Drug-Pricing Transparency, Vertical PBM Deals Are Top of Mind for Employers in 2019

January 16, 2019

As they look to win over employer clients this year, PBMs should be prepared to face stiff competition and embrace emerging trends such as value-based formularies and rebate-free models, benefits consultants tell AIS Health.

“I’ve heard more interest about RFPs and going out, looking for or market-checking vendors than I have in a while — particularly on the PBM side,” says Suzanne Taranto, a principal and consulting actuary for Milliman, Inc.

Companies are also considering how the vertical integration in the PBM space is “reshaping the landscape,” says Renya Spak, who leads Mercer’s Center for Health Innovation.

By Leslie Small

As they look to win over employer clients this year, PBMs should be prepared to face stiff competition and embrace emerging trends such as value-based formularies and rebate-free models, benefits consultants tell AIS Health.

“I’ve heard more interest about RFPs and going out, looking for or market-checking vendors than I have in a while — particularly on the PBM side,” says Suzanne Taranto, a principal and consulting actuary for Milliman, Inc.

Companies are also considering how the vertical integration in the PBM space is “reshaping the landscape,” says Renya Spak, who leads Mercer’s Center for Health Innovation.

“The main players in the pharmacy and medical space are all going to start operating a little bit differently,” Spak says. “We thought we knew how they operated and their business model, but now that they’re vertically integrated, I think we need to apply a whole new lens to understanding how they will operate and what will drive their business forward in the future.”

That said, many of the same themes that employers are focused on will apply, including greater transparency around drug pricing and rebates, and even rebate-free models, she says. Presumably in response to that demand, CVS in early December unveiled a Guaranteed Net Cost PBM model, under which it will pass 100% of rebates to plan sponsors.

Along similar lines, Spak says she’s seeing renewed interest in formularies that are based on the value that certain drugs deliver versus how rebates flow.

Another trend that Taranto is seeing involves “more care management programs, more interest in the specialty space and looking at alternative ways to procure those drugs,” she says.

Specialty drug spending is always a high-attention area, Taranto explains, but now there more tools and different options available — not only from the “usual suspects,” PBMs — but also from other vendors that are offering to help manage these pricey medications.

For employers that are large enough, that may mean they consider a different contract, she says. But “if you’re smaller, you may be looking at a number of specialty pharmacy providers outside of the standard PBM, on a carve-out basis, who promise better pricing, better deals.”

Datapoint: Centene Corp. to Purchase QualChoice

January 15, 2019

Centene Corp. this month entered an agreement to buy QCA Health Plan, Inc., an Arkansas-based health insurer with 88,855 members, as of the latest update to AIS’s Directory of Health Plans. Most of QualChoice’s members are enrolled in individual and group commercial products, but the insurer also operates a small Medicare Advantage plan with about 1,000 members. Financial details of the transaction have not been disclosed.

Centene Corp. this month entered an agreement to buy QCA Health Plan, Inc., an Arkansas-based health insurer with 88,855 members, as of the latest update to AIS’s Directory of Health Plans. Most of QualChoice’s members are enrolled in individual and group commercial products, but the insurer also operates a small Medicare Advantage plan with about 1,000 members. Financial details of the transaction have not been disclosed.

Source: AIS’s Directory of Health Plans

Walmart Drops CVS Pharmacy Coverage in Price Dispute

January 15, 2019

Walmart said Tuesday that it would no longer honor prescription drug coverage from CVS Health, leaving large numbers of Walmart customers searching for a new pharmacist and amplifying concerns about the growing market power of the CVS empire.

Walmart confirmed its exit from the CVS Health pharmacy insurance program, called CVS Caremark, after CVS refused the retail giant’s demand for larger reimbursements for the prescription drugs it dispenses.

Walmart said Tuesday that it would no longer honor prescription drug coverage from CVS Health, leaving large numbers of Walmart customers searching for a new pharmacist and amplifying concerns about the growing market power of the CVS empire.

Walmart confirmed its exit from the CVS Health pharmacy insurance program, called CVS Caremark, after CVS refused the retail giant’s demand for larger reimbursements for the prescription drugs it dispenses.

The move affects Walmart customers with CVS Caremark pharmacy coverage through employer-sponsored insurance and state Medicaid managed-care plans. It does not affect Medicare beneficiaries. It also does not affect pharmacies at Sam’s Club stores.

Walmart and CVS did not provide an estimate Tuesday of how many people will be affected….

Read the full The Washington Post article

Medicaid Plans Face Busy Year of Procurements, Waivers

January 15, 2019

From a flurry of state Medicaid managed care procurements and Section 1115 waiver activity to more states heading toward Medicaid expansion under the Affordable Care Act (ACA), Medicaid plans face a busy year ahead, experts tell AIS Health. They also cite more business opportunities for plans to better integrate people dually eligible for Medicare and Medicaid, and to address social determinants of health such as housing, transportation and nutritional needs.

By Judy Packer-Tursman

From a flurry of state Medicaid managed care procurements and Section 1115 waiver activity to more states heading toward Medicaid expansion under the Affordable Care Act (ACA), Medicaid plans face a busy year ahead, experts tell AIS Health. They also cite more business opportunities for plans to better integrate people dually eligible for Medicare and Medicaid, and to address social determinants of health such as housing, transportation and nutritional needs.

“There’s going to be a great deal to watch in the Medicaid managed care space in 2019,” says CEO Meg Murray of the Association for Community Affiliated Plans (ACAP). First is Medicaid expansion, with voters in three states last November electing to expand the program, and voters in two other states replacing governors who either obstructed or rolled back expansion efforts.

Rising drug costs also will be a significant issue, she says. “Just today [Jan. 10], California just moved all its Medicaid managed care plans to a state formulary,” she says. “It’s California, so other states will sit up and pay attention. Given that Medicaid managed care plans’ pharmacy management efforts have yielded large-scale savings in the past, it’s questionable whether a state formulary is the best pathway to containing cost growth.”

Other experts cite states’ activities on Medicaid managed care contracting. “We’re entering into a ‘warm’ bid year where you have perhaps Georgia open for RFP, North Carolina will close its RFP, Minnesota will presumably open an RFP as well as Kentucky [and] perhaps Ohio,” says Alex Shekhdar, vice president of policy at Medicaid Health Plans of America. MHPA represents 93 commercial and non-profit plans that serve more than 25 million lives in 39 states and the District of Columbia.

Sandeep Wadhwa, M.D., chief health officer and senior vice president of government programs and market innovation at Solera Health and a former Colorado Medicaid director, also cites significant procurement activity. “On the Medicaid side, to me there’s so much focus on the states dropping RFPs — Louisiana, Minnesota, Hawaii — and I think those are the ‘North Carolinas’ of 2019,” he says.

“In 2018, there was so much focus on North Carolina moving from ASO [administrative services only] to a capitated model,” Wadhwa explains. This year, “the interest is in what the states dropping RFPs are looking for in terms of innovation, population health programs and social determinants of health, and how the managed care plans respond….I think states are really looking for the plans to include in their bids a broader set of interventions.”

Datapoint: Maine Gov. Signs Executive Order to Expand Medicaid

January 14, 2019

Maine’s new governor, Janet Mills (D), Jan. 3 issued an executive order to expand Medicaid in the state, following more than a year of blocked attempts from the previous administration. Maine voters voiced their approval for Medicaid expansion in Nov. 2017. Expansion could add more than 70,000 people to the state’s Medicaid population, currently at 261,128 lives.

Maine’s new governor, Janet Mills (D), Jan. 3 issued an executive order to expand Medicaid in the state, following more than a year of blocked attempts from the previous administration. Maine voters voiced their approval for Medicaid expansion in Nov. 2017. Expansion could add more than 70,000 people to the state’s Medicaid population, currently at 261,128 lives.

Source: AIS’s Directory of Health Plans