There was a great deal of health plan news the past month, so I decided to do an insurer news roundup blog. Of course, you can find all the details on these topics in my newsfeeds, blogs, and podcasts on this website.
Here goes:
Q2 2024 investor calls
Q2 was a mixed bag for the publicly traded insurers. While some reported great news and others mixed, the message from many of the biggest plans was that Medicare Advantage (MA) and Medicaid rates have led to some financial uncertainty.
The insurtechs – Alignment Healthcare, Clover Health, and Oscar Health – reported overall good news, showing they seem to be gaining traction against the big guys. Cigna, Elevance Health, and United reported good news, largely as they are more isolated from government program uncertainty.
CVS Health, Humana, and Centene reported more mixed news and seem most impacted by government program issues. United was hurt in part by the ongoing costs of the Change Healthcare cyberattack.
Other insurer news
Other insurer headlines:
- The preliminary news from health plans is that MA benefits are almost assuredly going to be leaner in 2025 and we could see some geographic contraction in the program.
- MA plans are also struggling with the termination of contracts by rural hospital providers.
- CVS Health and Humana appear still to be committed to retail healthcare, with CVS expanding its Oak Street footprint and Humana taking over space in now-defunct Walmart Health locations for its primary care ventures. Elevance Health is now getting into the game too.
- Drug cost trends are expected to be high across lines of business, especially commercial. This is because of rising demand for GLP-1 weight-loss drugs and mental health trends.
- Many states have set up drug affordability boards because they are frustrated with the pace of federal reforms. Big Pharma is suing, arguing states do not have cognizance over this interstate commerce issue.
- After several years of no increases or negative ones, average premiums in the Exchanges nationwide have gone up in 2023 and 2024. They will go up again for a third year in 2025 based on preliminary data.
MA CEOs drive for accountability and collaboration
New Humana CEO Jim Rechtin created some waves recently when he made a compelling case on his Q2 2024 investor call that MA needs to transform and be more accountable to the government and the Americans it serves. Several other prominent MA executives, including Andrew Toy of Clover Health, John Kao of Alignment Healthcare, and Sachin Jain of Scan Health Group, also have signaled views that are similar.
The executives make the case that the value of MA is clear. AHIP, the health plan lobby group, just published an analysis that showed that Medicare Advantage outperforms traditional Medicare fee-for-service (FFS) in nine out of 10 Healthcare Effectiveness Data and Information Set (HEDIS) measures. The measures focused on preventive and chronic disease care in FFS Medicare and MA in 2021.
The executives also argue MA plans must be reasonable and allow the government to get some value back as well – principally lower costs. According to the Kaiser Family Foundation (KFF) MA plans receive an additional $2,329 per enrollee above their estimated costs of providing Medicare-covered services to provide additional benefits.
Recently, the focus on MA has been on three areas:
- Risk adjustment and overpayments. The Wall Street Journal has run a series of scathing analyses on what some MA plans do on the risk adjustment front, including the fact that home-based health risk assessments increase risk scores but these diagnoses often do not end up on provider claims or encounters.
- On supplemental benefits, studies have shown that utilization may not match what MA plans say the benefits cost in bids.
- A federal judge just struck down a reasonable agent-broker compensation reform proposed by the Centers for Medicare and Medicaid Services (CMS) to stop steerage deals between plans and third-party marketing organizations.
PBM reform steam
The Federal Trade Commission (FTC) came out with a scathing report on the Big 3 pharmacy benefits managers (PBMs) — CVS Caremark, Express Scripts, and Optum Rx — which control 80% of the market. The FTC will be suing these entities for anti-competitive practices. The suits could center on the vertical integration with their sister health plans, which means the PBMs favor corporate-owned pharmacy assets at higher costs to the public. The suit may also challenge rebate deals with brand drug makers and concomitant formulary restrictions.
The move likely means more pushes on Capitol Hill to reform PBMs.
Controversial premium stabilization program
CMS has proposed a controversial additional premium stabilization demonstration program for 2025 to 2027 for standalone Part D (PDP) plans. This occurred because CMS saw bids from plans that had huge premium increases that would come out right before the election. This was because of the massive expenses shifted in Part D from the government and member out-of-pocket costs in the Inflation Reduction Act (IRA). The small premium stabilization provision in the law was just not large enough in scope.
The GOP in Congress has asked the Government Accountability Office (GAO) to determine the costs and whether CMS has the statutory authority to conduct the program. A private group says it will cost $10 billion over three years. I don’t think CMS has authority and has proposed the program simply to solve a political problem because the Biden administration and Democrats in Congress did not think through the implications of what they did on Part D changes when passing the IRA.
Prior authorization and regulatory trends
There is a mixed review from plans on whether the recent MA prior authorization (PA) changes are impacting medical expense. Humana and some others believe so. Others have not said, but are reporting higher medical expense.
CMS will accelerate the 2026 MA and Part D rule, and it will almost certainly include more reforms. CMS has said it intends to expand PA restrictions. Congress likely will pass an MA PA bill that has languished in the past because it was too costly. It now has a no-cost score from the Congressional Budget Office (CBO).
Health plans in general seem to be shedding PAs due to the regulatory oversight and administrative costs.
Medicare drug price negotiations
Maximum fair prices and/or negotiated prices are out today from CMS for the first ten drugs chosen for 2026.
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— Marc S. Ryan
