Health Plans

Paying Patients to Switch to Lower-Price Providers Could Pay Off

March 15, 2019

Financially rewarding members who visit lower-price providers can drive health care savings, according to a study published in the March edition of Health Affairs. The study evaluated the impact of a Health Care Service Corp. rewards program launched in January 2017 by 29 employers, which paid patients $25 to $500 for receiving care from a designated lower-price provider for certain elective services.

by Jinghong Chen

Financially rewarding members who visit lower-price providers can drive health care savings, according to a study published in the March edition of Health Affairs. The study evaluated the impact of a Health Care Service Corp. rewards program launched in January 2017 by 29 employers, which paid patients $25 to $500 for receiving care from a designated lower-price provider for certain elective services. Researchers found that the implementation of the program was associated with a 2.1% reduction in the average price per service across all eligible services, a 1.3-percentage-point increase in the probability of an employee receiving care from a lower-price provider, and a 0.26-percentage-point relative reduction in the fraction of people in the intervention population who used a reward-eligible service. MRIs, ultrasounds and mammograms saw the greatest decreases in prices.

NOTE: The graphic shows the results of a difference-in-differences analysis that compared prices, use of lower-price providers, and utilization in the first year of the rewards program (2017) versus in the two prior years (2015-16), with trends in the comparison population controlled for.

SOURCE: Health Affairs 38, No. 3 (2019): 440-447. Visit https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2018.05068.

Fallon Health Reports Solid Financial Results with Aim to Adapt and Grow

March 14, 2019

Fallon Health in Massachusetts recently reported solid fourth quarter and full-year 2018 financial results, crediting its strategic investments in government programs and careful management of expenses as helping it continue to adapt and grow in its niche as a community health plan.

Fallon is experiencing growth in its Medicare Advantage (MA) line of business, and in Medicaid has enrolled nearly 100,000 members in its accountable care organizations under a reform initiative launched by MassHealth almost exactly a year ago.

By Judy Packer-Tursman

Fallon Health in Massachusetts recently reported solid fourth quarter and full-year 2018 financial results, crediting its strategic investments in government programs and careful management of expenses as helping it continue to adapt and grow in its niche as a community health plan.

Fallon is experiencing growth in its Medicare Advantage (MA) line of business, and in Medicaid has enrolled nearly 100,000 members in its accountable care organizations under a reform initiative launched by MassHealth almost exactly a year ago.

“Strategically, that’s where we’re putting our focus as a company,” Richard Burke, Fallon’s president and CEO, says of government-sponsored programs, noting “demographic and public policy changes have…allowed us to grow in the government space.”

“It’s clear that there is and will continue to be significant growth in government health lines of business,” especially from baby boomers aging into MA and Medicaid expansion, says Ceci Connolly, president and CEO of the Alliance of Community Health Plans, of which Fallon is a member. “And while every health plan in America knows that, I think that community-based plans that have been mission-driven probably have a jump because it’s part of their portfolio and their commitment to the community.”

In Connolly’s view, community-based plans’ close collaboration with local providers results in “better outcomes, happier consumers and much better value for the health care dollar,” and such plans’ experience “puts them a little further ahead” on risk contracting with providers and drugmakers.

Datapoint: Vermont’s Individual Mandate

March 13, 2019

Vermont lawmakers are struggling with setting financial penalties for its individual mandate law, which resurrects the struck-down provision of the Affordable Care Act that requires residents to have insurance. The ACA’s individual mandate penalty was set at $695, or 2.5% of household income. Vermont, which has 67,171 ACA exchange enrollees, is one of a handful of states that passed an individual mandate last year.

Vermont lawmakers are struggling with setting financial penalties for its individual mandate law, which resurrects the struck-down provision of the Affordable Care Act that requires residents to have insurance. The ACA’s individual mandate penalty was set at $695, or 2.5% of household income. Vermont, which has 67,171 ACA exchange enrollees, is one of a handful of states that passed an individual mandate last year.

Source: AIS’s Directory of Health Plans

Studies Offer Strategies to Encourage Health Care Price Shopping

March 13, 2019

Two newly published studies help shed light on which strategies insurers and employers should consider if they want to encourage consumers to seek out the lowest price providers.

One study, published in the March edition of Health Affairs, evaluates a program that Health Care Service Corp. introduced in 2017, which offers plan enrollees a cash reward ranging from $25 to $500 when they opt for a lower-price provider of certain health care services.

By Leslie Small

Two newly published studies help shed light on which strategies insurers and employers should consider if they want to encourage consumers to seek out the lowest price providers.

One study, published in the March edition of Health Affairs, evaluates a program that Health Care Service Corp. introduced in 2017, which offers plan enrollees a cash reward ranging from $25 to $500 when they opt for a lower-price provider of certain health care services.

In the program’s first year, researchers found a 2.1% reduction in prices paid for services targeted by the rewards program — offering savings that totaled $2.3 million. It’s worth noting, though, that “the impact on prices varied substantially by service, with the largest reduction in prices for imaging services such as MRIs and ultrasounds (though not for CT scans) and little impact on surgical procedures,” the study points out.

Meanwhile, a different Health Affairs study examined what researchers deemed a not-so-effective strategy to get consumers to price shop: steering them toward high-deductible health plans (HDHPs) that give them more “skin in the game.”

“Our results indicate that most Americans in high-deductible health plans have not engaged in the five consumer behaviors we examined,” the study says. Those include saving for future health care services, discussing costs with a provider, comparing prices, comparing quality and trying to negotiate a price.

To change this, the study authors suggest that health plans could develop programs to help HDHP enrollees learn to communicate effectively with providers about costs of services and negotiate prices.

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.

Survey: 16% of Covered Workers Are in Grandfathered Plans

March 8, 2019

The Trump administration recently issued a request for information on the challenges associated with maintaining grandfathered plans under the Affordable Care Act (ACA). Grandfathered plans are those that existed before the enactment of the ACA in 2010 and are allowed to be exempt from many of the law’s benefits requirements as long as they maintain their grandfathered status.

by Jinghong Chen

The Trump administration recently issued a request for information on the challenges associated with maintaining grandfathered plans under the Affordable Care Act (ACA). Grandfathered plans are those that existed before the enactment of the ACA in 2010 and are allowed to be exempt from many of the law’s benefits requirements as long as they maintain their grandfathered status. Though the administration’s request says very few grandfathered plans still exist in the individual insurance market, a 2018 Kaiser Family Foundation survey shows that 16% of workers with group coverage are enrolled in such a plan and 20% of firms offer at least one grandfathered plan.

NOTE: Small firms have 3-199 workers and large firms have 200 or more workers.

SOURCES: Kaiser Family Foundation Employer Health Benefits Survey, 2018; Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2011-2017.