Financial updates from UnitedHealth, Anthem + 5 other for-profit payers

https://www.beckershospitalreview.com/payer-issues/financial-updates-from-unitedhealth-anthem-5-other-for-profit-payers.html?utm_medium=email

The following seven health insurers recently released their financial statements for the fourth quarter of fiscal year 2019:

1. Anthem saw its revenues and profits grow in the fourth quarter, but the insurer missed analysts’ earnings expectations.

2. Cigna continued to realize higher revenues and profits in the fourth quarter, thanks to its subsidiary Express Scripts.

3. Molina Healthcare ended the fourth quarter with lower net income than a year prior as premium revenues declined.

4. Humana saw total revenue and net income grow in the fourth quarter, thanks in part to growth in its Medicare Advantage business and health services segment.

5. Centene Corp. saw its revenues grow in the fourth quarter, but experienced higher-than-expected flu costs.

6. UnitedHealth Group saw its revenues just miss analysts’ expectations in the fourth quarter, but the health insurance giant’s Optum unit boosted profits.

7. Aetna‘s parent company, CVS Health, exceeded Wall Street’s expectations with its fourth-quarter results, boosted largely by its pharmacy benefit management business.

 

AARP, United Healthcare and CVS keep prescription drug prices higher for seniors

https://www.washingtontimes.com/news/2020/feb/11/aarp-united-healthcare-and-cvs-keep-prescription-d/

Illustration on overpriced prescription drugs for seniors by Alexander Hunter/The Washington Times

Most folks think of the AARP as a membership organization that gives older Americans discounts on magazine subscriptions and cellphone plans. In fact, those business lines are secondary to AARP’s real source of income, a lucrative partnership with United Healthcare.

AARP partners with United Healthcare to offer health insurance plans to its membership. On its face, there’s nothing inappropriate about this type of affinity branding; the problem is that United Healthcare (and, frankly, other insurance companies) have made some decisions at the expense of seniors and the Medicare program, which should run counter to what a seniors-focused advocacy organization endorses. Recent actions by United Healthcare to limit seniors’ access to less expensive versions of Medicare drugs calls into question whether the AARP is looking out for older Americans or its own bottom line.

During the past three years, President Trump has maintained a laser focus on drug prices, causing pharmaceutical companies to respond in a variety of ways, including reducing or, in some instances, halting altogether annual price increases, pledging responsible pricing for new medications and reducing the price of medicines in certain instances.

For example, last year Eli Lilly launched a half-price version of its insulin drug, Humalog, to address affordability barriers for diabetic patients. Gilead created a subsidiary company in order to offer its two revolutionary hepatitis C products, Harvoni and Epclusa, as “authorized generics” at prices more than 70 percent lower than the identical brand version. In 2018, two companies competing in the cardiovascular space, Sanofi and Amgen, each introduced less costly versions of their cholesterol medications for patients who are unresponsive to statins — at 60 percent below the original price. These are all big wins for Mr. Trump’s jawboning campaign.

But the system is not working: These less expensive versions of innovative drugs are not available to many seniors because of how insurance companies and their negotiators (known as “pharmacy benefit managers” or PBMs) design drug coverage via formularies, particularly in Medicare. A perfect case study is cardiovascular disease, the No. 1 cause of death in the United States: For the past 14 months, in many instances, United Healthcare formulary design kept patients on the more expensive versions of the Sanofi and Amgen cholesterol medicines which came coupled with a high out-of-pocket co-insurance for the patient. Further, CVS (which is merging with insurance company Aetna) admitted to creating barriers for patients by requiring doctors to provide a “documented clinical reason” for prescribing the identical, cheaper version of the same medicine. Today in Medicare, CVS continues to block affordable access to the lower cost versions by not covering these medicines anywhere on their national formulary, effectively dissuading a patient at high risk for a heart attack or stroke from purchasing the medicine prescribed by his/her cardiologist.

Why would insurance companies and PBMs want to keep paying for the more expensive version of an identical drug? The answer lies in the backward way drugs are priced in America. Drug manufacturers set the “list price” of a drug the same way a car dealership lists the price of cars or colleges list the price of tuition. What’s actually paid by an insurer in the final transaction is usually steeply discounted from the starting price by the drug company “rebating” a portion — 40 percent on average, oftentimes more — to the PBM/insurance company (which then pocket it). That negotiation should result in reduced out-of-pocket drug costs for seniors. The problem is that this model results in perverse incentives.

Medicines have high “list prices” because the drug company knows that it will need to provide significant discounts/rebates in order to be listed on a health plan’s formulary. Positive formulary placement = patient access to a medicine. Insurance companies and PBMs like the higher list prices because they profit from both the steep, negotiated rebates and the higher co-insurance the patient pays to the plan. In Medicare, once a patient barrels through the initial drug coverage phase, the federal government picks up 80 percent of a senior’s drug costs, reducing the insurer’s liability. In the end, it’s patients who suffer at the pharmacy counter and in the long run.  

 

 

 

 

CVS long-term care pharmacy sued by DOJ over fraudulent prescribing practices

https://www.healthcaredive.com/news/cvs-long-term-pharmacy-sued-by-doj-over-fraudulent-prescribing-practices/569268/

Dive Brief:

  • CVS Health and its Omnicare business are being sued by the Department of Justice over alleged fraudulent billing of Medicare and other government programs for outdated prescriptions for elderly and disabled people.
  • The DOJ suit, filed Tuesday in New York, joins whistleblower ligitation accusing Omnicare of billing federal healthcare programs for hundreds of thousands of drugs based on out-of-date prescriptions for individuals in assisted living facilities, group homes, independent living communities and other long-term care facilities between 2010 and 2018. The lawsuit seeks civil penalties and other damages.
  • “We do not believe there is merit to these claims and we intend to vigorously defend the matter in court,” CVS spokesperson Joe Goode told Healthcare Dive. “We are confident that Omnicare’s dispensing practices will be found to be consistent with state requirements and industry-accepted practices.”

Dive Insight:

The suit alleges Omnicare, the nation’s largest long-term care pharmacy, kept dispensing antipsychotics, anticonvulsants, antidepressants and other drugs based off invalid prescriptions for months, and sometimes years, without obtaining fresh scripts from patients’ doctors.

Managers at the long-term care business allegedly ignored prescription refill limitations and expiration dates and forced staff to fill prescriptions quickly, pressuring some facilities to process and dispense thousands of orders daily. When prescriptions expired, Omnicare “rolled over” the scripts, assigning them a new number, allowing the pharmacy to dispense the drug indefinitely without need for doctor involvement.

This practice allowed Omnicare to continually dispenses drugs for seniors and disabled occupants in more than 3,000 residential long-term care facilities, at an ongoing risk to their health, according to DOJ. Many of the prescription drugs were meant to treat serious conditions like dementia, depression or heart disease and have side effects when not closely monitored by a physician — particularly when taken in tandem with other medications.

The pharmacy then submitted knowingly false claims to Medicare, Medicaid and TRICARE, which serves military personnel, for the illegally dispensed drugs over an eight-year period; and lied to the government about the status of the prescriptions. CVS Health senior management was also aware of the scheme, according to DOJ.

“A pharmacy’s fundamental obligation is to ensure that drugs are dispensed only under the supervision of treating doctors who monitor patients’ drug therapies,” Manhattan U.S. Attorney Geoffrey Berman said in a statement. “Omnicare blatantly ignored this obligation in favor drugs out the door as quickly as possible to make more money.”

The government joined the lawsuit originally brought by Uri Bassan, an Albuquerque, New Mexico pharmacist for Omnicare, filed in June 2015. The original whistleblower suit said Omnicare’s compliance department was aware of the “rolling over” process, but did nothing to stop it.

This is by no means the first time the CVS subsidiary, established in 1981 and acquired in 2015 for about $12.7 billion, has been under the federal microscope for fraud.

Omnicare has a history of friction with the DOJ
  • 2006Omnicare pays almost $50 million over improper Medicaid claims

  • 2009Omnicare shells out $98 million to settle kickback allegations

  • 2012Omnicare enters into a $50 million settlement following a DOJ investigation finding its pharmacies dispensed drugs to long-term care facility residents without valid prescriptions

  • Feb. 2014Omnicare pays the government more than $4 million to settle kickback allegations

In the May 16, 2017 suit, the government accused Omnicare of designing an automated label verification system that purposefully inflated profits by submitting claims for generic drugs different than those given to patients. CVS said that all happened before it acquired Omnicare.

​Omnicare provides pharmacy benefits for post-acute care and senior living care, including in skilled nursing facilities, hospitals and health systems and assisted living communities.

Despite the lucrative market in an aging U.S. population with complicated drug needs, Omnicare is an underperforming business in otherwise healthy times for CVS. The unit triggered a $2.2 billion goodwill impairment charge following a late 2018 test, according to CVS’ fourth quarter filing last year.

Omnicare operates 160 pharmacies in 47 states. During the eight years under investigation, Omnicare submitted more than 35 million claims for drugs dispensed to Medicare beneficiaries in assisted living facilities alone, DOJ says.

 

 

 

 

The consolidation of health insurance and drug benefits is back

https://www.axios.com/health-insurers-pharmacy-benefits-big-five-consolidation-03f39e42-3a9f-4bc6-beea-3b14f1187572.html

Image result for The consolidation of health insurance and drug benefits is back

Starting this spring, five corporate giants — Anthem, Cigna, CVS Health, Humana and UnitedHealth Group — will control health insurance and pharmacy benefits for more than 125 million Americans.

Why it matters: Most of this happened through rapid consolidation, and now the pressure is on these companies to prove they can better control both medical and drug spending with everything under the same roof.

Driving the news: Anthem has been working for over a year to create its own pharmacy benefit manager, called IngenioRx, so it could sever ties with Express Scripts.

  • Anthem’s new prescription drug negotiator is now ready to go live by March, 10 months ahead of schedule, the company said Wednesday.

This is the new landscape. These 5 companies will handle both drug and medical bills for millions of people across Medicare, Medicaid and employer-based insurance.

  • UnitedHealth Group is the largest entity combining health insurance and pharmacy benefits, with UnitedHealthcare and OptumRx (a PBM that got significantly bigger after it absorbed Catamaran in 2015).
  • CVS acquired Aetna to pair with its existing PBM, Caremark.
  • Cigna now owns Express Scripts.
  • Anthem will be moving millions of people onto IngenioRx this year.
  • Humana also has its own PBM, and it’s the fourth-largest by prescription volume.

It’s worth noting that several Blue Cross Blue Shield companies also own a PBM, Prime Therapeutics.

What they’re saying: PBMs “don’t need to be independent entities with their own profit margins … that adds costs,” former Aetna CEO Mark Bertolini said in 2017.

  • Some research says combining health care services and prescriptions under one benefit (not necessarily one common owner) could save money, if the insurer helps people manage their diseases.
  • But insurers and PBMs have lived under the same roof before, and these companies have been doing the same work while U.S. health care spending has continued to rise.

Reality check: These companies would not have pursued merging medical and drug plan offerings if they didn’t think there was a lot of money to retain.

  • Anthem’s ahead-of-schedule PBM raised the company’s projected 2019 adjusted earnings per share to $19 — significantly above every Wall Street estimate. Of the $4 billion in savings Anthem expects from the PBM, 20% will immediately be booked as profit.

 

 

 

Health insurance is as big as Big Tech

https://www.axios.com/health-insurers-pbms-revenue-big-tech-9bc7b8fd-5577-4ebe-a818-42f4f7fd2d36.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

Image result for Health insurance is as big as Big Tech

The 5 largest conglomerates combining health insurance and pharmacy benefits are on track this year to be bigger than the 5 preeminent tech companies.

The big picture: Anthem, Cigna, CVS Health, Humana and UnitedHealth Group cumulatively expect to collect almost $787 billion in 2019, compared with $783 billion of projected revenue for Facebook, Amazon, Apple, Netflix and Google.

Yes, but: The tech companies cumulatively were 5 times more profitable than the health care companies in 2018 and are projected to be 3.5 times more profitable this year.

  • There’s more money to be made selling smartphones and online ads than acting as a health care middleman.
  • Health insurers and pharmacy benefit managers pay out a vast majority of their revenues to hospitals, doctors and drug companies.
  • But insurers and PBMs are still turning large overall profits. And a delay in an Affordable Care Act tax is expected to create a big windfall for the insurance industry this year. Companies are working behind the scenes to get that tax delayed again for 2020 or permanently repealed.

It’s also worth remembering that health insurance giants today do a lot more than just pay out claims for medical care and prescriptions.

  • UnitedHealth owns surgery centers, doctors’ offices, consulting shops and data-analyzing services.
  • CVS, which just bought Aetna, brings in a lot of money through its retail pharmacies and in-store clinics.

 

UnitedHealth projects major revenue boost in 2020 on the back of continued Optum growth

https://www.fiercehealthcare.com/payer/unitedhealth-projects-242b-2019-revenue-offers-2020-guidance-262b-revenue?mkt_tok=eyJpIjoiWkdObE5HRTJNMlptT0RkayIsInQiOiJiaFk3K2s2TDl5OGNrMmJ5XC9EWWEyb3VacEVjUGpOUVhrdE5wQmxkaTN6TUNTbkVJaUJlTnl3eldXcmRaVU1nN3k4UUhKRFEzb1B3XC9pYWNJaHVcL0NqS29QSmI4RFR1aWEwWlNNRUE2QmdqaVJINkNIa090XC9lUzMxUUpUbG1yY24ifQ%3D%3D&mrkid=959610

The outside of Optum's headquarters

UnitedHealth Group projected it will generate $242 billion in revenue in 2019 and expects to report another 7% to 8% increase in top-line growth in 2020.

The insurance group presented updated figures during its investor conference that kicked off Tuesday with officials saying they expect to increase the company’s 2020 revenue to between $260 billion and $262 billion.

They project between $21 billion and $22 billion in operating earnings in 2020.

In comparison, UnitedHealth Group generated $17.3 billion in profits on $226 billion in revenue in 2018. The company is projecting to report $19 billion in profits in 2019.

The biggest driver of growth this year has been UnitedHealth’s Optum, the company’s pharmacy benefit management and care services group. Optum revenue is projected to have increased by 11% from 2018 to 2019, earning UnitedHealth $112 billion in revenue compared to $101 billion in 2018.Optum is expected to continue to be a major growth driver for the company in its 2020 earnings projection, with UnitedHealth pegging growth to increase again between 13% and 14%. UnitedHealth executives said that Optum is expected to make up 50.5% of the company’s total after tax operating earnings this year.. 

Optum could also be the key for UnitedHealth to improve its Medicare Advantage business.

“We don’t like being third, that’s fundamentally where we landed for the year,” said UnitedHealth Group CEO David Wichmann, “Over time I think we will continue to grow and outpace the market.”

Executives said that the key to growth is to keep its networks consistent as well as pharmacists and pharmacies consistent for seniors. 

“We believe we maintain in the Medicare market a strategic cost advantage because of the capacities we have as an organization,” Wichmann said.

UnitedHealth pointed to the success of OptumCare, the company’s primary and specialty care provider.  The highest performing Medicare Advantage plans were in markets that had an OptumCare presence. Wichmann said that growing the OptumCare platform is a majority priority for UnitedHealth over the next seven years.