Data & Analytics

Radar On Market Access: MA Insurers Report Strong Performance, Predict Enrollment Growth

December 1, 2020

Select publicly traded insurers reporting third-quarter 2020 earnings this past month predicted big gains in Medicare Advantage enrollment during the current Annual Election Period (AEP), and noted that growth in government products helped offset the impact of commercial losses and COVID-19 costs in the recent quarter, AIS Health reported.

Reporting third-quarter 2020 earnings on Nov. 6, CVS Health Corp. said a 3.5% year-over-year increase in overall revenues was due in part to growth in its Health Care Benefits segment, which includes Aetna. Revenues in that segment rose 8.8% from the prior-year quarter to $18.7 billion, primarily driven by membership increases in Aetna’s government products and the favorable impact of the return of the Affordable Care Act health insurer fee for 2020.

Select publicly traded insurers reporting third-quarter 2020 earnings this past month predicted big gains in Medicare Advantage enrollment during the current Annual Election Period (AEP), and noted that growth in government products helped offset the impact of commercial losses and COVID-19 costs in the recent quarter, AIS Health reported.

Reporting third-quarter 2020 earnings on Nov. 6, CVS Health Corp. said a 3.5% year-over-year increase in overall revenues was due in part to growth in its Health Care Benefits segment, which includes Aetna. Revenues in that segment rose 8.8% from the prior-year quarter to $18.7 billion, primarily driven by membership increases in Aetna’s government products and the favorable impact of the return of the Affordable Care Act health insurer fee for 2020.

Although earnings for the quarter dropped slightly from adjusted earnings per share of $1.84 a year ago to $1.66 (mostly due to COVID-related expenses), CVS raised its full-year adjusted EPS guidance to a range of $7.35 to $7.45.

Aetna President Karen Lynch, who will take over for CVS Health President and CEO Larry Merlo when he retires in February, said the insurer believes it is poised for “above-market growth” in MA in 2021 and beyond.

For the quarter ending Sept. 30, Humana Inc. reported adjusted EPS of $3.08, down from $5.03 in the year-ago quarter as a result of COVID- related expenses, as the company experienced lower-than-usual utilization that was largely offset by higher COVID testing and treatment costs, said Chief Financial Officer Brian Kane. “Accordingly, in the fourth quarter, we expect to record a loss of approximately $2.40 on an adjusted EPS basis, and are tightening our full-year 2020 EPS guidance to a range of $18.50 to $18.75, still within our initial guidance expectations prior to COVID,” he stated, as per a transcript of the call from The Motley Fool.

Humana for the year expects its individual MA membership to grow by approximately 375,000 lives, representing year-over-year growth of approximately 10%.

Pointing to continued expansion of its MA business as a growth driver, Cigna Corp. President and CEO David Cordani during a Nov. 5 earnings call said the company is on track to achieve a strategic EPS goal of $20 to $21 next year. Cigna reported adjusted EPS of $4.41 for the third quarter and anticipates full-year consolidated adjusted EPS of $18.30 to $18.60.

Perspectives on CMS Insulin Demo

November 26, 2020

In 2021, about half of enhanced stand-alone Prescription Drug Plans (PDPs) and a little more than a third of Medicare Advantage-Prescription Drug (MA-PD) plans will participate in a new demonstration that aims to lower diabetic seniors’ out-of-pocket costs by capping copays at $35 for a broad set of insulin products, according to a new analysis by consulting firm Avalere Health.

Among the 310 enhanced PDPs that opted to participate in CMS’s Part D Senior Savings Model for 2021, the average enrollment-weighted premium is $57.53 — $23.46 higher than the average premium for non-participating plans, the analysis found. But in the MA-PD space, the average enrollment-weighted premium for the 1,287 participating plans is $10.36 less than the cost of non-participating plans ($22.74 versus $33.10).

In 2021, about half of enhanced stand-alone Prescription Drug Plans (PDPs) and a little more than a third of Medicare Advantage-Prescription Drug (MA-PD) plans will participate in a new demonstration that aims to lower diabetic seniors’ out-of-pocket costs by capping copays at $35 for a broad set of insulin products, according to a new analysis by consulting firm Avalere Health.

Among the 310 enhanced PDPs that opted to participate in CMS’s Part D Senior Savings Model for 2021, the average enrollment-weighted premium is $57.53 — $23.46 higher than the average premium for non-participating plans, the analysis found. But in the MA-PD space, the average enrollment-weighted premium for the 1,287 participating plans is $10.36 less than the cost of non-participating plans ($22.74 versus $33.10).

Tom Kornfield, one of the co-authors of the Avalere report and a senior consultant with the firm, tells AIS Health one reason why PDPs with higher premiums tended to participate in the demonstration may be that “the additional protections [for consumers] cost the plans more money, so they’re increasing their bids as a result of that.”

Regarding why the average premium for participating MA-PD plans is lower than non-participating plans, Kornfield notes that, unlike stand-alone PDPs, such plans can reap the benefits of any cost savings associated with the demonstration’s ability to improve medication adherence and diabetes management.

CMS unveiled the Part D Senior Savings Model in March, and in May it said that 1,750 PDPs and MA-PD plans applied to participate, as well as the three major insulin manufacturers: Eli Lilly and Co., Novo Nordisk Inc. and Sanofi SA.

For seniors who sign up for plans that participate in the new model, the main benefit is a maximum copay of $35 each for a month’s supply of insulin while in the deductible, initial coverage and coverage-gap phases of the Part D benefit, rather than cost-sharing amounts that vary by coverage phase.

Kornfield says he was somewhat surprised that so many plan sponsors opted into the demonstration for 2021. “I don’t know that I anticipated quite as much participation, but having said that, the major insulin manufacturers are all voluntarily participating in the demonstration, so I think that makes a big difference.”

Radar On Market Access: Teledermatology Program Reduces Patient Wait Time But Doesn’t Increase Utilization

November 26, 2020

A pilot telemedicine program dramatically reduced the amount of time it took for primary care physicians to consult with dermatologists on skin ailments but did not increase utilization or cost, according to a new study from Independence Blue Cross and the University of Pennsylvania, AIS Health reported.

“Dermatology is an ideal specialty for telemedicine due to the visual nature of the clinical assessment,” says study co-author Aaron Smith-McLallen, director of health informatics and advanced analytics at Independence Blue Cross. “Using telemedicine, patients can get quality care very quickly and reduce wait times for patients with more acute needs that are not suitable for telemedicine intervention.”

A pilot telemedicine program dramatically reduced the amount of time it took for primary care physicians to consult with dermatologists on skin ailments but did not increase utilization or cost, according to a new study from Independence Blue Cross and the University of Pennsylvania, AIS Health reported.

“Dermatology is an ideal specialty for telemedicine due to the visual nature of the clinical assessment,” says study co-author Aaron Smith-McLallen, director of health informatics and advanced analytics at Independence Blue Cross. “Using telemedicine, patients can get quality care very quickly and reduce wait times for patients with more acute needs that are not suitable for telemedicine intervention.”

The study provides a blueprint for teledermatology programs that plans could potentially implement as soon as 2021, and also could show a path forward for telemedicine in other specialties, says F. Randy Vogenberg, Ph.D., principal, Institute for Integrated Healthcare in Greenville, S.C.

“Carriers are assessing how to best manage new technology-enabled care delivery in a more systematic manner that addresses their need to control financial risk while providing appropriate access to care,” Vogenberg tells AIS Health. “A study result like this clearly establishes the value proposition of providing a win-win scenario by leveraging technology to aid broader, easier access to care without increasing total costs associated with such expanded care delivery.”

The study, published in the journal Telemedicine and e-Health, examined implementation of teledermatology at five University of Pennsylvania Health System primary care practices in 2016 and 2017.

In the teledermatology arm of the study, dermatologists’ average response time was five hours, while in the “usual care” control arm, it took 84 days for primary care physicians to consult with dermatologists.

Teledermatology patients who were recommended for in-person evaluation completed visits to the dermatologist in fewer than four weeks, compared with longer than 14 weeks for controls, according to the study. Meanwhile, there were no significant differences detected in average outpatient costs or total medical costs between the two groups.

The store-and-forward evaluation approach has been used in other specialties, such as radiology and pathology, and Independence is exploring ways to expand its use, Smith-McLallen says.

Radar On Market Access: Centene Expands ACA Footprint But Faces More Competition

November 24, 2020

Centene Corp., which has come to dominate the Affordable Care Act exchange market by continuing to expand even when other carriers pulled back, is facing more competition now that the market has stabilized and insurer participation has increased, AIS Health reported.

Given that dynamic, Citi analyst Ralph Giacobbe advised investors recently that he was placing a “negative catalyst watch” on Centene due to the new competitive pressures it’s facing. Centene, he observed, “was displaced as the lowest priced plan in a number of markets,” and so the insurer “will have to rely on retention and new market entry to offset competitive pressures, which could prove challenging and may stunt growth relative to expectations.”

Centene Corp., which has come to dominate the Affordable Care Act exchange market by continuing to expand even when other carriers pulled back, is facing more competition now that the market has stabilized and insurer participation has increased, AIS Health reported.

Given that dynamic, Citi analyst Ralph Giacobbe advised investors recently that he was placing a “negative catalyst watch” on Centene due to the new competitive pressures it’s facing. Centene, he observed, “was displaced as the lowest priced plan in a number of markets,” and so the insurer “will have to rely on retention and new market entry to offset competitive pressures, which could prove challenging and may stunt growth relative to expectations.”

SVB Leerink analyst Stephen Tanal, however, takes a more optimistic view. “I’m pretty comfortable saying Centene’s likely to grow their overall HIX [health insurance exchange] earnings, because they’re going to be in so many more places with higher premiums,” he tells AIS Health.

According to Tanal’s analysis, Centene is increasing its county-level, member-weighted bronze plan premium by about 4% and raising premiums across all metal levels by 4% to 6%. Centene is also expanding its geographic footprint next year, a move that Tanal estimates will put the insurer in 61% more counties than it covered in 2020.

But Tanal did notes that the exchanges next year will feature “more competition in the form of fewer monopoly markets and a larger number of local market competitors.”

“It is definitely more competitive,” Kathy Hempstead, senior policy adviser at the Robert Wood Johnson Foundation, says of the 2021 ACA exchange market. “There’s more participants and it’s not just the Medicaid MCOs spreading out into more places.”

In fact, a new Kaiser Family Foundation analysis found that 30 insurers are entering the individual market next year across 20 states, and 61 insurers are expanding in states where they already operated.

However, “even though there’s a lot of new competition in the marketplace this year, I think that it’s definitely pretty fragmented so far,” Hempstead says. “UnitedHealth came back into a handful of states, Bright Health went into a handful of states, but it’s nothing like the scale that Centene has.”

Trends That Matter for Employer Health Benefits

November 19, 2020

Several recent surveys on employer-sponsored health insurance have found that plan sponsors are following three major trends: expanding virtual care and telehealth benefits, narrowing provider networks and emphasizing centers of excellence in their benefit designs, AIS Health reported.

According to the 2020 edition of the Kaiser Family Foundation’s (KFF) Employer Health Benefits Survey, this year’s annual premium growth (4% for individuals and families) outstripped both wage growth (3.4%) and inflation (2.1%).

Several recent surveys on employer-sponsored health insurance have found that plan sponsors are following three major trends: expanding virtual care and telehealth benefits, narrowing provider networks and emphasizing centers of excellence in their benefit designs, AIS Health reported.

According to the 2020 edition of the Kaiser Family Foundation’s (KFF) Employer Health Benefits Survey, this year’s annual premium growth (4% for individuals and families) outstripped both wage growth (3.4%) and inflation (2.1%).

Other surveys project similar results in 2021, but caution that the pandemic saddles employers with unprecedented risk and uncertainty when setting premiums. The main cause of that uncertainty is utilization. Health insurers reported a dramatic fall in claims during the second quarter of 2020, but indications are that utilization begun to return to somewhat normal levels in the third quarter.

“There’s a lot of chatter specifically about [Affordable Care Act] marketplace insurers and about how they are experiencing fewer claims than expected,” says James Gelfand, senior vice president for the ERISA Industry Committee. “That’s not what I’m hearing from member companies. They feel like they’re under the same dynamic that they’ve been under for a decade: costs are going up, and the things they’re doing to try and save money have had a very mediocre effect.”

That tension has led to the emerging trend of narrower networks. Lowering costs and reducing unnecessary utilization is a key goal of narrowing provider networks, along with emphasizing quality and return on investment.

Concerns about COVID-19 exposure have caused a boom in virtual care and telehealth utilization, as patients have avoided in-person clinical visits. Hodgson says that plan sponsors and insurers need to determine how virtual visits will fit into benefit designs going forward.

Radar On Market Access: Insurer-Affiliated PBMs Propel Parent Firms’ Revenues in Third Quarter

November 19, 2020

Large insurer-affiliated PBMs saw strong results for the third quarter of 2020, in several cases driving revenues for parent companies that are grappling with various disruptive effects of the coronavirus pandemic, AIS Health reported.

At CVS Health Corp., which reported earnings on Nov. 6, total revenues increased 3.5% year over year to $67 billion, and the company posted earnings per share (EPS) of $1.66, beating analysts’ estimates.

Large insurer-affiliated PBMs saw strong results for the third quarter of 2020, in several cases driving revenues for parent companies that are grappling with various disruptive effects of the coronavirus pandemic, AIS Health reported.

At CVS Health Corp., which reported earnings on Nov. 6, total revenues increased 3.5% year over year to $67 billion, and the company posted earnings per share (EPS) of $1.66, beating analysts’ estimates.

“Our pharmacy services segment delivered double-digit operating income growth versus [the] prior year, reflecting strength in specialty along with favorable purchasing economics, and our 2021 [PBM] selling season is wrapping up quite nicely, with $3.3 billion of net new business,” President and CEO Larry Merlo said.

Still, SVB Leerink equities analyst Stephen Tanal said in a Nov. 6 investor note that CVS’s Caremark business remains at risk from state-level initiatives involving Medicaid pharmacy benefits.

Cigna Corp.’s new Evernorth segment, which includes the company’s Express Scripts PBM business, its Accredo specialty pharmacy division and its eviCore utilization management business, drove strong third-quarter earnings that beat analysts’ expectations.

Evernorth helped to boost Cigna’s overall revenues to $40.8 billion, said Citi analyst Ralph Giacobbe in a Nov. 5 investor note. Revenues for the Evernorth segment were $29.83 billion, a 20% increase year over year.

Evercore ISI analyst Michael Newshel said in a Nov. 5 investor note that Evernorth showed higher script volume and a slightly better margin than anticipated in the quarter, along with lower corporate expenses than expected.

UnitedHealth, which also handily beat analyst expectations with earnings of $3.51 per share, brought in $65.1 billion in the third quarter, representing an 8% increase year over year. However, the $3.51 adjusted EPS is a 10% drop from last year’s third-quarter earnings.

Health insurer Anthem, which has launched its own in-house PBM, IngenioRx, reported third-quarter adjusted EPS of $4.20, a decline of 14% year over year that reflected the company’s obligations to pay out its $594 million share of a recently settled lawsuit against Blue Cross and Blue Shield plans.

Anthem’s revenues increased by 15.9% year over year to $30.6 billion, which Chief Financial Officer John Gallina attributed largely to growth in the firm’s Medicare and Medicaid businesses, although he also gave a nod to “pharmacy revenue related to the launch of IngenioRx.”