Tag Archives: Health Insurance Industry

Moody’s: Nonprofit hospitals face volume, margin declines as insurers acquire physicians

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https://www.beckershospitalreview.com/finance/moody-s-nonprofit-hospitals-face-volume-margin-declines-as-insurers-acquire-physicians.html

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As commercial payers swallow up more physician groups and nonacute care services, nonprofit hospitals will see greater pressure on their volumes and margins, according to Moody’s Investors Service.

Moody’s analysts predict insurers will be able to provide preventive, outpatient and post-acute care to their members through acquired providers at a lower cost than hospitals. As a result, insurers will begin carving out hospitals and select services from their contracts, leaving nonprofit hospitals with fewer patients and less revenue.

CVS Health’s $69 billion bid for Aetna and Optum’s takeover of Surgical Care Affiliates are examples of integrations that could threaten nonprofit hospitals’ bottom lines, Moody’s said.

On another front, nonprofit hospitals face increasing pressure from insurers moving quickly to value-based payment programs. Payers will also leverage their growing scale, driven by Medicare and managed Medicaid expansions, in rate negotiations.

“Insurers flexing their negotiating power by offering lower rate increases will likely result in more standoffs and terminations of contracts between insurers and hospitals,” according to Diana Lee, a Moody’s vice president. “To regain leverage, we expect hospitals to continue [merger and acquisition] and consolidation.”

 

Lawsuit filed against ObamaCare insurer over coverage

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Lawsuit filed against ObamaCare insurer over coverage

Lawsuit filed against ObamaCare insurer over coverage

The insurance carrier Centene misled enrollees about the benefits of its ObamaCare exchange plans and offered far skimpier coverage than promised, according to a class-action lawsuit filed Thursday.

The lawsuit, filed in federal court in Washington state, claims customers who bought Centene’s ObamaCare plans had trouble finding in-network doctors or hospitals and often found that doctors who were advertised as in-network actually were not.

ObamaCare requires plans to meet certain minimum requirements.

Centene covers about 10 percent of the ObamaCare individual market and is one of the largest insurance carriers that participates on the exchanges.

As many other insurers have pared back their ObamaCare exchange plans, or completely left the market, Centene has expanded. In some areas of the country, Centene is the only insurer offering plans for ObamaCare customers.

Centene markets its signature product — its three-tiered Ambetter plans — in at least 15 states, and covers more than 1.4 million customers.

According to the lawsuit, Centene targets low-income customers who qualify for substantial government subsidies “while simultaneously providing coverage well below what is required by law and by its policies.”

A spokeswoman for the company told The Hill they have not been served papers and only learned of the lawsuit Thursday morning.

“We believe our networks are adequate. We work in partnership with our states to ensure our networks are adequate and our members have access to high quality health care,” Marcela Manjarrez Hawn said in an email.

Narrow networks — insurance plans that limit which doctors and hospitals customers can use — are not uncommon, as they are cheaper than more expansive plans. But the lawsuit says Centene went far beyond the norm.

“Centene misrepresents the number, location and existence of purported providers by listing physicians, medical groups and other providers — some of whom have specifically asked to be removed — as participants in their networks and by listing nurses and other non-physicians as primary care providers,” the lawsuit claims.

According to the lawsuit, customers found the provider network Centene said was available was “largely fictitious. Members have difficulty finding — and in many cases cannot find — medical providers who will accept Ambetter insurance.”

The suit was filed on behalf of two Centene customers, but seeks class-action status to represent all customers who purchased Centene plans on the ObamaCare exchange.

 

Credit rating agency, researchers give vote of confidence to health insurance sector

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https://www.fiercehealthcare.com/payer/financial-performance-a-m-best-kaiser-family-foundation-insurers?mkt_tok=eyJpIjoiTjJRNU5qUXlZVEJqWmpjNCIsInQiOiJOR2V2bEp4NkdoeVB3VndhZE43TVBjZXdaTGJcLzk1Z3hBd1wvZ05teDMrcjZ5UzJhb0tzUkpQbWlaSmVvUmJFazVDcERmajBTREhCTXJxR3BBaGtoY1MrZlVtQW5xeXRSbFwvYVhPOE44VE9uYUhNZWNnbGtoR3c3S0xHUlp5SlwvS2kifQ%3D%3D&mrkid=959610

Health insurance, pen and stethoscope

Two new reports offer evidence that policy uncertainty aside, the health insurance industry is doing just fine.

In one report, A.M. Best explains why it decided to change its outlook for the health insurance sector from negative to stable. The credit rating agency said the change “reflects a variety of factors that have led to improvement in earnings and risk-adjusted capitalization.”

While insurers have experienced losses in the individual exchange business, this market segment has improved in 2016 and 2017—in part due to consecutive years of high rate increases, a narrowing of provider networks and a stabilizing exchange population, the report said.

A.M. Best also predicted that Congress won’t make repealing and replacing the Affordable Care Act a high priority in 2018. And even if it does, health insurers will have time to make adjustments, since legislative changes won’t take effect for two or more years.

The rating agency’s findings about the individual market echo those of a new report from the Kaiser Family Foundation, which examined insurers’ financial data from the third quarter of 2017.

It found that insurers saw significant improvement in their medical loss ratios, which averaged 81% through the third quarter. Gross margins per member per month in the individual market segment followed a similar pattern, jumping up to $79 per enrollee in the third quarter of 2017 from a recent third-quarter low of $10 in 2015.

One caveat is that KFF’s findings reflect insurer performance only through September—before the Trump administration stopped reimbursing insurers for cost-sharing subsidies. “The loss of these payments during the fourth quarter of 2017 will diminish insurer profits, but nonetheless, insurers are likely to see better financial results in 2017 than they did in earlier years of the ACA marketplaces,” KFF said.

As promising as these observations about the individual market are, A.M. Best pointed out that this market segment is just a small portion of most health insurers’ earnings and revenues. In fact, health plans largely owe their overall profitability to the combined operating results of the employer group, Medicaid and Medicare Advantage lines of business.

Looking ahead, the agency predicted that Medicare and Medicaid business lines will remain profitable for insurers—though margins will likely compress for both. It said the employer group segment will also remain profitable, but noted that membership will continue to be flat.

 

Health insurer Oscar nears $1 billion in revenue

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https://www.axios.com/oscar-2518896548.html

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Oscar, the healthcare insurance upstart co-founded by Joshua Kushner, tells Axios that it is expecting to generate nearly $1 billion in premium revenue for 2018. That’s up from “more than $300 million” in 2017 premium revenue. It also says that its insurance underwriting business is profitable for the first time, although the overall company remains in the red.

Why it matters: Oscar continues to grow, despite having originally launched to provide health insurance to individuals under an Affordable Care Act that the Trump Administration has been slowly dismantling.

  • More numbers: The company expects around 250,000 members in the individual markets, including in New York and California where open enrollment continues, representing around a 2.5x increase over last year, and doesn’t include Oscar’s recent expansion into employer plans.

Oscar CEO Mario Schlosser tells Axios that he isn’t too concerned about how the new tax bill repeals the ACA’s individual mandate, saying that much of the early instability has dissipated:

“It took a while to figure out how things work, but a lot of people now just have come around to thinking it’s smart to have health insurance. The loss of the mandate will have some impact on some states around country, but it won’t affect the overall stability of the individual markets.”

Oscar’s big marketing pitch is that it leverages technology to provide a more efficient healthcare experience, through such techniques as tele-medicine (25% of Oscar members have used it) and concierge teams that include both nurses and “care guides” (70% have used). It has taken steps to apply this tech-centric approach to the Medicare Advantage market, but tells Axios that it has slowed down those efforts a bit (i.e., no 2018 launch).

 

The GOP is getting closer to passing its tax bill. Here’s what it could mean for health insurers

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https://www.fiercehealthcare.com/payer/gop-tax-reform-bill-health-insurers-individual-mandate?mkt_tok=eyJpIjoiTTJFMk1XWm1aalV4WVRsayIsInQiOiJ2STJJYW85ZmhWc0tKakYzU2VlV05Ydk5NbVNpd1orNWt0anFYUW9GcDZkTDBMSmJlTGs0XC9tNDBIT3RmMDhzdmtFazBaTWpDYm9hMVplUjhSTElrSVgreHBJd3FLXC9YaHhzMXpPR2Y4MHVNRVJqcDVvMDVzOGdGQUNIMCtobDZtIn0%3D&mrkid=959610

man counting money

The House and Senate have agreed upon a unified tax overhaul bill, putting Republicans on the fast track to pass legislation that has significant implications for the health insurance industry.

For one, the compromise tax bill will repeal the Affordable Care Act’s individual mandate penalty, Senate Majority Leader Mitch McConnell said in a statement on Wednesday. To McConnell, axing the mandate will offer “relief to low- and middle-income Americans who have struggled under an unpopular and unworkable law.”

Health insurers and the healthcare industry at large have opposed removing the key ACA provision without a viable alternative to encourage healthy consumers to buy coverage, arguing that doing so will destabilize the individual markets. Indeed, the Congressional Budget Office has estimated that repealing the mandate would increase the number of uninsured people by 13 million over the next 10 years and hike individual market premiums by 10% during most years of that decade.

Yet while the individual mandate repeal is problematic for insurers that do business on the ACA exchanges, nearly all insurance companies stand to gain from the GOP tax bill overall, according to Leerink Partners analyst Ana Gupte, Ph.D. She estimates that insurers can capture about 10% to 15% of the potential 25% upside from the legislation, subject to regulatory constraints such as medical loss ratio rules and competitive pricing constraints.

Likely the biggest gain for insurers is the fact that, per the New York Times, the compromise bill sets the corporate tax rate at 21%—significantly lower than the current rate of 35%.

Though the House and Senate have ironed out the differences in their bills, the final version still must be approved by both chambers. GOP leaders have but two votes to spare in the Senate, and will likely have to include two bipartisan measures to shore up the ACA in Congress’ year-end spending bill to win the support of Sen. Susan Collins, R-Maine.

Collins said on Wednesday that Vice President Mike Pence assured her that those measures would make it into the spending bill, according to The Hill. Yet some House conservatives have expressed opposition to the bills, which would provide funding for cost-sharing reduction payments and state-based reinsurance programs, among other provisions.

Meanwhile, the results of the headline-grabbing Senate race in Alabama have put a major crimp in Republicans’ plans to retry repealing the ACA. Once Democrat Doug Jones officially takes his seat, the GOP will have an even slimmer majority in the Senate, where the defection of a handful of moderate Republicans was already enough to kill several repeal bills earlier this year.

 

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

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Rising Stocks

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.

 

Under ACA, largest health plans net lion’s share of underwriting gains while smaller players struggle

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https://www.fiercehealthcare.com/payer/health-plan-financial-performance-aca-deloitte?mkt_tok=eyJpIjoiTkdKallqUmhOV1prTmpZMyIsInQiOiIzV0NnWXA2amJKeHRybHVFTWl3bCtXMHpQXC92SXRnZyt0WGV0VFFUTkxoQk1UTHlyMGRlTFZkc3V2aXM0cGY5Q1Fndmh0ck5venI0OVJVMWhpNHQrakJWSytReEVBc2N4Y1lwRXBHQmZ2RGR6bk9cLzJxREZIbDk2VWQ2bzFKSmZvIn0%3D&mrkid=959610&utm_medium=nl&utm_source=internal

Financial market data. Image: Pixabay

The gap between the haves and have-nots has grown wider in the health insurance sector—and policy changes may be the culprit.

Most health plans are relatively small, posting an annual revenue of less than $2 billion, and are generally close to just breaking even financially. But the top three largest fully insured health plans by revenue—UnitedHealth Group, Kaiser Foundation Health Plan and Anthem—“exhibit performance that is dramatically differentiated from that of other market participants,” according to a new analysis from Deloitte.

For example, between 2011 and 2016, the top three saw their share of underwriting gains rise considerably even as their share of enrollment and revenue declined. By 2016, those three plans generated 84% of all underwriting gains in the fully insured market, while they accounted for just 55% in 2011. The top 10 plans, meanwhile, accounted for 92% of all underwriting gains in 2016.

What was behind that trend? Post-2014, one of the main reasons was the “number and magnitude of the losses suffered by many other health plans,” particularly in Affordable Care Act commercial individual products, the analysis said. Those losses were so large that they offset almost all the underwriting gains posted by the health plans not in the top three or top 10—thus magnifying the largest plans’ share.

For-profit insurers also grew faster and posted significantly higher margins than their nonprofit peers, the analysis found. While for-profit plans accounted for 66% of all underwriting gains in 2011, that share rose to 76% by 2016. Nonprofit plans, in comparison, saw their underwriting margins slip from 2.3% in 2011 to 0.8% in 2016.

The analysis also looked at health plan performance on the company and state levels. It found a significant increase in the number of plans with annual losses, a steep decline in average margins and widening variation among plans’ performance from 2011-2016. In addition, the number of states with health insurance market turbulence and unfavorable health plan financial performance increased.

Deloitte said its findings showed how large of a role public policy has played in driving change in the insurance markets in recent years. In addition, it highlighted the financial benefits associated with national scale.

Yet the firm also pointed out that it’s worth paying attention to how smaller-scale nonprofit plans are faring, given that they “play critical roles in their local communities and healthcare ecosystems.”

These plans, it noted, may lack the resources to withstand more disruption and “down years.” But with Republicans moving to unwind the ACA, that’s exactly what might lie ahead.

 

 

Are Payers the Leading Cause of Death in the United States?

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https://www.medpagetoday.com/blogs/revolutionandrevelation/68935?utm_source=Sailthru&utm_medium=email&utm_campaign=Daily%20Headlines%202017-11-07&utm_term=Daily%20Headlines%20-%20Active%20User%20-%20180%20days

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Milton Packer wonders if people suffer and die because it is cost effective.

As everyone knows, we are in the midst of a horrific opioid addiction epidemic. Physicians are prescribing opiates for pain relief, and patients are becoming addicted to them. One-fifth of patients who receive an initial 10-day prescription for opioids will still be using opiates a year later. That is simply extraordinary.

Physicians are prescribing opiate formulations that are highly addictive. But they do not need to do that.

There are several newer formulations that relieve pain and are far less addictive than older agents. But they are prescribed uncommonly. Why is that?

It is not because physicians are uninformed.

It is because payers will not pay for the alternatives. The less-addictive opiates are more expensive, so payers have declined to support them. Patients get addicted because paying for highly addictive opiates saves the payers money.

The New York Times also noted that the treatment of opiate addiction is expensive. It is far cheaper for payers if physicians continue to prescribe opiates than if physicians enrolled a person into a drug addiction program.

What does that look like? Patients get more prescriptions for opiates instead of getting the help they need.

The Payers Are in Charge

If you are looking for someone to blame for the opioid epidemic, you can certainly blame physicians. You can blame pharmaceutical companies. But while you are at it, don’t forget to include payers.

This conclusion should not be surprising. We live in a world where payers — not physicians — determine what drugs and treatments patients receive.

If patients have a life-threatening condition, it is not unusual for a payer to demand that a physician first prescribe a cheaper and less effective alternative. Physicians know that the drugs they are allowed to use may not work very well, but frequently, payers demand that they be tried first anyway.

What happens if the patient doesn’t respond to the cheap drug?

Often, the physician continues to prescribe it, because — to gain access to the more effective drug — physicians need to go through a painful process of preauthorization. For many practitioners, it isn’t worth it.

Don’t patients eventually get the drugs that they need?

No. All too often, physicians stop trying. Or patients get frustrated and give up. Often, payers says “No!” no matter how many times they are asked. And if the drug is for a life-threatening illness and enough time passes by, then the patient may no longer be alive to demand that they get the right drug.

So we spend more for healthcare than any other country in the world, but Americans do not get the care they need. There is a simple reason. Treatment decisions are not being driven based on a physician’s knowledge or judgment. They are being driven by what payers are willing to pay for.

How many people are affected by all of this?

Everyone.

That includes me and my family. That includes everyone that I know.

Medicine has made incredible progress in the last 20-30 years. But you are not likely to benefit from it.

Do you want to blame the high cost of drugs? You can do that, but if you do, you will be missing the point. We should expect better drugs to be more expensive than less effective ones. But we do not expect to have a company decide that we will get the inferior drug simply because they want to make a profit.

Are payers the leading cause of death in the United States? If you think this is a crazy question, please think again.

CVS considers acquiring Aetna

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CVS has reportedly put in an offer to buy Aetna.

CVS Health has proposed buying Aetna for $200 per share, the Wall Street Journal reports. That would value the transaction at more than $66 billion.

Why it matters: This would be a gigantic buyout offer, one of the biggest of the year, if it goes through. CVS and Aetna, which already have a pharmacy contract together, would create a behemoth health care company with roughly $240 billion in annual revenue and substantial bargaining power over hospitals, drug makers and employers. The deal also would displace UnitedHealth Group as the largest health insurer and pharmacy benefits manager.