Payer/Provider Relations

Payers and providers are increasingly adopting value-based care, although they need to continue to invest in the models and collaborate to make them work, according to a report released on April 10 by AHIP, the American Medical Association (AMA) and the National Association of Accountable Care Organizations (NAACOS). The 74-page report identified best practices for developing payment arrangements for value-based care, including establishing clearly defined contract terms and considering ways to incentivize payers and providers to participate and move away from fee-for-service arrangements.

“Our goal here — AMA, AHIP and NAACOS — is to identify these real world best practices, get those in the hands of health plans, of physicians and clinicians and the teams in general, the VBC entities, so that they can really absorb this information [and] take action based on it related to their own participation in these models, so that we can really scale this nationwide,” Danielle Lloyd, AHIP’s senior vice president of private market innovations and quality initiatives, said during an April 12 panel discussion at the NAACOS Spring 2024 conference in Baltimore.

Although the cyberattack on its Change Healthcare subsidiary cost the company about $870 million, or 74 cents per share, in the first quarter of 2024, UnitedHealth Group on April 16 reaffirmed its full-year adjusted earnings per share (EPS) guidance of $27.50 to $28.00. Reporting financial results for the quarter ending March 31, the company said its Medicare Advantage business saw heightened outpatient care utilization that was consistent with what it experienced in the first half of 2023 and planned for in 2024. Winter seasonal activity that included vaccinations, higher incidents of respiratory illness and related physician office visits have subsided, management said. “If other MCOs had the same experience, it would be most positive” for Humana, “given its guidance for persistent, elevated utilization and investors’ likely preference for a 50%+ EPS recovery story (HUM) over slightly better revenue/EPS growth,” wrote Jefferies analysts on April 17. Revenue for the UnitedHealthcare segment grew 7% from the prior-year quarter to $75.4 billion, reflecting enrollment growth in its commercial and senior segments that was offset by expected declines in Medicaid due to ongoing eligibility redeterminations. UnitedHealthcare highlighted major managed Medicaid wins in Michigan, Texas and Virginia but expressed disappointment in the recent Florida selections.

A panel of experts will recommend in a formal report to Congress that ground ambulance-related balance bills should be settled using a rate-setting benchmark rather than arbitration, according to one member of the panel; in addition, the report will recommend that Medicare should begin to cover care that is delivered by ambulance personnel but does not result in a hospital transport. The report is under review by CMS, and is expected to kick off another battle on Capitol Hill over surprise billing policy.

Balance or surprise billing generally occurs when a person unwittingly receives care from an out-of-network provider and is then billed by that provider for whatever balance remains after insurance reimbursement. According to a member of the panel, the report will recommend that balance bills for ground ambulance care should be banned in virtually all circumstances, including emergency transports to a hospital, interfacility transports and care delivered by EMTs in the field that does not result in a transport to a hospital.

Thanks to a final rule published just one year ago, Medicare Advantage plans as of Jan. 1 were expected to meet new constraints when it comes to applying their utilization management (UM) policies, including prior authorization. CMS has said it aims to assess UM-related performance of plans serving 88% of beneficiaries this year, and it intends to accomplish this through both routine program audits and “focused audits.” According to compliance experts, the volume of audit activity since CMS began sending engagement letters in late February suggests the agency is eager to meet its goal, but it may not like what it finds.

The Biden administration has launched an investigation into UnitedHealth Group following the cyberattack on its subsidiary Change Healthcare, which caused significant disruption in payments and claims processing for pharmacies and health systems across the nation. Cyberattacks targeting the nation’s largest insurer — UnitedHealthcare — have been on the rise in recent years and exposed almost 750,000 patient records in 2023 alone, according to the HHS Office for Civil Rights (OCR).

Since 2010, UnitedHealthcare reported 21 data breaches to OCR that affected more than 829,000 members, with six of them caused by hacking or IT incidents. As of March 14, the most recent Change Healthcare data breach has not been filed to the OCR breach portal. To meet the requirements of the HIPAA Breach Notification Rule, OCR must be notified within 60 days of the discovery of a data breach.

Specialty pharmacies and oncology practices dispensing costly specialty medications have long complained that Medicare Part D direct and indirect remuneration (DIR) fees are not appropriate for these drugs. Efforts to do away with these retroactive fees were finally successful, but revamped reimbursement has brought a new problem — underwater reimbursement — claims the Community Oncology Alliance (COA).

DIR includes rebates and price concessions that occur after the point of sale. According to CMS, total DIR “has been growing significantly in recent years.…In 2020, pharmacy price concessions accounted for about 4.8 percent of total Part D gross drug costs ($9.5 billion), up from 0.01 percent ($8.9 million) in 2010.”

The Federal Trade Commission, Dept. of Justice and HHS on March 5 released a request for information (RFI) on private equity (PE) and “other corporations’” — including payers’ — ownership of health care providers, citing concerns over patient and worker safety, consolidation, and escalating costs. In a public event held that day, the agencies presented a deeply negative view of providers currently owned by PE and tipped further enforcement actions — including a heightened emphasis on legal coordination with state antitrust regulators.

The investigation is just the latest in a series of ambitious health care antitrust moves by the Biden administration. The FTC has also launched investigations into PBMs, while the DOJ tried to block notable transactions like UnitedHealth Group’s acquisition of Change Healthcare — and in October launched a broad antitrust investigation into UnitedHealth itself, which became public in recent days. The text of the new RFI said it “complements” CMS’s recent, separate RFI on Medicare Advantage.

UnitedHealth Group faces a crisis as the fallout from the hack of its Change Healthcare subsidiary continues to spread. The firm is rumored to have paid $22 million to the hackers who may have caused the breach, even as it faces falling stock prices, federal actions to stabilize provider reimbursement, payer operations disrupted by the hack, and legal risk.

A civil suit has already been filed against UnitedHealth due to the cyberattack, and the scale of the disruption may strengthen enforcement action resulting from a newly revealed federal antitrust investigation into UnitedHealth. Because of the cyberattack, payments to thousands of providers have stalled, causing a liquidity crisis for some practices. The hack also may have exposed thousands of other health care entities to data breaches. UnitedHealth’s stock price dropped from $521.97 on Feb. 21 (the day the breach was disclosed) to $478.78 at the close of business on March 7.

Change Healthcare is the target of an ongoing cyberattack that is causing significant disruption for providers and pharmacists that rely on the UnitedHealth Group subsidiary to process claims, payments and authorizations.

While two prominent credit-rating firms say the incident likely won’t affect the credit worthiness or earnings outlook of UnitedHealth’s overall enterprise, one industry expert says the Change cyberattack does still pose risks for the company — and puts similarly diversified health insurers on notice.

“There’s just no guarantee that anybody’s going to be entirely safe from cyberattacks,” says Dean Ungar, a vice president and senior analyst at Moody’s Investors Service. “I think this does serve as a wake-up call or reminder to everyone in the industry…Even those [firms] that weren’t hit probably took this opportunity to take another look at what they’re doing and make sure that they’re protected — to the extent that you can be.”

The U.S. Dept. of Justice (DOJ) has opened an antitrust investigation into UnitedHealth Group, according to an internal company document shared with AIS Health and a Wall Street Journal report citing unnamed people familiar with the matter.

Federal regulators are reportedly seeking information about how the Minnesota-based company’s UnitedHealthcare insurance arm interacts with the many provider acquisitions that its Optum division has made in recent years — and how that relationship affects competition.

One health care economist says that while many unanswered questions remain, the result of a different investigation into provider consolidation suggests that the DOJ’s probe of UnitedHealth could end in an antitrust lawsuit.