Perspectives

Perspectives on MA Prior Authorization Bill

June 10, 2021

A bipartisan bill, which was recently introduced in the House of Representatives by Rep. Suzan DelBene (D-Wash.) and co-sponsored by Reps. Mike Kelly (R-Pa.), Ami Bera (D-Calif.) and Larry Bucshon (R-Ind.), would push health insurers to make “real-time” prior authorization determinations for Medicare Advantage (MA) beneficiaries, AIS Health reported.

According to DelBene’s press release, the Improving Seniors’ Timely Access to Care Act would “establish an electronic prior authorization process, require HHS to establish a process for ‘real-time decisions’ for items and services that are routinely approved, improve transparency by requiring MA plans to report to CMS on the extent of their use of prior authorization and the rate of approvals or denials, [and] encourage plans to adopt prior authorization programs that adhere to evidence-based medical guidelines in consultation with physicians.”

A bipartisan bill, which was recently introduced in the House of Representatives by Rep. Suzan DelBene (D-Wash.) and co-sponsored by Reps. Mike Kelly (R-Pa.), Ami Bera (D-Calif.) and Larry Bucshon (R-Ind.), would push health insurers to make “real-time” prior authorization determinations for Medicare Advantage (MA) beneficiaries, AIS Health reported.

According to DelBene’s press release, the Improving Seniors’ Timely Access to Care Act would “establish an electronic prior authorization process, require HHS to establish a process for ‘real-time decisions’ for items and services that are routinely approved, improve transparency by requiring MA plans to report to CMS on the extent of their use of prior authorization and the rate of approvals or denials, [and] encourage plans to adopt prior authorization programs that adhere to evidence-based medical guidelines in consultation with physicians.”

DelBene’s bill has been endorsed by dozens of provider groups, but payer groups have been silent on the measure.

Michael Lutz, a senior consultant at Avalere Health and a former MA executive at Independence Blue Cross, says some payers and providers are more prepared for prior authorization mandates than others, which has been the case for payer interoperability rules, another tech-oriented regulatory mandate.

“The impacts will be unique to each plan, not necessarily based on the size of the plan,” says Lutz via email. “For example, plans that tightly manage care with expansive Prior Authorization required conditions and services will be more impacted than plans that have few or no prior authorization requirements. Conversely, if done well, the automation of the easier cases may allow plans to free up clinical resources to focus on the complex requests, thus resulting in operational improvements and allowing the clinicians to focus their skills on those cases that most benefit from them.”

“Another impact will be to provider offices,” he adds. “If they don’t have an electronic medical record (EMR) system, are not proficient with its functionality, or don’t have skilled office staff, this could add an additional burden to the provider office.”

Still, Lutz suggests prior authorization changes could be a break-even proposition for health care organizations.

“The big impact will be on implementation costs or the costs of vendor contracts to handle the system build and management. Over time, there may be some balancing with cost savings if the process results in operational efficiencies,” he explains.

Perspectives on Alternatives to Traditional PBMs

May 27, 2021

In a sign of pent-up demand as the COVID-19 pandemic winds down, a near-record number of companies likely will consider switching to a new PBM during the 2022 selling season that’s now underway, consultants and observers tell AIS Health.

In addition, generally negative publicity about the PBM industry’s contracts and tactics is leading employers to look at more transparent alternatives to the largest traditional PBMs, says David Dross, national practice leader for managed care pharmacy consulting at Mercer.

“We have seen a tremendous increase in plan sponsors saying they want to look at the big three, but they also want to look at other non-traditional options,” says Dross. “We’ve also had some RFPs [requests for proposals] this year where at the beginning of the RFP, the plan sponsor says they don’t want to go to any of the big three — they only want to go to nontraditional providers.” Cigna Corp.’s Express Scripts, UnitedHealth Group’s OptumRx and CVS Health Corp.’s Caremark comprise the trio of dominant PBMs.

In a sign of pent-up demand as the COVID-19 pandemic winds down, a near-record number of companies likely will consider switching to a new PBM during the 2022 selling season that’s now underway, consultants and observers tell AIS Health.

In addition, generally negative publicity about the PBM industry’s contracts and tactics is leading employers to look at more transparent alternatives to the largest traditional PBMs, says David Dross, national practice leader for managed care pharmacy consulting at Mercer.

“We have seen a tremendous increase in plan sponsors saying they want to look at the big three, but they also want to look at other non-traditional options,” says Dross. “We’ve also had some RFPs [requests for proposals] this year where at the beginning of the RFP, the plan sponsor says they don’t want to go to any of the big three — they only want to go to nontraditional providers.” Cigna Corp.’s Express Scripts, UnitedHealth Group’s OptumRx and CVS Health Corp.’s Caremark comprise the trio of dominant PBMs.

These requests by plan sponsors have nothing to do with the pandemic, Dross says. “It’s a philosophical position on the part of the plan sponsors that they just don’t want to work with one of the big three, because they’re basically opposed to their business model.”

For 2022, the plan sponsors who definitely don’t want to contract with one of the big three PBMs are emphasizing transparency, member experience and customization, Dross says.

Overall, this doesn’t involve enough business right now for the biggest PBM players to “really get worried,” Dross says, but it could pose a threat to them in the future.

“The big three players still do have incredible size and scale compared to the rest of the market — it’s roughly 75% or 80% market share,” Dross says. “But the market dynamic around moving to transparency is real, and it’s definitely something that plan sponsors want.” Dross says he’s seeing “little baby steps around providing additional disclosure around underlying financial structure.”

Peter Manoogian, principal at the consulting firm ZS Associates, says that specialty pharmacy costs are receiving considerable scrutiny from employer groups. “Employers are getting out of the year of hibernation” that occurred as a result of the pandemic, Manoogian says. “It’s shaping up to be a very competitive season from all accounts. Employers are increasingly looking at PBMs’ abilities to manage specialty drug costs proactively as a top decision criteria for selection.”

by Jane Anderson

 

Perspectives on Uber’s Partnership With ScriptDrop

May 13, 2021

Uber, seeking to expand its prescription delivery business nationwide, has inked a deal with pharmacy home delivery start-up ScriptDrop that makes Uber the default delivery app for a network of grocery store and independent pharmacies that spans 37 states, AIS Health reported.

The partnership, which is just one of many corporate moves in the pharmacy delivery space, positions Uber to take advantage of the vastly increased consumer demand for home delivery services sparked by the pandemic.

It also puts PBMs in the position of playing some catch-up on developing and promoting home delivery services beyond traditional mail order, says Ashraf Shehata, partner and advisory industry leader for health plans at consulting firm KPMG.

Uber, seeking to expand its prescription delivery business nationwide, has inked a deal with pharmacy home delivery start-up ScriptDrop that makes Uber the default delivery app for a network of grocery store and independent pharmacies that spans 37 states, AIS Health reported.

The partnership, which is just one of many corporate moves in the pharmacy delivery space, positions Uber to take advantage of the vastly increased consumer demand for home delivery services sparked by the pandemic.

It also puts PBMs in the position of playing some catch-up on developing and promoting home delivery services beyond traditional mail order, says Ashraf Shehata, partner and advisory industry leader for health plans at consulting firm KPMG.

The immediate question, he says, is “as we start to see these home delivery options, are we really starting to see the digital world competing against the bricks-and-mortar world, plus delivery? That’s really the dynamic tension here. And I think that there are a lot more chapters to be written in that story.”

But Uber is far from the only company investing in this space, and opportunities for partnerships and acquisitions are plentiful. Meanwhile, PBMs do not appear to be reacting much to the changes in prescription delivery and purchasing patterns, says David Dross, national practice leader for managed care pharmacy consulting at Mercer. “It feels like, at this juncture, PBMs are honestly not seeing enough threat to do something different,” he says.

Competition from Amazon and its subsidiary PillPack hasn’t turned out to be as big of a threat as some in the industry had feared, at least so far, Dross notes. Shehata also doesn’t see Uber and Amazon as immediate threats to PBMs and mail-order pharmacy.

However, Peter Manoogian, principal at the consulting firm ZS Associates, notes that that there are multiple deals that touch on prescription delivery, and PBMs definitely are watching. “I think my clients — PBMs and mail order pharmacies — they are thinking about the threat that an Amazon could bring in the Rx delivery space, because the Amazon delivery model is so intertwined into so many people’s lives,” he says.

by Jane Anderson

 

Perspectives on Interoperability Mandate

April 29, 2021

Payers should look at the looming interoperability mandate as a chance to gain a lasting advantage over their competitors, according to two health care information technology (IT) experts.

In a March 26 webinar hosted by America’s Health Insurance Plans (AHIP), IBM Vice President Michael Curry of Watson Health and Jeff Rivkin, research director for payer IT strategies at IDC Insights, said payers should do more than meet the minimum interoperability standards, AIS Health reported.

“It’s just the tip of the iceberg. We’re going to see a lot of data exchanged. And if you don’t have a fairly robust platform to be able to do that, you’re going to hurt next year, too,” Rivkin said.

Payers should look at the looming interoperability mandate as a chance to gain a lasting advantage over their competitors, according to two health care information technology (IT) experts.

In a March 26 webinar hosted by America’s Health Insurance Plans (AHIP), IBM Vice President Michael Curry of Watson Health and Jeff Rivkin, research director for payer IT strategies at IDC Insights, said payers should do more than meet the minimum interoperability standards, AIS Health reported.

“It’s just the tip of the iceberg. We’re going to see a lot of data exchanged. And if you don’t have a fairly robust platform to be able to do that, you’re going to hurt next year, too,” Rivkin said.

Starting July 2021, HHS will require insurers that sell Medicare Advantage, Medicaid and CHIP managed care, and Affordable Care Act exchange plans to launch an application programming interface (API) that will allow patients to access their complete medical and claims history on demand along with a continually updated provider directory. Payers must also make all of their patient and claims data available to other insurers on a payer-to-payer data exchange, which must be in place by January 2022.

Rivkin said insurers should think about the interoperability mandate and the mandate to release pricing information as the same project. Starting on Jan. 1, 2023, health plans must offer members online shopping tools that allow them to see the negotiated rate between their provider and their plan, as well as a personalized estimate of their out-of-pocket cost for 500 of the most shoppable items and services.

“We’re all in the middle of those implementations, but there’s a huge downstream potential for that data,” Curry explained. He says the pandemic-spurred telehealth boom has accelerated changes in consumer expectations.
“The consumer side…has changed a lot in how payers have to think about their relationships with clients,” Curry added. Consumers, he said, now expect accessing health care to be more similar to “buying something on Amazon.”

“Amazon and those like it have raised the bar from the consumerism perspective,” Rivkin said. “Now, you’ve got a significant number of people in the individual market switching because they shop for price. The idea that retail companies have had for years of loyalty and stickiness…is now relevant to health insurance.”

by Peter Johnson

 

Perspectives on ACA Subsidy Expansion

April 15, 2021

For an individual health insurance market that is already hitting its stride, the new pandemic relief legislation’s expansion of Affordable Care Act (ACA) subsidies is yet another positive catalyst that should make the exchanges more attractive to insurers and customers alike, experts tell AIS Health.

Under the American Rescue Plan, which President Joe Biden signed into law on March 11, individuals who already qualified for premium tax credits under the ACA will see more generous financial aid. In addition, people who earn more than 400% of the federal poverty level (FPL) will be eligible for reduced premiums for the first time thanks to a provision that caps marketplace premiums at 8.5% of all enrollees’ income.

For an individual health insurance market that is already hitting its stride, the new pandemic relief legislation’s expansion of Affordable Care Act (ACA) subsidies is yet another positive catalyst that should make the exchanges more attractive to insurers and customers alike, experts tell AIS Health.

Under the American Rescue Plan, which President Joe Biden signed into law on March 11, individuals who already qualified for premium tax credits under the ACA will see more generous financial aid. In addition, people who earn more than 400% of the federal poverty level (FPL) will be eligible for reduced premiums for the first time thanks to a provision that caps marketplace premiums at 8.5% of all enrollees’ income.

Fritz Busch, an actuary at Milliman, Inc., says the newly expanded ACA subsidies will likely bring even more people into the exchanges than the pandemic-related special enrollment period that started Feb. 15. And, “it’s generally agreed that more membership in the individual market means favorable morbidity,” so actuaries will need to figure out just what the impact of that will be, he adds.

Looking ahead to 2022, not only will the revamped subsidies bring more people into the marketplaces, but they will also likely change how people sort themselves among the different coverage tiers — and how insurers respond, Busch says.

“The higher subsidies go, the more likely it is going to be that someone is eligible for a free plan — particularly bronze plans, so there could be some movement towards bronze because of that,” he explains. Health insurers, then, “will want to make sure that they’re in position for [enrollees] to select their bronze plan as a free plan. If their bronze plans are too expensive, they’re not going to be free anymore.”

“We’ll also have an extensive increase of competition in marketplaces in 2022, ’23 and ’24,” says David Anderson, a research associate at the Duke-Margolis Center for Health Policy. He predicts that more insurers will enter the marketplaces and spread their footprints within states where they already operate.

With that increased competition, which will continue a trend already taking place on the exchanges, “the opportunity for monopoly pricing…is going down dramatically,” according to Anderson.

Perspectives on Cigna’s MDLive Deal

April 1, 2021

Health insurers have begun to consolidate their position in the telehealth market, as indicated by a recent move by Cigna Corp. to acquire MDLive Inc. Meanwhile, lawmakers are beginning to consider the future of telehealth regulation and payment, AIS Health reported.

Cigna’s Evernorth health services arm announced on Feb. 26 that it had reached an agreement with MDLive to acquire the virtual care provider, according to MDLive’s website. MDLive has been available in-network as a primary care option to all members of Cigna’s commercial plans since January 2020.

Health insurers have begun to consolidate their position in the telehealth market, as indicated by a recent move by Cigna Corp. to acquire MDLive Inc. Meanwhile, lawmakers are beginning to consider the future of telehealth regulation and payment, AIS Health reported.

Cigna’s Evernorth health services arm announced on Feb. 26 that it had reached an agreement with MDLive to acquire the virtual care provider, according to MDLive’s website. MDLive has been available in-network as a primary care option to all members of Cigna’s commercial plans since January 2020.

Ashraf Shehata, national sector leader for health care and life sciences at KPMG, says he expects even more efforts by payers to offer telehealth benefits directly to members.

He adds that the COVID-19 pandemic has acted as an accelerant for telemedicine use. He expects patients will continue to demand telemedicine options even after the pandemic subsides, and that payers will see that demand as an opportunity to narrow the gap between themselves and members.

“We saw that with massive and immediate uptake of the platforms — all the platforms, I should say. Not only did [payers] use their existing platform relationships, but they added new platforms because demand is so high,” Shehata explains.

Shehata adds that robust, internal telemedicine options offer plans an opportunity to exercise leverage in negotiations with provider systems, which have sought to have virtual visits reimbursed at the same rate as traditional visits.

The payment equity question is central to the coming regulatory battle over telemedicine. Payer and plan sponsor lobbying groups will square off against providers in Congress over whether virtual visits should be reimbursed at the same rate as in-person visits. Early in the pandemic, the Trump administration mandated that Medicare must reimburse most telehealth visits at parity with traditional visits.

Also at issue is whether the full menu of services authorized in response to the pandemic will continue to be eligible for Medicare reimbursement. CMS expanded the types of services that could be delivered via telehealth to Medicare beneficiaries, temporarily adding 135 services. Unless Congress acts or the Biden administration issues new rules, the remaining expanded services will expire either at the end of 2021, or when the pandemic public health emergency ends.

In a March 2 hearing of the House Committee on Energy and Commerce’s Subcommittee on Health, legislators indicated that they are studying both issues.