Datapoint: Texas Cancels Recent Medicaid Contract Awards

April 8, 2020

Following months of uproar from insurers, the state of Texas recently canceled re-procurement contracts for its STAR+PLUS Medicaid program, which provides more highly coordinated care for seniors and people with disabilities. Hit particularly hard by the disputed awards was Molina Healthcare, which saw its STAR+PLUS contracts reduced from six service areas to two. Molina currently serves 195,168 Medicaid members in Texas, holding 5.1% of the state’s market share.

Following months of uproar from insurers, the state of Texas recently canceled re-procurement contracts for its STAR+PLUS Medicaid program, which provides more highly coordinated care for seniors and people with disabilities. Hit particularly hard by the disputed awards was Molina Healthcare, which saw its STAR+PLUS contracts reduced from six service areas to two. Molina currently serves 195,168 Medicaid members in Texas, holding 5.1% of the state’s market share.

Source: AIS’s Directory of Health Plans

COVID-19 Pandemic Could Drive Up Premiums, Accelerate Consolidations

April 8, 2020

Many of the nation’s largest health insurers have now waived patient cost sharing and prior authorization requirements for treatment of COVID-19, the disease caused by the novel coronavirus. Experts praise payers for making the change, but say the moves could have negative financial impacts for some firms.

The changes will be welcome news for members stricken with the virus and the caregivers treating them. Ashraf Shehata, KPMG national sector leader for health care and life sciences, says payers are doing their best to act responsibly during the crisis.

By Peter Johnson

Many of the nation’s largest health insurers have now waived patient cost sharing and prior authorization requirements for treatment of COVID-19, the disease caused by the novel coronavirus. Experts praise payers for making the change, but say the moves could have negative financial impacts for some firms.

The changes will be welcome news for members stricken with the virus and the caregivers treating them. Ashraf Shehata, KPMG national sector leader for health care and life sciences, says payers are doing their best to act responsibly during the crisis.

However, insurers will need to come up with a way to pay for the cost sharing waivers and, more importantly, the increased care utilization that COVID-19 has made inevitable. Shehata says the costs are difficult to project, and a full assessment of the financial impact of the pandemic will take years.

Michael Abrams, a co-founder of health care consultancy Numerof & Associates, says higher premiums are a certainty, particularly as people across the economy lose income.

“Insurers faced with higher claims numbers will need to adjust their premiums in the future to try and recoup the money they will have to pay out now,” Abrams says. “People without benefits will need to go to Medicaid or the individual market to get coverage. That’s going to saddle those programs with unanticipated claims. Higher Medicaid and individual market premiums will be the result.”

Both Abrams and Shehata say that utilization for routine medical procedures will drop during the pandemic.

“We haven’t really fully realized the impact of shutting off a lot of the outpatient and elective surgeries yet. So the expectation is we might see positive claims experience, which might help offset some of the COVID impact in the short term. In the long term, we’ll start to see some of that impact of the delay [in routine care],” Shehata says.

Abrams adds the crisis could accelerate payer-provider consolidation. “To the extent that you have some vertical consolidation, provider organizations are often limited in capital reserves. But that’s exactly what insurers have to bring to the party. That is a convenient marriage,” he says.

Datapoint: DOJ Sues Anthem, Inc. for MA Billing Practices

April 7, 2020

The U.S. Dept. of Justice recently filed a lawsuit against Anthem, Inc., alleging that from 2014 to 2018, the company knowingly submitted inaccurate billing codes to obtain higher risk adjusted payments from the Medicare Advantage program. Anthem replied in a statement to news outlets that “the government is trying to hold Anthem and other Medicare Advantage plans to payment standards that CMS does not apply to original Medicare.” As of March 2020, the insurer currently serves 1,288,321 Medicare Advantage members.

The U.S. Dept. of Justice recently filed a lawsuit against Anthem, Inc., alleging that from 2014 to 2018, the company knowingly submitted inaccurate billing codes to obtain higher risk adjusted payments from the Medicare Advantage program. Anthem replied in a statement to news outlets that “the government is trying to hold Anthem and other Medicare Advantage plans to payment standards that CMS does not apply to original Medicare.” As of March 2020, the insurer currently serves 1,288,321 Medicare Advantage members.

Source: AIS’s Directory of Health Plans

How Will the COVID-19 Outbreak Change How Payers, Providers Interact?

April 7, 2020

Besides all the other ways it’s changing American life, the COVID-19 pandemic is sure to have a major impact on how the health care industry does business going forward, equities analysts said March 31 during the 24th Wall Street Comes to Washington Health Care Roundtable.

In the short term, the all-consuming nature of the public health crisis is very likely to pause health care providers’ and payers’ work on alternative payment models, said Matthew Borsch, a managing director at BMO Capital Markets. Executive attention is needed to hammer out arrangements that base provider pay on better health care quality and lower costs, he pointed out, and “efforts are being refocused right now.”

By Leslie Small

Besides all the other ways it’s changing American life, the COVID-19 pandemic is sure to have a major impact on how the health care industry does business going forward, equities analysts said March 31 during the 24th Wall Street Comes to Washington Health Care Roundtable.

In the short term, the all-consuming nature of the public health crisis is very likely to pause health care providers’ and payers’ work on alternative payment models, said Matthew Borsch, a managing director at BMO Capital Markets. Executive attention is needed to hammer out arrangements that base provider pay on better health care quality and lower costs, he pointed out, and “efforts are being refocused right now.”

George Hill, a managing director at Deutsche Bank, added that the pandemic will also influence rate negotiations between payers and providers.

“This crisis…is going to give the hospitals the artillery to go back and demand higher prices [and] say that they’ve been put under too much pressure for too long, that the infrastructure was not readily available when it was needed,” he said.

“You’re going to see high-acuity providers try to build a wall around the prices that they charge and the value that they think that they provide,” Hill predicted. “And as we come out of a crisis like this, it’s going to be hard for payer organizations — whether we’re talking about the government or whether we’re talking about commercial payers — to push back.”

On the plus side, changes that occur during the current crisis will probably accelerate innovation in the health care sector, said Ricky Goldwasser, a managing director at Morgan Stanley.

“We have to think about some of the news that came out of CMS, where nurse practitioners can now write prescriptions,” she said. “I think that we’re going to see a real…leap forward in some of the trends that we were looking for that otherwise would have taken five years to a decade.”

Datapoint: Amarin Loses Key Vascepa Patents

April 6, 2020

A Nevada district judge last week invalidated patents for Amarin’s Vascepa, a fish-oil based cholesterol drug that was poised as a blockbuster. Vascepa will now be open to generic competition, though none are currently approved by the FDA. The drugmaker said it will appeal the decision. Vascepa currently holds preferred status for 24% of all covered lives in the United States.

A Nevada district judge last week invalidated patents for Amarin’s Vascepa, a fish-oil based cholesterol drug that was poised as a blockbuster. Vascepa will now be open to generic competition, though none are currently approved by the FDA. The drugmaker said it will appeal the decision. Vascepa currently holds preferred status for 24% of all covered lives in the United States.

SOURCE: MMIT Analytics, as of 4/1/20