Preview: Health Plan Weekly

For Managed Care, Democrats’ Spending Bill Is Mixed Bag

November 5, 2021

Among a slew of health care-related provisions in the most recent draft of the Build Back Better Act, the one with the biggest implications for health insurers is likely the proposal that would temporarily close the Medicaid “coverage gap.” But for the health care industry at large, the proposal that packs the biggest punch in H.R. 5376 is the narrowed-down — but still significant — set of drug pricing reforms recently added to the bill.

Included in those drug-pricing provisions is the long-sought authority that would allow HHS to negotiate the price of a select set of prescription drugs. Drugs with the highest gross spending in Medicare Part B and Part D would be targeted for negotiation, but only those that are single-source therapies and have been on the market for nine years or more (for small-molecule drugs) and 12-plus years (for biologics). All insulin products would be targeted for negotiation, and therapies produced by small biotech companies would be exempted.

Among a slew of health care-related provisions in the most recent draft of the Build Back Better Act, the one with the biggest implications for health insurers is likely the proposal that would temporarily close the Medicaid “coverage gap.” But for the health care industry at large, the proposal that packs the biggest punch in H.R. 5376 is the narrowed-down — but still significant — set of drug pricing reforms recently added to the bill.

Included in those drug-pricing provisions is the long-sought authority that would allow HHS to negotiate the price of a select set of prescription drugs. Drugs with the highest gross spending in Medicare Part B and Part D would be targeted for negotiation, but only those that are single-source therapies and have been on the market for nine years or more (for small-molecule drugs) and 12-plus years (for biologics). All insulin products would be targeted for negotiation, and therapies produced by small biotech companies would be exempted.

Starting in 2023, 10 drugs would be eligible for government price negotiation, and that number would increase marginally in later years. But there is a largely overlooked, crucial detail worth calling out regarding how that provision would work, says Lindsay Bealor Greenleaf, vice president at the Washington, D.C.-based consulting firm ADVI Health.

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Insurers Are Anxious to Resolve Uncertain Telehealth Policies

November 5, 2021

The COVID-19 pandemic has made virtual health care a permanent fixture of care delivery — at least as far as patients, practitioners and health plans are concerned. But the regulatory future of telehealth is still an open question: New state and federal policies on virtual care were implemented on a temporary, emergency basis and will expire in coming months unless state legislatures and Congress act.

The COVID-19 pandemic has made virtual health care a permanent fixture of care delivery — at least as far as patients, practitioners and health plans are concerned. But the regulatory future of telehealth is still an open question: New state and federal policies on virtual care were implemented on a temporary, emergency basis and will expire in coming months unless state legislatures and Congress act.

Forty-four bills have been introduced by members of Congress from both parties and both chambers to address telehealth issues, according to JD Supra. Many emergency policies were enacted by HHS to increase telehealth access during the pandemic, but they will expire with the public health emergency, which is currently set to end 60 days after Jan. 15, 2022. At the state level, the picture becomes even more complicated. According to the Kaiser Family Foundation, 37 states and D.C. enacted some sort of policy that expanded telehealth services during the pandemic.

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Wall Street Isn’t Sweating Cigna’s Third-Quarter MLR Miss

November 5, 2021

Cigna Corp. on Nov. 4 reported a higher-than-expected medical loss ratio (MLR) for the third quarter of 2021, which the company blamed on rising medical costs from COVID-19 care and from high utilization among customers who signed up for Affordable Care Act exchange plans during the pandemic special enrollment period. However, equities analysts were not overly concerned, noting that most investors saw the “MLR miss” coming and that Cigna did beat Wall Street consensus estimates for its quarterly earnings.

The insurer’s MLR for the quarter was 84.4%, which was higher/worse than the consensus estimate of 83.0% as well as up from the 82.6% MLR recorded in the third quarter of 2020. But its adjusted earnings per share (EPS) of $5.73 for the quarter beat the consensus estimate of $5.12, and its adjusted revenues of $44.3 billion also beat the Street’s expectations of $43 billion.

Cigna Corp. on Nov. 4 reported a higher-than-expected medical loss ratio (MLR) for the third quarter of 2021, which the company blamed on rising medical costs from COVID-19 care and from high utilization among customers who signed up for Affordable Care Act exchange plans during the pandemic special enrollment period. However, equities analysts were not overly concerned, noting that most investors saw the “MLR miss” coming and that Cigna did beat Wall Street consensus estimates for its quarterly earnings.

The insurer’s MLR for the quarter was 84.4%, which was higher/worse than the consensus estimate of 83.0% as well as up from the 82.6% MLR recorded in the third quarter of 2020. But its adjusted earnings per share (EPS) of $5.73 for the quarter beat the consensus estimate of $5.12, and its adjusted revenues of $44.3 billion also beat the Street’s expectations of $43 billion.

“Given commentary from peers around higher commercial trends, and considering prior guidance that did not appear to factor in higher trajectory of cost, we don’t believe the MLR miss was surprising,” Citi analyst Ralph Giacobbe advised investors in a Nov. 4 note. “Moreover, despite the lower quality, management was able to drive EPS upside, and all focus will shift to 2022 and commentary around pricing and visibility to still grow in the 10%-13% range next year.” The “lower quality” Giacobbe referred to stemmed from the fact that Cigna’s higher-than-expected EPS was “driven in part by higher investment income and lower tax rate and share count,” he explained.

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For Many Specialties, Commercial-to-Medicare Markup Is Modest

November 5, 2021

Only a small number of physician specialties paid commercial health insurance plans over 150% more than Medicare payment rates for healthcare services, according to a recent Urban Institute study based on data from FAIR Health’s private health insurance claims database from March 2019 to February 2020. Anesthesia received the highest markup, at 330% of Medicare rates. Meanwhile, many specialties, such as cardiology, cardiovascular surgery, general surgery and orthopedics, received modest commercial payment rates that were 130% to 150% above Medicare rates.

Only a small number of physician specialties paid commercial health insurance plans over 150% more than Medicare payment rates for healthcare services, according to a recent Urban Institute study based on data from FAIR Health’s private health insurance claims database from March 2019 to February 2020. Anesthesia received the highest markup, at 330% of Medicare rates. Meanwhile, many specialties, such as cardiology, cardiovascular surgery, general surgery and orthopedics, received modest commercial payment rates that were 130% to 150% above Medicare rates.

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Humana Lowers EOY Guidance, Looks for More Home Care Deals

November 5, 2021

Humana Inc.’s earnings for the third quarter beat Wall Street projections, but the firm lowered its end-of-year guidance, citing COVID-19 costs. The Medicare Advantage-focused payer’s executives also said it would sell off much of its hospice operations, touted the firm’s acquisitions in home care and said they are actively looking for more home health and primary care providers to purchase.

Humana Inc.’s earnings for the third quarter beat Wall Street projections, but the firm lowered its end-of-year guidance, citing COVID-19 costs. The Medicare Advantage-focused payer’s executives also said it would sell off much of its hospice operations, touted the firm’s acquisitions in home care and said they are actively looking for more home health and primary care providers to purchase.

Humana reported adjusted earnings per share (EPS) of $4.83 for the quarter, which beat the Wall Street consensus projection of $4.66. However, the firm lowered its end-of-year guidance by about $1.00 to $23.67, citing the persistence of the COVID-19 pandemic. The firm brought in more than $20.8 billion in adjusted revenue during the third quarter, up from over $18.8 billion in the third quarter of 2020. Adjusted pretax income amounted to $802 million, up from $550 million in the third quarter last year.

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