Industry Trends

Radar On Market Access: Anthem Warns of Greater Commercial Enrollment Drop in Second Half

August 6, 2020

While Anthem, Inc. has seen less of an enrollment dip in its commercial business than it originally feared when the COVID-19 pandemic and economic recession first took hold, the insurer’s executives said during a July 29 earnings conference call that they expect that attrition to accelerate in the coming months as some furloughs become permanent job losses, AIS Health reported.

From March 31 to June 30, Anthem saw enrollment in its commercial and specialty business lines drop by 290,000. “But as you think about unemployment, that was fairly muted,” especially when it comes to Anthem’s risk-based business, President and CEO Gail Boudreaux said during the earnings call. She and other Anthem executives attributed that effect to the fact that many companies have thus far furloughed rather than laid off workers, thanks in part to federal stimulus funding.

While Anthem, Inc. has seen less of an enrollment dip in its commercial business than it originally feared when the COVID-19 pandemic and economic recession first took hold, the insurer’s executives said during a July 29 earnings conference call that they expect that attrition to accelerate in the coming months as some furloughs become permanent job losses, AIS Health reported.

From March 31 to June 30, Anthem saw enrollment in its commercial and specialty business lines drop by 290,000. “But as you think about unemployment, that was fairly muted,” especially when it comes to Anthem’s risk-based business, President and CEO Gail Boudreaux said during the earnings call. She and other Anthem executives attributed that effect to the fact that many companies have thus far furloughed rather than laid off workers, thanks in part to federal stimulus funding.

“We can’t predict exactly what’s going to happen when they come off [furlough]; it will depend on the strengthening of the economy and what happens there and what employers decide to do,” Boudreaux said.

Ultimately, “we do expect further declines, assuming the economy continues to operate at less than full capacity,” Boudreaux said of Anthem’s commercial business. Meanwhile, Anthem’s Medicaid and Medicare enrollment grew by 599,000 from the first quarter of 2020 to the second quarter. Overall medical enrollment rose by 0.7% between the first and second quarters of this year, and it increased 3.9% in the second quarter of 2020 compared with the prior-year quarter.

Anthem reported adjusted earnings per share of $8.91 per share in the quarter, compared with $4.36 during the prior-year period. The insurer’s quarterly operating revenue was $29.2 billion — an increase of $4 billion, or 15.9% compared with the prior-year quarter — which Anthem attributed to “pharmacy product revenue related to the launch of IngenioRx,” the company’s PBM.

Radar On Market Access: Experts Are Skeptical of Trump Administration’s Drug Pricing Executive Orders

August 4, 2020

In executive orders released July 24, the Trump administration renewed its push toward a signature campaign issue: lowering drug prices. The three executive orders call for regulations allowing drugs to be imported from other countries, requiring Federally Qualified Health Centers to make insulin and epinephrine available to low-income members of the public at the discounted prices set by the 340B Drug Pricing Program, and removing safe harbor protections under the Anti-Kickback Statue for prescription drug rebates in Medicare Part D, AIS Health reported.

“I think that what you have here is a collection of policies that are intended to make noise, but will have little to no practical effect on drug prices before the election,” Avalere founder Dan Mendelson says.

In executive orders released July 24, the Trump administration renewed its push toward a signature campaign issue: lowering drug prices. The three executive orders call for regulations allowing drugs to be imported from other countries, requiring Federally Qualified Health Centers to make insulin and epinephrine available to low-income members of the public at the discounted prices set by the 340B Drug Pricing Program, and removing safe harbor protections under the Anti-Kickback Statue for prescription drug rebates in Medicare Part D, AIS Health reported.

“I think that what you have here is a collection of policies that are intended to make noise, but will have little to no practical effect on drug prices before the election,” Avalere founder Dan Mendelson says.

Marc Samuels, CEO of ADVI, says that the proposals seem half-baked, and will likely draw strong opposition. “These executive orders are consistent with the previous [drug pricing] blueprint adopted by the Administration and debated in part in Congress. But having the authority to make quick changes doesn’t mean doing so is a good idea, especially so close to an election,” he says.

The idea of importing drugs from other developed countries, and relying on their drug safety inspection regimes, has popped up in the past. Mendelson, who ran the health division of the Office of Management and Budget between 1998 and 2000, says that although the Clinton administration considered the idea seriously, it found that it wasn’t feasible.

“We looked at it and rejected the policy because we were concerned that it wouldn’t work, and that in fact it would not only compromise the pharmaceutical supply chain but also likely be rejected by the very countries we would want to import the drugs from,” Mendelson explains.

The rebate order addresses a persistent challenge for the administration. And Citi analyst Ralph Giacobbe is skeptical that the proposal will actually manifest substantial changes in the way PBMs do business.

“While this will resurrect some debate on the PBM business model, we see the likelihood as either low or limited in scope,” Giacobbe wrote in a note. “Additionally, [with] the language of HHS having to confirm that this action does not increase federal spending, Medicare beneficiary premiums or out-of-pocket cost may make it a moot point since premiums will definitively rise, in our opinion.”

A fourth executive order would tie drug prices to their list prices in countries with Most Favored Nation status. That order has not yet been released, but could be in the coming weeks.

Trends That Matter for Medicaid MCOs

July 30, 2020

Two recent reports found that Medicaid managed care plans now enroll most Medicaid members, help keep costs and premiums low in the markets where they participate, and are competitive with commercial plans at the low end of the individual market in areas including network quality and benefit design, AIS Health reported.

One white paper was prepared by consultancy The Menges Group for America’s Health Insurance Plans (AHIP), and the other was authored by researchers at the Robert Wood Johnson Foundation (RWJF) and Urban Institute.

Two recent reports found that Medicaid managed care plans now enroll most Medicaid members, help keep costs and premiums low in the markets where they participate, and are competitive with commercial plans at the low end of the individual market in areas including network quality and benefit design, AIS Health reported.

One white paper was prepared by consultancy The Menges Group for America’s Health Insurance Plans (AHIP), and the other was authored by researchers at the Robert Wood Johnson Foundation (RWJF) and Urban Institute.

The Menges Group-AHIP white paper, which had a national scope, found that Medicaid MCO enrollment increased by 121% between fiscal years 2010 and 2018, from 26 million to over 56 million members, and that as of 2018, more than 75% of all Medicaid enrollees are members of an MCO, up from 50% in 2010. The report also found that, since 2017, capitated payments to MCOs have exceeded fee-for-service expenditures.

The RWJF-Urban Institute paper, which relied on case study surveys in Arkansas, California, Florida, New York, Ohio, and Washington state, concluded that MCOs offer coverage that is at least as good as commercial plans in the low end of the Affordable Care Act individual market.

“Many [stakeholders] feel there are no longer major distinctions between Medicaid and commercial insurers in the marketplaces. Most interviewees have positive perceptions of Medicaid insurers, crediting their ability to increase choice and affordability in the individual health insurance market,” wrote the paper’s authors.

Perspectives on Trump Admin’s COVID-19 Testing Payment Guidance

July 23, 2020

As more employers turn to COVID-19 testing to see if employees are safe to return to the workplace, the Trump administration has clarified that insurers must cover only physician-ordered “medically necessary” diagnostic and antibody tests, AIS Health reported.

The guidance, released jointly on June 23 by HHS, the Dept. of Labor and the Dept. of the Treasury, also says self-funded employer plans must pay for COVID-19 testing that’s medically appropriate.

As more employers turn to COVID-19 testing to see if employees are safe to return to the workplace, the Trump administration has clarified that insurers must cover only physician-ordered “medically necessary” diagnostic and antibody tests, AIS Health reported.

The guidance, released jointly on June 23 by HHS, the Dept. of Labor and the Dept. of the Treasury, also says self-funded employer plans must pay for COVID-19 testing that’s medically appropriate.

“Testing conducted to screen for general workplace health and safety (such as employee ‘return to work’ programs), for public health surveillance for SARS-CoV-2, or for any other purpose not primarily intended for individualized diagnosis or treatment of COVID-19 or another health condition is beyond the scope” of the requirements embedded in the legislation approved by Congress earlier this year that requires insurers to pay for COVID-19 testing, the FAQ document said.

“I think now that [the insurers] have had this clarification, they’re going to use that as part of their determination of coverage,” Ashraf Shehata, KPMG national sector leader for health care and life sciences, tells AIS Health.

Richard Hughes IV, managing director at Avalere Health, says that it’s possible to argue that Congress intended insurers to cover all tests for their members, regardless of whether a physician ordered them, whether the person was symptomatic, or whether the test was needed to return to work.

However, Hughes says it’s also possible to argue that Congress gave CMS the authority to implement these testing requirements with some restrictions. “There could be tremendous variability across payers’ approaches to coverage policy and how they process claims,” he says.

In fact, many insurers already have moved to limit testing coverage in some ways, although their policies are fluid and have been updated frequently, says Danielle Showalter, principal at Avalere.

Individuals whose plans will not cover a test can turn to what Shehata calls the “retail model,” which is direct-to-consumer COVID-19 testing sites that don’t require a health care provider’s permission. Costs vary for this type of testing, which generally wouldn’t be covered by insurance unless the person is symptomatic.

Radar On Market Access: Despite Coronavirus Surge, UnitedHealth Expects Care Utilization to Rebound This Year

July 23, 2020

With COVID-19 cases and deaths surging in some U.S. states, it has become clear that the nation won’t be back to normal anytime soon. Still, the country’s largest health insurer is betting that health care utilization, and the costs associated with it, will return to something close to typical levels in the second half of the year, AIS Health reported.

With COVID-19 cases and deaths surging in some U.S. states, it has become clear that the nation won’t be back to normal anytime soon. Still, the country’s largest health insurer is betting that health care utilization, and the costs associated with it, will return to something close to typical levels in the second half of the year, AIS Health reported.

At its lowest point in April, inpatient care volume — including care for COVID-19 patients — was about three quarters less than normal, UnitedHealth Group Chief Financial Officer John Rex said during a July 15 conference call to discuss the company’s second-quarter earnings. At that same low point, utilization of outpatient and physician services fell to roughly 60% of normal levels. But in June, UnitedHealth saw inpatient volume recover to nearly 95% of baseline, and as June turned to July, outpatient and physician services were “tracking above 90%,” Rex said. “These national trends have continued thus far in July, even as certain states are seeing short-term deferral of services where there are elevated levels of infection and hospitalization,” he added.

Indeed, the company predicts that overall, “utilization’s going to come back during the second half of the year,” UnitedHealthcare CEO Dirk McMahon said.

In a note to investors, Citi analyst Ralph Giacobbe observed that the executives’ comments about health care utilization returning to normal were “surprising to us.”

“Ultimately we believe healthcare cost trends will remain muted, and as we look out over the next 12+ months we see those trends driving upside, and lower headline risk post-election driving multiples higher,” Giacobbe added.

In the second quarter, UnitedHealth’s adjusted earnings per share of $7.12 easily beat the consensus estimate of $5.28, and the firm nearly doubled its adjusted EPS compared with the second quarter of 2019. UnitedHealth also maintained its 2020 EPS outlook of $15.45 to $15.75 ($16.25 to $16.55 on an adjusted basis).

Meanwhile, job losses tied to the COVID-19 pandemic and ensuing recession led to a decline in revenue and enrollment for UnitedHealth’s commercial insurance business. But revenue rose on the government business side as Medicare and Medicaid enrollment grew “by nearly 600,000 additional people served year to date,” per the company’s earnings release.

Radar On Market Access: Trump Admin’s COVID-19 Testing Payment Guidance Stirs Debate

July 21, 2020

Weeks after the Trump administration released guidance saying private health insurers don’t have to pay for COVID-19 testing conducted for the purposes of workplace safety or public health surveillance, questions and controversy are still simmering about the implications of that edict, AIS Health reported.

“With COVID-19 cases skyrocketing and our testing capacity nowhere near where it needs to be, it is unacceptable that this Administration’s priority seems to be giving insurance companies loopholes instead of getting people the free testing they need,” wrote Frank Pallone Jr. (D-N.Y.), Bobby Scott (D-Va.), Richard Neal (D-Mass.), Patty Murray (D-Wash.) and Ron Wyden (D-Ore.) in a recent letter to HHS, the Dept. of Labor and the Treasury Dept.

Weeks after the Trump administration released guidance saying private health insurers don’t have to pay for COVID-19 testing conducted for the purposes of workplace safety or public health surveillance, questions and controversy are still simmering about the implications of that edict, AIS Health reported.

“With COVID-19 cases skyrocketing and our testing capacity nowhere near where it needs to be, it is unacceptable that this Administration’s priority seems to be giving insurance companies loopholes instead of getting people the free testing they need,” wrote Frank Pallone Jr. (D-N.Y.), Bobby Scott (D-Va.), Richard Neal (D-Mass.), Patty Murray (D-Wash.) and Ron Wyden (D-Ore.) in a recent letter to HHS, the Dept. of Labor and the Treasury Dept.

James Gelfand, senior vice president of health policy at the ERISA Industry Committee (ERIC), tells AIS Health that he’s fielded concerns that since insurers aren’t paying for back-to-work testing, workers might have to. But in reality, many of the large, self-insured businesses that ERIC represents “are starting to reopen and relaunch back up to full capacity, but most of them are not using a robust testing regime to do so.” The reason, he says, is that diagnostic tests “are essentially taking a snapshot of a moment in time with sometimes a 10-day lag time,” so they’re not very helpful to employees who need to know right away if they’re safe to go back to work.

Steve Wojcik, vice president of public policy at the Business Group on Health, says he sees the logic behind not forcing health insurers to pay for back-to-work testing.

“If there is a medical reason…to get tested, and a doctor is recommending it, then the health plan would cover it, but if testing is part of return to work, some employers may be incorporating testing [costs] into their return-to-work plans,” he points out.

According to Christen Linke Young, a fellow at the USC-Brookings Schaeffer Initiative for Health Policy, a separate problem is the fact that private insurers are required to pay for out-of-network COVID-19 testing at whatever cash price that a lab or provider lists on a public website. Because those prices aren’t necessarily constrained by prevailing market rates, that can “put a lot of upward pressure on insurance reimbursement for tests,” she says.