Health Plan Weekly

Health Insurers, Hospitals Grapple With Inflation, Labor Costs

While inflation hits consumers at car dealerships, airline counters and grocery stores, health insurers and hospitals also are seeing inflationary pressure, particularly with the so-called Great Resignation underway and labor costs skyrocketing.

The Labor Department reported on May 11 that the Consumer Price Index rose 8.3% over the 12-month period that ended in April 2022, down only slightly from the four-decade high of 8.5% reported in March.

“There’s no question that the labor market is tight. So, as you think about inflation, we hear it certainly from our provider partners, and we see it in certain parts of our own business,” Anthem, Inc. CEO Gail Boudreaux told investors during an April 20 conference call to discuss first-quarter 2022 financial results, per The Motley Fool.

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Feds Approve Virginia Individual Market Reinsurance Program

HHS and the Treasury Department on May 19 approved Virginia’s waiver for a state reinsurance program starting on Jan. 1, 2023. Although states have been less aggressive when it comes to applying for reinsurance programs recently, the looming expiration of enhanced premium tax credits in the individual marketplace could create renewed interest in reinsurance, policy experts tell AIS Health, a division of MMIT. That would be welcome news for insurers who are in favor of such programs because they incentivize more individuals to enroll in plans, create a more balanced risk pool and help insurers deal with large claims.

Reinsurance programs are primarily focused on lowering premiums for individuals who did not previously qualify for subsidies on the Affordable Care Act exchanges. In early 2021, the American Rescue Plan Act (ARPA) made enhanced subsidies available to people whose incomes are above 400% of the federal poverty level, the previous threshold, leading to a smaller number of people who benefited from reinsurance.

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North Carolina Sets Sights on Medicaid Expansion

Republican leaders in North Carolina, one of a dozen states that have yet to broaden access to Medicaid programs, say that they are now ready to embrace expansion, which may be a boon to its managed care organizations.

By widening Medicaid eligibility to limits allowed under the Affordable Care Act, North Carolina would enroll an additional 600,000 individuals, a sharp increase over the 2.7 million currently covered under Medicaid in the state, according to a summary of a draft bill first reported on by Axios.

In a May 25 press conference, state Senate leader Phil Berger called Medicaid expansion “the right thing for us to do,” citing the need for coverage for low-income individuals and families and the federal government’s responsibility to pick up 90% of costs for enrollees newly eligible under the expanded coverage guidelines, according to reports.

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The Vast Majority of Physicians Accept New Medicare and Private Insurance Patients

Most non-pediatric office-based physicians accepted new patients, with similar shares accepting new Medicare (89%) and privately insured patients (91%), according to a Kaiser Family Foundation analysis based on the 2019 National Electronic Health Records Survey. A smaller share of primary care physicians accepted new patients with Medicare or private insurance than physicians in other medical or surgical specialties. Across the nation, the share of physicians accepting new Medicare patients ranged from 95% in Iowa, Minnesota and Pennsylvania to 76% in the District of Columbia, similar to the range across states for privately insured patients. As of March 2022, only 1% of non-pediatric physicians formally opted out of the Medicare program, with psychiatrists accounting for 42% of these physicians opting out.

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News Briefs: Consumer Satisfaction With Plans Hits Roadblocks

While health insurers have made gains in consumer satisfaction in recent years, that progress stalled over the last year, according to a new report from J.D. Power & Associates. “Overall satisfaction has increased…during the past five years, but there is no change in 2022 from 2021, due in part to declines in satisfaction in customer service and dissatisfaction with coverage options and desired network providers,” a J.D. Power press release said. The report said that the health plans that members call “responsive” and “innovative” received the best satisfaction scores. Members also critiqued long hold times at call centers and have found decreasing satisfaction from electronic contact tools like texting and mobile apps. The highest scores for health plans, which were separated by region, were awarded to Kaiser Permanente, Humana Inc., Anthem, Inc., Geisinger Health Plan and several Blue Cross Blue Shield affiliates.

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Marketplace, MCOs Will Face a Rocky Transition When PHE Ends

When the Biden administration ends the COVID-19 public health emergency (PHE), states will disenroll millions of Medicaid beneficiaries — and insurers will have to take Medicaid MCO members off their books. Experts tell AIS Health, a division of MMIT, that carriers can take steps to retain some of those members by helping them enroll in Affordable Care Act (ACA) marketplace coverage — but say the number of people who make the switch will be far lower than the number of people who joined the Medicaid rolls during the pandemic (see infographic).

Medicaid and individual exchange enrollment have both boomed with the higher federal funding that was included in the American Rescue Plan Act (ARPA) — and both segments’ total enrollment and enrollee profiles will change significantly when that extra funding ends.

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Startups Oscar Health, Bright Health Exit Markets & Tighten Belts

Startup insurers Oscar Health, Inc. and Bright Health Group, Inc. have decided they will no longer sell individual and/or family plans in certain states after this year. Ari Gottlieb, a principal at consulting firm A2 Strategy Group, tells AIS Health that those are signs the companies are looking to stem large losses and shore up their businesses as their stock prices fall and raising additional capital becomes harder.

Gottlieb says he anticipates Cigna Corp, which invested in Oscar earlier this year, could buy the company as soon as the end of the year. The fate of Bright remains unknown, although Gottlieb does not see Oscar, Bright or the two other publicly traded startup insurers (Alignment Healthcare and Clover Health Investments Corp.) becoming profitable anytime soon. Gottleib says Cigna may buy Bright also.

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Humana Doubles Down on Primary Care Clinic Investments

Humana Inc. has become the latest insurer to increase its investment in building de novo primary care clinics, perhaps finding that while building is more effective than buying, opening clinics on a broad scale is a costlier proposition than first thought.

The insurer on May 16 said it had established a second joint venture with Welsh, Carson, Anderson & Stowe (WCAS) to further expand its value-based, senior-focused primary care clinics. (Hg Capital Partners and WCAS share control of MMIT, the parent of AIS Health.) The deal will provide up to $1.2 billion of additional capital for the development of approximately 100 new payer-agnostic clinics operated by Humana subsidiary CenterWell between 2023 and 2025. The expansion follows an earlier agreement that is currently deploying up to $800 million of capital to open 67 clinics by early 2023 and support ongoing operations, Humana added. WCAS will have majority ownership of the joint venture, while Humana will have a minority stake.

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News Briefs: Biden Admin. Likely to Extend PHE

Biden administration officials confirmed that they would extend the COVID-19 public health emergency (PHE) past July 15, when it is currently set to expire, according to press reports, though HHS Sec. Xavier Becerra has not yet issued an official proclamation to that effect. The administration has promised states that it will give them at least 60 days’ notice before the end of the emergency, in part to assist state officials as they restart Medicaid eligibility redeterminations. The PHE also allows for certain flexibilities in areas including telehealth practice. According to news reports, the PHE is likely to be extended until at least Oct. 13.

Nationally, commercial health plans pay 224% more than Medicare rates for services at hospitals, according to new research from the RAND Corp. The study is the latest in a series on hospital prices; the last installment came in 2018. Relative prices vary widely from state to state, with some states’ plans reimbursing below 175% of Medicare rates and some seeing rates of 310% or higher. The study also found that “a large portion of price variation is explained by hospital market power.”

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Insurers Are Helping Patients, Providers Deal With Medical Debt

Although fewer Americans are dealing with medical-related financial hardships since the coronavirus pandemic began, the percentage is still high and could rise further as Medicaid redeterminations resume, major Affordable Care Act subsidy expansions expire and inflation eats away at people’s incomes and savings. To that end, payers are implementing ways to ease the burden of high out-of-pocket costs for patients and to help providers improve their collections, even as one expert calls the services a “Band-Aid attempt to cover the widening healthcare affordability gap.”

An Urban Institute report published on May 11 found that 16.8% of adults from 18 to 64 years old had medical debt in April 2021, down from 23.6% in March 2019. The Urban Institute cited several potential reasons for the decline, including a reduction in health care utilization, pandemic relief measures and growth in Medicaid enrollment.

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© 2024 MMIT