Health Plan Weekly

N.C. Blues CEO Scandal Offers Lessons on Transparency

October 22, 2019

In the wake of a scandal surrounding the news that Blue Cross and Blue Shield of North Carolina’s CEO, Patrick Conway, M.D., was arrested in a drunken driving incident back in June, the insurer has officially called off its planned “strategic affiliation” with Cambia Health Solutions.

Experts tell AIS Health that the whole saga offers powerful lessons for other organizations about how not to handle a tricky public relations situation.

By Leslie Small

In the wake of a scandal surrounding the news that Blue Cross and Blue Shield of North Carolina’s CEO, Patrick Conway, M.D., was arrested in a drunken driving incident back in June, the insurer has officially called off its planned “strategic affiliation” with Cambia Health Solutions.

Experts tell AIS Health that the whole saga offers powerful lessons for other organizations about how not to handle a tricky public relations situation.

One major problem is the fact that members of the North Carolina Blues plan’s board of directors opted to keep Conway’s arrest under wraps when he reported it to them, says Lawrence J. Parnell, an associate professor of strategic public relations at George Washington University.

Conway told The Wall Street Journal in a September interview that when he informed the Blues insurer’s board of the incident, lawyers recommended that he “not disclose anything publicly until the legal process was completed.”

According to Parnell, the North Carolina Blues plan should have notified regulators and the public of the incident when it happened.

“When they didn’t do that and allegedly advised him to not talk about it, it smacks of trying to cover something up,” he says. “And in almost every case, the efforts to clean up or cover up something are as bad — if not worse — than the initial incident that you’re dealing with.”

Indeed, for organizations in general, “the longer they wait to release the information, the harder it is to understand why they did it,” says James Lukaszewski, a corporate executive consultant.

TRICARE Moves Toward Risk-Based Contracting

October 15, 2019

The Dept. of Defense (DoD) is taking the first steps toward bringing value-based contracting to the TRICARE program — the government’s health insurance program for members of the armed forces, military retirees and their dependents.

Currently, Centene Corp. subsidiary Health Net Federal Services LLC holds a contract to cover the West TRICARE region, while Humana Military Healthcare Services Inc. controls the East region.

By Leslie Small

The Dept. of Defense (DoD) is taking the first steps toward bringing value-based contracting to the TRICARE program — the government’s health insurance program for members of the armed forces, military retirees and their dependents.

Currently, Centene Corp. subsidiary Health Net Federal Services LLC holds a contract to cover the West TRICARE region, while Humana Military Healthcare Services Inc. controls the East region.

In a request for information (RFI) issued in late September, the DoD’s Defense Health Agency (DHA) says it’s “planning the future generation of managed care contracts,” which will be called T-5.

In that RFI, the DHA ask stakeholders what TRICARE should consider when developing incentives for T-5 contract holders to increase access to and utilization of high-value care, and how it can design contracts that encourage contractors to create alternative payment methodologies for their in-network providers.

Dan Mendelson, founder of the consulting firm Avalere Health, says the moves TRICARE is considering would be a major departure from the current version of the program, which involves administrative services only contracts with insurers.

“This is really interesting — I mean historically it’s not a heavily managed product,” he says. “I think that the DoD is coming to the understanding that a heavily managed product could be in the best interest of military personnel and dependents if done right.”

TRICARE may simply need to look at another booming public-private partnership for a model, he suggests. “Where I see them going is really using Medicare Advantage as a model, where there’s specific payments that are tied to specific outcomes.”

Citi analyst Ralph Giacobbe recently cautioned investors that it’s not yet clear “if the contracts will move entirely from ASO to risk in the next awards or if the DoD could adopt more of a test or partial risk approach.”

“Regardless, if there is some transition to risk, then [Centene] and [Humana] could see billions of incremental revenue, assuming that they retain their contracts,” he wrote.

Harvard Pilgrim-Tufts Deal Would Produce Major Rival for Massachusetts Blues

October 10, 2019

Blue Cross Blue Shield of Massachusetts (BCBSMA) would still retain its edge in the competitive Bay State market but face significant new competition if the merger between Harvard Pilgrim Health Care, Inc. and Tufts Health Plan goes through as planned, market analysts say.

Tufts and Harvard Pilgrim, which are in second and third place in the state’s market, unveiled plans to merge on Aug. 14. One major motivating factor is a desire to take on BCBSMA more directly, says Dan Mendelson, the founder of consulting firm Avalere Health.

By Jane Anderson

Blue Cross Blue Shield of Massachusetts (BCBSMA) would still retain its edge in the competitive Bay State market but face significant new competition if the merger between Harvard Pilgrim Health Care, Inc. and Tufts Health Plan goes through as planned, market analysts say.

Tufts and Harvard Pilgrim, which are in second and third place in the state’s market, unveiled plans to merge on Aug. 14. One major motivating factor is a desire to take on BCBSMA more directly, says Dan Mendelson, the founder of consulting firm Avalere Health.

“BCBSMA maintains an advantage by virtue of its market share, brand and history, particularly in the Boston area,” Mendelson tells AIS Health. “But you can never discount the ability of an agile upstart to gain market share — particularly in the fluid and profitable Massachusetts markets.”

Joe Paduda, principal of Health Strategy Associates, LLC, says Harvard Pilgrim’s failed 2018 effort to merge with Partners HealthCare likely influenced its plans.

“Harvard Pilgrim’s stillborn effort to negotiate with Partners HealthCare last year may have convinced HP management that it wasn’t big enough to get the discount rates necessary to compete with the Blues,” Paduda tells AIS Health. “A combined HP-Tufts will have about 2.5 million members, which will put it about level with BCBSMA.”

Still, both analysts say the Massachusetts Blues plan is prepared for the increased competitive effects that such a deal would bring.

BCBSMA has the largest fully insured commercial risk population in Massachusetts, with close to 1 million covered lives, according to AIS’s Directory of Health Plans, and would remain in first place in commercial risk even after the merger closed.

MA Insurers Embrace Supplementary Benefits, But Barriers Remain

October 8, 2019

Despite being able to offer an expanded array of supplemental benefits to Medicare Advantage (MA) customers for the first time in 2019, few insurers took advantage of that opportunity. One year later, health plans appear to be increasingly embracing the new flexibilities.

CMS recently revealed that in 2020 about 300 plans will offer reduced cost-sharing and additional benefits to MA enrollees with conditions like diabetes and congestive heart failure. And about 500 plans will give enrollees access to expanded health-related supplemental benefits. Combined, 800 out of 4,300 MA plans will offer such benefits in 2020, or 18.6%, compared with 7.3% of plans — or 270 out of a total 3,700 — that did so in 2019.

By Leslie Small

Despite being able to offer an expanded array of supplemental benefits to Medicare Advantage (MA) customers for the first time in 2019, few insurers took advantage of that opportunity. One year later, health plans appear to be increasingly embracing the new flexibilities.

CMS recently revealed that in 2020 about 300 plans will offer reduced cost-sharing and additional benefits to MA enrollees with conditions like diabetes and congestive heart failure. And about 500 plans will give enrollees access to expanded health-related supplemental benefits. Combined, 800 out of 4,300 MA plans will offer such benefits in 2020, or 18.6%, compared with 7.3% of plans — or 270 out of a total 3,700 — that did so in 2019.

In addition, about 250 MA plans in 2020 will give certain chronically ill enrollees access to a “broader range of supplemental benefits that are not necessarily health related but may help to improve or maintain their health.”

However, recent research from the Urban Institute points out that supplemental benefits must be funded by existing rebate dollars that the government pays to MA plans when their bids are lower than the county-level benchmark — and there is “substantial geographic variation” in rebate amounts.

Other barriers identified by MA insurers and other stakeholders include “the lack of additional funding for new benefits, MA plans’ lack of experience addressing social needs, and plans’ concerns about investing in benefits that reach a small number of enrollees and therefore have limited appeal to a broad group of beneficiaries,” according to the study.

Laura Skopec, one of the study’s authors and a senior research associate in the Urban Institute’s Health Policy Center, says that she’s not surprised there are more plans offering supplementary benefits for 2020, as insurers had more time to develop them than they did for 2019.

However, “I still remain skeptical that this will be like a nationwide, available-in-every-plan sort of thing, just because there’s no additional funding; in some areas rebates are very small or nonexistent, so it will always be inherently limited by that,” Skopec says.

Cambia Deal Put on Hold After North Carolina Blues CEO Resigns

October 3, 2019

Facing a growing firestorm over an alleged drunken driving incident, Blue Cross Blue Shield of North Carolina CEO Patrick Conway, M.D., resigned from his post. Meanwhile, the Blues insurer’s “strategic affiliation” with a fellow payer has been put on hold.

On June 22nd, according to a report from The News & Observer, Conway was arrested after striking a commercial vehicle while driving on a North Carolina highway with his two daughters as passengers. Conway, who allegedly exhibited signs of intoxication and refused a breathalyzer, faces charges of driving while impaired, reckless driving and misdemeanor child abuse.

By Leslie Small

Facing a growing firestorm over an alleged drunken driving incident, Blue Cross Blue Shield of North Carolina CEO Patrick Conway, M.D., resigned from his post. Meanwhile, the Blues insurer’s “strategic affiliation” with a fellow payer has been put on hold.

On June 22nd, according to a report from The News & Observer, Conway was arrested after striking a commercial vehicle while driving on a North Carolina highway with his two daughters as passengers. Conway, who allegedly exhibited signs of intoxication and refused a breathalyzer, faces charges of driving while impaired, reckless driving and misdemeanor child abuse.

Conway wrote in a statement on Twitter that he stepped down from his daily duties and completed 30 days of inpatient substance use treatment following the incident. After news of his arrest became public, however, he resigned on Sept. 26 at the request of the Blue Cross Blue Shield of North Carolina board of trustees. Current chief operating officer, Gerald Petkau, will serve as interim CEO, the insurer said in a statement.

In March, Blue Cross and Blue Shield of North Carolina announced that it and fellow Blues insurer Cambia Health Solutions struck a deal for a “strategic affiliation,” which would involve merging operations and administrative functions but keeping their respective health plans and provider networks independent. The two not-for-profit plans have a combined net revenue of $16 billion and more than 6 million covered lives.

Now, the North Carolina Blues insurer “has decided to put its proposed strategic affiliation with Cambia Health Solutions on temporary hold,” a spokesperson says. In a statement, Cambia added that the two insurers “have mutually agreed to withdraw their respective Form A applications for regulatory approval.” The two companies would have to refile if they want to merge in the future.