Elevance Health, Inc. has agreed to acquire Indiana University Health Plans, according to a Sept. 10 press release. IU Health Plans, a subsidiary of Indiana University Health, has 19,000 Medicare Advantage members and 12,000 fully insured commercial beneficiaries. It will become a part of Anthem Blue Cross and Blue Shield in Indiana, which is Elevance’s insurance affiliate in the state. The deal is subject to customary closing conditions and is expected to close by the end of the year.
AMA Report Details PBM Market Concentration; PCMA Fires Back
UnitedHealth Group’s Optum Rx, The Cigna Group’s Express Scripts, CVS Health Corp.’s Caremark and Prime Therapeutics together control about 70% of the national PBM market in 2022, according to an American Medical Association (AMA) report released on Sept. 9.
Although the PBM industry’s trade group immediately criticized the report, pointing out that the nation’s largest physician trade group could be biased against PBMs, data from AIS Health’s parent company, MMIT, tells a similar story. And one leading health policy expert tells AIS Health that what the researchers found is “very reasonable” and consistent with other reports on the concentration and vertical integration in the PBM market.
News Briefs: L.A. Care, Health Net to Aid People Experiencing Homelessness
L.A. Care Health Plan and Health Net announced on Aug. 28 they have launched two programs that will collectively invest $90 million over five years to help people experiencing homelessness receive access to care. The health plans will invest $60 million in the L.A. County Field Medicine Program, in which 19 providers will provide coordinated care. They also will invest $30 million in the Skid Row Care Collaborative, which will include harm reduction services, extended hours for urgent care and pharmacies, and onsite specialty medical services in Los Angeles’s Skid Row neighborhood. The programs could assist about 85,000 Los Angeles residents, according to L.A. Care and Health Net, which is a division of Centene Corp.
A federal district judge on Aug. 26 ruled in favor of TennCare beneficiaries who alleged the state’s Medicaid program caused thousands of residents to lose coverage after the introduction in 2019 of an electronic eligibility determination system, Fierce Healthcare reported on Aug. 28. “After years of litigation, plaintiffs have proven TennCare violated their rights under the Medicaid Act, the Due Process Clause of the Fourteenth Amendment, and the Americans with Disabilities Act,” the judge wrote. Fierce noted the state may appeal the court’s ruling. The Tennessee Justice Center, National Health Law Program and National Center for Law and Economic filed the lawsuit in March 2020.
PBMs and Vertical Integration: CBO Adds to Growing Concerns About Negative Impacts
The Congressional Budget Office raised concerns about the potential harms of joint ownership of pharmacy benefits managers, health insurance companies and pharmacies in new responses to U.S. lawmaker questions, adding to the chorus of scrutiny that may be building toward 2025 congressional action against vertical integration in the health sector.
Insurance company and PBM mergers “tends to lower the prices paid for drugs” and “reduce spending on drugs for patients in vertically integrated health insurance plans,” the CBO found, but any reductions in spending by the plan may not be passed on to enrollees in the form of lower premiums.
News Briefs: Elevance, PE Firm Form Primary Care Delivery Platform
Elevance Health, Inc. and private equity firm Clayton, Dubilier & Rice (CD&R) announced on Aug. 14 the formation of Mosaic Health, a primary care delivery platform focused on value-based arrangements with payers. The companies revealed in April their plans to merge CD&R-owned apree health and Millenium Physician Group with primary care assets owned by Elevance through its Carelon Health division. Elevance CEO Gail Boudreaux said in April that the company would own a “significant minority position” in Mosaic, while Chief Financial Officer Mark Kaye said Mosaic would have more than $4 billion in annual revenue when formed.
News Briefs: CMS Posts First Set of Medicare Negotiated Prices for 10 Part D Drugs
CMS released the first set of negotiated prices for 10 drugs with the highest total gross Part D spending, as directed by the Inflation Reduction Act (IRA). The agency published the list of 10 drugs selected for Medicare price negotiations a year ago and on Aug. 15 posted the maximum fair prices reached with manufacturers, reflecting discounts that range from 38% to 79% off of list price. The negotiated prices will take effect in 2026 and are expected to generate an aggregated savings of $1.5 billion in out-of-pocket costs for seniors. CMS estimated that about 9 million people with Medicare use at least one of the 10 negotiated drugs, which include highly utilized brand-name drugs Eliquis (apixaban) for the prevention and treatment of blood clots and Jardiance (empagliflozin) for the treatment of diabetes, heart failure and chronic kidney disease. CMS will continue to engage in price negotiations on select high-cost Part B and Part D drugs for future years.
Summer of Deals Heats Up Integrated MA Market
The summer of 2024 is shaping up to be a hotbed of M&A activity among health systems that operate Medicare Advantage plans. While the year kicked off with Point32Health, Inc.’s planned acquisition of Baystate Health’s Health New England, which serves about 12,000 MA members, a flurry of deals announced in recent weeks will further shake up the landscape.
Kaiser Permanente in June unveiled its second Risant Health deal just a few weeks after shoring up its purchase of Geisinger Health, a 10-hospital system that operates one of the largest insurers in Pennsylvania. This time, the MA stalwart set its sights on Cone Health, a system of four hospitals in North Carolina. The health system also operates Triad HealthCare Network, a physician-led ACO, and an MA plan.
News Briefs: Humana Heightens MA Enrollment Projections for 2024
In its second quarter 2024 earnings report, Humana Inc. said it now expects individual Medicare Advantage membership growth of approximately 225,000 this year, up from its previous projection of approximately 150,000. The insurer on July 31 reported adjusted earnings per share of $6.96, which was higher than internal and Wall Street projections but down from its prior year EPS of $8.94, and Humana reaffirmed its adjusted EPS guidance of “approximately $16.00.” It also maintained its full-year medical loss ratio guidance of “approximately 90 percent,” which “prudently allows for the higher net inpatient costs observed in the second quarter to continue for the remainder of the year,” according to prepared remarks from Jim Rechtin, president and CEO. During a July 31 conference call to discuss the results, Rechtin added that the company has seen some “modest claims pressure in Medicaid” but does not expect it to impact full-year results. The company’s Medicaid membership is on track to grow by 250,000 lives and reach roughly 1.5 million members by the end of the year. That increase is primarily driven by new contracts in Oklahoma and Indiana, as well as growth in Humana’s Ohio Medicaid business, and partially offset by the redetermination process that is mostly completed. Its active Medicaid footprint is now nine states.
Molina Agrees to Acquire ConnectiCare; Centene Reveals Medicaid Struggles
Molina Healthcare, Inc. has agreed to pay $350 million to acquire ConnectiCare, a subsidiary of EmblemHealth that covers about 140,000 medical lives in Connecticut. The July 23 announcement occurred one day before Molina reported second-quarter earnings results that beat Wall Street analysts’ projections. The ConnectiCare deal is expected to close in the first half of next year and is subject to regulatory approvals.
Centene Corp., meanwhile, reported second-quarter financial results on July 26 that underscored the elevated cost trends it’s seeing in its dominant Medicaid segment. Like other insurers, Centene is feeling the effects of a higher-acuity risk pool created by the exodus of millions of people from the Medicaid rolls since states restarted routine eligibility checks last spring. Still, other positive developments for Centene led one Wall Street analyst to declare its quarterly performance “mixed.”
FTC’s Reported Plan to Sue PBMs Over Rebates Raises Eyebrows
The Federal Trade Commission (FTC) on July 9 released a new report stemming from its investigation into the business practices of PBMs — and on the next day, the Wall Street Journal and other news outlets reported the antitrust agency is on the verge of filing a lawsuit against the country’s largest PBMs over how they negotiate rebates with drug manufacturers for products including insulin. The FTC reportedly is concerned that the lure of high rebates is causing PBMs to steer patients toward higher-cost drugs.
The FTC has not yet confirmed the WSJ report, which cited people familiar with the matter. But one expert says the FTC needs to be careful about the way it treats rebates.