Medical Costs

New Billing Codes Led to Explosion of Patient-Messaging Claims

The typical cost for a patient-provider email messaging claim was $39 in 2021, including both the portion paid by health plans and by patients. Although insurers covered the full cost for 82% of these claims, the patients who need to pay out of pocket typically spent $25 on a typical email message, according to Peterson-KFF Health System Tracker.

Use of electronic health communications has exploded since the COVID pandemic as more patients are seeking medical care remotely. CMS introduced several new billing codes in 2020 to help health care providers bill patients and insurers for a range of digital health services including electronic visits or asynchronous patient portal messages that require medical decision-making and at least five minutes of clinician time over a seven-day period.

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Oscar, Clover, Alignment Make Progress Toward Profitability

The software-focused startup insurers known as “insurtechs” last year made tangible strides toward reaching profitability, according to their full-year earnings reports, backing up their executives’ statements that 2024 may see break-even results or better.

Financial institutions generally took a positive view toward Oscar Health Inc., Alignment Healthcare Inc. and Clover Health Investments Corp., but some analysts tempered their praise by pointing out holes in the firms’ growth and profitability strategies.

One former insurtech, the erstwhile Bright Health Group, Inc., exited the insurance business altogether, and now operates as a care delivery-focused business under the name NeueHealth.

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PBMs Place Biosimilars on Preferred Tiers, yet Adoption Varies by Product

PBMs often place biosimilar medications on preferred formulary tiers soon after the drugs hit the market, a change from a few years ago, when payers were more hesitant to cover biosimilars, according to a recent Cardinal Health report. However, one of the report’s authors tells AIS Health that PBMs in some cases have kept the reference biologic product on their preferred tier as well, leading to slower adoption of biosimilars.

For instance, Fran Gregory, Pharm.D., Cardinal Health’s vice president of emerging therapies, notes that CVS Health Corp.'s Caremark, The Cigna Group's Express Scripts and UnitedHealth Group's Optum Rx all added Humira (adalimumab) biosimilars to their national preferred formularies when they launched last year. Gregory says those PBMs were “very strategic” about which of the nine Humira biosimilars to place in a preferred tier, analyzing the wholesale acquisition costs (WACs) and concentrations of the products and tailoring them “based on the lines of business they’re serving.” But the payers all put the same tier as the biosimilars, which Gregory says “is where the challenge lies” with adoption.

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2028 Global Medicine Spending Is Expected to Reach $2.3 Trillion

Global spending on medications is expected to hit $2.3 trillion by 2028, as not only more therapies become available but also more people have access to them. That’s one of the findings of the IQVIA Institute for Human Data Science’s recent report titled The Global Use of Medicines 2024: Outlook to 2028. Oncology and obesity, among other therapeutic classes, are expected to be among the top areas in global spending over the next five years, estimated researchers.

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Prescription Drugs, Home Care Drove Health Spending in 2023

With respective increases of 10.8% and 10.7% in 2023, health care spending on prescription drugs and home health care rose the fastest out of seven health care categories analyzed in a recent Altarum report.

Total national health care expenditures grew by 6.2% last year, while gross domestic product (GDP) increased by 6.3% year over year. In December 2023, health care spending accounted for 17.2% of GDP and has remained below 17.5% since January 2022. About 84% of health spending was attributed to personal health care, half of which was spent on hospital care and physician and clinical services.

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Immediate Reporting of Supp Benefits Usage Puts Added Pressure on MAOs

As Medicare Advantage organizations grapple with rising medical costs — driven in part by increased spending on supplemental benefits such as dental, vision and over-the-counter coverage — CMS is tasking plans with the immediate submission of utilization data for “all items and services, including supplemental benefits” through the MA Encounter Data System (EDS). That requirement, which is retroactive to Jan. 1, presents a host of challenges as supplemental benefit vendors may not have the kind of detailed information CMS is seeking. And it raises broader questions about how the data will be used.

Supplemental benefits have been on the rise since plan year 2019, when CMS’s reinterpreted definition of “primarily health-related” enabled MAOs to include benefits like adult day health services, support for caregivers of enrollees and therapeutic massage in their plan benefit packages. In 2020, MAOs began offering Special Supplemental Benefits for the Chronically Ill (SSBCI), a category of “non-primarily health related” items and services that can be made available to certain beneficiaries. According to health care research and advisory services firm ATI Advisory, the number of plans offering expanded primarily health-related supplemental benefits and/or non-primarily health-related SSBCI grew from 628 plans in 2020 to 2,334 plans in 2024.

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News Briefs: BMA-Sponsored Paper Predicts $33 PMPM Cut to Supplemental Benefits

A recent report commissioned by the Better Medicare Alliance (BMA) estimated that Medicare Advantage per-member per-month (PMPM) payments could drop by 1.0% if CMS finalizes proposals contained in the 2025 Advance Notice. It also estimated that the PMPM value of supplemental benefits, or reductions to premiums and cost sharing, would decline by an average of $33 or more. In its preliminary rate notice released in January, CMS projected that MA plans could see an average revenue increase of 3.70%, which included an estimated a -2.45% revenue decline due to a combination of risk model changes that are being phased in and fee-for-service Medicare normalization, an effective FFS growth rate of 2.44%, and an average risk score trend of 3.86%. The report, prepared by Berkeley Research Group (BRG), projected that MA medical cost inflation will rise by 4% to 6% in 2025 and that CMS’s estimated pay increase will not adequately cover increased medical expenses. Citing a National Association of Insurance Commissioners analysis, BRG pointed out that PMPM medical costs in MA increased by an estimated 7.3% for the first nine months of 2023, while recent insurer earnings reports suggest medical costs will continue to grow in 2024.

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Prescription Drugs, Home Care Drove Health Spending in 2023

With respective increases of 10.8% and 10.7% in 2023, health care spending on prescription drugs and home health care rose the fastest out of seven health care categories analyzed in a recent Altarum report.

Total national health care expenditures grew by 6.2% last year, while gross domestic product (GDP) increased by 6.3% year over year. In December 2023, health care spending accounted for 17.2% of GDP and has remained below 17.5% since January 2022. About 84% of health spending was attributed to personal health care, half of which was spent on hospital care and physician and clinical services.

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Preventive Drug Lists Can Boost Workers’ Health, Study Suggests

A study published this month in JAMA Health Forum indicates people with diabetes can see short-term health benefits from enrolling in plans offering preventive drug lists (PDLs) that sharply reduce or eliminate cost-sharing for certain medications. However, the study’s lead author and a pharmacy benefits consultant tell AIS Health, a division of MMIT, that more work needs to be done to evaluate whether such programs are cost-effective for employer-sponsored plans.

Still, they were encouraged with the results, which found that people who switched to plans with PDLs had an 8.4% reduction in acute, preventable diabetes complication days compared with the non-PDL group. In addition, there was a 10.4% reduction in preventable diabetes complication days among members from lower-income areas who switched to PDLs.

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Latest Earnings Reports Suggest MA Insurers Aren’t ‘Out of the Woods’

As the second batch of publicly traded insurers posted fourth-quarter and full-year 2023 financial results, continued utilization pressures in Medicare Advantage remained a prominent theme during earnings calls held in the first two weeks of February. Such pressures prompted Humana Inc. to slash its outlook for 2024, but this month only CVS Health Corp.’s Aetna lowered its adjusted earnings per share (EPS) guidance, while The Cigna Group — which is planning to sell its relatively small MA business — raised its outlook.

CVS Health Corp. on Feb. 7 reported fourth-quarter adjusted EPS of $2.12 and full-year adjusted EPS of $8.74. Consolidated revenue grew 11.9% year over year to $93.8 billion, while revenue for the Health Care Benefits segment, which includes Aetna’s MA business, increased 16% to nearly $27 billion. CVS Health said it added 1.3 million members in 2023, which reflected growth across multiple product lines.

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