CVS Ousts CEO Due To Financial Woes
CVS Health ousted CEO Karen Lynch and replaced her with another insider, PBM President David Joyner. CVS also announced that investors can no longer rely on previous guidance from the company in terms of financial performance in 2024.
CVS’ financial woes stem from its Aetna insurance business. It says its Aetna medical loss ratio (MLR) could hit 95.2% in Q3. This is stunnng given it has a substantial commercial line of business. CVS increased Medicare Advantage (MA) benefits phenomenally over the past few years and enrollment grew tremendously in 2024. This led to financial instability due to a number of inside and outside forces.
I followed Lynch and met her a few times as Aetna’s leader. I found her an innovative and strong executive. She was dealt a bad hand since becoming CEO in February 2021. She had to weather the COVID pandemic, artificial Star score inflation in MA that skewed benefits at many plans, and political challenges with pharmacy benefits managers (PBMs) and pharmacies. MA has seen a perfect storm of rate drops, Stars plummeting, and regulatory trends that have hit most of the big national insurers.
While I don’t know David Joyner, friends that do know him say he is savvy and has a keen financial and sales sense. He has had a long history in healthcare generally, at Aetna, and most recently at the PBM division of CVS, Caremark. There is no question he has a huge chore to right Aetna’s finances, battle Capitol Hill on attacks on the Big 3 PBMs, challenges with primary care investments, and more.
There is talk that CVS Health could be carved up in order to right itself. Time will tell.
I have a timely blog on Monday that discusses the troubles of big healthcare and what the future might hold.
Additional articles: https://www.modernhealthcare.com/insurance/analysts-cvs-health-karen-lynch-david-joyner-aetna and https://www.modernhealthcare.com/insurance/cvs-caremark-ceo-karen-lynch-david-joyner-aetna and https://www.managedhealthcareexecutive.com/view/karen-lynch-steps-down-as-ceo-of-cvs-health and https://www.healthcaredive.com/news/cvs-replaces-ceo-karen-lynch-caremark-head-david-joyner/730275/
(Some articles may require a subscription.)
#cvshealth #aetna #medicareadvantage
https://www.fiercehealthcare.com/payers/david-joyner-becomes-cvs-ceo-karen-lynch-steps-down
Elevance Health Joins Humana, United In Challenging Star Scores
Elevance Health announced its own challenges and appeals to the Centers for Medicare and Medicaid Services (CMS) on its 2025 Star scores. Like Humana and United, Elevance says it fell just short of a 4.0 rating in several contracts, which led to an overall drop in the percentage of enrollment in 4 Star or greater plans. Elevance successfully challenged its call center measure scores last year. Several other MA plans also announced appeals and challenges, including Centene. The call center results seem to generate the biggest controversies by plans. Plans see the criteria and assessments by CMS as arbitrary.
Additional article: https://www.beckerspayer.com/payer/more-payers-challenge-medicare-advantage-star-ratings.html
(Some articles may require a subscription.)
#medicareadvantage #cms #stars
https://www.modernhealthcare.com/insurance/elevance-health-medicare-advantage-star-ratings-2025
Cigna, Humana Merger Talks Back On
Insiders have told Bloomberg that talks are back on between Cigna and Humana. After talks earlier fell through, Cigna is selling its Medicare Advantage (MA) business to Health Care Service Corporation (HCSC), a move that would be required for any merger anyway. MA-dominant Humana is currently financially challenged due to low rates, dropping Star scores and regulatory changes. But Cigna probably sees the MA scale at Humana as a huge margin generator once issues are cleared up. There are tremendous opportunities to leverage Cigna’s growing Carelon service unit with Humana. Humana could see the move as good to insulate its investors from too much risk.
I as much as predicted the rebirth of the marriage back in a April 25, 2024 blog: https://www.healthcarelabyrinth.com/health-plan-economics-part-1-medicare-advantage-and-new-rumors-of-a-cigna-humana-combination/
#medicareadvantage #cigna #humana
https://www.fiercehealthcare.com/payers/cigna-humana-merger-talks-are-back-report
Medicare Supplement Outside Reach Of Many
About 42% have Medicare Supplement if enrolled in traditional fee-for-service (FFS) Medicare. Just 76% of the disabled under 65 have such coverage, compared with 46% of those 65 or older.
Supplement coverage by state differs from as low as 7% to as high as 67%. And premiums vary dramatically by state. Federal law requires guaranteed issue of coverage when turning 65 or for other qualifying events. Rates are not subject to pre-existing conditions. But outside of these periods, issuance is not guaranteed, premiums could be higher, waiting periods could apply, and pre-existing conditions could be excluded. Some states do not allow some or all of these conditions outside of guaranteed issue periods. Just four states require continuous or annual guaranteed issue. Another 12 have guaranteed issue for other qualifying events.
The conditions outside of the guaranteed issue periods are controversial when seniors enter Medicare Advantage at 65 but later want to change back to the traditional program. In most cases, they do not have access to affordable supplement coverage.
Read the Kaiser Family Foundation’s two briefers on the subject. Excellent explanations.
Additional article: https://www.kff.org/medicare/issue-brief/key-facts-about-medigap-enrollment-and-premiums-for-medicare-beneficiaries/
#medicare #medicaresupplement #medigap #coverage
Compounders Get Reprieve To Continue Fulfilling GLP-1 Tirezepatide
The Food and Drug Administration (FDA) has changed course after threatened legal action from compounders. It now says compounding pharmacies may continue producing compounded versions of Eli Lilly’s GLP-1 drugs Mounjaro and Zepbound even though the FDA declared the drugs no longer in shortage. This is sure to anger the brand drug industry.
(Article may require a subscription.)
#weightlossdrugs #glp1s #branddrugmakers
Moody’s: Hospital Margins Moving In Right Direction
Moody’s says hospital margins are heading in the right direction in 2024 for non-profits. Labor costs are high but stabilizing, although staff shortages still impact hospitals. Margins are expected to be around 6% in 2024 and keep improving in 2025.
(Article may require a subscription.)
#hospitals #margins
https://www.modernhealthcare.com/finance/moodys-hospital-margins-staffing-2025
— Marc S. Ryan
