Payer, provider trends to watch in 2019

https://www.healthcaredive.com/news/payer-provider-trends-to-watch-in-2019/545612/

Ripple effects from 2018 will continue well into the new year as players deal with some massive policy and business shifts.

 

 

Optum a step ahead in vertical integration frenzy

https://www.healthcaredive.com/news/optum-unitedhealth-vertical-integration-walmart/520410/

Vertical integration is all the rage in healthcare these days, with Aetna, Cigna and Humana making notable plays. 

If the proposed CVS-AetnaCigna-Express Scripts and Humana-Kindred deals are cleared by regulators, the tie-ups will have to immediately face UnitedHealth Group’s Optum, which has been ahead of the curve for years and built out a robust pharmacy benefit manager (PBM) business already along with a care services unit, employing about 30,000 physicians and counting.

UnitedHealth formed Optum by combining existing pharmacy and care delivery services within the company in 2011. Michael Weissel, Group EVP at Optum, told Healthcare Dive the company began by focusing on three core trends in the industry: data analytics, value-based care and consumerism.

Since then, the company has been on an acquisition spree to position itself as a leader in integrated services.

“For the longest time, the market assumed that they were building the Optum business [to spin it out] and what is interesting in the evolution of the industry is that that combination has now set a trend,” Dave Windley, managing director at Jefferies, told Healthcare Dive.

“United has now set the industry standard or trend … to be more vertically integrated and it seems less likely now that United would spin this out … because many of their competitors are now mimicking their strategy by trying to buy into some of the same capabilities,” he said.

Weissel said Optum will continue to push on the three identified trends in the next three to five years, with plans to invest heavily in machine learning, AI and natural language processing.

The question will be whether and how the company can keep its edge.

What Optum is

Optum is a company within UnitedHealth Group, a parent of UnitedHealthcare. Optum’s sister company UnitedHealthcare is perhaps more well known within the industry and with consumers.

However, Optum, a venture that encompasses data analytics, a PBM and doctors, has been gradually building its clout at UnitedHealth Group.

In 2017, the unit accounted for 44% of UnitedHealth Group’s profits.

In 2011, UnitedHealth Group brought together three existing service lines under one master brand. Services are delivered through three main businesses within a business within a business:

  • OptumHealth – the care delivery and ambulatory care capabilities of OptumCare, as well as the care management, behavioral health, and consumer offerings of Optum;
  • OptumInsight – the data and analytics, technology services and health care operations business; and
  • OptumRx – its pharmacy benefit service.

The company focuses on five core capabilities, including data and analytics, pharmacy care services, population health, healthcare delivery and healthcare operations. Services include but are certainly not limited to OptumLabs (research), OptumIQ (data analytics), Optum360 (revenue cycle management), OptumBank (health savings account) and OptumCare (care delivery services).

The Eden Prairie, MN-headquartered company has recently expanded its care delivery services, with much of the growth coming from acquisitions. The past two years have seen Optum expand its footprint into surgical care (Surgical Care Affiliates), urgent care (MedExpress) and primary care (DaVita Medical Group).

It’s a wide pool, but the strategy affords UnitedHealth the opportunity to grab more revenue by expanding its market presence. For example, the DaVita acquisition, which is still pending, allows OptumCare to operate in 35 of 75 local care delivery markets the company has targeted for development, Andrew Hayek, OptumHealth CEO, said on an earnings call in January.

Optum’s strategy of meeting patients where they are and deploying more ambulatory, preventative care services works in concert with its sister company UnitedHealthcare’s goal of reducing high-cost, unnecessary care services, when applicable. If Optum succeeds in creating healthier populations that use lower levels of care more often, that benefits the parent company UnitedHealth Group as UnitedHealthcare spends less money and time on claims processing/payout.

The strategy has been paying off so far.

Three charts that show UnitedHealth’s financial health as it relates to Optum

Optum’s presence has grown as it has steadily increased its percentage of profits for UnitedHealth Group.

Credit: Healthcare Dive / Jeff Byers

In 2011, the first year Optum was configured as it looks today, the company contributed 14.8% of total earnings through operations to UnitedHealth Group with $1.26 billion. That’s about 29 percentage points lower than in 2017, when Optum brought in $6.7 billion in profits on $83.6 billion in revenue.

Broken down, it’s clear that pharmacy services make up the lion’s share of the company’s revenue. In 2017, OptumRx earned $63.8 billion in revenue, fulfilling 1.3 billion prescriptions. OptumRx’s contributions to the company took off in 2015 when Optum acquired pharmacy benefit manager Catamaran.

Credit: Healthcare Dive / Jeff Byers

In recent years, OptumHealth has grown due to expansion in care delivery services, including consumer engagement and behavioral and population health management. The care delivery arm served 91 million people last year, up from 60 million in 2011.

OptumInsight has grown largely due to an increase in revenue cycle management and operations services in recent years.

On Wall Street, UnitedHealth Group is performing well and has seen healthy growth since 2008. The stock peaked in January and took a dive when Amazon, J.P. Morgan and Berkshire Hathaway — industry outsiders yet financial giants — announced they would create a healthcare company.

Credit: Healthcare Dive / Jeff Byers

While these charts suggest a dominant force, the stock activity shows that investors believe there’s still more room for competition, if the new entrants play their cards right.

Where Optum could lock out and rivals could cut in on competition

UnitedHealth started down this strategic path many years ago and the rest of the industry just now seems to be catching up.

“Optum’s been the leader in showing how a managed care organization with an ambulatory care delivery platform and a pharmacy benefit manager all in house can lower or maintain and bend cost trend and then drive better market share gains in their health insurance business,” Ana Gupte, managing director of healthcare services at Leerink, told Healthcare Dive. “I think they have been the impetus in the large space for the Aetna-CVS deal.”

Because the company is multi-dimensional, Optum’s competition will be varied. If all the mergers making news — including the Walmart’s rumored buyout of Humana — close, here’s what competition could look like:

Perhaps oddly, its largest revenue contributor, OptumRx, seems to have the largest vulnerability for competition in the coming years.

Optum’s competitive advantage in the PBM space is driven largely by already realized integration. Merging data across IT systems is no easy task, and Optum has spent years harmonizing pharmacy data across platforms to assist care managers in OptumCare to see medical records for United members.

Anyone with experience implementing EHR systems can tell you such integration doesn’t happen over night.

If the Cigna-Express Scripts deal closes, the equity can compete with OptumRx, but the technology investment needed to harmonize data and embed Cigna’s service and pharmacy information into Express Scripts servers will take time, Windley said. Optum, on the other hand, has invested in the effort and integration for years.

Gupte says the encroaching organizations in the PBM space have the ability to realize the efficiencies and savings and the integrated medical that Optum has been realizing across OptumRx and the managed care organization.

Optum’s leg up in PBM space could last two to three years over the competition, she said.

On the care delivery side, OptumHealth has been purchasing large physician groups for a variety of services. There are only so many large physician groups putting themselves on the market, and Optum has been making bids for them.

There’s still a bit of white space to fill in its 75 target markets, but analysts note Optum may have the competition on lock in this space

Even if CVS-Aetna closes, OptumCare is a $12 billion business with many urgent and surgery care access points. If CVS-Aetna is finalized, the company will have about 1,100 MinuteClinics capable of realizing efficiencies with Aetna, but, as Windley notes, they likely won’t have primary care or surgery care elements.

There’s also a lot of time and capital needed for building out and retrofitting retail space to medical areas.

On the surgical care services, “I don’t see either Cigna, Aetna or Humana getting into that business,” Gupte said. “That will be one element of their footprint on care delivery that will be unique and differentiated for them.”

Urgent care has the potential for outsider competition, she added. However, Optum is using its MedExpress business to treat higher acuity conditions and have an ER doctor on staff in each center. Compared to the typical types of conditions treated in retail clinics or those that would be feasible over time, Gupte believes services that could be seen in CVS or Walmart would be lower acuity, chronic care management services.

“[Optum has] been so proactive and so strategic I don’t think there’s going to be a lot of reactive catchup they have to do,” Gupte said. “I think it’s going to be hard for the other entities to play catch up, outside of the PBM.”

One potential issue will be harmonizing the disparate businesses so patients can be effectively managed across the various organizations, Trevor Price, founder and CEO of Oxean Partners, told Healthcare Dive.

“I think the biggest challenge for Optum is operationalizing the combined platform,” Price said. “The biggest question is do they continue to operate as individual businesses or do they merge into one.”

What’s next?

Optum will continue to explore ground in the three core trends it has identified.

Out of the three, consumerism has the longest path to maturity in healthcare, Weissel said, adding he believes consumerism is going to change healthcare more than any other trend over the next decade.

“There is a wave coming, and this expectation that we will move there,” he said. “Increasingly, this aging of people who become very comfortable in a different modality is going to tip the balance with how people will want to interact with healthcare. I know there’s pent up demand already.”

That means the company is putting bets into the marketplace around consumer building and segmentation models as well as thinking about how to connect data to allow patients to schedule appointments, view health records, sign up for insurance, search for providers or renew prescriptions online.

Consumer-centric projects currently underway include digital weight loss programs — including streaming fitness classes — and maternity programs to track pregnancy. The company is also experimenting with remote patient monitoring to understand the impacts on those with heart disease or asthma and to search for service opportunities.

Optum will pursue investments as well as acquisitions to push into the consumer space.

“When it comes to acquisitions to Optum overall, we’re always in the marketplace looking to extend our capabilities, to extend our reach in the care management space to fill in holes or gaps that we have,” Weissel said. “That’s a constant process in our enterprise.”

 

 

 

 

Anthem partners with Walmart to expand access to over-the-counter drugs

https://www.fiercehealthcare.com/payer/anthem-walmart-over-counter-medicine-medicare-advantage-retail?mkt_tok=eyJpIjoiTjJRMlpERTBObU0yWldOaiIsInQiOiJPMDVjRGNQVzcxMjIzOGt1ZTZva0R2YU1PXC9mYkczVEtYVHNHWmZzSHc1TjU1RGRZZ1o4VVprZStEV3R3VWdXWFwvQlRoYVg4cGpzakZIOFFkMkthRnVPbVwvNEUwQ3ptOVozRGQ0U3IyVDFENENmZTErMjc3TDhRYlwvaUlrT1oxSWgifQ%3D%3D&mrkid=959610

Walmart sign

Anthem has entered a new partnership with retail giant Walmart to offer members access to over-the-counter (OTC) medications.

Beginning in January, Anthem’s Medicare Advantage members will be able to use OTC plan allowances to purchase medications and other supplies such as support braces and pain relievers, the two companies announced on Monday.

Previously, MA beneficiaries with OTC allowances could purchase medications through a catalog or by calling a designated number. Some members were provided a card they could use at a limited set of retail stores.

The new partnership significantly expands access to OTC drugs and supplies by allowing members to make purchases at any of Walmart’s 4,700 locations. 

“The program with Walmart will allow consumers to pick the shopping method that best fits their lifestyle and the initiative is expected to significantly reduce the out-of-pocket cost burden for those enrolled in Anthem’s affiliated MA health plan,” Anthem spokesperson Hieu Nguyen said in an email.

Walmart says 90% of Americans live within 10 miles of a Walmart. The partnership will also give members access to free two-day shipping on orders $35 or more.

“We believe that programs like this can make a tremendous difference for healthcare consumers who often live on a fixed income or are managing chronic medical conditions,” Felicia Norwood, executive vice president and president of Anthem’s Government Business Division, said in a statement. Sean Slovenski, senior vice president of health and wellness at Walmart, said the company is “thrilled to be working with Anthem to provide its Medicare Advantage members with convenient access to our broad assortment of high-quality over-the-counter products.”

Interestingly, the partnership comes months after Walmart was reportedly considering an acquisition of Humana. Slovenski, the former vice president of innovation at Humana, joined Walmart last month. 

 

Top 5 Areas of Extreme Interest to Healthcare Executives

http://www.managedhealthcareexecutive.com/mhe-articles/top-5-areas-extreme-interest-healthcare-executives?rememberme=1&elq_mid=2619&elq_cid=876742

What issues are currently of greatest strategic importance to hospital and health system executives? The Health Care Advisory Board research team conducted the “Advisory Board Research Annual Health Care CEO Survey” to find out.

“While the survey tests interest in a wide range of topics, issues related to margin management—whether through revenue growth or cost control—rose to the top for 2018. In a particularly notable contrast to years’ past, cost control eclipsed revenue growth as executives’ most urgent strategic priority for the year,” says Yulan Egan, practice manager, Advisory Board Research.

The nationwide survey of 146 C-suite executives was conducted between December 2017 and March 2018. This year, the researchers asked respondents to rate 33 issues on a scale of “A” to “F,” with “A” indicating the greatest interest in learning more from Advisory Board researchers about the topic.

Here are the top five areas of interest to hospital and health system executives, based on the survey.

  1. Preparing the enterprise for sustainable cost control

This is the No. 1 concern for hospital executives (62% said they were extremely interested). That’s a higher percentage than any other topic received in the last four years, and 5% higher than for any topic received in 2017.
“The focus on long-term sustainability reflects a belief among healthcare executives that today’s margin pressures are permanent and structural in nature,” says Egan. “As a result, the current focus on cost control does not center on the types of temporary campaigns organizations have historically pursued to weather an economic downturn or a sudden shift in reimbursement policy.  Instead, executives are looking for strategies to permanently bend the expense curve; doing so will require radical improvements to cost structure, such as redesigning staffing models, rationalizing service lines across their market, and even transforming their facility footprint,” she says.

2.  Innovative approaches to expense reduction

For the second year in a row, C-Suite executives voted this as the No. 2 area of interest (56% of executives were extremely interested)

The healthcare cost problem has executives looking to go beyond the tried-and-true cost strategies of the past, according to Egan.

“Of particular interest today are strategies for controlling expense growth while avoiding mass lay-offs and other major drivers of employee disengagement,” she says. “Executives are also exploring the need to invest in innovative new technologies—like artificial intelligence—to drive drastic improvements in productivity and efficiency.”

3.  Exploring diversified, innovative revenue streams

This number 3 area of interest (56%) has ranked near the top for the past two years.

“Executives increasingly believe that relying on conventional determinants of market share—such as competing for referrals from independent physicians—will be insufficient for driving necessary levels of revenue growth,” Egan says. “Instead, hospitals and health systems are shifting their focus to include nontraditional sources of growth, such as contracting directly with employers, commercializing intellectual property, and launching innovation hubs.”

4.  Boosting outpatient procedural market share

This response has also ranked near the top for the past two years, with 50% of executives being extremely interested in this topic this year.

Technology advancements, reimbursement shifts, high deductibles, and evolving patient expectations continue the outmigration of care away from the inpatient setting, according to the survey.

“With lower barriers to entry in the outpatient setting, health systems find themselves in an increasingly competitive landscape, despite having made heavy investments in ambulatory care in recent years,” Egan says. “Successfully securing and growing outpatient market share will require hospitals and health systems to compete on the basis of convenience, service, and affordability—not just their clinical capabilities or brand.”

5.  Meeting rising consumer demands for service

According to the survey, 50% of executives are extremely interested in this topic.

“As transparency in healthcare has grown thanks to services such as Yelp, service experience is becoming more important than ever before,” Egan says. “Hospitals and health systems are also facing pressure from a growing number of consumer-focused competitors who are raising the bar on experience before, during, and after episodes of care.”

The goal, according to Egan, is to not only meet—but exceed—consumer expectations. For this, “executives will need to think holistically about improving patients’ experience with their system, from the moment they search for a provider to the point at which they ultimately pay their bill,” she says.

 

Walmart drug program cheaper for many Medicare patients

https://www.nbcnews.com/health/health-news/walmart-drug-program-cheaper-many-medicare-patients-n893811

Grand Opening At A New Wal-Mart Store

Walmart’s $4 generic prescription drug program ends up being cheaper for some Medicare patients than their own health insurance, according to a new study released Monday.

It’s more evidence that patients cannot always rely on their health insurance to get them the lowest prices for their prescription drugs, said Dr. Joseph Ross of the Yale School of Medicine, who led the study.

“Patients were paying more out of pocket when they were using their insurance than when they went to Walmart,” Ross told NBC News.

The study, published in the Annals of Internal Medicine, documents that Walmart provides a better deal than the government’s health insurance plan for people over 65. And that is bad news for Medicare, because if people don’t take their drugs, whether for cost or for other reasons, they tend to get sicker and then end up costing even more to treat.

“Everyone’s talking about pharmacy costs these days,” Ross said. “We did this study in part because of all the discussion about pharmacy gag rules.”

Pharmacy gag rules prevent pharmacists from telling patients that they could save money on drugs, for instance by not using their health insurance.

Pharmacy benefit managers are the middlemen between drug companies and pharmacies, and some of those companies have agreements forbidding talk of discounts. But some states have also banned pharmacists from giving this information to customers.

According to the National Conference of State Legislatures, at least 22 states have some kind of gag rule legislation.

One way patients can get around this is to ask, but few people think to do so.

Ross and colleagues decided to see what would happen if Medicare patients just took advantage of Walmart’s program offering $4 generic prescription drugs.

They looked at Walmart’s generic list for drugs commonly used to treat heart conditions, including high blood pressure and high cholesterol.

“Next, we used Medicare prescription drug plan data from June 2017 to determine beneficiary out-of-pocket costs for the lowest-priced dose of each drug in each plan,” they wrote. They got data on more than 2,000 Medicare prescription drug plans, including Medicare Advantage plans.

Overall, 21 percent of the plans asked patients to pay more out of pocket for the drugs than they would pay if they just got them for $4 at Walmart, the team reported.

Medicare Advantage plans were the most expensive for patients, Ross said. And the higher-tier programs were the worst, he found.

“Twenty percent of the time, at least, we should go to Walmart,” Ross said.

It doesn’t help that Medicare is very complicated. Patients can choose from dozens of different plans, depending on where they live, and it can take a great deal of research to find out which plan is most likely to cover a particular person’s health conditions for the least amount of money.

“Each Medicare drug plan has its own list of covered drugs (called a formulary),” the Center for Medicare and Medicaid Services says on its website.

“Many Medicare drug plans place drugs into different ‘tiers’ on their formularies. Drugs in each tier have a different cost. A drug in a lower tier will generally cost you less than a drug in a higher tier.”

Ross said it is time-consuming to compare one Medicare plan to another. But understanding one of the many plans tells people very little about what the others might offer.

“If you have read through the details and material for one plan, you have read through the details and materials for one plan. It’s very hard to compare,” he said.

In addition, any given plan may change the drugs that it covers and their prices throughout the year.

Ross said he studied Walmart because its $4 price for a 30-day supply of a generic drug seemed like the least expensive option, but other retailers also have inexpensive drug plans. Some grocery-based pharmacies even offer free drugs, such as antibiotics.

These offers get customers into the store, and the hope is that they’ll buy something else while they are there.

Ross said no patient should decide on a Medicare plan based solely on whether Walmart offers a better deal on prescriptions.

Switching plans might not be the best idea, because different plans provide different levels of coverage for doctor visits, medical procedures and other health needs.

“What we are showing is there may be some ways to save some money on some drugs by going to Walmart,” Ross said.

According to the Kaiser Family Foundation, about 90 percent of prescriptions filled in the U.S. are for generic drugs. Most people get health insurance through an employer, and the typical co-pay for a generic drug for a patient covered by employer-provided health insurance is $11, Kaiser found. For a brand-name drug, the average co-pay is $33.

Walmart is moving aggressively to get a big share of the U.S. health care market. Besides having large pharmacies, stores offer free health screenings and the company has said it intends to expand its locations of retail walk-in health clinics.

Walmart is also negotiating a closer partnership with health insurer Humana, including the possibility of buying it outright, according to CNBC.

The discount retailer’s $4 generic prescriptions beat Medicare’s co-pays 21 percent of the time, a study found.

 

 

 

7 AREAS CFOS MUST ADDRESS FOR ORGANIZATIONAL VIABILITY

https://www.healthleadersmedia.com/finance/7-areas-cfos-must-address-organizational-viability?utm_source=silverpop&utm_medium=email&utm_campaign=20180613_HLM_SPOTLIGHT_Cost-Containment%20(1)&spMailingID=13684315&spUserID=MTY3ODg4NTg1MzQ4S0&spJobID=1421195534&spReportId=MTQyMTE5NTUzNAS2

Image result for financial viability

 

An upcoming CFO roundtable provides a peer-sharing platform to learn best practices for advancing a healthcare organization’s financial health.

Today’s healthcare financial leaders face escalating costs, quality improvement issues, difficult reimbursement environments, an increasingly complex service portfolio, and risk management associated with performance contracting.

Pressure mounts on CFOs to ensure their organizations remain viable as they deal with these issues, which makes gleaning proven strategies from colleagues imperative.

Four dozen executives will convene at a private roundtable forum during the 2018 HealthLeaders Media CFO Exchange, August 8–10 in Santa Barbara, California, to
address top-of-mind concerns.

In pre-event planning calls, Exchange participants—representing integrated health systems, academic medical centers, community hospitals, and safety net providers from across the U.S.—want to know how others are taking on risk, improving costs, addressing consumerism, and capturing additional reimbursement.

During the two-day event, a series of moderated roundtables will explore areas of special interest expressed by CFOs, including the following:

1. Cost improvement

Since costs are increasing at rates higher than reimbursement, how does a CFO drive cost performance to maintain sufficient operating margins? How are systems successfully leveraging scale to rationalize administrative and support services?

2. Proliferation of mergers and acquisitions

How can an independent organization survive in this environment? Should it consider other affiliations? For those involved in new entities, how are leaders achieving value?

3. Taking on risk

How does an organization prepare to take on and reduce risk, and when does an organization know that it is ready? How can CFOs build reserves to offset unexpected outlays?

4. Enhancing revenue cycle performance

How can financial leaders improve payer terms, reduce denials, ensure payer compliance, and improve clinical documentation? What are effective ways to deploy new workflow technologies in patient accounts?

5. Performance-based contracts

How are organizations engaging medical staff to reduce the cost of care and improve outcomes?

6. Medical group employment

How does a health system minimize provider subsidies for employed physicians and improve practice performance?

7. Medical consumerism

How can healthcare organizations compete against disruptors in the growing environment of consumer choice? What are creative ideas for meeting consumer demand without adding cost?

Additional information will be shared during the two-day gathering. The CFO Exchange is one of six annual HealthLeaders Media events for healthcare thought leadership and networking.

Revenue cycle and patient financial experience

Recently, HealthLeaders Media hosted a Revenue Cycle Exchange, which brought together 50 executives to discuss improving the patient financial experience; maximizing reimbursement; managing claims denials; technology adoption and data analytics; revenue cycle optimization; and creating a leaner, more effective team.

Noting how consumerism is influencing bill payment and giving rise to the patient voice, leaders are seeking ways to make paying easier. Consumer feedback suggested easy-to-understand and consolidated statements.

“We have a single business office with Epic, so regardless of where a patient gets their services, they get one bill from our organization,” says Cassi Birnbaum, director of health information management and revenue integrity at UC San Diego Health.

“We’ve also created a position for a patient experience director, so any complaint goes through that unit and they’ll contact one of my supervisors to ensure the patient gets the answers they need. That’s helped a lot and provides a one-stop, concierge, patient-facing experience to help ensure the patient’s balance is paid,” Birnbaum says.

Providing estimates and leveraging technology are also helpful for fostering patient payments. More health systems are promoting MyChart, an online tool for patients to manage their health information, as well as kiosks in key locations.

“We have a patient portal in which you can see any outstanding balance at a hospital or clinic and decide what you want to pay today,” says Mary Wickersham, vice president of central business office services at Avera in Sioux Falls, South Dakota.

“Patients can also extend their payments since we have a hyperlink that goes to the extended loan program if needed. With kiosks at our clinics, patients pull out their credit card and complete their copay. Nobody asks; they just automatically do it,” she says.

Staffing

Front- and back-end staff play an integral role in calculating payment estimates, collecting dollars in advance of procedures and tests, and communicating the often-puzzling connection between hospital charges for physician practice and provider-based department patients.

“One of our big challenges now is we’re bringing a lot of that back-end work to the front,” says Terri Etnier, director of system patient access at Indiana University Health in Bloomington, Indiana.

Centralizing processes

As facilities move toward centralized scheduling systems to manage reimbursement, some facilities are centralizing coding and billing processes.

“We don’t have a full comprehensive preregistration function for our clinics mainly due to volume. We’re piloting a preregistration group for our clinic visits to work accounts ahead of time since we are continuing to work toward automation,” says Katherine Cardwell, assistant vice president at Ochsner Health System in New Orleans.

“We have kiosks in some of our clinics. Epic has an e-precheck function where we can now do forms. You can sign forms on your phone, and make your payment and your copayment ahead of time. And you can actually get a barcode that you can just scan when you get to the clinic,” Cardwell says.