Perspectives

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.”

Perspectives on MA Star Ratings

November 12, 2020

Although more than three-quarters of Medicare Advantage beneficiaries remain in highly rated plans, roughly 77% of MA Prescription Drug (MA-PD) members are currently in contracts that will have 4 or more stars in 2021, down from about 81% in 2020, estimated CMS.

Approximately 49% of MA-PD plans (194 contracts) that will be offered in 2021 earned overall star ratings of 4 or higher, compared with 52% of MA-PDs (210 contracts) offered in 2020, according to CMS.

Although more than three-quarters of Medicare Advantage beneficiaries remain in highly rated plans, roughly 77% of MA Prescription Drug (MA-PD) members are currently in contracts that will have 4 or more stars in 2021, down from about 81% in 2020, estimated CMS.

Approximately 49% of MA-PD plans (194 contracts) that will be offered in 2021 earned overall star ratings of 4 or higher, compared with 52% of MA-PDs (210 contracts) offered in 2020, according to CMS.

Those declines are at least partly due to the increased weight of member experience measures based on Consumer Assessment of Healthcare Providers and Systems (CAHPS) and CMS administrative data, Melissa Newton Smith at HealthMine, Inc. tells AIS Health. For the 2021 star ratings, CMS increased the weighting value of the Part C Patients’ Experience and Complaints measures from 1.5 to 2.

That combined with the “continued improved performance on the Part D measures” created a downward shift in overall performance, she suggests.

MA-PDs performed worse on nine out of 14 Part D measures, including on all three medication adherence measures and in Statin Use in Persons with Diabetes (SUPD), which contribute about 15% to the overall rating. And 15 out of the 16 cut points for those measures increased, observes Smith.

“When you look at the number of plans that improved, there were 65 contracts that improved and only 19 picked up the fourth star, which is a pretty low number,” observes Smith. “And if you compare that to the plans that dropped this year…you can [observe that] CMS is seeing more plans dip below the 4-star level and losing quality bonus payments, which obviously trickles down into the market and changes the competitiveness of those contracts, which really jumped out.”

Tom Kornfield, senior consultant with Avalere Health, estimates that the 31 contracts that lost their fourth star collectively cover about 2 million enrollees, which is “not insignificant.” And even though three-quarters of the MA population are still in contracts with 4 or more stars, “when we look at the fact sheets from the last several years, there’s been an increase — or if it went down it was maybe by a percentage point,” says Kornfield.

Perspectives on the Future of ACA

October 29, 2020

The Sept. 18 death of Justice Ruth Bader Ginsburg — which could tip the scales in favor of striking down the Affordable Care Act (ACA) — was hardly welcome news for health insurers during a year when a pandemic and a presidential election are already fueling high levels of uncertainty. However, industry analysts and legal experts say there are plenty of reasons not to hit the panic button just yet, AIS Health reported.

“This definitely increases the chance of the Supreme Court striking down the full ACA. But we’re going from a pretty low likelihood base,” says Chris Sloan at Avalere Health. “The odds are still really stacked against anything materially changing for the ACA.”

At issue is a case now known as California v. Texas, which Republican state officials filed in 2018 to challenge the constitutionality of the ACA. Because Congress changed the tax penalty for the law’s individual mandate to $0 via the 2017 Tax Cuts and Jobs Act, they argued, the mandate is unlawful, and if that part is unconstitutional, the whole law must go.

The Sept. 18 death of Justice Ruth Bader Ginsburg — which could tip the scales in favor of striking down the Affordable Care Act (ACA) — was hardly welcome news for health insurers during a year when a pandemic and a presidential election are already fueling high levels of uncertainty. However, industry analysts and legal experts say there are plenty of reasons not to hit the panic button just yet, AIS Health reported.

“This definitely increases the chance of the Supreme Court striking down the full ACA. But we’re going from a pretty low likelihood base,” says Chris Sloan at Avalere Health. “The odds are still really stacked against anything materially changing for the ACA.”

At issue is a case now known as California v. Texas, which Republican state officials filed in 2018 to challenge the constitutionality of the ACA. Because Congress changed the tax penalty for the law’s individual mandate to $0 via the 2017 Tax Cuts and Jobs Act, they argued, the mandate is unlawful, and if that part is unconstitutional, the whole law must go.

Until Ginsburg’s death from cancer complications, many legal observers expected that the ACA had a good shot at surviving this latest Supreme Court challenge. But if Senate Republicans are able to confirm a replacement for Ginsburg before Nov. 10 oral arguments, not one but two conservative justices would have to side with their liberal colleagues to produce a pro-ACA ruling, explains health care attorney Katie Keith.

Ultimately, “I’m still skeptical that the entire law would be invalidated; I think that would be a step too far and does go against some of the recent decisions we’ve seen on severability from this court,” Keith says. However, she adds that the loss of Ginsburg “makes it more likely that parts of the ACA will be struck down” — in particular, the so-called preexisting condition protections.

Wall Street analysts, meanwhile, appeared unconvinced that the law will be unraveled — but noted that Centene Corp. has the most exposure if that happens, given its strong concentration in Medicaid and the individual market. Credit Suisse’s A.J. Rice estimated that those two business lines make up roughly 26% of Centene’s earnings, but only 4% for Anthem, Inc., and less than 1% each for Cigna Corp., CVS Health Corp., Humana Inc. and UnitedHealth Group.

Perspectives on Provider Consolidation

October 15, 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 Amazon-Sharp HealthCare Deal

October 1, 2020

Health care industry insiders say that Amazon.com Inc.’s Aug. 27 deal to provide Halo fitness trackers to Sharp HealthCare indicates the retail and tech giant will make big bets on clinical and actuarial data analytics, AIS Health reported.

Sharp Chief Information and Innovation Officer Michael Reagin says that Amazon will provide the San Diego-based integrated plan and provider with about 500 of the wearable fitness trackers.

Sharp will use the devices in two pilot programs, Reagin says. The company will give “about 100” Halos to clinicians, who will wear them in order to track staff performance and prevent burnout. Reagin says the Halo’s much-discussed voice monitoring technology is an essential element of the clinician-focused effort.

Health care industry insiders say that Amazon.com Inc.’s Aug. 27 deal to provide Halo fitness trackers to Sharp HealthCare indicates the retail and tech giant will make big bets on clinical and actuarial data analytics, AIS Health reported.

Sharp Chief Information and Innovation Officer Michael Reagin says that Amazon will provide the San Diego-based integrated plan and provider with about 500 of the wearable fitness trackers.

Sharp will use the devices in two pilot programs, Reagin says. The company will give “about 100” Halos to clinicians, who will wear them in order to track staff performance and prevent burnout. Reagin says the Halo’s much-discussed voice monitoring technology is an essential element of the clinician-focused effort.

Michael Abrams, co-founder and managing partner of health care consultancy Numerof & Associates, says that member engagement will be essential to the pilot program’s success. He says that remote monitoring can be stifled if patients don’t fully buy in.

Since the Halo will continually monitor members without any action in their part, Abrams is optimistic that the program will enjoy better adherence than other remote monitoring efforts.

“If plans can get member adoption and perseverance, this could be a great tool for seeing high-level, aggregated community trends and identifying specific interventions,” says Rajshri Ravi, the head of product and technology at ConsejoSano. “Population health management is all about data: the more, the better. It depends on how they use the data. Propensity modeling could predict member behavior and offer insights to increase retention.”

Friso van Reesema, a senior account executive for Eliza, Elli and Essette Solutions, says that Amazon is uniquely well-positioned to offer health plans technology and services that will process that data.

“In the next three years, we’re going to see some really exciting artificial intelligence and improvement of these platforms that are leveraging these devices to power the platform and be able to roll out exciting algorithms, whether they’re retrospective, prospective, prescriptive,” van Reesema says.

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.”