Value-based Arrangements

Elevance Health, Inc. will offer Affordable Care Act exchange plans in three new states next year. The insurer’s Wellpoint-branded plans will expand into Florida, Maryland and Texas — all states where it has a managed Medicaid presence. According to AIS’s Directory of Health Plans, Elevance Health has approximately 1 million members enrolled in ACA exchange plans, making it the insurer’s smallest market segment. As of 2024, the insurer offered exchange plans in 10 states, with California, Virginia and New York representing its three largest markets.

The value of Affordable Care Act marketplace plans decreased from 2014 to 2023, according to a Paragon Health Institute report published on Sept. 3. The authors — actuaries Daniel Cruz and Greg Fann — noted that just 11% of exchange customers were enrolled in plans with broad provider networks in 2023, down from 36% in 2014. During that same period, gross premiums in the individual marketplace increased 50% more than premiums for people enrolled in employer plans. The authors argued that “the ACA insurance rules caused premiums to increase and led insurers to offer narrower and more restrictive networks over time” and that “the design of the ACA premium tax credits has also incentivized enrollees to select lower-quality plans.”

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.

More and more plan sponsors are interested in introducing risk-based reimbursement in their contracts with health insurers. That interest has grown into a range of plan designs: On the extreme end, plan sponsors like CalPERS are introducing upside and downside risk to entire third-party administrator contracts. A more incremental approach sees health insurers offering upside risk to plan sponsors based on the health insurer’s ability to control costs for a specific condition.

UnitedHealthcare on June 26 launched such an offering, called the Level2 Assured Value Program. It’s a new payment model for an existing Type 2 diabetes management benefit design called Level2.

More and more plan sponsors are interested in introducing risk-based reimbursement in their contracts with health insurers. That interest has grown into a range of plan designs: On the extreme end, plan sponsors like CalPERS are introducing upside and downside risk to entire third-party administrator contracts. A more incremental approach sees health insurers offering upside risk to plan sponsors based on the health insurer’s ability to control costs for a specific condition.

UnitedHealthcare on June 26 launched such an offering, called the Level2 Assured Value Program. It’s a new payment model for an existing Type 2 diabetes management benefit design called Level2.

The U.S. health care system could save billions if it increases access to treatment for hepatitis C, now that a series of curative therapies approved in the 2010s have decreased in price, according to the Congressional Budget Office (CBO). However, one expert says that federal and state governments will have to force health plans — particularly Medicaid managed care organizations — to increase access to those therapies.

Doubling hepatitis C treatment access in Medicaid could save the federal government $7 billion over 10 years, the CBO found in a report published June 14. In addition, a 2023 white paper from researchers affiliated with the National Bureau of Economic Research found that a Biden administration budget request for a federal program to eliminate hepatitis C would diagnose and cure about 90% of all U.S. hepatitis C patients, saving the health care system $18.1 billion, of which $13.3 billion would accrue to the federal government.

CalPERS, the California state agency that administers state and local government employees’ benefits and retirement programs, on June 12 selected Blue Shield of California to administer the agency’s statewide PPO plan, which is projected to have about 400,000 members when the contract starts in the 2025 plan year. The size of the contract makes the deal notable, as does the fact that Blue Shield (which already administers a CalPERS HMO with approximately 175,000 members) will take CalPERS’ PPO business away from incumbent Elevance Health, Inc.

But the structure of the contract itself is what has the health insurance business abuzz. In the new deal, Blue Shield will take on both upside and downside risk based on the plan’s rate of medical cost growth. According to a CalPERS press release, Blue Shield in 2029 stands to gain $31 million in additional fees if it can cut spending growth by 5.5% annually — but Blue Shield would have to pay the agency $61.5 million if it hits “observed trend compared to benchmark” of 5.5%.

There are persistent challenges around the collection and transmission of that data between providers and payers. The same is true of the quality of the data itself. It's a key challenge for the health insurance industry as payers try to measure provider quality and transition to value-based contracting.

"I'll just say the accuracy of our directory is bad. It just is," said Mike Kane, senior vice president for provider data operations at UnitedHealthcare. Kane was speaking on a June 12 panel organized by the Council for Affordable Quality Healthcare (CAQH) at the 2024 AHIP Conference in Las Vegas. "About half of every single provider [data profile] that our members call, there's at least one data element in our directory that's wrong."

"It's a horrible, horrible experience," Kane said.

Data from two clinical studies found that people with inflammatory bowel disease — ulcerative colitis and Crohn’s disease — who were enrolled in one company’s IBD-focused digital care coordination program experienced decreases in both emergency department (ED) visits and hospitalizations compared with control groups. The data, says the company’s CEO, show the benefits of partnerships among stakeholders to manage chronic gastrointestinal (GI) care.

Established in 2018, SonarMD, Inc. enters into risk-bearing value-based care arrangements with health plans and gastroenterology practices. It currently has five such arrangements with large plans and partners with hundreds of U.S. gastroenterologists.

The FDA recently approved the second gene therapy for hemophilia B, Pfizer Inc.’s Beqvez (fidanacogene elaparvovec-dzkt). While the agent offers an additional treatment option with the potential for freedom from regular infusions of factor therapy, its price — which is equal to that of its competitor — may be too high for many payers, according to a Zitter Insights survey. Industry experts say that it may suffer from some of the challenges other cell and gene therapies have faced in gaining a foothold in the U.S. market.

On April 25, the FDA approved Beqvez for the treatment of adults with moderate to severe hemophilia B who use factor IX (FIX) prophylaxis therapy; have current or historical life-threatening hemorrhage; or have repeated, serious spontaneous bleeding episodes and do not have neutralizing antibodies to adeno-associated virus (AAV) serotype Rh74var (AAVRh74var) capsid as detected by an FDA-approved test. The manufacturer launched a warranty program for the intravenous infusion based on durability of patient response to treatment.

The FDA recently approved the second gene therapy for hemophilia B, Pfizer Inc.’s Beqvez (fidanacogene elaparvovec-dzkt). But while the manufacturer priced the agent at parity to the other treatment, that price may still be too high for many payers, according to a Zitter Insights survey.

On April 25, the FDA approved Beqvez for the treatment of adults with moderate to severe hemophilia B who use factor IX prophylaxis therapy; have current or historical life-threatening hemorrhage; or have repeated, serious spontaneous bleeding episodes and do not have neutralizing antibodies to adeno-associated virus (AAV) serotype Rh74var (AAVRh74var) capsid as detected by an FDA-approved test. The manufacturer launched a warranty program for the intravenous infusion based on durability of patient response to treatment.