Enrollment in health savings account (HSA)-eligible health plans and health reimbursement arrangements (both of which are known as consumer-driven health plans) climbed back to a record high in 2022, with 19% of employees enrolled in such a plan, according to the annual Consumer Engagement in Health Care Survey, published by the Employee Benefit Research Institute (EBRI) and Greenwald Research. Enrollment in high deductible health plans (HDHPs) that were not eligible to be paired with an HSA fell from 15% in 2020 to 12% in 2022. HDHP enrollees were more likely to have a choice of health plan than traditional plan enrollees, with 29% of them having three health plans to choose from. However, about 72% of enrollees spent less than an hour on their health insurance decision during open enrollment. HDHP enrollees reported they spent more time selecting a health plan.
Medicaid Drug Spending Growth Hit Double Digits in 2021, Magellan Rx Reports
In 2021, the net cost per prescription drug claim in 25 Medicaid fee-for-service (FFS) programs went up 11.0%, or $5.81, according to Magellan Rx Management’s latest annual Medicaid Pharmacy Trend Report. It is the first time that drug spending growth reached double digits since the inception of Magellan’s report in 2016. Net spending on specialty drugs continued to see double-digit growth at 13.0%, compared with 10.9% in 2020, while net trend on traditional drugs rose 5.8%, up 4.1 percentage points from 2020. For the second year in a row, specialty drugs accounted for more than half of total drug spending in Medicaid FFS, while only representing 1.3% of total pharmacy utilization.
ACA Marketplace Plans Deny Over 16% of In-Network Claims in 2021
About 16.6% of in-network claims were denied by non-group qualified health plans (QHPs) offered on HealthCare.gov in 2021, down from 18.3% in 2020, according to a recent Kaiser Family Foundation analysis. Among the 162 issuers in HealthCare.gov states with complete data on claims received and denied, 65 of them had a denial rate between 10% and 19%. Only 17 issuers had a denial rate over 30%, compared with 28 in 2020. The majority of denials (76.5%) were classified as “all other reasons,” while 8% were for services that lacked a prior authorization or referral. Of the more than 48 million denied claims in 2021, marketplace enrollees appealed 90,599 claims — a 0.2% appeal rate — and insurers upheld 59% of denials that were appealed.
The Big Three PBMs’ Formulary Exclusions Continue to Grow in 2023
Cigna Corp.-owned Express Scripts removed 43 medications from its 2023 National Preferred Formulary, while the other two major PBMs — CVS Health Corp.’s Caremark and UnitedHealth Group’s Optum Rx — cut 23 and 19 drugs from their formularies in 2023, respectively. Since 2014, the three PBMs have dramatically increased the number of excluded drugs, but the growth rate of exclusions has slowed for the second year in a row.
Medicare Price Negotiation Simulation Shows Substantial Savings, Despite Restrictions
The U.S. will likely save billions of dollars in the first few years of Medicare drug price negotiation — a provision of the Inflation Reduction Act (IRA) — suggests a recent study published in JAMA Health Forum. Acting as though the IRA had been implemented from 2018 to 2020, researchers from Harvard Medical School and Brigham and Women’s Hospital created a simulation of the drug selection process, and found that Part D and Part B drug spending would have been reduced by 5% — $26.5 billion — over those three years.
Overall, 40 drugs were selected. CMS’s criteria are strict — spending on each drug must exceed $200 million in the year prior to its selection, and products must have been on the market for at least nine years (or 13, if the drug is a biologic). Selected therapies cannot have any generic or biosimilar alternatives, and orphan drugs and plasma-derived products are also ineligible. Then, the negotiated price must fall below a drug’s “ceiling price,” which is determined by the lesser of two figures: the average net price of a drug after its existing rebates and discounts, or between 40%-75% of the drug’s nonfederal average manufacturer (non-FAMP) price, depending on the drug’s age.
Health Care Utilization Rebounded in 2022, Yet Remained Below Pre-Pandemic Levels
As of mid-to-late 2022, health care utilization had bounced back to levels on par with those seen at the beginning of the COVID-19 pandemic. Yet the utilization of some non-COVID health care services remained below expectations based on pre-pandemic trends, according to a recent Peter-KFF Health System Tracker analysis. The number of hospital discharges in the third quarter of 2022 was 9.1 million, or 700,000 discharges below the pre-COVID quarterly average in 2018-2019.
The share of adults who visited a doctor in the last 12 months (83.1%) recovered in 2022 after dipping in 2020-2021, but did not reach the percentage seen in early 2019 (85.3%). Similarly, emergency care utilization saw a rebound last year, yet remained below prepandemic levels. The number of physician encounters per person, however, did rebound to 2019 levels as of the third quarter of 2022.
MCO Stock Performance, January 2023
Here’s how major health insurers’ stock performed in January 2023. Elevance Health had the highest closing stock price among major commercial insurers as of January 31, 2023, at $499.99. Humana Inc. had the highest closing stock price among major Medicare insurers at $511.70.
The Big Three PBMs’ Formulary Exclusions Continue to Grow in 2023
Cigna Corp.-owned Express Scripts removed 43 medications from its 2023 National Preferred Formulary, while the other two major PBMs — CVS Health Corp.’s Caremark and UnitedHealth Group’s Optum Rx — cut 23 and 19 drugs from their formularies in 2023, respectively. Since 2014, the three PBMs have dramatically increased the number of excluded drugs, but the growth rate of exclusions has slowed for the second year in a row.
As CMS Finalizes RADV Rule, Prior Audits Shed Light on Payment Errors, High-Risk Codes
In a highly anticipated final rule on the Medicare Advantage Risk Adjustment Data Validation program, CMS on Jan. 30 said it would extrapolate RADV audit findings starting with the 2018 payment year. Notably, CMS will not extrapolate RADV audit findings for payment years 2011 through 2017 as it had previously proposed. Currently, CMS reviews a small sample of patient medical records to compare them with billing codes sent to the federal government. Under the final rule, CMS will extrapolate the error rate found in the sample to the entire plan. Additionally, the rule finalized a plan to not apply a “fee-for-service adjuster” to its audit methodology. Using the new methodology, CMS officials said the agency expected to recover $479 million in overpayments from 2018 alone, and an extra $4.7 billion from 2023 through 2032.
Medicare Enrollees May Still Face Affordability Issues After Part D Benefit Redesign
About 800,000 Medicare beneficiaries in 2024 and 200,000 in 2025 could see their out-of-pocket (OOP) medication costs exceed 10% of their annual income, even with the Part D drug benefit reforms passed via the Inflation Reduction Act (IRA), according to an Avalere analysis.
The IRA will establish a beneficiary OOP cap at the catastrophic threshold, which is estimated to be $3,233 in 2024. Avalere estimated that 1.5 million Part D enrollees without low-income subsidies (LIS) are projected to reach OOP drug spending levels above the catastrophic threshold in 2024. Among them, about 18% of beneficiaries will reach the catastrophic phase in the first three months. Greater shares of beneficiaries who are younger than 65 years old or who are Hispanic will face affordability challenges compared to the average non-LIS enrollees. The analysis also suggested that non-LIS enrollees taking asthma drugs, blood thinners, immunology therapies, cancer treatments and HIV drugs are more likely to reach the OOP cap in 2024.