Contract Awards

Not in Kansas Anymore: Aetna Gets Left Out of Medicaid Awards

Ousting CVS Health Corp.’s Aetna from the current roster of Medicaid managed care organizations serving the Kansas Medicaid program, Elevance Health, Inc.’s Healthy Blue was chosen as the third insurer for new KanCare contracts starting Jan. 1, 2025. Incumbents Sunflower Health Plan (Centene Corp.) and UnitedHealthcare Community Plan held onto their spots. The awards mark the latest in a string of wins for Centene and Elevance and another disappointment for Aetna.

According to results posted by the Kansas Dept. of Health and Environment on May 14, seven MCOs responded to the request for proposals (RFP) process that began in October 2023 after a delay. Serving nearly 154,000 enrollees, UnitedHealthcare currently has the biggest share of the Kansas Medicaid market, per AIS’s Directory of Health Plans. Aetna, meanwhile, serves nearly 133,000, or about 31% of KanCare enrollees.

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News Briefs: Walmart Cites Reimbursement Woes in Closing Clinics, Virtual Care

Walmart Inc. announced on April 30 that it is closing its 51 health centers in five states as well as its virtual care offering. The company said in a press release that it had determined “there is not a sustainable business model for us to continue” with its Walmart Health and Walmart Health Virtual Care centers and added that “the challenging reimbursement environment and escalating operating costs create a lack of profitability that makes the care business unsustainable for us at this time.” Walmart launched the clinics in 2019. The company will continue to operate its nearly 4,600 pharmacies and more than 3,000 vision centers.

UnitedHealth Group CEO Andrew Witty testified before the Senate Finance Committee and House Energy & Commerce Committe on May 1 about the cyberattack on Change Healthcare, a UnitedHealth subsidiary. Fierce Healthcare reported that Witty said much of Change’s data was stored in data centers rather than on the cloud and that hackers accessed a server that did not have two-factor authentication. Fierce also noted that several politicians criticized UnitedHealth for its massive vertical integration, noting it owns a PBM and is a major player in health care delivery. Axios reported that UnitedHealth “could face more regulation or even calls to divest some of its businesses in the fallout from the hack.” Last month, a bipartisan group of politicians wrote a letter to Witty seeking information about the cyberattack and noted that Change’s systems process about 15 billion transactions each year and are linked to about 900,000 physicians, 118,000 dentists, 33,000 pharmacies and 5,500 hospitals.

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Centene Wins Big in Latest Round of Medicaid Contract Awards

For Medicaid-focused insurers facing the headwinds of the post-pandemic disenrollment backlog, a contract win can cause a major sigh of relief. That’s particularly true for Centene Corp., the largest managed Medicaid insurer in the U.S., which held onto three state contracts in Michigan, New Hampshire and Florida in recent months. Shares of Centene were up 3.5% following its April 12 win in Florida, where it currently serves 1.46 million members, according to AIS’s Directory of Health Plans (DHP).

Awards from Kansas and Georgia — where Centene is an incumbent — are expected to be announced in the coming weeks. Texas, meanwhile, is in the middle of a procurement process that could mean a plan switch for about 1.8 million beneficiaries. And it could spell the end of Centene’s winning streak. CEO Sarah London at the Barclays Global Healthcare Conference, held in March, said the company was “disappointed” in the scoring of its most recent Texas proposal, and planned to protest any contract loss. “I would say the biggest concern for the program overall is the idea that the results are going to force 1.8 million Medicaid members in Texas, which is a state that has a very high choice rate, to choose a different place,” London continued.

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News Briefs: Politicians Probe Change Cyberattack

A bipartisan group of politicians wrote a letter on April 15 to UnitedHealth Group CEO Andrew Witty seeking information about the cyberattack on Change Healthcare, a UnitedHealth subsidiary since 2022. They wrote that they were interested in UnitedHealth’s “efforts to secure Change Healthcare’s systems since it was acquired by your company and the efforts you are taking to restore systemic functionality and support patients and providers affected by the attack.” The letter noted that Change’s systems process about 15 billion transactions each year and are linked to about 900,000 physicians, 118,000 dentists, 33,000 pharmacies and 5,500 hospitals. House Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-Wash.) and Ranking Member Frank Pallone, Jr. (D-N.J.), Subcommittee on Health Chair Brett Guthrie (R-Ky.) and Ranking Member Anna G. Eshoo (D-Calif.) and Subcommittee on Oversight and Investigations Chair Morgan Griffith (R-Va.) and Ranking Member Kathy Castor (D-Fla.) signed the letter.

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News Briefs: UnitedHealth Reaffirms Full-Year Earnings Guidance Despite Cyberattack Impact

Although the cyberattack on its Change Healthcare subsidiary cost the company about $870 million, or 74 cents per share, in the first quarter of 2024, UnitedHealth Group on April 16 reaffirmed its full-year adjusted earnings per share (EPS) guidance of $27.50 to $28.00. Reporting financial results for the quarter ending March 31, the company said its Medicare Advantage business saw heightened outpatient care utilization that was consistent with what it experienced in the first half of 2023 and planned for in 2024. Winter seasonal activity that included vaccinations, higher incidents of respiratory illness and related physician office visits have subsided, management said. “If other MCOs had the same experience, it would be most positive” for Humana, “given its guidance for persistent, elevated utilization and investors’ likely preference for a 50%+ EPS recovery story (HUM) over slightly better revenue/EPS growth,” wrote Jefferies analysts on April 17. Revenue for the UnitedHealthcare segment grew 7% from the prior-year quarter to $75.4 billion, reflecting enrollment growth in its commercial and senior segments that was offset by expected declines in Medicaid due to ongoing eligibility redeterminations. UnitedHealthcare highlighted major managed Medicaid wins in Michigan, Texas and Virginia but expressed disappointment in the recent Florida selections.

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Blue Shield of California’s PBM Overhaul Could Still See Boost From Transparency Legislation

Blue Shield of California’s plan to replace its traditional pharmacy benefit arrangement with what it hopes will be a more transparent assemblage of services won’t go into full effect until 2025, but it has already generated a lot of hope and criticism across the healthcare landscape. The insurer, though, is aiming to inspire as much at it aiming to succeed on its own.

“It’s going to take more than just one plan, or one employer group or one manufacturer. It’s going to take all of us to look at our business model and think about how it can be simpler, more sustainable, more affordable, with higher quality care,” Alison Lum, Blue Shield of California’s VP-Pharmacy Services, said in an interview with the Pink Sheet on 6 February.

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News Briefs: HHS Looks to Improve MA Transparency by Gathering Consumer Data

As part of new actions to lower health care and prescription drug costs by promoting competition, the Biden administration on Dec. 7 said it aims to further improve Medicare Advantage transparency. Noting that the MA program now serves roughly half of Medicare-eligible beneficiaries, the Biden administration in a fact sheet said it is committed to ensuring that MA plans “best meet the needs of people with Medicare, there is timely access to care, and the market has healthy competition.” Therefore, early next year HHS will solicit from the public “programmatic data” to better understand “the effects of market shifts on consumers and care outcomes.” When asked during a Dec. 6 press call for more details on this effort, a senior administration official responded: “We’ll be seeking additional information that will allow the agency to explore new policies and learn more about this really important program for seniors and people with disabilities.” Additionally, the administration said it will build on recent steps “[c]racking down on anticompetitive and anti-consumer practices” in MA and continue to implement updates to MA payment “that improve payment accuracy, address gaming, and recover overpayments.”

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KFF: Medicaid MCOs Will Grapple With Higher Rates, New Mandates in 2024

In 2024, managed care organizations will have to manage more complex care coordination requirements and compliance with ambitious equity goals in many states — even as Medicaid programs have been forced to step up reimbursement rates across many care categories. That’s according to the 2023 edition of KFF's annual survey of state Medicaid officials, which was released on Nov. 14.

The overwhelming majority of states are increasing Medicaid reimbursement rates across many care categories. Forty-eight states increased rates for at least one care category in 2023, and 47 will do the same in 2024. Only 21 states implemented at least one rate restriction in 2023, and 19 expect to do so in 2024.

That means total state spending for the safety net health insurance program is likely to increase, despite the ongoing reduction in total enrollment due to the return of eligibility redeterminations. Medicaid spending per enrollee is likely to increase in 2024, KFF found, while total Medicaid spending growth in the surveyed states will likely be 8.3% in 2023, down from 9.8% in 2022.

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Latest Round of RFPs Focuses on Integrating New Medicaid Populations, Improved Analytics 

With more than 78% of Medicaid beneficiaries enrolled in managed care plans as of the latest update to AIS’s Directory of Health Plans (DHP), winning and maintaining state contracts is crucial to MCOs that serve the Medicaid population. Six states have pending requests for proposals (RFPs) that serve about 11 million lives combined, while four states recently awarded new contracts. 

In recent years, new Medicaid RFPs have emphasized population health, asking payers to focus on health equity and social determinants of health while integrating services such as behavioral health, managed long-term services and supports (MLTSS), and pharmacy services into acute care. For example, Georgia will shift its aged, blind and disabled Medicaid population from fee-for-service care delivery to managed care when its new contracts begin, and Virginia plans to combine its MLTSS and managed Medicaid plans into one program. States also want improved analytics capabilities to track member outcomes and simplify claims and appeals processes.  

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Big Three PBMs Drive 3Q Profitability for Parent Companies

The Big Three PBMs — The Cigna Group’s Express Scripts, UnitedHealth Group’s Optum Rx and CVS Health Corp.’s Caremark — all delivered positive results during the third quarter of 2023, and in some ways helped offset underperformance for the firms’ health benefits businesses.

Wall Street analysts were generally positive about the performance of the firms’ PBM subsidiaries, but they had questions about the way each firm plans to manage the cost of glucagon-like peptide 1 (GLP-1) agonists for their clients.

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