Health Plan Weekly

UnitedHealth, Anthem Steer Patients to Less Costly Sites of Care

October 31, 2019

Insurers, led by UnitedHealth Group and Anthem, Inc., are clamping down on sites of care for services such as outpatient surgery, imaging, infusions and colonoscopies in an effort to cut costs by utilizing cheaper free-standing facilities instead of hospital-based outpatient departments.

UnitedHealth CEO Dirk McMahon said during a recent earnings conference call that United sees “considerable excess spending” on care delivered at “sub-optimal high cost settings.” On United’s commercial side, McMahon said, the insurer sees an opportunity to shift more than 20% of medical spend to what it terms “more effective sites.”

By Jane Anderson

Insurers, led by UnitedHealth Group and Anthem, Inc., are clamping down on sites of care for services such as outpatient surgery, imaging, infusions and colonoscopies in an effort to cut costs by utilizing cheaper free-standing facilities instead of hospital-based outpatient departments.

UnitedHealth CEO Dirk McMahon said during a recent earnings conference call that United sees “considerable excess spending” on care delivered at “sub-optimal high cost settings.” On United’s commercial side, McMahon said, the insurer sees an opportunity to shift more than 20% of medical spend to what it terms “more effective sites.”

Anthem, meanwhile, continues to enforce a controversial policy first implemented in 2017 to deny coverage for some emergency room visits it considers “non-emergency,” and also has restricted coverage on hospital-based outpatient imaging.

UnitedHealth and Anthem are far from alone, says Timothy Epple, a principal at Avalere Health. “I think it’s safe to say just about every insurer we’ve spoken to or work with is addressing site of care optimization and steerage in some way,” he tells AIS Health.

Ashraf Shehata, a principal in KPMG’s health care life sciences advisory practice, says these types of limits — with plans steering care to less-expensive settings — could still gain significant traction in certain markets. “I think in major metro markets we could see it shift a lot of care,” Shehata says. “We could see the plan making it very attractive to compete on unit costs.”

As this trend takes hold, hospitals might consider rolling up competition by buying ambulatory surgery centers and associated physician practices, Shehata says.

States Experiment With Health Care Rate Setting

October 29, 2019

As Congress tries to tackle the issue of surprise medical bills and as Medicare for All proposals remain a hot topic during the Democratic presidential debates, a common concept unites the two issues: limiting how much health care providers get paid. But in addition to what’s being discussed at the federal level, providers are increasingly finding themselves fending off rate-setting efforts taken up by states.

“Hospital consolidation pushed prices up, and for all the attention on drug prices, hospital prices are a much bigger driver of health care cost growth,” says Larry Levitt, executive vice president for health policy at the Kaiser Family Foundation. “The national debate over Medicare for All or a public option has created a fertile political environment for states to go after hospital prices in their own ways.”

By Leslie Small

As Congress tries to tackle the issue of surprise medical bills and as Medicare for All proposals remain a hot topic during the Democratic presidential debates, a common concept unites the two issues: limiting how much health care providers get paid. But in addition to what’s being discussed at the federal level, providers are increasingly finding themselves fending off rate-setting efforts taken up by states.

“Hospital consolidation pushed prices up, and for all the attention on drug prices, hospital prices are a much bigger driver of health care cost growth,” says Larry Levitt, executive vice president for health policy at the Kaiser Family Foundation. “The national debate over Medicare for All or a public option has created a fertile political environment for states to go after hospital prices in their own ways.”

A recent example comes from North Carolina, where State Treasurer Dale Folwell (R) led an effort to move the state employee health plan to a reference-based pricing model that ties payments for health care services to Medicare rates. But less than a year after debuting the project, Folwell revealed that most hospitals in the state refused to join his newly created network.

In Connecticut, Democratic Gov. Ned Lamont’s budget proposed to establish a maximum price — set at a percentage of Medicare — that the state employee health plan will pay for health care services, according to the National Academy for State Health Policy. Both Connecticut’s and North Carolina’s efforts come in the wake of Montana’s successful implementation of a reference-pricing program for its state employee health plan, NASHP noted in an issue brief.

Rate setting is also a feature of “public option” plans for individual insurance markets in states such as Washington, which implemented such a program, and Colorado, which is planning to.

But according to Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy, “all of these state proposals to date are sort of tiptoeing into rate setting, restraining from pushing too hard on the status quo, still allowing quite high hospital payment rates relative to Medicare rates or the cost of providing that care.”

Some Insurers Cover Acupuncture to Combat Opioid Epidemic

October 23, 2019

Insurers seeking non-opioid alternatives to treat chronic pain increasingly are opting to cover acupuncture, despite scant medical evidence for its effectiveness. In many cases, plans are classifying acupuncture benefits as part of their wellness program instead of as medical benefits, and members don’t need a diagnosis to have sessions covered.

The acute need for alternatives to opioids to treat chronic pain is a major reason for new acupuncture coverage, insurers say, and acupuncture is also a member-pleasing bonus.

By Jane Anderson

Insurers seeking non-opioid alternatives to treat chronic pain increasingly are opting to cover acupuncture, despite scant medical evidence for its effectiveness. In many cases, plans are classifying acupuncture benefits as part of their wellness program instead of as medical benefits, and members don’t need a diagnosis to have sessions covered.

The acute need for alternatives to opioids to treat chronic pain is a major reason for new acupuncture coverage, insurers say, and acupuncture is also a member-pleasing bonus.

Blue Cross Blue Shield of Massachusetts (BCBSMA) will offer a new acupuncture benefit starting Jan. 1 for all members except for those in Medicare Advantage (MA) plans.

According to Ken Duckworth, M.D., medical director for behavioral health at BCBSMA, combating opioid abuse isn’t the only rationale behind adding acupuncture as a benefit, but “this could also be another step in helping to reduce the number of inappropriate opioid prescriptions being written in Massachusetts.”

Independence Blue Cross began covering acupuncture in January, says Ginny Calega, M.D., vice president of medical affairs. Acupuncture is a covered benefit for Independence large-group commercial plans, she says. It can be used as part of a comprehensive treatment plan for patients with chronic pain.

Cigna Corp., meanwhile, will offer limited acupuncture sessions to select MA members beginning in 2020. The insurer’s rationale is different than reasons offered by Independence and the Massachusetts Blues plan: it’s hoping that the benefit could help lure seniors who are on the fence about which MA plan to choose.

CMS also has proposed to cover acupuncture, but only for fee-for-service Medicare beneficiaries enrolled in certain clinical trials.

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.