Industry Trends

Perspectives on UnitedHealth, Humana’s Chronic Conditions Programs

August 20, 2020

Both UnitedHealthcare and Humana Inc. are rolling out new disease-specific care management programs aimed at providing patients with the tools they need to help control their chronic conditions, AIS Health reported.

The new initiatives highlight new digital and time-tested interpersonal ways of managing chronic conditions, observers say.

UnitedHealth said it has launched its new digital therapy for people with type 2 diabetes that combines wearable technology and customized personal support. The therapy, called Level2, helps participants gain real-time insights about their condition, using a mobile continuous glucose monitor, activity tracker, app-based alerts and one-on-one clinical coaching.

Both UnitedHealthcare and Humana Inc. are rolling out new disease-specific care management programs aimed at providing patients with the tools they need to help control their chronic conditions, AIS Health reported.

The new initiatives highlight new digital and time-tested interpersonal ways of managing chronic conditions, observers say.

UnitedHealth said it has launched its new digital therapy for people with type 2 diabetes that combines wearable technology and customized personal support. The therapy, called Level2, helps participants gain real-time insights about their condition, using a mobile continuous glucose monitor, activity tracker, app-based alerts and one-on-one clinical coaching.

Meanwhile, Humana says it has contracted with REACH Kidney Care, an educational nonprofit affiliated with Dialysis Clinic, Inc., to provide kidney disease care coordination services to eligible Medicare Advantage and commercial members in Georgia, North Carolina, South Carolina and Tennessee. The collaboration is focused on early detection of chronic kidney disease, slowing disease progression and improving the patient experience.

Joseph Paduda, principal at Health Strategy Associates, LLC, notes that both programs are designed to reduce severity and therefore the cost of treating patients, identifying patients who are “heading in the wrong direction and likely intervening.” Still, Paduda says, “what’s notable is that both are focused on individual disease states, especially knowing more than a third of adults — and more than half of older adults — have multiple chronic conditions.”

William DeMarco, president of Pendulum HealthCare Development Corp., says that UnitedHealth has an in-house advantage with its Optum subsidiary, which connects the insurer’s data platforms for claims and clinical data. Therefore, more information and measures can be tracked electronically, reducing the need for physician or even nurse intervention except when needed, DeMarco says.

DeMarco says the applicability of digital care management solutions, versus more traditional solutions, depends on the condition — although technology always has a place.

“Diabetes is a data-driven disease,” and therefore particularly well-suited to digital therapy, observes Dan Mendelson, founder of Avalere Health. Other chronic conditions that are particularly data-driven include cardiovascular disease and Crohn’s disease, he says, and “any conditions that require regular medication management are likely to benefit from some kind of digital tools.”

Radar On Market Access: Anthem, Cigna, CVS Report Strong PBM Performance Amid COVID-19

August 18, 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.”

Trends That Matter for Major Insurers’ Performance Amid COVID-19

August 13, 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.

Below shows the key financial data for leading health plans in the second quarter of 2020 and 2019.

Radar On Market Access: Trump Administration Issues Telehealth Executive Order, More Acts Are Needed

August 13, 2020

Recent events indicate the telehealth boom caused by the COVID-19 pandemic will result in a permanent expansion of virtual care. On Aug. 3, the Trump administration issued an executive order directing HHS to make permanent some of the telehealth regulations it relaxed for Medicare beneficiaries during the public health emergency, AIS Health reported.

Recent events indicate the telehealth boom caused by the COVID-19 pandemic will result in a permanent expansion of virtual care. On Aug. 3, the Trump administration issued an executive order directing HHS to make permanent some of the telehealth regulations it relaxed for Medicare beneficiaries during the public health emergency, AIS Health reported.

The executive order directs officials to issue proposed regulations that will lock in some of the changes in telehealth policy that the Trump administration included as part of pandemic relief. In response to the order, CMS on Aug. 3 proposed a rule that would permanently allow Medicare to reimburse for certain services that are furnished virtually, “including home visits for the evaluation and management of a patient (in the case where the law allows telehealth services in the patient’s home), and certain types of visits for patients with cognitive impairments.”

Avalere Health founder Dan Mendelson says that the order will have limited impact in the near term, but it speaks to the rapid entrenchment of telehealth.

“The administration is doing what they can with their existing authority. Notionally, it’s in the right direction,” says Mendelson. “It’s thoughtful and positive, but it’s also limited in terms of the practical effect because it’s focused on these rural geographies.”

Meanwhile, telehealth provider Teladoc Health Inc. reached a deal to acquire remote monitoring firm Livongo Health Inc. in a transaction announced Aug. 5, which the firms expect to close by the end of the year. In a July white paper prepared by members of its health care practice, KPMG predicted ample transactions in the telehealth space going forward.

James Gelfand, ERISA Industry Committee (ERIC) senior vice president for health policy, tells AIS Health via email that Congress needs to take telehealth reform further.

“ERIC urges Congress to follow the President’s lead and remove restrictions that ban employers from offering telehealth to all employees, opening up access to health care for millions of Americans nationwide permanently,” he wrote.

Mendelson makes a similar point. He says that Congress needs to set rules for complex, controversial issues like reimbursement. He adds that he expects action on telehealth after the election, if only for Medicare and Medicaid.

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.