Health Plans

Major Blues Plans May Gain Opportunities From Tentative Antitrust Settlement

October 6, 2020

The Blue Cross and Blue Shield Association (BCBSA) has reportedly reached a tentative settlement in a lengthy legal battle over whether its member plans engage in anticompetitive business practices.

The lawsuit in question was filed in 2012 on behalf of employers and policyholders who took issue with Blues plans’ agreement to divide the country among the association’s 36 members and to restrict members’ ability to offer non-Blues products. A related lawsuit filed by health care providers alleged that the Blues’ anticompetitive practices improperly depressed their reimbursement.

The Blue Cross and Blue Shield Association (BCBSA) has reportedly reached a tentative settlement in a lengthy legal battle over whether its member plans engage in anticompetitive business practices.

The lawsuit in question was filed in 2012 on behalf of employers and policyholders who took issue with Blues plans’ agreement to divide the country among the association’s 36 members and to restrict members’ ability to offer non-Blues products. A related lawsuit filed by health care providers alleged that the Blues’ anticompetitive practices improperly depressed their reimbursement.

On Sept. 24, the Wall Street Journal reported that BCBSA negotiated a tentative agreement in which it would pay $2.7 billion to the employer/policyholder plaintiffs. BCBSA also reportedly agreed to:

Relax rules that currently require a national employer to work through the Blues insurer where its headquarters are located when seeking coverage from a Blues plan;

Allow certain national employers to request a bid from a second Blues insurer of their choice when seeking coverage; and

Abandon the rule that requires member plans to derive at least two-thirds of their national health insurance revenue from Blues brands.

Jay Godla, a partner at Strategy&, PwC’s strategy consulting practice, tells AIS Health that the “bigger Blues are obviously very thrilled about the idea of lifting restrictions on the two-thirds rule, because that allows them to grow.”

But there are bigger question marks surrounding how the settlement would affect the national accounts market, according to Godla, who says he could see three primary ways that would play out. Under one scenario, a smaller Blues plan would team up with a larger one in order to enter the national accounts market. Or there could be “account-level collaboration,” in which a smaller Blues plan partners with a larger organization to pursue the business of select national employers. And “the third thing is free for all, where Anthem is competing with Blue Cross Blue Shield of Michigan for autos in Michigan,” Godla says, referring to Detroit-based large employers such as General Motors or Chrysler Group. That last scenario, he says, is probably the least likely.

But Credit Suisse’s A.J. Rice, in a research note to investors, wrote that Anthem “and other well-capitalized Blue plans may be able to compete more aggressively in the markets of other Blue plans if they choose to.”

Surprise Billing Reform Could Reduce Billions in Premiums, Study Shows

October 5, 2020

A study published Sept. 11 in the American Journal of Managed Care found that a federal law to rein in surprise medical billing could reduce overall health insurance premiums by 1% to 5%.

The study, which was prepared by researchers at the USC-Brookings Schaeffer Initiative for Health Policy, is based on 2017 data compiled by the Health Care Cost Institute, which is drawn from claims submitted to UnitedHealthcare, Humana Inc. and CVS Health Corp.’s Aetna.

By Peter Johnson

A study published Sept. 11 in the American Journal of Managed Care found that a federal law to rein in surprise medical billing could reduce overall health insurance premiums by 1% to 5%.

The study, which was prepared by researchers at the USC-Brookings Schaeffer Initiative for Health Policy, is based on 2017 data compiled by the Health Care Cost Institute, which is drawn from claims submitted to UnitedHealthcare, Humana Inc. and CVS Health Corp.’s Aetna.

The cost reduction finding is based on a model that assumes new legislation would reduce procedures that are currently surprise billed either by 15% altogether, or reduce their costs to 150% of traditional Medicare rates. In the former scenario, legislation would save commercially insured members about $12 billion, and in the latter, those members would save roughly $38 billion.

Loren Adler, a fellow at the USC-Brookings Schaeffer Initiative for Health Policy and an author of the study, says surprise bills have an underappreciated impact on overall health plan spending.

“Fundamentally, surprise billing is obviously awful for the people who receive the surprise bills themselves. But this study shows that we’re talking about a pretty substantial effect on premiums,” he adds.

“To me, what really matters is, how much money would you save per member per year if you could get the average payment [of surprise bills] down to what the average payment is for in-network physicians? [The study’s] number is $212 per member per year,” says Joseph Antos, a resident scholar at the American Enterprise Institute.

Antos points out that providers who surprise bill are acting rationally in an unfair set of economic conditions that is enabled by a failure of government.

That gap in the rules has not gone unnoticed by public officials, but Washington, D.C. insiders say that surprise billing legislation isn’t likely to advance any time soon. Many were hopeful that surprise billing legislation would pass Congress by now, but progress has stalled.

“It feels very unlikely that anything constructive is going to be done in health care legislatively at this point, just given everything else that is going on and given that we’re so close to the election. I think that we’re looking into a window of lame duck or into the next session,” says Avalere founder Dan Mendelson.

A Closer Look at COVID-19 Diagnostic, Antibody Testing Charges

October 2, 2020

The rates that providers and laboratories charge for COVID-19 diagnostic and antibody testing — prices that “have important implications for out-of-network plans, uninsured patients, and other payers with little negotiating power” because of provisions in the CARES Act — far exceeded their Medicare reimbursement rates, according to a recent study published in the Society of General Internal Medicine. By analyzing administrative claims data from the COVID-19 Research Database, the study found that independent labs — which performed almost half of all COVID-19 diagnostic tests — charged $140.41 on average, while the Medicare rate was $51.31. Independent labs performed more than 95% of all antibody tests, with an average charge of $62.30, compared to the Medicare rate of $42.13. Across the country, average diagnostic testing fees ranged by state, from a low of $64.98 in Utah to a high of $505.65 in Washington, D.C. For antibody testing, New Mexico providers and labs charged an average of $195.41, more than four times of the average charge in New York ($45.85).

by Jinghong Chen

The rates that providers and laboratories charge for COVID-19 diagnostic and antibody testing — prices that “have important implications for out-of-network plans, uninsured patients, and other payers with little negotiating power” because of provisions in the CARES Act — far exceeded their Medicare reimbursement rates, according to a recent study published in the Society of General Internal Medicine. By analyzing administrative claims data from the COVID-19 Research Database, the study found that independent labs — which performed almost half of all COVID-19 diagnostic tests — charged $140.41 on average, while the Medicare rate was $51.31. Independent labs performed more than 95% of all antibody tests, with an average charge of $62.30, compared to the Medicare rate of $42.13. Across the country, average diagnostic testing fees ranged by state, from a low of $64.98 in Utah to a high of $505.65 in Washington, D.C. For antibody testing, New Mexico providers and labs charged an average of $195.41, more than four times of the average charge in New York ($45.85).

NOTES: States that had 10 or fewer claims were classified as “no data.” This study was funded by Arnold Ventures.

SOURCE: “Charges of COVID-19 Diagnostic Testing and Antibody Testing Across Facility Types and States,” Society of General Internal Medicine 2020, DOI: 10.1007/s11606-020-06198-y. Visit https://bit.ly/32WJtEH.

Datapoint: Molina to Acquire Affinity Health Plan

October 1, 2020

Molina Healthcare last week said it has entered an agreement to acquire all assets of Affinity Health Plan, a Medicaid managed care plan in New York that currently serves 285,035 members. This is the latest in a string of acquisitions for Molina, which has also made deals with Kentucky’s Passport Health Plan, Illinois’ NextLevel Health and the multistate Magellan Complete Care. With the Affinity deal, Molina is also quickly ramping up its New York Medicaid market presence — the insurer completed its acquisition of YourCare Health Plan in July 2020. Molina is currently the fifth-largest managed Medicaid insurer in the U.S., with 3,046,020 members.

Molina Healthcare this week said it has entered an agreement to acquire all assets of Affinity Health Plan, a Medicaid managed care plan in New York that currently serves 285,035 members. This is the latest in a string of acquisitions for Molina, which has also made deals with Kentucky’s Passport Health Plan, Illinois’ NextLevel Health and the multistate Magellan Complete Care. With the Affinity deal, Molina is also quickly ramping up its New York Medicaid market presence — the insurer completed its acquisition of YourCare Health Plan in July 2020. Molina is currently the fifth-largest managed Medicaid insurer in the U.S., with 3,046,020 members.

Source: AIS’s Directory of Health Plans

If Preexisting Condition Protections Vanish, Health Insurers Probably Won’t Cheer

October 1, 2020

Since at least the 2017 saga when Republicans tried to repeal and replace the Affordable Care Act (ACA), one of the law’s most visible — and politically charged — components has become its protections for people with preexisting conditions. Now, with the makeup of the Supreme Court slated to shift, some experts believe those same provisions are the most at risk from being struck down alongside the law’s now-defunct individual mandate.

But that begs the question: Would health insurers actually want to go back to a pre-ACA world?

By Leslie Small

Since at least the 2017 saga when Republicans tried to repeal and replace the Affordable Care Act (ACA), one of the law’s most visible — and politically charged — components has become its protections for people with preexisting conditions. Now, with the makeup of the Supreme Court slated to shift, some experts believe those same provisions are the most at risk from being struck down alongside the law’s now-defunct individual mandate.

But that begs the question: Would health insurers actually want to go back to a pre-ACA world?

“No, they so do not want that to happen,” says Chris Sloan, an associate principal at Avalere Health. Before the ACA was enacted, “it wasn’t that they [insurers] liked medically underwriting…it’s just that anybody who didn’t would get all the bad risk and their health plan would collapse,” Sloan explains.

Katie Keith, a health care attorney and faculty member at Georgetown University’s Center on Health Insurance Reforms, says that companies that are already underwriting short-term, limited-duration plans “could jump right in” and underwrite more plans if parts of the ACA are struck down. But other insurers might not even have the infrastructure to do so anymore, having given up their underwriting divisions after the ACA was enacted, she observes.

About 54 million people currently have a preexisting condition that could have resulted in them being denied coverage in the pre-ACA individual market, according to a new analysis from the Kaiser Family Foundation. The ACA required insurers in the non-group, small-group and large-group markets to issue coverage regardless of health status and prohibited non-group and small-group plans from varying premiums based on health status or gender, among other protections for preexisting conditions.

In Sloan’s view, insurers would prefer to keep operating in a post-underwriting world mainly because “they like that everybody plays by the same rules across the markets” so that they can compete more fairly.

Sloan also points out that “disruption is challenging — I mean, just think about how long it took to get the ACA and the individual markets to a sort of stable place.” Therefore, insurers “above all else value stability in markets, and in particular, stability when it comes to rules and regulations,” he adds.

Datapoint: Almost Two-Thirds of Commercial Health Insurance Market Enrolled in Self-Funded Plans

September 30, 2020

Of the 193.7 million people currently enrolled in a commercial health insurance product, 36.4% are covered by a risk-based small group, large group or individual plan. The remaining 63.6% are enrolled in an administrative services only (ASO) contract.

Of the 193.7 million people currently enrolled in a commercial health insurance product, 36.4% are covered by a risk-based small group, large group or individual plan. The remaining 63.6% are enrolled in an administrative services only (ASO) contract.

Source: AIS’s Directory of Health Plans