Reimbursement

“Truly shocking” and “huge setback” were just two of a flood of analyst reactions to Humana Inc.’s Oct. 2 disclosure that its percentage of Medicare Advantage members in plans with 4 or more stars will plummet to 25% next year. That’s down from an estimated 94% for 2024 and is largely the result of a decline in Star Ratings for its largest contract, according to a new filing from Humana. Although the full set of Star Ratings data won’t be released until next week, this development confirmed industry fears that rising cut points will diminish ratings — and related revenue.

In advance of the Medicare Annual Election Period that starts on Oct. 15, preliminary Stars data became available in the CMS Medicare Plan Finder on Oct. 1. According to Humana’s filing with the U.S. Securities and Exchange Commission (SEC), contract H5216 fell from a 4.5-star rating to a 3.5-star rating for next year, which impacts quality bonus payments in 2026. That contract holds approximately 45% of Humana’s MA membership, including more than 90% of its group MA membership, Humana clarified.

Across the U.S., UnitedHealthcare’s negotiated commercial rates with hospitals for hip and knee replacements last year ranged from $11,203 to $106,427, according to a Sept. 20 analysis published in JAMA Health Forum. Meanwhile, the same study found that the negotiated rates for hip and knee replacements in the Chicago area varied significantly by hospital and payer.

Allison Oakes, Ph.D., the study’s lead author, tells AIS Health the variation was “staggering” and “inexcusable” and occurred even as insurers are subject to the Transparency in Coverage (TiC) rule that went into effect in 2022.

A recent Avalere Health analysis found that some managed Medicaid insurers have stricter policies for cell and gene therapies than fee-for-service Medicaid programs, even though the authors cited a federal regulation that “requires MCO coverage policies to be no more restrictive than FFS policies.” Despite that regulation, Margaret Scott, an Avalere principal and report co-author, says it is “a little bit of a gray area” whether MCOs need to abide by that mandate.

“That really isn’t defined very well either in regulation or in any guidance from CMS,” Scott tells AIS Health, a division of MMIT. “We also see that a lot of states don’t actually review the clinical coverage criteria that are used by their MCOs. It may not come to a state’s attention that a particular MCO may have stricter coverage criteria unless they receive a complaint from a beneficiary.”

Employers and health plans are less satisfied with the “Big Three” PBMs — CVS Health Corp.’s Caremark, UnitedHealth Group’s Optum Rx and The Cigna Group’s Express Scripts — compared with their smaller peers in the pharmacy benefits industry, according to a Pharmaceutical Strategies Group (PSG) survey published this month. While the Big Three have taken steps in recent months to offer more transparent models, Michael Lonergan, PSG’s president, tells AIS Health those companies have faced numerous challenges to their businesses that have made them more unpopular among clients.

For instance, he mentions the Federal Trade Commission (FTC) lawsuit filed on Sept. 20 against the Big Three PBMs and their affiliated group purchasing organizations (GPOs), accusing them of inflating the list price of insulin medications and restricting access to those drugs. The FTC also issued an interim report in July that was highly critical of the Big Three, which together account for about 80% of the U.S. prescription drug claim processing market.

Three transgender women filed a lawsuit on Sept. 10 against CVS Health Corp.-owned Aetna alleging the insurer denied them coverage of gender-affirming facial reconstruction (GAFR) surgeries and procedures in violation of an Affordable Care Act statute. David Kaufman, a lawyer who is not involved in the case, tells AIS Health the plaintiffs made a “pretty persuasive argument” in the lawsuit, although he points out that court proceedings are “often a tedious, drawn-out process” and it remains to be seen whether a judge will certify the case as a class action.

The plaintiffs — Binah Gordon, Kay Mayers and an individual identified as S.N. — alleged the surgeries and procedures they sought were medically necessary and that Aetna violated “the prohibition on discrimination on the basis of sex in federally funded health programs and activities under Section 1557” of the ACA. Gordon, a 42-year-old Nebraska resident who works as a language curriculum specialist at a community college, was covered under an Aetna plan in the federal employee health benefits program. Mayers, a 52-year-old Alaska resident who works in information technology, and S.N., a 48-year-old physical therapist from Pennsylvania, were enrolled in Aetna employer-sponsored plans.

Medicare Advantage insurers and their distribution partners are bracing for a busy Annual Election Period, thanks in part to multiple Part D benefit changes resulting from the Inflation Reduction Act. Adding to their concerns about likely market disruption and enrollee confusion is a new drug manufacturer letter that raises operational and financial questions about the interplay between Patient Assistance Programs (PAPs) and the Medicare Payment Prescription Plan (M3P).

In a letter dated Aug. 19, Pfizer Inc. informed Part D beneficiaries using its Pfizer Oncology Together program that they must enroll in the M3P before they can be reconsidered for the PAP. According to the company’s website, Pfizer Oncology Together provides financial assistance with out-of-pocket (OOP) deductible, co-pay, or coinsurance costs for eligible patients who have been prescribed certain Pfizer Oncology oral and injectable medicines.

Changing coverage requirements for a slew of preventive services may be coming to health plans, as CMS eyes an update to Affordable Care Act provisions that may eventually extend to insurance markets beyond the federal and state marketplaces.

On August 30, a new proposed rule, Enhancing Coverage of Preventive Services under the Affordable Care Act, was posted to the Office of Management and Budget’s (OMB) dashboard.

The release date of the rule remains uncertain, but it may contain new coverage requirements for preventive services such as contraceptive care and vaccines, Richard Hughes IV, health care lawyer with Epstein Becker Green in Washington, D.C., tells AIS Health, a division of MMIT.

Since Oregon placed a payment cap on hospitals for its state employee health plans, beneficiaries have seen a reduction in out-of-pocket spending and an increase in utilization, according to a recent JAMA Health Forum study. Roslyn Murray, Ph.D., the lead author, tells AIS Health that “there’s an appetite” from other states to implement similar price regulations, although they have faced pushback from providers.

The Oregon State Legislature passed a law in 2017 limiting in-network facility prices at 24 urban hospitals to 200% of Medicare prices and out-of-network hospital facility prices to 185% of Medicare prices. The legislation applied to members of the state employee plans, which provide benefits for two groups: educators in school districts and community colleges (known as the Oregon Educators Benefit Board) and employees of state agencies and universities (known as Public Employees Benefit Board).

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.

CareFirst BlueCross BlueShield, one of the largest insurers in the mid-Atlantic region, recently announced its involvement in a program for early stage technology companies looking to develop artificial intelligence (AI) products for the health care sector. A CareFirst executive tells AIS Health that the payer hopes to learn more about what is happening in the AI space for potential use within the company. One expert, however, says insurers for the most part are still contemplating how to implement AI in their workflows while also being cognizant of its potential flaws.

CareFirst is partnering with Johns Hopkins University for the TechStars AI Health accelerator that will take place in March 2025 in Baltimore. TechStars is a company that invests in and provides guidance and money to startup companies in several industries. The firm hosts numerous so-called accelerators, which are months-long programs where founders of young companies meet with experienced industry leaders and investors. TechStars invests $120,000 in the companies it chooses for the accelerators in exchange for a 6% to 9% equity stake. Most accelerators receive hundreds of applicants, of which TechStars usually selects 20 or fewer to participate.