Medical Costs

A new study published in Health Affairs urged government leaders to limit market consolidation among the largest dialysis providers as more and more seniors choose Medicare Advantage over fee-for-service (FFS) Medicare. Analyzing 2016 and 2017 outpatient Medicare claims data, the study authors found that MA organizations paid inflated costs for dialysis services compared to what FFS Medicare would have paid, especially to large national dialysis organizations — where the majority of patients receive treatment. Notably, MA plans’ median cost for in-network hemodialysis (the most common form of the therapy) was $301, which was markedly higher than the $232 median cost for out-of-network treatments. Findings were similar for peritoneal dialysis, the less common form of dialysis.

Overall, MA plans paid 131% of the FFS price for in-network hemodialysis at large chains, compared to 120% of the FFS price at regional chains, and they paid 112% of the price at independently owned facilities. These markups were also found for in-network peritoneal dialysis but were not observed for out-of-network services.

A new study published in JAMA Network Open raises questions about whether health systems can actually achieve significant savings through the Medicare Shared Savings Program (MSSP), or if Medicare Advantage could be a better bet. To identify spending patterns in MA and MSSP’s Accountable Care Organizations (ACOs), researchers studied the characteristics and claims data of about 16,000 Medicare patients at Ochsner Health System (OHS), a large, academic system in Louisiana, from 2014 to 2018. Ochsner joined MSSP in 2013, and its ACO hosts more than 2,200 providers. It also offers MA plans via a partnership with Humana Inc.

UnitedHealth Group on Sept. 7 unveiled a “10-year, wide-ranging collaboration” with Walmart Inc., which will start in 2023 with 15 Walmart Health locations in Florida and Georgia. UnitedHealth’s Optum division will provide Walmart Health clinicians with “analytics and decision support tools” to help them improve outcomes for Medicare beneficiaries, and the two firms will offer a co-branded Medicare Advantage plan starting in January called UnitedHealthcare Medicare Advantage Walmart Flex (HMO-POS). Commercial health plan members with UnitedHealthcare’s Choice Plus PPO plan will also have in-network access to Walmart Health Virtual Care, effective in January. “Eventually, the collaboration aims to serve even more people, including those across commercial and Medicaid plans, by providing access to fresh food and enhancing current initiatives to address social determinants of health, over-the-counter and prescription medications, and dental and vision services,” stated a UnitedHealth press release.

Multiple companies that provide alternate funding options for patients have been launching over the last several years. But one maximizer company has found itself the target of a legal battle with manufacturer Johnson & Johnson over its strategy to reclassify drugs and maximize the copay assistance it gets from pharma manufacturers.

Copay maximizers have companies classify some drugs as “non-essential health benefits” (NEHBs) as outlined in the Affordable Care Act (ACA). They then secure patient assistance for these drugs through manufacturers’ or charitable foundations’ patient assistance programs, taking the full annual amount of assistance per drug and spreading out that money over the course of the year (see story). The programs are seen as follow-on offerings to copay accumulators, which take the maximum assistance up front and deplete the contribution before the end of the year.

Multiple companies are offering copay maximizer — also known as variable copay — programs. And while they may be attractive to firms that implement them, a closer look might reveal them to be not as appealing as they seem at first blush, say industry experts. The programs also are being challenged in legal settings, including a lawsuit by manufacturer Johnson & Johnson against SaveOnSP (see story).

Traditionally, when a manufacturer provides copay assistance for one of its drugs, that dollar amount would count toward the patient’s deductible and out-of-pocket maximum. But copay maximizer programs will distribute 100% of available manufacturer copay offset funds over 12 months, as opposed to copay accumulators, which apply the maximum manufacturer assistance up front and deplete that contribution before the end of the year. Payments in both approaches do not count toward members’ deductibles and out-of-pocket maximums.

Cancer replaced musculoskeletal conditions as the biggest driver of large companies’ health care costs, according to the Business Group on Health’s 2023 Large Employers’ Health Care Strategy and Plan Design Survey. The survey found that “13% of employers said they have seen more late-stage cancers and another 44% anticipate seeing such an increase in the future, likely due to pandemic-related delays in care.” Between May 31, 2022, and July 13, 2022, the organization polled 135 large employers in various sectors that cover more than 18 million people in the U.S. The survey also found that 99% of respondents said that they are concerned about prescription drug trend. Last year, prescription drugs were responsible for a median of 21% of the companies’ health care costs, and specialty drugs accounted for more than half of pharmacy spend.

Specialty drug trend in 2021 largely recovered from the hit it took from the COVID-19 pandemic in 2020, driven mainly by an increase in utilization. That’s according to the 2022 Artemetrx State of Specialty Spend and Trend Report from Pharmaceutical Strategies Group (PSG), an EPIC company.

Published in August, the report is sponsored by specialty pharmacy Reliance Rx. Findings are based on an Artemetrx analysis of 73.9 million medical claims and 55.1 million pharmacy claims from PSG’s book of business. It is the sixth annual version of the report.

Overwhelming consolidation in the dialysis provider market, dominated nationally by two organizations, may have a chilling effect on the financial health of some Medicare Advantage plans, which hold limited negotiating power barring regulatory reform, says a new study.

Since the 21st Century Cures Act loosened enrollment rules in 2021, allowing more patients with a previous diagnosis of end-stage renal disease (ESRD) to join Medicare Advantage, plans have witnessed a significant shift. More than 40,000 fee-for-service (FFS) Medicare members with ESRD switched to an MA plan during the first Annual Election Period under the new policy, according to the consultancy Avalere.

A new study published in Health Affairs urged government leaders to limit market consolidation among the largest dialysis providers as more and more seniors choose Medicare Advantage over fee-for-service (FFS) Medicare. Analyzing 2016 and 2017 outpatient Medicare claims data, the study authors found that MA organizations paid inflated costs for dialysis services compared to what FFS Medicare would have paid, especially to large national dialysis organizations — where the majority of patients receive treatment. Notably, MA plans’ median cost for in-network hemodialysis (the most common form of the therapy) was $301, which was markedly higher than the $232 median cost for out-of-network treatments. Findings were similar for peritoneal dialysis, the less common form of dialysis.

After a year in which health care cost trend flatlined, costs for self-funded plan sponsors increased “significantly” — by 8.2% — in 2021, according to the Business Group on Health’s 2023 Large Employers’ Health Care Strategy and Plan Design Survey. In addition, for the first time in the history of the annual survey, cancer eclipsed musculoskeletal conditions as the top driver of large firms’ health costs.

In 2020, 78% of polled employers said cancer was the top cost-driving condition, and the share rose to 80% in 2021 and 83% in 2022. The percentage of employers identifying musculoskeletal conditions as the most expensive condition dropped each of the three years, from a high of 90% in 2020, down to 84% in 2021 and 76% in 2022.