Health Plan Weekly

‘Breakthrough’ Cystic Fibrosis Drug Could See High Demand

November 14, 2019

The FDA recently approved a drug therapy for cystic fibrosis (CF) that is being viewed as a “game-changer” for the roughly nine in 10 patients with the rare, progressive disease who might benefit from it. Where does this leave payers facing rising specialty drug costs across the board? Industry experts predict that most payers likely will cover this latest cystic fibrosis treatment option despite an annual price tag topping $300,000.

By Judy Packer-Tursman

The FDA recently approved a drug therapy for cystic fibrosis (CF) that is being viewed as a “game-changer” for the roughly nine in 10 patients with the rare, progressive disease who might benefit from it. Where does this leave payers facing rising specialty drug costs across the board? Industry experts predict that most payers likely will cover this latest cystic fibrosis treatment option despite an annual price tag topping $300,000.

Vertex Pharmaceuticals, Inc.’s Trikafta (elexacaftor/tezacaftor/ivacaftor and ivacaftor), taken as a twice-daily pill regimen, is the first triple combination therapy available to treat patients with the most common cystic fibrosis mutation. The drug directly addresses the underlying cause of the illness — mutations in the CFTR protein.

The FDA approved Trikafta for patients 12 years and older with at least one F508del mutation in the CFTR gene, which is estimated to represent 90% of the cystic fibrosis population — many of whom have had no approved therapeutic options previously.

“From a utilization management standpoint, there is nothing in the marketplace that will be more effective or significantly less costly” than Trikafta, says Yusuf Rashid, R.Ph., vice president of pharmacy and vendor relationship management at Community Health Plan of Washington.

Manu Jain, M.D., professor of medicine and pediatrics at Northwestern University’s Feinberg School of Medicine and director of Northwestern’s adult CF program, expects the payer community generally will approve Trikafta. But coverage “definitely will be uneven,” he says.

According to Jain, certain people on Kalydeco won’t be candidates for the new drug; but most on Symdeko or Orkambi likely will switch to Trikafta.

During Vertex’s third-quarter 2019 earnings call, Vertex’s Chief Commercial Officer Stuart Arbuckle said the first patients have already been prescribed Trikafta by their physicians, “underscoring the strong interest in the medicine.” But he added that such demand for the new product might prompt launch delays.

Georgia Unveils Bold ACA Waiver Plan

November 12, 2019

More than a year after the Trump administration issued controversial new guidelines for the Affordable Care Act’s Section 1332 waivers, Georgia became the first state to take CMS up on that increased flexibility by unveiling a draft waiver proposal that would make some major changes to its individual insurance market.

The state’s waiver proposal has two primary phases: first is a reinsurance program to help insurers pay high-cost claims (and thus lower premiums), set to go into effect in 2021. Then there’s the “Georgia Access Model,” which starting in 2022 would:

By Leslie Small

More than a year after the Trump administration issued controversial new guidelines for the Affordable Care Act’s Section 1332 waivers, Georgia became the first state to take CMS up on that increased flexibility by unveiling a draft waiver proposal that would make some major changes to its individual insurance market.

The state’s waiver proposal has two primary phases: first is a reinsurance program to help insurers pay high-cost claims (and thus lower premiums), set to go into effect in 2021. Then there’s the “Georgia Access Model,” which starting in 2022 would:

✦ Direct consumers to buy coverage through private broker or insurer websites, rather than HealthCare.gov;
✦ Put the state in control of ACA subsidies; and
✦ Allowhealth plans that don’t cover all 10 of the ACA’s essential health benefits (EHB) categories to be sold alongside qualified health plans (QHPs).

David Anderson, a research associate at the Duke-Margolis Center for Health Policy, says the basic idea is to exclude select EHB categories which would create a lower actuarial value in exchange for cheaper premiums. In his view, the population that stands to lose the most in such a scenario is people who don’t qualify for subsidies but have significant medical conditions. “Their premiums are going to skyrocket because they’re still going to need all the EHBs,” he says.

Anderson predicts insurers will “love the reinsurance” portion of Georgia’s proposal and be able to handle the other individual market changes. “The biggest challenge will be projecting relative risk and market share between the full EHB and the limited EHB plans,” he adds.

But Joel Ario, managing director of Manatt Health, points out that “health insurers are generally risk averse; this seems to have a lot of risky dimensions to it.” Some unanswered questions, he says, include how the state will implement a system with alternative enrollment channels and what type of non-QHP health plans will actually be rolled out.

Cigna, WellCare Report Solid Third-Quarter Earnings

November 7, 2019

Both Cigna Corp. and WellCare Health Plans, Inc. delivered third-quarter 2019 earnings results that beat Wall Street’s expectations and largely impressed analysts — particularly in light of other insurers’ recent issues with medical loss ratio (MLR) results.

In its quarterly earnings report posted on Oct. 31, Cigna said its strong financial results were driven primarily by its health services and integrated medical segments.

By Leslie Small

Both Cigna Corp. and WellCare Health Plans, Inc. delivered third-quarter 2019 earnings results that beat Wall Street’s expectations and largely impressed analysts — particularly in light of other insurers’ recent issues with medical loss ratio (MLR) results.

In its quarterly earnings report posted on Oct. 31, Cigna said its strong financial results were driven primarily by its health services and integrated medical segments.

The health services segment, which includes the company’s PBM business, reported a pretax operating profit of $1.4 billion, beating Wall Street’s consensus of $1.36 billion. The insurer’s integrated medical segment, which includes its health insurance business, saw its pretax operating profit increase from $932 million to $953 million year over year.

Cigna’s MLR of 80.5% was higher than it was in the third quarter of 2018, as the company expected, but it beat the 80.8% consensus estimate, “bucking the trend seen from peers,” Citi analyst Ralph Giacobbe observed in an Oct. 31 research note. Anthem, Inc., for instance, said during its recent third-quarter earnings conference call that its full-year 2019 MLR will likely be higher than it originally estimated due to issues with Medicaid eligibility redeterminations that it’s experienced this year.

Across its books of business, Cigna reported an adjusted earnings per share of $4.54, beating the consensus $4.36, and it raised its full-year EPS estimate to a range of $16.80 to $17.00.

WellCare, which reported its financial results on Oct. 30, “delivered impressive 3Q results,” with its adjusted EPS of $5.50 beating the consensus estimate by 43%, Jefferies analysts David Windley and David Styblo wrote in a research note.

WellCare’s third-quarter 2019 MLR of 87.0% beat the consensus estimate by 130 basis points, which Windley and Styblo described as a “pretty clean result.”

Blues Plans Offer ACA Coverage in Counties They Once Exited

November 6, 2019

Blues plans, testing new ways to cope with the volatility of the Affordable Care Act (ACA) individual market, in 2020 will re-enter major counties that they’d previously abandoned.

Overall, Blues plans’ participation in the individual market has remained fairly steady in the last five years, according to an analysis by the Robert Wood Johnson Foundation.

By Jane Anderson

Blues plans, testing new ways to cope with the volatility of the Affordable Care Act (ACA) individual market, in 2020 will re-enter major counties that they’d previously abandoned.

Overall, Blues plans’ participation in the individual market has remained fairly steady in the last five years, according to an analysis by the Robert Wood Johnson Foundation.

However, Blues plans in Arizona and Tennessee had abandoned major metro-area counties in recent years. Now, they’re rejoining the exchanges in those areas, having adjusted their rates and their networks accordingly.

Blue Cross Blue Shield of Arizona will rejoin the exchange in Maricopa County, which has more than 4.4 million residents. The insurer will compete with four other insurers in that county, and says it will focus on enrolling residents who currently are uninsured.

BlueCross BlueShield of Tennessee, which refunded nearly $23 million to individual and small group policyholders in September for overpayments made in 2018 and lowered rates for 2019 by an average of 14.8%, will have “nominal” rate increases of 1.4% on average for 2020 compared with 2019. The Tennessee Blues plan also will rejoin the markets in Nashville and Memphis, which it exited in 2017 amid heavy losses.

In Minnesota, the state’s reinsurance program debuted in 2018 with lower overall rates and is credited with steep premium declines for 2019. Blue Cross and Blue Shield of Minnesota, which offers only HMO Blue Plus plans, dropped rates by an average of nearly 28% in 2019.

This year, the Minnesota Blues plan will increase rates by about 5% while offering coverage statewide for the first time since 2016. “After years of volatility and unpredictability, the individual market has shown encouraging signs of stability,” says Craig Samitt, M.D., president and CEO.

Study Highlights Racial Bias in Optum Risk-Prediction Algorithm

November 5, 2019

To improve care for patients with the most complex health needs, many providers and payers turn to risk-prediction tools that use an algorithm to determine which patients need more intense care management. But a recent study, published in the journal Science, found that one such widely used algorithm exhibits significant racial bias by assigning black patients the same level of risk as white patients even when they are far sicker.

This study garnered significant media attention, and at least one state’s regulators launched an investigation into UnitedHealth Group, whose Optum subsidiary sells Impact Pro, the data analytics program that researchers studied.

By Leslie Small

To improve care for patients with the most complex health needs, many providers and payers turn to risk-prediction tools that use an algorithm to determine which patients need more intense care management. But a recent study, published in the journal Science, found that one such widely used algorithm exhibits significant racial bias by assigning black patients the same level of risk as white patients even when they are far sicker.

This study garnered significant media attention, and at least one state’s regulators launched an investigation into UnitedHealth Group, whose Optum subsidiary sells Impact Pro, the data analytics program that researchers studied.

Brian Powers, M.D., one of the study’s authors and a researcher at Brigham and Women’s Hospital, says that “the algorithm did a great job of what it was specifically designed to do, which was predict future health care costs.” The problem is that the organizations deploying the tool often “use health care costs as a proxy for health care need,” he says, and black patients tend to cost the health system less because of a “lack of access to care due to structural inequalities, and a variety of other issues that have been well documented.” So while there is a correlation between high-risk patients and high health care spending, just looking at expenditures doesn’t paint a truly accurate picture of patients’ health care needs.

Rich Caruana, a Microsoft Corp. senior researcher who studies machine learning in health care, says he was “not at all surprised” to learn that researchers uncovered hidden bias in a predictive algorithm.

“Most of what machine learning is doing is right, but in addition to these things it’s doing really right, roughly 5% of what it’s learning are these sort of silly, wrong things,” he continues. “These are known as treatment effects — we’re seeing patients’ risk as more or less based on the treatment that they receive.”