COVID-19

Radar On Market Access: Racial Disparities Are Highlighted by Pandemic

October 22, 2020

The COVID-19 pandemic has been especially harmful to people of color in the U.S., as they are more likely to suffer financial hardship, extreme cases of the disease or death than the white population. Experts say the devastation to communities of color is the product of systemic racism — particularly a lack of access to insurance coverage and quality care — and the pandemic’s economic consequences will make all of those problems worse, AIS Health reported.

According to a Sept. 15 report released by the Kaiser Family Foundation (KFF) and the Epic Health Research Network, people of color were more likely to test positive for COVID-19 and to require a higher level of care at the time of diagnosis compared to white patients, and they also were more likely to be hospitalized and die from the novel coronavirus than white patients were.

The COVID-19 pandemic has been especially harmful to people of color in the U.S., as they are more likely to suffer financial hardship, extreme cases of the disease or death than the white population. Experts say the devastation to communities of color is the product of systemic racism — particularly a lack of access to insurance coverage and quality care — and the pandemic’s economic consequences will make all of those problems worse, AIS Health reported.

According to a Sept. 15 report released by the Kaiser Family Foundation (KFF) and the Epic Health Research Network, people of color were more likely to test positive for COVID-19 and to require a higher level of care at the time of diagnosis compared to white patients, and they also were more likely to be hospitalized and die from the novel coronavirus than white patients were.

The economic impact of the pandemic has been similarly dire for households of color. According to a Sept. 16 survey prepared by NPR, the Robert Wood Johnson Foundation and the Harvard T.H. Chan School of Public Health, majorities of Latino (72%), Black (60%) and Native American (55%) households all “report facing serious financial problems during the coronavirus outbreak.”

The survey also found that 25% of Latino households, 18% of Black households and 12% of Native American households “report serious problems affording medical care during the coronavirus outbreak.”

Policymakers say that COVID-19’s poor outcomes within communities of color are sadly predictable. During an Oct. 7 webinar organized by Axios, Rep. Markwayne Mullin (R-Okla.), a member of the Cherokee Nation, said that the problems in Indian Country are a direct product of underfunding the federal Indian Health Service (IHS), which is the primary insurer and provider for Native Americans. According to Mullin, the IHS receives about one-third of the funding per patient as Medicare, Medicaid and the Veterans Administration.

Leading public health figures have argued that racial disparities must be accounted for in plans to distribute COVID-19 vaccines. On Oct. 6, a panel convened by the National Academies of Sciences, Engineering and Medicine released a draft of a report titled Framework for Equitable Allocation of COVID-19 Vaccine. The framework emphasizes the importance of accounting for existing racial disparities in vaccine distribution, and noted the skepticism that communities of color have toward vaccines and the medical profession in general.

Radar On Market Access: COVID-19 Pandemic May Lower Health Care Costs, But Deferral Impact Exists

October 8, 2020

Health insurers will probably have lower health care expenditures in 2020 and 2021 than before the COVID-19 pandemic, according to a new analysis from Willis Towers Watson. However, the white paper emphasizes that substantial risk is still possible and says plan sponsors need to take proactive steps to blunt the future impact of deferred care, AIS Health reported.

The policy environment could change suddenly and dramatically depending on the outcome of California v. Texas, a suit that could lead the Supreme Court to overturn the Affordable Care Act, and the presidential election.

Health insurers will probably have lower health care expenditures in 2020 and 2021 than before the COVID-19 pandemic, according to a new analysis from Willis Towers Watson. However, the white paper emphasizes that substantial risk is still possible and says plan sponsors need to take proactive steps to blunt the future impact of deferred care, AIS Health reported.

The policy environment could change suddenly and dramatically depending on the outcome of California v. Texas, a suit that could lead the Supreme Court to overturn the Affordable Care Act, and the presidential election.

“Pursuant to the upcoming case on the ACA, and obviously the current Supreme Court nomination and whether or not it gets through — so many major factors really put a lot of these pieces into an unknown place,” says Trevis Parson, Willis Towers Watson’s managing director and chief actuary for health and benefits, who coauthored the analysis.

According to the paper, “the likelihood of deferred care returning to the system will vary based on the type of care. In fact, we expect that a significant portion of deferred care will be completely forgone and never return. Further, the return time will depend on status of the pandemic, system capacity, public policy, patient willingness to visit care settings and the urgency of the need for care.”

Worryingly, the paper found that “the largest decreases in utilization have been in preventive care and other office-based services.” Parson says plan sponsors were not doing a very good job emphasizing preventive care and holistic health before the pandemic, and the care deferrals could make that problem worse.

The paper also attempts to project the short- and middle-term impact of the pandemic on utilization. Parson and coauthor Jeff Levin-Scherz, M.D., the North America co-leader of the health management practice at Willis Towers Watson, modeled four scenarios, and found that any of the four scenarios would result in a 2.7% to 3.8% net decrease in medical costs per member over the course of the combined two years.

These findings are welcome news to health insurance stakeholders, as previous projections of the pandemic’s costs were much more catastrophic. However, Parson urges plan sponsors to resist complacency — a point he regards as the “key message” of the paper.

Trends That Matter for COVID Cost-Sharing Waivers

September 24, 2020

Although federal relief legislation tied to the pandemic required health insurers to waive cost sharing for COVID-19 testing, not treatment, many plans opted to do both anyway. In fact, a recent analysis from the Kaiser Family Foundation (KFF) found that 80% of enrollees in the individual and fully insured group insurance markets were in plans that voluntarily waived out-of-pocket costs for COVID-19 at some point during the pandemic, AIS Health reported.

Yet according to the Peterson-KFF Health System Tracker analysis, published Aug. 20, 20% of individual and fully insured group plan enrollees are in plans where a cost-sharing waiver for COVID-19 treatment has already expired, and another 16% are in plans where the waiver is scheduled to expire by the end of September.

Although federal relief legislation tied to the pandemic required health insurers to waive cost sharing for COVID-19 testing, not treatment, many plans opted to do both anyway. In fact, a recent analysis from the Kaiser Family Foundation (KFF) found that 80% of enrollees in the individual and fully insured group insurance markets were in plans that voluntarily waived out-of-pocket costs for COVID-19 at some point during the pandemic, AIS Health reported.

Yet according to the Peterson-KFF Health System Tracker analysis, published Aug. 20, 20% of individual and fully insured group plan enrollees are in plans where a cost-sharing waiver for COVID-19 treatment has already expired, and another 16% are in plans where the waiver is scheduled to expire by the end of September.

Daniel McDermott, a KFF research associate and co-author of the analysis, says that the calculus could change for some insurers as the pandemic wears on.

“Among the insurers who have pushed back their expiration date or extended it, a lot of them had initially set expiration deadlines in early spring — so around May — only to push those back as that date approached,” he says. “So I think it would be reasonable to expect that as some of these fall expiration dates approach, some insurers might take the opportunity to re-evaluate…and make a decision about whether to push back that expiration date again.”

Among enrollees in individual and fully insured group health insurance, 15% were in plans where the expiration date of the COVID-19 treatment cost-sharing waiver was either unspecified or set to end when the public health emergency does, observed the KFF analysis.

Radar On Market Access: Pandemic, Market Stability Encourage Major Insurers to Expand ACA Footprints

September 24, 2020

Given that enrollment in the Affordable Care Act (ACA) exchanges has basically flatlined, one might not expect insurers to view the exchanges as a growth opportunity. But recent moves by some of the country’s largest payers suggest otherwise.

Centene Corp. said on Sept. 11 that it will widen its ACA marketplace footprint by selling plans in “nearly 400 new counties” next year. The company will increase its presence in 13 of the states where it already sells plans, plus enter two new states: Michigan and New Mexico.

Given that enrollment in the Affordable Care Act (ACA) exchanges has basically flatlined, one might not expect insurers to view the exchanges as a growth opportunity. But recent moves by some of the country’s largest payers suggest otherwise.

Centene Corp. said on Sept. 11 that it will widen its ACA marketplace footprint by selling plans in “nearly 400 new counties” next year. The company will increase its presence in 13 of the states where it already sells plans, plus enter two new states: Michigan and New Mexico.

On Sept. 10, Cigna Corp. announced that it will be increasing its ACA exchange presence by “nearly 80 counties” next year, expanding its customer reach in that market by more than 50%. All told, Cigna will offer marketplace plans in 220 counties spanning 10 states.

In addition, UnitedHealth Group has so far announced it will expand to three new states in 2021: Maryland, Tennessee and Virginia. And startup insurer Oscar said on July 30 that it will increase its ACA marketplace presence for the fourth consecutive year in 2021, entering four new states.

As for what may be driving those moves, Katherine Hempstead, a senior policy adviser at the Robert Wood Johnson Foundation, observes that “there’s been this kind of secular trend away from employer-sponsored insurance vs. various other government or quasi-government products — Medicaid, Medicare Advantage and the marketplace — and I think that carriers are seeing synergies between all those government markets and want to be in all of them.”

The COVID-19 pandemic and its economic repercussions comprise another, more recent, catalyst for insurers’ ACA exchange expansions, according to S&P Global Ratings analyst Deep Banerjee.

“This market has not been growing in terms of the number of people signing up each year — it’s not drastically declining either, but you wouldn’t look at this market and say all of a sudden it’s a growth market,” Banerjee says. “But because of unemployment, because of [commercial group enrollment] shrinking, this could become a growth option in the future.”

While the economy is expected to eventually rebound, it makes sense for firms that stand to lose group-market members in the short term to follow those enrollees by investing in other market segments, Hempstead adds.

Radar On Market Access: As Payer M&A Slows Down, What’s Next?

September 22, 2020

The climate for payer mergers and acquisitions (M&A) has cooled substantially at a national level ever since the collapse of the proposed deals between Anthem, Inc. and Cigna Corp. and between Aetna Inc. and Humana Inc. However, consolidation in the provider sector has increased since the start of the COVID-19 pandemic as such firms grapple with the rapid collapse of fee-for-service revenue, AIS Health reported.

The breakdown of Anthem’s bid to acquire Cigna resulted in a public spat and dueling lawsuits over Cigna’s attempt to exit their agreement before exhausting the firms’ option to appeal a federal ruling against the transaction. On Aug. 31, the Delaware Court of Chancery ruled that neither firm had to pay damages to the other over the failed deal.

The climate for payer mergers and acquisitions (M&A) has cooled substantially at a national level ever since the collapse of the proposed deals between Anthem, Inc. and Cigna Corp. and between Aetna Inc. and Humana Inc. However, consolidation in the provider sector has increased since the start of the COVID-19 pandemic as such firms grapple with the rapid collapse of fee-for-service revenue, AIS Health reported.

The breakdown of Anthem’s bid to acquire Cigna resulted in a public spat and dueling lawsuits over Cigna’s attempt to exit their agreement before exhausting the firms’ option to appeal a federal ruling against the transaction. On Aug. 31, the Delaware Court of Chancery ruled that neither firm had to pay damages to the other over the failed deal.

This failed deal was a catalyst for the slowing pace of health insurance consolidation at the national scale, according to antitrust lawyer and former Federal Trade Commission official David Balto.

Ashraf Shehata, KPMG national sector leader for health care and life sciences, says that Cigna’s acquisition of Express Scripts, a transaction that the firm pursued partly because of the failed Anthem merger, set a precedent of its own.

“I would say what that has spawned instead of the health plan integration, it’s spawned…the PBM integration. Rather than health plan to health plan, it was health plan plus PBM. And we saw that across the board with all the commercial entities,” he says.

Shehata says he sees three likely types of payer transactions and reorganizations going forward. The first is the PBM-payer integration. Second, Shehata says that horizontal coordination between regional payers, if not outright mergers, is likely to accelerate. Finally, he’s tracking the emerging model of “health plan plus retail plus PBM.”

Michael Abrams, co-founder and managing partner of consultancy Numerof & Associates, says that large regional hospital systems with healthy balance sheets are likely to speed up their vertical acquisition of independent hospitals or horizontal consolidation with local peers.

Abrams also points out that this wave of consolidation will compound or accelerate the rising cost of health care. He adds this continual rise in prices will eventually drain the generous margins that payers have enjoyed over the course of the pandemic.

Perspectives on PBM Performance Amid COVID-19

September 17, 2020

For PBMs, 2020 has been far from business as usual, given the myriad ways the COVID-19 pandemic has changed how people interact with the health care system. However, during their second-quarter earnings conference calls, companies that own some of the largest PBMs emphasized that they are largely satisfied with how the PBM segments of their businesses are performing, AIS Health reported.

Anthem, Inc. Chief Financial Officer John Gallina said during the insurer’s earnings call that “IngenioRx is actually doing quite well, and has really done a nice job of meeting our expectations.”

For PBMs, 2020 has been far from business as usual, given the myriad ways the COVID-19 pandemic has changed how people interact with the health care system. However, during their second-quarter earnings conference calls, companies that own some of the largest PBMs emphasized that they are largely satisfied with how the PBM segments of their businesses are performing, AIS Health reported.

Anthem, Inc. Chief Financial Officer John Gallina said during the insurer’s earnings call that “IngenioRx is actually doing quite well, and has really done a nice job of meeting our expectations.”

Anthem is on track this year to realize $900 million in operating profit contributed from its relatively new PBM, which exceeds its prior expectation of $800 million, Credit Suisse analyst A.J. Rice pointed out in a July 29 note to investors. But he also noted that while maintenance prescription volume was steady compared with the prior-year quarter, “new scripts saw a 10-15% drop in April versus normal utilization. Thus, IngenioRx captured less profit in Q2.”

CVS Health Corp., which owns the PBM Caremark, reported that operating income and adjusted operating income for its pharmacy services segment increased 6.2% and 2.4%, respectively, from the prior-year quarter. Those results were “primarily driven by growth in specialty pharmacy and improved purchasing economics,” but they were offset by “continued price compression and previously disclosed client losses,” the company said in its earnings release.

Cigna Corp. reported on July 30 that for its health services segment — which houses the PBM Express Scripts — pretax adjusted income from operations increased 7% relative to the second quarter of 2019.

Executives from Anthem, Cigna and CVS all acknowledged that the PBM selling season for 2021 was affected by the shutdowns and economic uncertainty ushered in by the COVID-19 pandemic.

Anthem President and CEO Gail Boudreaux described the selling season as “an interesting operating environment, given all the change.” As the insurer mentioned in its first-quarter earnings call, “things are, I would say, at least slightly delayed, as customers try to work through their own stability across their business,” Boudreaux said.

Alan Lotvin, M.D., the executive vice president and president of Caremark, offered: “I’d say the season itself has been interesting in the lumpiness with COVID, but overall ending up about where we thought.”