This is Jacob Emerson with the Becker's payer
issues podcast.
Here's your biweekly industry news briefing for August
7th.
CVS Health CEO Karen Lynch is taking over
leadership of Aetna after a difficult year for
the health insurer.
The company reported its Q2 earnings,
August 7th. Revenue in CVS's health care benefits
segment dropped 40% from the Q2 of last
year. Brian Kane, now the former president of
Aetna, is no longer with the company.
Miss Lynch said that they are disappointed by
the current performance at Aetna and outlook for
the health care benefit segment, and she has
decided to make leadership changes effective immediately.
Mister Cain was appointed EVP and CEO of
Aetna last year after serving as CFO of
Humana.
CVS has faced challenges in its health benefits
business recently, especially in the Medicare Advantage segment.
The company expects to lose up to 10%
of its MA members next year as it
cuts benefits to recover margins. The company lowered
its earnings got its earnings guidance for 2024
based on the performance of its health care
benefits segment.
Miss Lynch said that she and
CVS's CFO, Tom Caughey, will assume day to
day leadership of Aetna until a new president
is named.
CVS is also planning to cut $2,000,000,000
in expenses in the coming years, a plan
that includes further streamlining the company's portfolio and
using AI tools and automation.
While Centene will exit a handful of Medicare
Advantage Markets next year, will continue to offer
prescription drug plans in those states.
But we'll continue to offer prescription drug plans
in those states.
Novant Health is looking to acquire a 200
provider urgent care group from Blue Cross Blue
Shield of South Carolina.
Novant entered into a definitive agreement with BCBS
on July 19th to purchase UCI Medical Affiliates,
which includes its affiliates, Doctors Care and Progressive
Physical Therapy.
Doctors Care is an urgent care network established
in Columbia, South Carolina in 1981.
It employs 1100 people with nearly 200 providers
focused on urgent care, family care, occupational medicine,
and employee wellness.
That transaction
is expected to close in the Q4.
Terms were not disclosed.
Well, Blue Cross Blue Shield of Louisiana is
rebranding as Louisiana Blue. The BCBS affiliate will
keep Blue Cross Blue Shield as its formal
name, but will use Louisiana Blue in marketing,
promotions, and public facing materials.
The change is one of a few pits
the insurer has made after its proposed sale
to Elevance Health fell through.
In May, the company appointed Brian Camrelink as
its next CEO.
In February, BCBS scrapped the proposed sale to
Elavance after the deal faced a lot of
scrutiny from physicians and state officials.
UnitedHealth Care will launch its national gold carding
program on October 1st.
That program will reward contracted provider groups that
consistently adhere to evidence based care guidelines. That's
according to an August 1st policy update from
United.
The program will apply to all of United's
commercial, individual, Medicare Advantage, and community, which is
Medicaid,
plans. The payer said the details on how
to determine whether a provider group is qualified
for the program
will be published September 1st.
UnitedHealth Group is suing the state of Minnesota
over a new law that bans for profit
Medicaid managed care providers from participating in the
state's Medicaid program.
United alleged that Minnesota lawmakers violated the state's
constitution by passing a quote jumbo omnibus at
the end of its legislative session. The ban
on health maintenance organizations
that turn a profit was included in a
bill that included provisions on vaccines, traffic cameras,
college admission requirements, and several other changes outside
of the health care industry.
United wrote or its attorneys wrote that none
of the legislators had time to read it,
much less any members of the public or
press, nor were legislators given time for debate.
The jumbo jumbo omnibus was on the floor
of each chamber for barely 10 minutes, and
it was passed on a party line vote
minutes before midnight.
Minnesota had banned for profit companies from participating
in its Medicaid program until 2017 when it
then reversed course.
United was awarded a contract to manage care
for Minnesota enrollees in 2022.
And then in June, the Minnesota Department of
Human Services informed United that its contract would
be terminated at the end of 2024
due to the new law.
Well, encircleRx,
a program from Cigna helping employers control the
cost of GLP-one drugs for weight loss, has
reached 2,000,000 enrollees in its 1st 6 months
since launch.
Cigna launched that program back in March when
it called the when it called it the
first ever GLP one management program with a
financial guarantee for health plans. GLP one medications
approved for weight loss include Wegovy, Saxenda, and
Zepbound.
Those drugs, of course, can cost 1,000 of
dollars a month. On an August first call
with investors, Cigna CEO David Cordani said that
GLP ones are expected to be the number
one driver of pharmacy benefit trends for plans
of all sizes this year. Eric Palmer, president
and CEO of Evernorth, told investors that the
program is growing nicely, reaching 2,000,000 enrollees so
far.
Around 50% of plan sponsors are choosing to
cover the cost of GLP 1 drugs for
weight loss for their beneficiaries,
he said.
Some estimates predict that as many as 1
in 10 people in the US will be
prescribed a GLP one drug over the next
decade.
Cigna also isn't sweating the gross the growth
of the individual coverage health reimbursement arrangement markets
or ICRA. On an on that August 1st
call, Brian Ivankoe, CEO of Cigna's insurance segment,
said that the market is niche, though the
company is monitoring closely any new developments.
ICRA's allow employers to offer employees
contributions to purchase an individual health plan on
the ACA exchange
rather than offering a group policy.
Mister Ivanka told investors that the product is
likely to be attractive to employers with under
50 employees,
a market that is financially immaterial for Cigna.
He said, all that said, our
Some insurers including Oscar Health and
Centene
have said that they are betting on the
ICRA market.
And finally, the 2 midnight rule is driving
up inpatient costs for Humana. On a July
31 call with investors, Humana CEO Jim Rechten
said
inpatient admissions in Medicare Advantage were higher than
expected
in the back half of the second quarter
of 2024.
Humana's medical loss ratio was 89%
in the second quarter. That's up from 86.3%
in the same period last
year. Susan Diamond, Humana's CFO,
said the 2 midnight rule was likely the
largest factor driving higher inpatient costs.
At the beginning of 2024, new CMS regulations
took effect requiring MA plans to provide coverage
for an inpatient admission rather than observation
when the admitting physician expects the patient to
require
hospital care for at least 2 midnights, though
insurers do have discretion over this final decision.
The increased inpatient admissions Humana has observed tend
to be lower acuity and lower cost. The
increased inpatient stays correlated to a decrease in
observation stays, meaning the 2 midnight rule is
likely to blame for rising utilization rates. Miss
Diamond said that we would say this is
also consistent with what we've seen reported from
the hospital systems with their results in terms
of volume and revenue per patient. So we
do believe it's all consistent.
In April, HCA Healthcare CFO, Bill Rutherford, said
the 2 midnight rule was providing a moderate
benefit to the system's revenues.
Mr. Recton at Humana said the company is
enhancing claim audits and negotiating with providers to
mitigate the impact of the rule. He said
despite the increase in inpatient admissions, the company's
overall medical benefits ratio was lower than expected
for the quarter. The company also raised its
MA member growth expectations for the year offsetting
the higher inpatient costs. Humana expects to add
225
1,000 members in 2024, though the company said
it also expects to lose a few 100,000
members through market and plan exits starting next
year. If you'd like the latest health insurance
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