Medical Costs

In recent months, the interest in prescription weight loss medications has grown exponentially as celebrities tout the drugs and clinical trial results show their safety and effectiveness. However, while tens of millions of people could benefit from the medications, health policy experts tell AIS Health that payers are taking a cautious approach and are concerned at the financial impact if the FDA approves more drugs for that indication, as is expected.

A recent survey from the International Foundation of Employee Benefit Plans found that 22.1% of employers last year offered prescription drug coverage for weight loss, including 21.3% of corporations, 22% of public employers and 27% of multiemployer plans. Of the 470 companies that responded to the survey, 25% said obesity is one of the top three health conditions that has the largest impact on overall health costs.

The higher the market share of the leading insurer in a state, the lower the negotiated prices were that the insurer paid to hospitals, according to a new study published in Health Affairs, which used market concentration data from 2019 and payer-specific negotiated prices from 1,446 acute care hospitals as of the end of 2021.

The level of insurer market concentration varied significantly across the nation. In states like Alabama and Alaska, the dominant insurers held a near-monopoly position with market share over 71%, while the leading health plans in states like New York and Wisconsin faced a more competitive environment. The study found that market leaders in the most concentrated markets paid 15% less to hospitals than those in the least concentrated markets.

As more employers shifted to self-funded health plans, the stop-loss insurance segment expanded to $26 billion in 2021, with a growth rate exceeding 10% in each of the past five years, according to an A.M. Best report. There has been a notable uptick in employers with fewer than 1,000 employees choosing stop-loss insurance since 2018. Although the medical loss ratio for stop-loss has been lower than for group commercial coverage over recent years, it rose from 81.5% in 2020 to 85.0% in 2021, largely due to a year-over-year increase in stop-loss claims from major insurers and several other insurers that had claims for the first time in 2021.

Not one, not two, but three insurtechs that have gone public in recent years reported their first-quarter earnings on May 9 — and each took the opportunity to detail how they’re stepping away from unprofitable parts of their businesses and focusing on ventures that can help put them in the black.

“Oscar is in a very different place than we were a year ago,” newly minted CEO Mark Bertolini said during Oscar Health Inc.’s earnings call.

“A year ago, we were focused on absorbing our increased scale and ensuring that our operations could handle a sizable increase in growth,” continued Bertolini, the former Aetna CEO who left the company after its acquisition by CVS Health Corp. “Today, we are focused on advancing the capabilities and technology to best serve our members and have been able to shift our attention to implementing a series of initiatives aimed at improving the efficiency of our operations.”

With premiums steadily rising and turbulence shaking up the market-share leaderboard, the stop-loss insurance segment has become integral to many health plans’ portfolios in recent years. Experts believe the level of competition will only grow as more employers transition to self-funded plans.

Net premiums earned (NPE) for stop-loss insurance, an additional layer of coverage that protects employers against extremely high-dollar claims, reached $26 billion in 2021, according to a new report from credit rating firm A.M. Best. That’s up from $24 billion in NPE in 2020 — and more than double the $11.6 billion in total NPE seven years earlier in 2014.

Although executives during The Cigna Group’s first-quarter 2023 earnings call put a heavy emphasis on the firm’s evolving PBM business model, Cigna’s ability to control health care costs was a noteworthy —albeit less headline-grabbing — highlight that caught one equities analyst’s eye.

Cigna delivered “the best MLR beat of the bunch,” Jefferies analyst David Windley wrote in a May 8 research note, pointing out that the insurer’s medical loss ratio of 81.3% beat the Wall Street consensus estimate by 60 basis points. For the full year 2023, Cigna expects its MLR to be in the range of 81.5% to 82.3%.

People receiving injectable fertility drugs through a specialty pharmacy order review program expressed high satisfaction with the offering, found a recent study by AllianceRx Walgreens Pharmacy and Walgreen Co. Researchers also observed that the services helped reduce waste due to incorrect storage and prevented late or missed doses, producing savings of almost $50,000.

In 2012, AllianceRx Walgreens started the Fertility Order Review (FOR) program to assist people who are self-administering injectable fertility medications, helping ease the anxiety that these patients often deal with. On the day a person’s first order arrives, a fertility nurse calls them to go over the order’s contents, including each item’s purpose and proper storage; direct them to online patient guides available in English and Spanish on administration, medication and fertility education; alert them to expiration dates; educate them about setting up refill reminders; and answer any patient questions.

Although the managed care earnings season kicked off with concerns about rising medical costs, equities analysts appeared optimistic about Humana Inc.’s prospects after the insurer reported its first-quarter 2023 financial results on April 26. They seemed particularly impressed by Humana’s performance during the Annual Election Period (AEP) and Open Enrollment Period (OEP) for Medicare Advantage customers.

Humana’s first-quarter results “brought forth a positive preliminary look at 2024 MA rates, strong MLR [medical loss ratio] upside aided by favorable development, and 2023 AEP/OEP details that draw a positive look into the composition of members, retention, and margins,” SVB Securities analyst Whit Mayo wrote in an April 26 note to investors.

Although new treatments hold tremendous promise for addressing obesity and the myriad health issues associated with it, Medicare Part D is barred from covering them, and private insurers’ coverage is variable. And there are multiple barriers that will make fixing those coverage gaps challenging, health policy experts said during a recent panel discussion.

Perhaps the most headline-grabbing obesity treatment is semaglutide, which Novo Nordisk sells under the brands Ozempic (for Type II diabetes) and Wegovy (for weight loss). That drug has recently been the topic of a cascade of news articles discussing the drug’s ability to help patients shed stubborn pounds, side effects such as hair loss, and shortages faced by some diabetes patients due to semaglutide’s skyrocketing popularity.

Elevance Health, Inc. reported increased premium revenues in the first quarter of 2023 and strong results from its fast-growing PBM and services division, Carelon. While Wall Street analysts were mostly positive about the results, some expressed concerns that the firm’s medical loss ratio (MLR) and operating expenses were too high.

Elevance took in $41.9 billion during the first quarter of 2023, an increase of 10.6% year over year. Income rose 16.6% year-over-year to $2.8 billion, yielding adjusted earnings per share (EPS) of $9.46, which beat the Wall Street consensus of $9.23. Elevance’s MLR was 85.8%, which was in line with projections from the firm and the Street consensus. Days claims payable (DCP) was 46 days as of March 31, “a decrease of 1.5 days from December 31, 2022 and a decrease of 0.9 days compared to March 31, 2022,” per a press release announcing the results.