Radar on Market Access

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.

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.”

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.”

Radar On Market Access: Biden Administration’s Drug-Pricing Moves May Be Limited

November 17, 2020

As is the case for other flavors of health care reform, President-elect Joe Biden’s chance of passing substantial, transformative drug-pricing legislation is now highly dependent upon whether Democrats can eke out a majority in the Senate. While that question won’t be resolved until Georgia completes runoff elections in January, industry observers point out that there are still ways that a Biden administration can address drug pricing, AIS Health reported.

“A president can do a lot even with a divided Congress,” says Stephanie Kennan, a member of McGuireWoods Consulting’s federal public affairs group. “Part of how well something gets done…depends upon the skills of the president or those negotiating for him. With Biden perhaps having a better understanding of the Senate, having come from the Senate, [that] might help him.”

As is the case for other flavors of health care reform, President-elect Joe Biden’s chance of passing substantial, transformative drug-pricing legislation is now highly dependent upon whether Democrats can eke out a majority in the Senate. While that question won’t be resolved until Georgia completes runoff elections in January, industry observers point out that there are still ways that a Biden administration can address drug pricing, AIS Health reported.

“A president can do a lot even with a divided Congress,” says Stephanie Kennan, a member of McGuireWoods Consulting’s federal public affairs group. “Part of how well something gets done…depends upon the skills of the president or those negotiating for him. With Biden perhaps having a better understanding of the Senate, having come from the Senate, [that] might help him.”

During a webinar held on Nov. 5, Avalere Health experts highlighted restructuring the Medicare Part D benefit as an area of potential bipartisan compromise. “I see something like that packaged with the health care extenders that’ll need to move in 2021,” said Chris Sloan, an associate principal at the consulting firm.

Yet Kathryn Bakich, the National Health Compliance Practice Leader at Segal, says that adding an out-of-pocket cost cap in Part D could raise some concerns from employers. “The problem with that is for employer-sponsored plans that have a Part D program, that could make the value of that program less to them,” she says.

In a Nov. 3 note to investors, Leerink SVB analyst Geoffrey Porges pointed out that using regulatory authority to rein in drug prices won’t have as large of an impact as legislation would. “Drug pricing mechanisms implemented via executive order are likely to be limited to a small class of higher-priced drugs within Medicare and Medicaid, with expansion to the commercial side requiring congressional action,” he wrote.

Porges also argued that regardless of who is in charge of the federal government, “the PBM system is likely to remain a target of future reforms.”

Going forward, it’s likely that “lawmakers will focus on the incentives governing formulary decisions and rebates in considering drug pricing reform, although the vehicle for this change is highly uncertain,” he wrote.

Radar On Market Access: What’s Next for Health Insurers in a Likely Split Congress?

November 12, 2020

Though the new makeup of Congress may not be cemented until runoff elections take place in Georgia, perhaps the most consequential outcome of the 2020 general elections for the health insurance industry is that no one political party is likely to control the White House and both chambers of Congress, AIS Health reported.

“[I]t is evident there is no ‘blue wave’ as Republicans appear to have held the Senate,” Citi analyst Ralph Giacobbe advised investors on Nov. 5. “The news drove significant outperformance within the managed care space,” he observed. On Nov. 7, the presidential election was called in favor of former Vice President Joe Biden.

Though the new makeup of Congress may not be cemented until runoff elections take place in Georgia, perhaps the most consequential outcome of the 2020 general elections for the health insurance industry is that no one political party is likely to control the White House and both chambers of Congress, AIS Health reported.

“[I]t is evident there is no ‘blue wave’ as Republicans appear to have held the Senate,” Citi analyst Ralph Giacobbe advised investors on Nov. 5. “The news drove significant outperformance within the managed care space,” he observed. On Nov. 7, the presidential election was called in favor of former Vice President Joe Biden.

Jefferies analyst Brian Tanquilut, in his note to investors on Nov. 5, pointed out that a split Congress helps health insurers because it “essentially eliminates” the risk associated with Medicare for All gaining traction and generally limits legislators’ ability to advance progressives’ health care priorities.

In addition to implementing a public insurance option and lowering the Medicare eligibility age, other Democratic health care priorities that likely won’t happen with a GOP-controlled Senate include expanding Affordable Care Act (ACA) subsidies to middle-income individuals and allowing the federal government to negotiate Medicare Part D drug prices, Larry Levitt at the Kaiser Family Foundation, wrote in a Nov. 5 post on Twitter.

Kathryn Bakich, National Health Compliance Practice Leader at Segal, points out that a split Congress is also less likely to pass legislation that rescues the ACA if all or part of the law is struck down by the Supreme Court, which on Nov. 10 heard oral arguments in a case challenging the law’s constitutionality.

One area where the Biden administration and Congress will likely train their sights is on surprise medical billing.

Yet bipartisan support for a surprise-billing fix existed long before the election — including an executive order from Trump directing Congress to pass such legislation — and still a solution failed to materialize.

“Presumably if you had an administration that had really great negotiating skills, they could get everybody in the same room and say, ‘We’ve got to figure this out; we’re not leaving until we do,'” says Stephanie Kennan, a member of McGuireWoods Consulting’s federal public affairs group. “But I think people have tried that.”