Managed Medicaid

Panelists: CMS Prior Authorization Rule Should Help, But More Is Needed

The rule that CMS finalized last month regarding prior authorization (PA) should help streamline the increasingly scrutinized process and lead to faster decisions, according to panelists who spoke during a KFF webinar on Feb. 22. However, they noted that regulation did not apply to employer-sponsored plans or state-based exchange plans and did not address how PA decisions are made and the clinical criteria plans use in determining which procedures are subject to PA.

Troyen Brennan, M.D., former chief medical officer at CVS Health Corp. and Aetna, noted that the rule did not include prescription medications, which are often subject to PA — a process that draws the ire of providers who worry that delays could worsen patient outcomes. The CMS Interoperability and Prior Authorization Final Rule also required insurers to have a PA application programming interface (API), where providers can access information, although the regulation did not require them to disclose PA data on medications.

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Checking on the Blues: Analysts Predict Margin Uptick in ’23 Will Be Short-Lived

Although Blue Cross Blue Shield plans’ margins started rising again in 2023 after a two-year slump, industry analysts say that a diverse array of factors could prevent continued margin expansion among the Blues this year.

“We don’t question that Blues overall will probably remain profitable…but the improvement in the margins in ’23 probably is not going to reoccur [this year],” says Bridget Maehr, director at the insurance-focused credit rating firm AM Best. “We’re probably going to see a little bit more of a normalization of margins.”

According to a new analysis from Mark Farrah Associates, Blues’ aggregate profit margin — net income divided by total revenues — swelled to 6.1% in the third quarter of 2020. During that time, the uptick in COVID-19-related care was far outpaced by declines in routine care, causing coffers to fatten across the insurance industry. Blues’ aggregate margin then declined to 3.9% by the third quarter of 2021, and it fell further to 3.0% in the third quarter of 2022.

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© 2024 MMIT

News Briefs: Cyberattack Targets UnitedHealth’s Change Healthcare

Change Healthcare, which UnitedHealth Group acquired in October 2022, has been targeted by a cyberattack. UnitedHealth said in a regulatory filing that on Feb. 21 it discovered “a suspected nation-state associated cyber security threat actor” had gained access to some of Change Healthcare’s information technology systems, and the firm reacted by isolating the affected systems. According to the latest update on a website dedicated to information about the incident, as of Feb. 23 “the disruption is expected to last at least through the day.” All other systems across UnitedHealth Group’s enterprise are operational, and the company said in the filing that it’s working with security experts and law enforcement to address the incident. “The cyberattack against UnitedHealth Group, one of the largest U.S. commercial prescription processors, is credit negative for the company, as financial and reputational impacts may ensue,” Moody’s Investors Service Vice President and Senior Credit Officer Dean Ungar said in a statement emailed to reporters about the incident.

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State Officials’ Skepticism Stymies Elevance-BCBSLA, SCAN-CareOregon Deals

This week, a growing chorus of criticism from state officials effectively stopped two proposed health insurer combinations in their tracks.

One industry observer says SCAN Group and CareOregon’s now-scuttled deal, as well as Elevance Health, Inc.’s beleaguered bid to purchase Blue Cross Blue Shield of Louisiana, offer valuable lessons for companies hoping to combine in the future.

“In both cases, the organizations proposing the merger spent over a year trying to convince stakeholders that the deal was a good thing, and after multiple efforts to generate support for the decision, gave up when that support did not materialize,” Michael Abrams, managing partner of the consulting firm Numerof & Associates, tells AIS Health, a division of MMIT.

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Centene Downplays Medicare MLR Miss, Reports ACA Marketplace Growth

Centene Corp.’s results for the fourth quarter of 2023 were largely positive, earning mild praise from Wall Street analysts. While Centene was the latest health insurer to face higher-than-expected Medicare Advantage utilization, executives claimed that the firm’s MA performance was far less worrisome than that of its peers — an argument that analysts seemed to accept.

Centene’s Medicare medical loss ratio (MLR) for the quarter was an eye-popping 95.3%, up from 87.5% in the fourth quarter of 2022, an increase of 780 basis points (bps). According to Jefferies analyst David Windley, that figure was 510 bps above Wall Street consensus projection for Centene’s Medicare book of business. However, during a Feb. 6 earnings call, Centene CEO Sarah London and Chief Financial Officer Drew Asher both insisted that the high MLR figure was not a reason for concern, was not caused by the same factors that drove high MLRs for MA peer firms like Humana Inc., and was accounted for in 2024 guidance.

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News Briefs: At Least 16.4M People Have Been Disenrolled From Medicaid

As of Feb. 1, at least 16.4 million Medicaid enrollees had been disenrolled from coverage since last April, representing about one-third of people who had applied to have their coverage renewed, according to KFF. KFF said the number of people disenrolled is likely higher “due to varying lags for when states report data.” Of the people who had been disenrolled, 71% were terminated for procedural reasons, meaning they did not complete the renewal process in time. The disenrollment rates ranged from 13% in Maine to 61% in Texas. Overall, states and Washington, D.C., have reported renewal outcomes for 52% of people enrolled in Medicaid, while the remaining 48% of people were awaiting decisions as of Feb. 1.

Dirk McMahon, UnitedHealth Group’s president and chief operating officer, plans on retiring, effective April 1. McMahon joined UnitedHealth in 2003 and has been president and COO since February 2021. UnitedHealth has not named a replacement for McMahon, whose previous roles at the company included CEO of UnitedHealthcare and president and COO of Optum.

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Preventable Hospitalizations Are More Common Among Black Medicaid Enrollees

Black Medicaid enrollees were more likely to be hospitalized for preventable reasons than white enrollees, regardless of whether they were enrolled in the Supplemental Security Income (SSI) program, according to an Urban Institute study.

Using data from CMS, the analysis studied preventable hospitalization rates across 21 states and among Medicaid enrollees ages 19 to 64 for the three most common types of preventable conditions: asthma/chronic obstructive pulmonary disease (COPD), diabetes, and heart failure. For all three conditions, preventable hospitalization rates were significantly higher for people enrolled in Medicaid through the SSI program — meaning they have a qualifying disability — compared with those who enrolled through other pathways.

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News Briefs: CMS Projects MA Plans Will Receive Average Pay Boost of 3.7% in 2025

Medicare Advantage plans next year can expect to receive, on average, a 3.70% increase in risk adjusted revenue, according to the 2025 Advance Notice of payment changes for MA and Part D plans, released on Jan. 31. That’s when taking into account a 2.45% revenue decline stemming from CMS’s phased-in risk model revision and fee-for-service (FFS) normalization, an effective growth rate of 2.44% and an average increase in risk scores of 3.86%, according to a CMS fact sheet. CMS this time last year estimated that plans would see a modest rate increase of 1.03%, but revised that projection to 3.32% for 2024 after deciding to phase in changes to the CMS-Hierarchical Condition Categories risk adjustment model starting this year. CMS said it plans to proceed with the phase-in as described in last year’s rate notice and is “proposing updates to the Part D risk adjustment model to reflect the redesign of the Part D benefit as required by the IRA [Inflation Reduction Act].” CMS requested comments on the proposals by March 1; the final rate notice is expected to be released no later than April 1.

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Study Underscores Challenges of Integrating Physical, Behavioral Health in Medicaid

Since integrating physical and behavioral health into its managed Medicaid program beginning in 2016, the state of Washington has not seen significant changes in utilization, quality measures or health outcomes, according to a recent JAMA Health Forum study. Experts tell AIS Health, a division of MMIT, that the study illustrates the challenges associated with integrating behavioral and physical health care that may not be fully apparent until the process begins.

K. John McConnell, Ph.D., the study’s lead author, tells AIS Health that Washington is just one of many states that in recent years have moved away from so-called carve-out models in Medicaid, where one health plan handles physical health and a separate behavioral health organization manages behavioral health. Most states now have carve-in designs where states contract with managed care organizations (MCOs) that are responsible for payment for all health care services for their members.

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Final Rule Could Reduce Improper Prior Authorization Denials in Medicaid

A rule recently finalized by CMS may address widespread problems with Medicaid prior authorization identified in an HHS Office of Inspector General (OIG) report, industry experts say. However, they suggest that to truly solve the problem of improper coverage denials, states and Congress must limit managed care organizations’ leeway in such matters.

The CMS Interoperability and Prior Authorization Final Rule, released on Jan. 17 and scheduled for publication in the Feb. 8 Federal Register, should help providers and patients better understand why a given request was rejected, experts tell AIS Health, a division of MMIT. The rule requires MCOs to share precise, specific reasons for denials and make those decisions faster. Most provisions in the final rule also apply to Medicare Advantage organizations, state Medicaid and Children’s Health Insurance Program fee-for-service programs, and Affordable Care Act plans sold on the federally facilitated exchanges. Additionally, the regulation includes interoperability and data transparency provisions.

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© 2024 MMIT