Study: ‘Big five’ insurers depend heavily on Medicare, Medicaid business

https://www.fiercehealthcare.com/cms-chip/big-five-insurers-medicare-medicaid-growth-profits?mkt_tok=eyJpIjoiT0RnMFkySXdPV0psWldSaCIsInQiOiJQSllQNlpcL2RhTzBDZFwvZXh5M1ZUSDJyUU5JTGw3dnh1QTVac01rZUFcL2pNUUhhMXBaQjBxK29ScHRrOHhsT3d6aE5pcFRJUWd4Sm0rYXA4S0RYVGE2N0czN2hhc2hsXC9EZk9mSGVLR0V1UFlwVDZpQmdkcll0eTBMNDUzTHlIZDIifQ%3D%3D&mrkid=959610&utm_medium=nl&utm_source=internal

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Even as they’ve retreated from the Affordable Care Act exchanges, the country’s biggest for-profit health insurers have become increasingly dependent on Medicare and Medicaid for both profits and growth.

In fact, Medicare and Medicaid accounted for 59% of the revenues of the “big five” U.S. commercial health insurers—UnitedHealthcare, Anthem, Aetna, Cigna and Humana—in 2016, according to a new Health Affairs study.

From 2010 to 2016, the combined Medicare and Medicaid revenue from those insurers ballooned from $92.5 billion to $213.1 billion. The companies’ Medicare and Medicaid business also grew faster than other segments, doubling from 12.8 million to 25.5 million members during that time.

All these positive trends, the study noted, helped offset the financial losses that drove the firms to reduce their presence in the individual marketplaces. Indeed, the big five insurers’ pretax profits either increased or held steady during the first three years of the ACA’s individual market reforms (2013-2016). Their profit margins did decline during those three years, but stabilized between 2014 and 2016.

Not only do these findings demonstrate the “growing mutual dependence between public programs and private insurers,” the study authors said, but they also suggest a useful policy lever. The authors argued that in order to help stabilize the ACA exchanges, federal and state laws could require any insurer participating in Medicare or state Medicaid programs to also offer individual market plans in those areas.

Nevada has already done something similar: It offered an advantage in Medicaid managed care contract billing for insurers that promised to participate in the state’s ACA exchange. The state credited that policy with its ability to coax Centene to step in and cover counties that otherwise would have lacked an exchange carrier in 2018.

It’s far less certain, though, whether such a concept will ever be embraced at the federal level during the Trump administration, since its focus has been on unwinding the ACA rather than propping it up.

Either way, recent events underscore the study’s findings about how lucrative government business has become for major insurers. One of the main goals of CVS’ proposed acquisition of Aetna is to improve care for Medicare patients, which would help the combined company “be more competitive in this fast-growing segment of the market,” CVS CEO Larry Merlo said on a call this week.

Aetna CEO Mark Bertolini added that the transaction has “incredible potential” for Medicare and Medicaid members, as the goal is to provide the type of high-touch interaction and care coordination they need to navigate the healthcare system.

 

Cigna latest major payer to post strong Q2

http://www.healthcaredive.com/news/cigna-latest-major-payer-to-post-strong-q2/448675/

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Dive Brief:

  • Cigna reported strong second-quarter earnings Friday, which included a 4% increase in total revenues compared to a year ago to $10.3 billion.
  • In announcing its earnings, Cigna also raised its 2017 earnings forecastfrom between $9.35 and $9.85 to between $9.75 and $10.05 per share. Experts had predicted $9.77.
  • With Cigna’s announcement, six major health insurers have beaten Wall Street expectations in the second quarter, despite the healthcare debate in Washington and uneasiness in the Affordable Care Act exchanges.

Dive Insight:

Cigna’s positive results are yet another second-quarter success for payers. In recent days, Aetna raised its outlook after a strong quarter, Humana beat its earnings predictions, Anthem posted strong results and UnitedHealth announced that its revenue grew 8% from last year.

For Cigna, the payer’s adjusted income from operations increased to $750 million compared to $515 million last year, which Cigna said “reflects significantly increased earnings contributions from each of our business segments.”

Premiums and fees increased 3% compared to a year ago, which was “driven by customer growth and specialty contributions in our commercial business.” Cigna reported that its financial results for its commercial insurance projects more than offset a drop in revenue from government products because of lower enrollments in those programs.

Cigna’s positive second-quarter numbers may lead to M&A activity, especially regarding Medicare Advantage (MA). Cigna Chief Executive David Cordani said in June the payer has between $7 billion and $14 billion that it may use on mergers and acquisitions this year. That money may go to expanding its MA offerings. Corandi declined to say in June whether Cigna is looking to buy Humana, which is the second-largest MA payer, or whether it may acquire or merge with other companies.

Regardless, you can expect Cigna to grow its MA market in the coming months after the CMS lifted Cigna’s suspension to sell MA and Medicare Part D plans in June. The suspension came after CMS found issues with Cigna’s appeals and grievances processes, Part D, formulary and benefits administration. The CMS restricted Cigna for 18 months, which the company said cost them at least $500 million.

Also, earlier this year, a proposed $54 billion merger proposal with Anthem  failed. Despite the failed merger, Humana reported $1.1 billion net income in the first quarter compared to $254 million last year. At the time, Humana officials pointed to the failed merger with Anthem as a major reason for the net income increase and Bruce D. Broussard, Humana’s president and chief executive officer, especially highlighted MA as a positive.

After the merger failed, Cigna filed a lawsuit against Anthem that seeks more than $13 billion in damages and a $1.85 billion contractual breakup fee. Anthem is protesting both payments.

Cigna teams with CVS Health in collaboration to rival urgent care clinics

http://www.healthcarefinancenews.com/news/cigna-teams-cvs-health-collaboration-rival-urgent-care-clinics?mkt_tok=eyJpIjoiTXpVelkyRXhZMkpqTmpKaSIsInQiOiJFVjFscVRVVDdXZmZqek02STNMSVNjelwvREEwMmZmckZrWmNyZjNrQnVcL0szTGZuNXA4ZGdrOGRhT1V5bnREanBwWitPbTNkQllLZW5BTmd4VDk5TDg0ak1NNStnTllqdEllQlNpQmRZbDUwcm5JdVNaZ1lJcmpVVXJNYWxcL0JcL28ifQ%3D%3D

Roughly 45 percent of urgent care facility visits by Cigna members could be conducted at retail healthcare clinics, insurer says.

Cigna expects to save money on urgent care and emergency room visits through a new collaboration with CVS Health called Cigna Health Works..

In June, the insurer and CVS Health announced the initiative for Cigna’s self-funded employer-sponsored health plans.

Retail pharmacies are competing against traditional providers by offering convenient walk-in clinics.

Cigna Health Works offers patients an alternative to urgent care and emergency room visits, the insurer said. Roughy 45 percent of urgent care facility visits by its members could be conducted at retail clinics, potentially reducing healthcare costs by 81 percent per visit, Cigna said.

The collaboration aligns Cigna-administered health benefits with CVS Pharmacyand CVS MinuteClinic retail healthcare services.

“This new model is based on how the customer wants to consume health care — it’s about creating value and a new way for healthcare consumers to get more from their health plan, by ensuring that we are there for them at the places they prefer to go for convenient care,” said Michele Paige, vice president and general manager of Cigna Onsite Health.

“As the popularity of retail health care continues to rise, Cigna Health Works is designed to help improve healthcare quality and address potential gaps in care. In some markets, up to one-third of Cigna customers have used some form of retail health care within a year’s time.”

Cigna Health Works can help patients who do not have a primary care doctor to find one by providing a list of Cigna-contract physicians from the health plan’s provider network.

CVS MinuteClinic nurse practitioners can offer pre-diabetic health screening, acute episodic care at discounted rates, as well as low cost A1C blood sugar testing, with the drugs available at CVS.

The nurse practitioner can ensure that an electronic record of each visit to CVS MinuteClinic is sent to the PCP‘s office.

“This new level of collaboration with Cigna is a part of the growing trend toward consumer-directed care,” said Helena Foulkes, president of CVS Pharmacy. CVS Health, a pharmacy benefit manager, has nearly 9,700 retail locations and more than 1,100 walk-in medical clinics nationwide.

It is among the country’s top pharmacies that also include Walgreens, Walmart, Rite Aid and Kroger.

In November, CVS Health partnered with OptumRx, UnitedHealth’s pharmacy benefit manager business. OptumRx consumers are able to fill 90-day prescriptions at CVS for prices that compete with  home delivery copays.

Walgreens formed a similar deal with OptumRx.

Cigna Health Works beneficiaries get personalized pharmacy support through Health Tag Messages on the prescription bag to advise patients of needed health actions by the pharmacist or clinician, and provide information on available Cigna health and wellness coaching services included in their Cigna plan at no additional cost.

They get contracted discounts at CVS MinuteClinic for select preventive and acute care, including biometric screenings for blood pressure, cholesterol and blood sugar as well as diagnosis and treatment for minor illnesses such as bronchitis, ear infections and strep throat.

Consumers get an exclusive 20 percent discount on CVS health brand over-the-counter products through the CVS ExtraCare Health card. This program can be coupled with Cigna 90 Now, which offers 90-day refills for maintenance prescriptions to help improve patient adherence to their medication regimen.

The personalized health and wellness program is being offered in select markets for U.S. Cigna-administered employer-sponsored medical plans.