1 00:00:00,160 --> 00:00:02,560 This is Jacob Emerson with the Becker's payer 2 00:00:02,560 --> 00:00:03,699 issues podcast. 3 00:00:04,000 --> 00:00:07,299 Here's your biweekly industry news briefing for September 4 00:00:07,440 --> 00:00:07,940 18th. 5 00:00:08,480 --> 00:00:11,599 The Cigna Group's pharmacy benefit manager, Express Scripts, 6 00:00:11,599 --> 00:00:14,074 is suing the Federal Trade Commission and chair 7 00:00:14,074 --> 00:00:15,855 Lina Khan over what it describes as a, 8 00:00:16,875 --> 00:00:17,301 quote, unfair, biased, erroneous, and defamatory report on 9 00:00:17,301 --> 00:00:19,274 PBMs released by the agency earlier this year. 10 00:00:19,274 --> 00:00:20,335 Express Scripts 11 00:00:20,875 --> 00:00:22,015 called the FTC's 12 00:00:25,940 --> 00:00:29,480 July report 74 pages of unsupported innuendo 13 00:00:30,019 --> 00:00:32,500 and claims the agency relied on cherry picked 14 00:00:32,500 --> 00:00:35,560 information to push a predetermined narrative that PBMs 15 00:00:35,700 --> 00:00:39,240 inflate drug prices and disadvantage independent pharmacies. 16 00:00:39,825 --> 00:00:42,545 In 2022, the FTC launched its inquiry into 17 00:00:42,545 --> 00:00:45,344 the PBM industry, requesting information and records from 18 00:00:45,344 --> 00:00:48,564 the 6 largest PBMs regarding their business practices. 19 00:00:49,424 --> 00:00:52,304 The commission's corresponding reports published in July of 20 00:00:52,304 --> 00:00:55,120 this year stated that PBMs favor their own 21 00:00:55,120 --> 00:00:59,200 pharmacies and exercise significant market control, affecting both 22 00:00:59,200 --> 00:01:00,979 medication access and affordability. 23 00:01:01,679 --> 00:01:04,719 The report also claimed PBMs sometimes steer patients 24 00:01:04,719 --> 00:01:06,819 away from cheaper drugs and overcharge 25 00:01:07,694 --> 00:01:09,715 for treatments related to cancer. 26 00:01:10,494 --> 00:01:13,454 Express Scripts, in its lawsuit filed September 17th 27 00:01:13,454 --> 00:01:15,234 in the Saint Louis federal court, 28 00:01:15,534 --> 00:01:18,174 argues that the commission's report, driven by bias 29 00:01:18,174 --> 00:01:19,954 and politics rather than evidence, 30 00:01:20,359 --> 00:01:23,319 falsely concluded that PBMs inflate drug costs and 31 00:01:23,319 --> 00:01:24,780 harm independent pharmacies. 32 00:01:25,079 --> 00:01:27,319 The company claims its business has been damaged 33 00:01:27,319 --> 00:01:29,500 by defamatory statements and unconstitutional 34 00:01:30,120 --> 00:01:32,780 actions. It's seeking a court ruling to invalidate 35 00:01:32,920 --> 00:01:35,064 the report, recuse chair Khan, 36 00:01:35,444 --> 00:01:38,724 and recover legal costs. Cigna Group's chief legal 37 00:01:38,724 --> 00:01:40,965 officer stated publicly that the goal of the 38 00:01:40,965 --> 00:01:43,605 suit is to have the report retracted and 39 00:01:43,605 --> 00:01:45,704 removed from the FTC's website. 40 00:01:46,420 --> 00:01:48,500 According to the FTC's reports, the 3 largest 41 00:01:48,500 --> 00:01:52,439 PBMs, CVS Caremark, Express Scripts, and UnitedHealth's OptumRx, 42 00:01:53,140 --> 00:01:54,519 control nearly 80% 43 00:01:54,819 --> 00:01:56,679 of US prescription drug distribution, 44 00:01:56,979 --> 00:01:58,200 serving about 270,000,000 45 00:01:58,979 --> 00:01:59,444 people. 46 00:01:59,924 --> 00:02:02,325 The report also noted that PBMs contributed to 47 00:02:02,325 --> 00:02:04,885 the closure of 10% of independent pharmacies in 48 00:02:04,885 --> 00:02:06,825 rural areas between 2013 49 00:02:07,204 --> 00:02:07,864 and 2020. 50 00:02:08,564 --> 00:02:09,224 The FTC 51 00:02:09,604 --> 00:02:12,004 defended its report in the Wall Street Journal, 52 00:02:12,004 --> 00:02:14,540 telling the outlets that just 3 companies control 53 00:02:14,540 --> 00:02:16,699 nearly 80% of the markets that millions of 54 00:02:16,699 --> 00:02:19,659 Americans must use to purchase necessary drugs at 55 00:02:19,659 --> 00:02:22,300 high costs. This is a complicated and opaque 56 00:02:22,300 --> 00:02:24,460 market, and the FTC is committed to using 57 00:02:24,460 --> 00:02:26,639 its clear authority to help the public 58 00:02:26,939 --> 00:02:27,680 and policymakers 59 00:02:28,139 --> 00:02:28,965 understand it. 60 00:02:29,525 --> 00:02:32,405 When the report was released, Lina Khan added 61 00:02:32,405 --> 00:02:35,125 in a corresponding news release, the PBMs have 62 00:02:35,125 --> 00:02:37,284 the power to hike drug costs and squeeze 63 00:02:37,284 --> 00:02:40,724 independent pharmacies, which many Americans, especially in rural 64 00:02:40,724 --> 00:02:43,909 areas, rely on for essential care. The FTC 65 00:02:43,909 --> 00:02:46,229 will continue to use all available tools, she 66 00:02:46,229 --> 00:02:49,030 said, to scrutinize dominant players across health care 67 00:02:49,030 --> 00:02:49,530 markets 68 00:02:49,830 --> 00:02:51,930 and ensure that Americans have access 69 00:02:52,310 --> 00:02:53,930 to affordable health care. 70 00:02:54,789 --> 00:02:56,629 At the time of the report's release, another 71 00:02:56,629 --> 00:03:00,754 FTC commissioner, Melissa Holyoke, issued dissenting statement criticizing 72 00:03:00,895 --> 00:03:03,474 the report's process and lack of substantive 73 00:03:03,854 --> 00:03:06,735 engagement on policy. She said, quote, the report 74 00:03:06,735 --> 00:03:08,594 was plagued by process irregularities 75 00:03:08,974 --> 00:03:09,635 and concerns 76 00:03:10,094 --> 00:03:12,495 over the substance or lack thereof of the 77 00:03:12,495 --> 00:03:13,469 original order. 78 00:03:13,790 --> 00:03:16,189 She further expressed concerns that the report would 79 00:03:16,189 --> 00:03:16,689 exacerbate 80 00:03:17,069 --> 00:03:17,569 ideological 81 00:03:17,949 --> 00:03:20,610 divides and erode the FTC's legitimacy, 82 00:03:20,909 --> 00:03:22,610 failing to provide a better understanding 83 00:03:22,990 --> 00:03:25,810 of PBM practices and their impact on consumers. 84 00:03:26,485 --> 00:03:26,985 Cigna's 85 00:03:27,284 --> 00:03:30,344 full lawsuit is available to view on Becker's 86 00:03:30,405 --> 00:03:31,384 Payers website. 87 00:03:32,485 --> 00:03:34,965 Well, 4 4 insurers or their subsidiaries are 88 00:03:34,965 --> 00:03:36,965 among the top 100 companies in the US 89 00:03:36,965 --> 00:03:39,305 for jobs that consist of some remote work 90 00:03:39,364 --> 00:03:40,824 and some in office work. 91 00:03:41,180 --> 00:03:43,740 The job site called FlexJobs, which is a 92 00:03:43,740 --> 00:03:45,819 site for work from home and flexible scheduling 93 00:03:45,819 --> 00:03:46,319 employment, 94 00:03:46,700 --> 00:03:49,180 released its list in September, ranking companies by 95 00:03:49,180 --> 00:03:51,659 the highest number of hybrid job openings posted 96 00:03:51,659 --> 00:03:54,719 between September 1st last year and August 31st 97 00:03:55,420 --> 00:03:56,080 this year. 98 00:03:56,474 --> 00:04:00,235 Express Scripts, Cigna's PBM, Elavance Health, UnitedHealth Group, 99 00:04:00,235 --> 00:04:03,435 and CVS Health were all among those top 100 00:04:03,435 --> 00:04:06,094 100 companies for hybrid work positions. 101 00:04:07,594 --> 00:04:10,014 Some Medicare Advantage plans say that the turbulence 102 00:04:10,290 --> 00:04:13,189 facing the industry is not slowing them down. 103 00:04:13,569 --> 00:04:15,969 The CFO of Clover Health recently told Becker's 104 00:04:15,969 --> 00:04:18,069 that new risk adjustment rules from CMS 105 00:04:18,529 --> 00:04:20,370 and the 2 Midnight rule could have very 106 00:04:20,370 --> 00:04:21,830 little impact on the company. 107 00:04:22,574 --> 00:04:24,735 Clover Health is able to avoid the pressures 108 00:04:24,735 --> 00:04:26,814 other fan plans are facing because of its 109 00:04:26,814 --> 00:04:29,314 technology and its focus on PPO plans. 110 00:04:30,574 --> 00:04:32,814 Medicare Advantage plans have faced a lot of 111 00:04:32,814 --> 00:04:34,834 challenges in the past few years. 112 00:04:35,615 --> 00:04:39,479 Major payers reported increasing medical costs driven by 113 00:04:39,479 --> 00:04:41,639 pent up demand for care delayed during the 114 00:04:41,639 --> 00:04:42,139 pandemic. 115 00:04:43,639 --> 00:04:46,600 In addition to rising medical utilization, plans are 116 00:04:46,600 --> 00:04:49,084 continuing with new reimbursement models from CMS. 117 00:04:50,105 --> 00:04:52,345 2024 is the 2nd year of a 3 118 00:04:52,345 --> 00:04:54,204 year phase in of readjustment 119 00:04:54,504 --> 00:04:55,324 model changes. 120 00:04:55,785 --> 00:04:58,185 Payers have said the change amounts to a 121 00:04:58,185 --> 00:04:59,404 cut in funding. 122 00:05:01,289 --> 00:05:04,250 Executives at Humana, the 2nd largest Medicare Advantage 123 00:05:04,250 --> 00:05:06,089 insurer, said the company has seen an increase 124 00:05:06,089 --> 00:05:08,490 in inpatient utilization because of the 2 midnight 125 00:05:08,490 --> 00:05:11,769 rule. New CMS regulations took effect requiring Medicare 126 00:05:11,769 --> 00:05:14,009 Advantage Plans to provide coverage for an inpatient 127 00:05:14,009 --> 00:05:15,470 admission rather than observation 128 00:05:16,024 --> 00:05:18,185 when the admitting physician expects the patient to 129 00:05:18,185 --> 00:05:20,444 require hospital care for at least 2 midnights. 130 00:05:20,745 --> 00:05:22,824 And though Humana said the rule change was 131 00:05:22,824 --> 00:05:25,464 not the largest factor behind increasing inpatient admission 132 00:05:25,464 --> 00:05:27,785 costs, other insurers said the rule did not 133 00:05:27,785 --> 00:05:29,645 have a large effect on costs. 134 00:05:31,159 --> 00:05:33,959 A smaller, more nuanced member population has meant 135 00:05:33,959 --> 00:05:36,759 that one health plan, CleverCare, has avoided rising 136 00:05:36,759 --> 00:05:39,099 utilization costs according to its CEO. 137 00:05:40,439 --> 00:05:43,560 She told us, Becker's, that their membership primarily 138 00:05:43,560 --> 00:05:46,185 consists of Asian Americans and Pacific Islanders, and 139 00:05:46,264 --> 00:05:47,944 their approach to health care tends to focus 140 00:05:47,944 --> 00:05:50,105 more on prevention. So they prefer, if possible, 141 00:05:50,105 --> 00:05:51,165 to avoid hospitalizations, 142 00:05:51,785 --> 00:05:54,204 so increasing utilization is not CleverCare's 143 00:05:54,504 --> 00:05:57,225 biggest challenge right now. And while some smaller 144 00:05:57,225 --> 00:05:59,564 payers say they are shrugging off headwinds, UnitedHealth 145 00:05:59,625 --> 00:06:02,290 Group, the largest Medicare Advantage carrier, says it's 146 00:06:02,290 --> 00:06:04,850 poised to navigate the challenges in Medicare Advantage 147 00:06:04,850 --> 00:06:07,569 as well. The convergence of rising costs and 148 00:06:07,569 --> 00:06:10,689 lower reimbursements from CMS has led several insurers 149 00:06:10,689 --> 00:06:13,350 to exit markets that are no longer profitable. 150 00:06:13,675 --> 00:06:15,835 Humana is going to be exiting 13 markets 151 00:06:15,835 --> 00:06:16,975 affecting about 600,000 152 00:06:17,275 --> 00:06:19,995 members, and Centene plans to exit 6 states. 153 00:06:19,995 --> 00:06:21,754 CVS Health has projected it will lose up 154 00:06:21,754 --> 00:06:23,375 to 10% of its MA members. 155 00:06:23,835 --> 00:06:25,915 And insurers that aren't planning large scale market 156 00:06:25,915 --> 00:06:28,180 exits could pick up members from companies exiting 157 00:06:28,180 --> 00:06:30,040 markets and pulling back on benefits. 158 00:06:30,500 --> 00:06:31,560 In May, UnitedHealthcare 159 00:06:31,939 --> 00:06:33,939 CEO said that medical costs were in line 160 00:06:33,939 --> 00:06:36,600 with the company's expectations and that they're comfortable 161 00:06:36,899 --> 00:06:38,740 with the products that they're putting into the 162 00:06:38,740 --> 00:06:40,519 marketplace for next year. 163 00:06:41,345 --> 00:06:43,985 Andrew Witty, the CEO of UnitedHealth Group, cautioned 164 00:06:43,985 --> 00:06:45,665 that it was too early to predict if 165 00:06:45,665 --> 00:06:47,685 the company would pick up growth from competitors' 166 00:06:47,824 --> 00:06:51,025 existing markets. And Elavance Health executives have also 167 00:06:51,025 --> 00:06:53,264 said they feel confident in the company's Medicare 168 00:06:53,264 --> 00:06:56,870 Advantage offerings saying that they're comfortable predicting market 169 00:06:56,870 --> 00:06:59,830 plus growth for the company's MA business in 170 00:06:59,830 --> 00:07:00,330 2025. 171 00:07:02,069 --> 00:07:04,470 They've also said they're encouraged by the commentary 172 00:07:04,470 --> 00:07:06,970 by some of their competitors around market rationalization 173 00:07:07,670 --> 00:07:09,370 and taking a hard look at the market 174 00:07:09,584 --> 00:07:11,824 because they know that others are potentially losing 175 00:07:11,824 --> 00:07:13,044 money this year. 176 00:07:13,904 --> 00:07:16,384 And finally, Florida's insurance commissioner has given the 177 00:07:16,384 --> 00:07:18,865 green light to Health Care Service Corporation to 178 00:07:18,865 --> 00:07:21,444 purchase Cigna's Medicare business in the state. 179 00:07:21,910 --> 00:07:23,990 On September 11th, insurance the insurance commissioner in 180 00:07:23,990 --> 00:07:26,569 Florida signed a consent order approving the indirect 181 00:07:26,629 --> 00:07:29,850 acquisition of Cigna's HealthSpring of Florida by HCSC, 182 00:07:30,069 --> 00:07:32,069 which, of course, is the parent company of 183 00:07:32,069 --> 00:07:33,930 5 Blue Cross Blue Shield plans. 184 00:07:34,310 --> 00:07:36,164 Cigna reached a deal in January to sell 185 00:07:36,164 --> 00:07:38,345 its Medicare business to HCSC for 186 00:07:38,805 --> 00:07:39,305 $3,300,000,000 187 00:07:39,764 --> 00:07:40,425 that includes 188 00:07:40,805 --> 00:07:43,625 Cigna's Medicare Advantage supplemental part d 189 00:07:44,084 --> 00:07:46,644 and CareAllies, which is a value based care 190 00:07:46,644 --> 00:07:47,784 management subsidiary. 191 00:07:48,084 --> 00:07:51,544 That will nearly quadruple HCA's Medicare Advantage membership. 192 00:07:51,685 --> 00:07:52,800 They've They've got about 217,000 193 00:07:53,819 --> 00:07:56,060 MA members right now, and Cigna has just 194 00:07:56,060 --> 00:07:56,959 under 600,000. 195 00:07:57,740 --> 00:07:59,579 If you like the latest health insurance industry 196 00:07:59,579 --> 00:08:01,740 news delivered straight to your inbox every morning, 197 00:08:01,740 --> 00:08:04,079 subscribe to the Becker's payer issues enewsletter 198 00:08:04,539 --> 00:08:06,000 on our website atbeckerspayer.com.