina, tells AIS Health. “There is a dimension of self-determination by the tribe and by American Indians that hadn’t been realized previously,” he says.

Under Medicaid, state-contracted managed care plans may be an option for American Indians and Alaska Natives, but this is the first time a tribal nation has contracted with a state Medicaid program, Wadhwa adds.

Approximately 100,000 Navajos live in New Mexico, and around three-quarters of them are eligible for Medicaid, according to the New Mexico Human Services Department (HSD). Navajos experience a heavy disease burden, with a mortality rate that’s 31% higher than the overall U.S. rate, HSD figures show.

If this arrangement with Molina and the Navajo Nation helps to improve health outcomes and reduce costs, there may be other tribes and tribal nations that consider similar initiatives, Wadhwa says.