This is Jacob Emerson with the Becker's payer
issues podcast.
Here's your biweekly industry news briefing for September
18th.
The Cigna Group's pharmacy benefit manager, Express Scripts,
is suing the Federal Trade Commission and chair
Lina Khan over what it describes as a,
quote, unfair, biased, erroneous, and defamatory report on
PBMs released by the agency earlier this year.
Express Scripts
called the FTC's
July report 74 pages of unsupported innuendo
and claims the agency relied on cherry picked
information to push a predetermined narrative that PBMs
inflate drug prices and disadvantage independent pharmacies.
In 2022, the FTC launched its inquiry into
the PBM industry, requesting information and records from
the 6 largest PBMs regarding their business practices.
The commission's corresponding reports published in July of
this year stated that PBMs favor their own
pharmacies and exercise significant market control, affecting both
medication access and affordability.
The report also claimed PBMs sometimes steer patients
away from cheaper drugs and overcharge
for treatments related to cancer.
Express Scripts, in its lawsuit filed September 17th
in the Saint Louis federal court,
argues that the commission's report, driven by bias
and politics rather than evidence,
falsely concluded that PBMs inflate drug costs and
harm independent pharmacies.
The company claims its business has been damaged
by defamatory statements and unconstitutional
actions. It's seeking a court ruling to invalidate
the report, recuse chair Khan,
and recover legal costs. Cigna Group's chief legal
officer stated publicly that the goal of the
suit is to have the report retracted and
removed from the FTC's website.
According to the FTC's reports, the 3 largest
PBMs, CVS Caremark, Express Scripts, and UnitedHealth's OptumRx,
control nearly 80%
of US prescription drug distribution,
serving about 270,000,000
people.
The report also noted that PBMs contributed to
the closure of 10% of independent pharmacies in
rural areas between 2013
and 2020.
The FTC
defended its report in the Wall Street Journal,
telling the outlets that just 3 companies control
nearly 80% of the markets that millions of
Americans must use to purchase necessary drugs at
high costs. This is a complicated and opaque
market, and the FTC is committed to using
its clear authority to help the public
and policymakers
understand it.
When the report was released, Lina Khan added
in a corresponding news release, the PBMs have
the power to hike drug costs and squeeze
independent pharmacies, which many Americans, especially in rural
areas, rely on for essential care. The FTC
will continue to use all available tools, she
said, to scrutinize dominant players across health care
markets
and ensure that Americans have access
to affordable health care.
At the time of the report's release, another
FTC commissioner, Melissa Holyoke, issued dissenting statement criticizing
the report's process and lack of substantive
engagement on policy. She said, quote, the report
was plagued by process irregularities
and concerns
over the substance or lack thereof of the
original order.
She further expressed concerns that the report would
exacerbate
ideological
divides and erode the FTC's legitimacy,
failing to provide a better understanding
of PBM practices and their impact on consumers.
Cigna's
full lawsuit is available to view on Becker's
Payers website.
Well, 4 4 insurers or their subsidiaries are
among the top 100 companies in the US
for jobs that consist of some remote work
and some in office work.
The job site called FlexJobs, which is a
site for work from home and flexible scheduling
employment,
released its list in September, ranking companies by
the highest number of hybrid job openings posted
between September 1st last year and August 31st
this year.
Express Scripts, Cigna's PBM, Elavance Health, UnitedHealth Group,
and CVS Health were all among those top
100 companies for hybrid work positions.
Some Medicare Advantage plans say that the turbulence
facing the industry is not slowing them down.
The CFO of Clover Health recently told Becker's
that new risk adjustment rules from CMS
and the 2 Midnight rule could have very
little impact on the company.
Clover Health is able to avoid the pressures
other fan plans are facing because of its
technology and its focus on PPO plans.
Medicare Advantage plans have faced a lot of
challenges in the past few years.
Major payers reported increasing medical costs driven by
pent up demand for care delayed during the
pandemic.
In addition to rising medical utilization, plans are
continuing with new reimbursement models from CMS.
2024 is the 2nd year of a 3
year phase in of readjustment
model changes.
Payers have said the change amounts to a
cut in funding.
Executives at Humana, the 2nd largest Medicare Advantage
insurer, said the company has seen an increase
in inpatient utilization because of the 2 midnight
rule. New CMS regulations took effect requiring Medicare
Advantage 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.
And though Humana said the rule change was
not the largest factor behind increasing inpatient admission
costs, other insurers said the rule did not
have a large effect on costs.
A smaller, more nuanced member population has meant
that one health plan, CleverCare, has avoided rising
utilization costs according to its CEO.
She told us, Becker's, that their membership primarily
consists of Asian Americans and Pacific Islanders, and
their approach to health care tends to focus
more on prevention. So they prefer, if possible,
to avoid hospitalizations,
so increasing utilization is not CleverCare's
biggest challenge right now. And while some smaller
payers say they are shrugging off headwinds, UnitedHealth
Group, the largest Medicare Advantage carrier, says it's
poised to navigate the challenges in Medicare Advantage
as well. The convergence of rising costs and
lower reimbursements from CMS has led several insurers
to exit markets that are no longer profitable.
Humana is going to be exiting 13 markets
affecting about 600,000
members, and Centene plans to exit 6 states.
CVS Health has projected it will lose up
to 10% of its MA members.
And insurers that aren't planning large scale market
exits could pick up members from companies exiting
markets and pulling back on benefits.
In May, UnitedHealthcare
CEO said that medical costs were in line
with the company's expectations and that they're comfortable
with the products that they're putting into the
marketplace for next year.
Andrew Witty, the CEO of UnitedHealth Group, cautioned
that it was too early to predict if
the company would pick up growth from competitors'
existing markets. And Elavance Health executives have also
said they feel confident in the company's Medicare
Advantage offerings saying that they're comfortable predicting market
plus growth for the company's MA business in
2025.
They've also said they're encouraged by the commentary
by some of their competitors around market rationalization
and taking a hard look at the market
because they know that others are potentially losing
money this year.
And finally, Florida's insurance commissioner has given the
green light to Health Care Service Corporation to
purchase Cigna's Medicare business in the state.
On September 11th, insurance the insurance commissioner in
Florida signed a consent order approving the indirect
acquisition of Cigna's HealthSpring of Florida by HCSC,
which, of course, is the parent company of
5 Blue Cross Blue Shield plans.
Cigna reached a deal in January to sell
its Medicare business to HCSC for
$3,300,000,000
that includes
Cigna's Medicare Advantage supplemental part d
and CareAllies, which is a value based care
management subsidiary.
That will nearly quadruple HCA's Medicare Advantage membership.
They've They've got about 217,000
MA members right now, and Cigna has just
under 600,000.
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