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Volume 25, Number 16
May 11, 2015
Strategic Business, Financial and Regulatory News of the Health Insurance Industry
Contents
3
Health Net, WellCare Post
Solid Starts; MLRs Are
Mostly Tempered
3
Molina Revenues Soar,
Pumping Up a Strong 1Q
Earnings Season
4
Table: Health Plan Stock
Performances Weaken at
Close of First Quarter
5
Table: Insurers With the
Highest Risk-Corridor
Receivables in 2014
7
Health Plan Briefs
S&P Sees Market Unease Heading Into ’16
As Plans Weigh Risk of Exchange 3R Hole
The likelihood CMS will not be able to make good on 100% of the risk corridors
payments owed to health plans that lost significant amounts of money on Affordable
Care Act (ACA) exchanges in 2014 will create market instability in 2016, a new report
by Standard & Poor’s Ratings Services says. Market consultants say the lack of certainty
about these payments, from the so-called 3Rs (reinsurance, risk corridors and risk adjustment) risk-mitigation programs under the ACA, will lead plans to hike exchangebased premiums next year as aggressive pricing gives way to the hard realities of the
marketplace.
Deep Banerjee, an associate director at Standard & Poor’s and lead author of the
report, tells HPW that because of budget neutrality, which requires the risk-corridors
pool to be funded by payments insurers make into the pool, there are major shortfalls in
store. This is because many insurers are incurring big losses in their exchange business.
“Our study indicates that the risk corridor payables are less than 10% of the receivables
insurers reported in 2014,” he says.
A receivable refers to the amount a health plan expects to get in payment as a result
of the risk corridor. On the other hand, payables are the amount an insurer expects to
pay into the corridor pool based on the risk-corridor formula.
continued on p. 5
Cigna Moves Value-Based Collaborative
Care Into New Areas; Feds Tout Pioneer
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Executive Editor
Jill Brown
Marching ever forward, value-based contracting saw significant positive news
when on May 4 HHS said independent auditors found that its Pioneer Accountable
Care Organization (ACO) Model coaxed more than $384 million in savings for the
Medicare program in its first two years, an average of $300 per participating beneficiary
per year. On the commercial side of the payer spectrum, Cigna Corp. on May 4 and 5
trumpeted its forays into the specialty physician practice space with its ACO-equivalent
Cigna Collaborative Care and payment model, which was once reserved for only large
physician groups.
These announcements come at a time that the near-daily stream of activity by payers and providers to move more of their risk to value-based models continues unabated.
But as these encouraging news stories come out, is there enough evidence to support
the positive spin for accountable care?
Harriett Wallsh, R.N., director of Cigna Collaborative Care clinical operations, tells
HPW that generally it takes two to three years to determine whether a specific initiative
is a success, but that timetable is shortening, with the ramp-up a little faster these days.
Her broad statistics do indicate much progress in the value-based model for Cigna.
“At the end of the calendar year 2014, for the 86 CACs [Collaborative Accountable Care]
with us one year or more, there were 1.05 million customers. And for those people, over
a million customers, 77% were in CACs that achieved quality or cost success,” she says.
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An independent publication not affiliated with insurers, vendors, consultants or associations
2 Health Plan Week
The numbers also show that the absolute medical cost
was in general 1% better than the market, Wallsh adds.
As far as proof that the move away from fee-forservice (FFS) can pay dividends, Bruce Landon, M.D.,
a professor in the Department of Health Care Policy
at Harvard Medical School, tells HPW that the year-in,
year-out findings by Blue Cross and Blue Shield of Massachusetts and its Alternative Quality Contract (AQC)
are exhibit A (HPW 11/11/13, p. 1). “The most developed
piece of evidence is from the work we have done with
the AQC in Blue Cross and Blue Shield of Massachusetts.
It started in 2009 as a commercial ACO on an HMO
population and has seen increasing rates of savings over
time of participation in the program,” he says. “For the
2009 cohort, in the first year they had savings of $21 per
patient per quarter, and that grew to $121 per patient
per quarter for the fourth year. It is not like they are seeing 30% off spending, but they are making significant
inroads.”
And the Blues plan has widened the scope of its
AQC, declaring in March that it will make the model
available to PPO customers as well, increasing the
breadth of the program to more than 1 million members
from its current 680,000 (HPW 3/9/15, p. 7).
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May 11, 2015
Rosemarie Day, president of Day Health Strategies,
based in Somerville, Mass., tells HPW these success stories are real bottom-line material, generated by payers
and providers being able to “truly share information on
a patient,” like through electronic medical records. “But
is also a cultural change for them [physicians],” she adds.
And, Day stresses, there is a need to have insurers take
the impetus to effect new attitudes about care management. “Insurers are trying to move in the right direction
and reset incentives, and there are some docs already
there. But others are slower on the adoption curve and
need a push,” she says.
For Ellen Lukens, a vice president at Avalere Health
LLC, a Washington, D.C.-based consultant, the trick is
for insurers and physicians working under these new
models to determine the medical necessity of what they
are doing and to deal with the bigger picture. “Whether
it is under FFS or a value-based system, what has really changed now is this sense that the providers have
a much more longitudinal focus. It is not just about the
hospital but what impacts how the patient transitions
back home and the impact on overall spending,” she tells
HPW.
Carrier Spreads Its Value-Based Designs
Cigna, a veteran in the value-based space, has long
held the goal of expanding collaborative care programs
from large physician groups to small groups, hospitals
and specialty practices. In that vein, recently the carrier said early results from OB/GYN medical practices
in Florida and Texas taking part in the Cigna ACO-like
model have recorded improved quality and lower medical costs.
Wallsh says the key is that the initiatives have specific clinical targets that go beyond simple cost savings.
“The OB/GYN program aims to reduce primary cesarean deliveries and inductions of labor prior to 39 weeks
gestation for non-medical reasons, increase the use of
generic drugs and shift certain gynecologic surgical procedures to less-costly sites of service. The program also
focuses on the identification and referral of at-risk pregnant women, safety certification for office-based procedures and maternal mental health screening,” according
to the carrier.
OB/GYN practices taking part are compensated
for their successful quality and cost efforts with a patient care management payment that varies based on
how well the group performs. After its first year in the
program, Women’s Care Florida, LLC, with offices in
Tampa and Orlando, showed a 15.2% improvement in its
primary cesarean delivery rate, 6.4% increase in generic
dispensing rate and 3.7% rate for early elective deliveries,
below the national rate of 5%, Wallsh says.
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May 11, 2015
Health Plan Week
Separately, Southwest Women’s Health Alliance (formerly Obstetrical & Gynecological Associates) in Houston improved total medical cost performance by 3%,
experienced a 7.6% improvement in generic dispensing
rate and had 93% overall patient satisfaction.
Cigna has pilot programs with four other OB/GYN
groups and estimates the launch of up to six more like
efforts this year.
Cigna also said on May 5 that Hackensack, N.J.based Regional Cancer Care Associates LLC (RCCA) is
now working with the carrier to improve care for chemotherapy patients. Also part of the Cigna Collaborative
Care brand, “the arrangement encourages RCCA to follow evidence-based medicine guidelines for cancer care
and to use COTA, Inc., an industry-leading oncology analytics company that tracks the quality of care and associated costs. In addition, the practice will expand access to
daily acute care with same day appointment availability,
after-hours access and after-hours clinical advice, including 24/7 access to clinical triage staff,” Cigna said.
This is more of what Wallsh calls valuable, realworld changes that a collaborative, value-based care
program can bring. Another will be that RCCA will designate a registered nurse or an advanced care practitioner
as the specialty group’s oncology care coordinator for as-
sisting patients and managing coordinated care. In turn,
Cigna will compensate the New Jersey medical group
with a one-time care management payment for each of its
member patients undergoing chemotherapy treatment.
Contact Wallsh via Mark Slitt at mark.slitt@cigna.
com, Lukens at [email protected], Day at rosemarie@
dayhealthstrategies.com and Landon at landon@hcp.
med.harvard.edu. G
Health Net, WellCare Post Solid
Starts; MLRs Are Mostly Tempered
Health Net, Inc. and WellCare Health Plans, Inc. are
both off to “good” starts for 2015, according to securities analysts who point to positive first-quarter earnings
underpinned by effective cost management programs,
robust enrollment growth and sensible strategies for
commercial and government-sponsored market segments moving forward.
First out of the gate was Health Net, which on May
4 told investors that it recorded net income of $30 million
or 39 cents a share for the first quarter, compared with
$28.8 million or 36 cents a share for the same quarter of
2014. But taking into account one-time events, Health
Net said adjusted net income stood at 74 cents a share for
Molina Revenues Soar, Pumping Up a Strong 1Q Earnings Season
Medicaid managed care specialist Molina Healthcare, Inc. on May 7 said its business is doing very
well, reporting significant gains in first-quarter 2015
net income, revenue and enrollment as the carrier
benefits from the expansion of coverage eligibility for
low-income Americans under the Affordable Care Act
(ACA).
The insurer said first-quarter net income was
$28.2 million, or 56 cents a share, up from $4.5 million, or 9 cents a share, for the same period of 2014.
Year-on-year revenues for the quarter grew to $3.2
billion from $2.1 billion, a 53% jump from 2014. Wall
Street analysts had expected net earnings of 49 cents
per share, giving Molina a clear beat to start the year.
Enrollment stood at nearly 3 million members as of
March 31, 38% higher than the same period of 2014.
A sharp rise in customers buying Molina coverage
on public exchanges aided the carrier’s performance.
As of March 31, Molina said it had 266,000 customers
enrolled in ACA marketplaces, compared with only
15,000 at the end of the first quarter in 2014.
3
Chris Carter, an analyst with Credit Suisse, in a
May 7 research note said the positive results for Molina came despite some headwinds generated by the
lack of reimbursement from states for the ACA insurer
fee that is typically passed on to the states under
Medicaid contracts.
Molina said in its earnings release that the company’s results continue to be adversely affected by the
delays. “Due to progress made in securing agreements
for the reimbursement of the HIF [health insurance
fee] with various state Medicaid agencies in 2014, the
company recognized approximately 73% of the Medicaid-related reimbursement revenue associated with
HIF expense in the first quarter of 2015, compared
with only 51% in the first quarter of 2014,” the insurer said. “[But the] delay in recognition of the HIF
expense reimbursement from California, Michigan
and Utah reduced income from continuing operations
before income tax expense by approximately $16 million, or 20 cents per diluted share in the first quarter of
2015.”
Contact Carter at [email protected].
Web addresses cited in this issue are live links in the PDF version, which is accessible at
HPW’s subscriber-only page at http://aishealth.com/newsletters/healthplanweek.
4 Health Plan Week
May 11, 2015
the quarter, 5 cents better than the pre-release expectations of financial analysts.
The insurer logged a $47 million pretax charge tied
to its outsourcing agreement with Cognizant Healthcare
Services, LLC. Last November, Health Net CEO Jay
Gellert said the insurer had finalized a master services
agreement with Cognizant, a subsidiary of Cognizant
Technology Solutions Corp., and the deal was expected
to produce $150 million to $200 million in savings by
2017. Cognizant provides information technology, consulting and business process services, and Health Net
contracted with it to help shrink administrative costs
(HPW 11/10/14, p. 7).
Health Net also increased its full-year earnings guidance by 10 cents to a range of $3.25 to $3.35 a share. “This
is a result of better medical cost experience in government programs,” Gellert said in a May 4 conference call
after the earnings release. He also cited the individual
market on the California public exchange as one of the
key drivers of the company’s positive results.
“In 2014, we experienced substantial growth in this
business resulting in a 17% market share statewide and
a 31% market share in Southern California at the end of
the year. We’ve maintained that market share in the first
quarter of 2015,” Gellert said. “Our subsidized silver
plan continues to be an attractive option, evident by the
enrollment of 47,000 new individual exchange members
in the first quarter of this year. While we grew in California, we lost some less-profitable individual members as
expected on the Arizona exchange. This loss in membership was primarily due to a migration of membership to
a lower-priced co-op plan.”
Ralph Giacobbe, a securities analyst for Credit
Suisse, said in a May 4 research note that Health Net’s
consolidated medical loss ratio (MLR) of 84.5% “came
in relatively in-line with consensus of 84.4%.” But he
said commercial MLR was better than forecast at 82.1%
versus the consensus 82.5%. “However, MA [Medicare
Advantage] MLR was higher than expected at 92.9% (vs.
consensus 91.4%) primarily due to prior year changes to
risk adjuster estimates [MA risk adjustment under CMS
rules.]. Medicaid MLR was in-line at 81.9%.”
Also commenting on the MLRs, Scott Fidel, securities analyst for Deutsche Bank, in a May 4 report said
the impact of the insurer’s revisions to its 3Rs estimates
under the Affordable Care Act provisions on public exchanges lowered pretax income by $11.4 million. “Health
Net’s commercial MLR would have been 81.2% excluding the revised 3R’s assumptions,” he said.
Health Plan Stock Performances Weaken at Close of First Quarter
Health plan stock prices fell an average of 7.4% in April, effectively negating March’s average gain of 7% to end the quarter on a
sour note. Of the 10 plans HPW tracks, WellCare Health Plans, Inc. and Health Net, Inc. fared the worst, posting 15.3% and 12.6%
losses, respectively, and pushing their year-to-date numbers into the red. Aetna Inc. broke even for the month, preserving its 20.3%
full-year gain, with the same percentage boost as Anthem, Inc., even though Anthem had a 2% decline in its stock price last month.
Closing Stock Price
on 4/30/2015
April Gain (Loss)
Full-Year Gain
(Loss)
Consensus 2015
EPS*
Consensus 2015 P/E
Ratio*
COMMERCIAL
Aetna Inc.
$106.87
0.0%
20.3%
$7.35
14.6 x
Cigna Corp.
$124.64
(4.4%)
21.2%
$8.49
14.7 x
$52.65
(12.6%)
(0.7%)
$3.21
16.4 x
UnitedHealth Group
$111.40
(5.2%)
10.5%
$6.26
17.8 x
Anthem, Inc.
$150.93
(2.0%)
20.3%
$9.94
(5%)
14%
$165.60
(6.8%)
15.8%
$8.83
$9.99
(4.9%)
10.9%
$0.25
(6%)
13%
18.7%
$2.68
23.2 x
23.8 x
Health Net, Inc.
Commercial Mean
15.2 x
15.7 x
MEDICARE
Humana Inc.
Universal American Corp.
Medicare Mean
18.8 x
39.3 x
29.0 x
MEDICAID
Centene Corp.
$61.99
(12.0%)
Molina Healthcare, Inc.
$59.23
(10.7%)
13.0%
$2.49
WellCare Health Plans, Inc.
$77.43
(15.3%)
(4.3%)
$3.40
Medicaid Mean
(13%)
9%
23.3 x
Industry Mean
(7.4%)
12.6%
20.7 x
22.8 x
* Estimates are based on analysts' consensus estimates for full-year 2015.
SOURCE: Bank of America Merrill Lynch. Compiled by Atlantic Information Services, Inc., April 2015.
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May 11, 2015
Health Plan Week
On membership, Health Net said that as of March
31, 2015, total enrollment in its Western Region increased
by 20% from the same time last year to 3.2 million members. Western Region commercial enrollment gained 7%
to 1.2 million members.
On May 6, WellCare also beat Wall Street estimates
with its first-quarter 2015 results but did not revise its
2015 guidance. The carrier posted net earnings of $17.5
million, or 39 cents a share for the quarter, lower than the
$44.1 million, or $1 a share, it had a year earlier. But in the
first quarter of 2014, WellCare benefited from its acquisition of Windsor Health Group, Inc. (HPW 5/12/14, p. 5).
Financial analysts had expected net income of 28 cents a
share. WellCare also said its total membership expanded
by 8.3% year to year to 3.8 million as of March 31.
In looking at both insurers’ results, Steve Zaharuk,
senior vice president at Moody’s Investors Service, tells
HPW that it is clear the carriers had strong quarters,
extending the trend set by most of the top-tier publicly
traded carriers like UnitedHealth Group (HPW 4/20/15,
p. 1), Aetna Inc. and Anthem, Inc. (HPW 5/4/15, p. 1). “It
shows a continuation of what we are seeing, with the
medical trend under control. Companies are tightening
their belts on expenses and focusing on managed care,”
he says.
For WellCare, Zaharuk says new management seems
to have corrected course in its key Medicaid business and
improved cost-utilization strategies. WellCare on Feb. 17
informed investors of a turnaround plan by its new CEO,
Kenneth Burdick. The insurer on Dec. 15, 2014, named
then-President and Chief Operating Officer Burdick its
new CEO, succeeding Chairman and Interim CEO David
Gallitano (HPW 2/23/15, p. 7).
Contact Fidel at [email protected], Zaharuk at
[email protected] and Giacobbe at ralph.
[email protected]. G
3R’s Underfunding Triggers Unease
continued from p. 1
Insurers do not have to make payments if their
risk-corridor ratio (i.e., costs as a share of revenues) is
between 97% and 100%, and no payments will be made
to insurers if their ratio is between 100% and 103%. But
if the risk-corridor ratio falls between 92% and 97%, the
health plan will pay into the corridor 50% of the excess.
If the ratio is below 92%, the plan will pay about 80% of
the excess into the corridor. These amounts will then be
paid out in similar proportion to plans between 103%
and 107% and to those at above 107%. CMS is likely to
announce these risk-corridor payments in late June.
Banerjee says larger insurers will be able to take any
lost receivables under the risk-corridor program (see
5
table, below) in stride, but smaller players with a larger
proportion of their business tied to ACA exchanges will
experience a tougher hit. And for all insurers, the fact
CMS may be unable to fulfill the promise of the risk-mitigation programs is a wake-up call. “The reinsurance and
risk-corridor programs are temporary [expiring at the
end of 2016], and after they are gone eventually rational
pricing will have to come back to the market,” he says.
“With the programs, however, you can afford to be a little
aggressive in your pricing to pick up members and grow
scale, but once these programs are gone, you probably
have to price more conservatively than now.”
Christopher Condeluci, a principal at CC Law &
Policy, tells HPW that 2016 premium increases are in
store because of this rethinking by insurers on their
individual-market pricing due to the uncertainties of 3R
payments. “I don’t want to be a sky is falling type of person, but more new entrants may exit because they cannot
cope, unlike the big guys. And separately, you are going
to have a premium spike by those new entrants that are
Insurers With the Highest Risk-Corridor
Receivables in 2014
Insurer
Net ACA
ACA corridor
risk-corridor receivables as
State of receivables % of reported
domicile
(mil. $)
capital
Health Care Service Corp.
IL
115
1
Select Health Inc
UT
105
24
Health Net, Inc.
National
Insurer
87
5
Moda Health Plan
OR
82
68
Kentucky Health
Cooperative Inc.
KY
76
117
PreferredOne Insurance
Co.
MN
72
149
Blue Cross and Blue
Shield of North Carolina
NC
61
3
Humana Inc.
National
Insurer
51
1
Health Republic Insurance
of New York Corp.
NY
58
54
Common Ground
Healthcare Cooperative
WI
25
69
Geisinger Insurance Group
PA
19
9
Neighborhood Health Plan,
MA
Inc.
18
14
Independence Health
Group Inc.
PA
16
1
Oscar Insurance Co.
NY
15
57
Rocky Mountain Health
Group
CO
13
18
SOURCE: Standard & Poor’s Ratings Services, “The Unfunded ACA
Risk Corridor May Make The U.S. Insurance Market Less Stable, Not
More.” http://www.globalcreditportal.com. NAIC annual statutory filings
and SEC 10K filings.
Copyright © 2015 by Atlantic Information Services, Inc. All rights reserved.
Please see the box on page 2 for permitted and prohibited uses of Health Plan Week content.
6 Health Plan Week
May 11, 2015
still able to see if they can weather the storm, and the big
guys will still charge higher premiums,” he says.
This interplay between insurer pricing strategies in
the new public exchanges and expectations for riskmitigation payments is a factor in all markets. But Humana Inc.’s experience in the Georgia individual market,
where the carrier has admitted to pricing problems, is to
brokers that operate in the state a prime example of this
phenomenon.
ACA exchanges were virgin territory for insurers
when they opened for business about a year and a half
ago. And in some cases, like Humana in Georgia, and
in a much more drastic way for smaller insurers like the
failed CoOportunity Health, Inc. in Iowa and Nebraska
(HPW 1/12/15, p. 1), the purpose of the safety net offered
by the 3Rs has become especially important because of
mistakes in setting premiums for individual policies.
Executives of Humana, which is best known for its
major presence in the Medicare market, spoke on April
29 during a first-quarter 2015 earnings conference call
about how Georgia’s individual market has hurt the bottom line of its Humana One individual plan offering.
Humana CEO Bruce Broussard, on the earnings call,
told investors that even as Humana One membership
has grown nationally, and continues to be a break-even
business, the insurer projects an increased reliance on the
3Rs. Humana Senior Vice President and Chief Financial
Officer Brian Kane said the ACA exchange business is
akin to what a startup deals with, and that has meant
some successes and some stumbles.
As a result, he said, “We have increased our net 2015
3R guidance range to $450 million to $550 million with
reinsurance accounting for approximately 75% and risk
adjustment and risk corridors accounting for approximately 25% of the total. As we have discussed in the past,
there is an interplay between risk adjustment and risk
corridors in that if we don’t get the risk adjustment exactly right, a meaningful part of the balance, either positive
or negative, is captured through the risk corridors.”
Kane said that in Georgia the insurer’s limited claims
experience and an unexpected “less healthy state population” resulted in Humana accruing both a risk-adjust-
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ment and risk-corridor receivable. But this trial and error
for the start of ACA exchanges is exactly the point of the
premium stabilization programs, “namely early-year
protection in this circumstance,” he added.
Brokers Detail Humana Pricing Strategies
Early protection or not, Rick Bailey, president of
insurance brokers Rick Bailey & Company, Inc., based
in Woodstock, Ga., tells HPW it seems Humana simply
overplayed a low pricing move it undertook for open
enrollment for 2014. “They came out with some very
aggressive pricing last year for their first exchange open
enrollment. And they were killing it. They were so much
lower than everybody,” he says. “For this year, we kind
of expected a price correction from them and someone
else to come in and take them on, but it really didn’t
happen. Humana’s pricing is still underneath everybody
in metro Atlanta again for a second year. I was kind of
shocked on how they could do that. My guess is maybe
they have been aggressive in pricing in thinking the
money from government for the first three years would
help offset that.”
Concurring with Bailey is Russ Childers, an insurance agent based in Americus, Ga., and past president of
the Georgia Association of Health Underwriters. He tells
HPW that Humana priced “real low in the market” for
the first year of exchanges, offering plans in major metro
areas centered in north Georgia (Atlanta), with exceptions made for Savannah and Macon. “They were significantly lower than anyone else for 2014, probably 10% to
15% under Blue Cross [Anthem, Inc.’s Blue Cross Blue
Shield of Georgia], the primary competition. Their idea
was to secure market share,” he says.
For Childers, this extremely low pricing strategy
struck him as a “little strange,” given the inevitable in the
health plan world, which is that enrollees likely will be
filing plenty of claims at some point. Now, from what he
saw for 2015, Humana did adjust its pricing, raising premiums on the order of 10% on average. But other carriers
adjusted as well, like the Blues plan, which did the opposite and reduced premiums. “And United [UnitedHealth
Group unit UnitedHealthcare] entered at about the same
price point as Blue Cross,” Childers adds.
He says that he thinks the way Humana started off
in 2014, with its aggressive approach, made other large
carriers nervous and resulted in the twitches by Aetna
Inc. and UnitedHealth that saw both carriers file to enter
the Georgia exchange but then withdraw.
Humana had no comment on the Georgia market.
Contact Condeluci at [email protected],
Banerjee at [email protected],
Childers at [email protected] and Bailey at rick@
rickbaileycompany.com. G
Web addresses cited in this issue are live links in the PDF version, which is accessible at
HPW’s subscriber-only page at http://aishealth.com/newsletters/healthplanweek.
May 11, 2015
Health Plan Week
7
HEALTH PLAN BRIEFS
u Aetna Inc. said starting on May 15 it will stop
covering the routine use of the laparoscopic power
morcellator in removal of uterine fibroids, reacting to FDA concerns that the medical device can
spread hidden cancer in women. The insurer will
require that doctors obtain prior approval for any
medical procedure that uses a morcellator. “Myomectomy and hysterectomy procedures that use a power
morcellator will not be covered in most circumstances because the safety and efficacy of this approach
has not been demonstrated,” Aetna said. Doctors
can ask for exceptions for pre-menopausal women
who want to remain fertile and have no other clinical
option or in cases where a woman’s life is in danger
without the procedure. The Aetna decision is one of a
string taken by insurers. For instance, UnitedHealth
Group last month imposed tighter restrictions for its
coverage of hysterectomies (HPW 3/2/15, p. 7). The
trade group America’s Health Insurance Plans on
April 14 said the federal government and medical societies need to do more to help guide health plans on
how to handle the morcellator issue (HPW 4/27/15, p.
8). Visit http://tinyurl.com/m2tsac7.
u Arlington, Va.-based Evolent Health, Inc. on May
6 registered for an initial public offering (IPO) with
the Securities and Exchange Commission to raise
$100 million and operate as a public company.
The population and health management company
was founded in 2011 by UPMC (the University of
Pittsburgh Medical Center) and The Advisory Board
Company (HPW 12/24/12, p. 1). Visit http://tinyurl.
com/kgcbchm.
u New York City-based Assurant, Inc. on May 6
released its first-quarter 2015 earnings, detailing
“worse than expected” results from its Milwaukeebased Assurant Health unit that just one week
before on April 28 it said it was looking to sell,
along with its employee benefits subsidiary (HPW
5/4/15, p. 4). The parent company, which is strongest in the home and life insurance segments, had
said that the long-term prospects for the insurance
unit were not sufficient to continue operations. During the conference call after earnings were released,
Christopher Pagano, Assurant chief financial officer,
said the net operating loss for Assurant Health was
$84 million for the first quarter of 2015. “Approximately half was due to a reduction in our estimated
recoveries under the ACA [Affordable Care Act]
risk-mitigation programs for 2014 policies,” he said.
Assurant said ACA policies now make up 60% of
the health insurer’s premiums compared to 18% last
year. Pagano said absent a sale of Assurant Health,
“we will begin the process to exit the market and will
not participate in the 2016 ACA open enrollment.”
On the same call, Assurant CEO Alan Colberg said
the sale of the health and employee benefits units
would be separate and not a package deal. Visit
http://tinyurl.com/ml3bvtp.
u Kansas Gov. Sam Brownback (R) on May 4
said he would file an amicus brief in support of
the lawsuit filed by Florida Gov. Rick Scott (R) on
April 28 against the Obama administration over
its attempt to convince Florida to expand Medicaid by refusing to fund its Low-Income Pool (HPW
5/4/15, p. 8). “CMS has indicated that Low Income
Pool funding to the states will be cut off unless they
expand Medicaid. The Supreme Court ruled in 2012
that the federal government is prohibited from coercing the states to expand Medicaid,” Brownback
said. “Kansas intends to join Texas through an amicus
brief supporting Florida’s effort to stop the Obama
administration from cutting off health care dollars for
the Low Income Pool in an effort to force Obamacare
upon the states.” Visit http://tinyurl.com/othr6jk.
u U.S. District Judge William Yohn Jr. in Philadelphia ruled that a surgical clinic’s counterclaims for
payment against Aetna Inc. should stand, rejecting the insurer’s arguments that the outpatient
center can’t enforce a network reimbursement
agreement. In Aetna Life Insurance Co. v. Huntingdon Valley Surgery Center et al., case number 2:13cv-03101, in the U.S. District Court for the Eastern
District of Pennsylvania, Yohn on April 30 mostly
sided with the surgical center. “Put simply, in the
counterclaims, Huntingdon Valley contends that
Aetna has consistently underpaid it for its services to
Aetna members and also interfered with its prospective contractual relations with Aetna members and
with doctors in Aetna’s network. Aetna has moved
to dismiss all eight counterclaims on a variety of
grounds….I will dismiss Huntingdon Valley’s claim
for ERISA benefits but otherwise deny the motion,” he said. Huntingdon filed its counterclaims
in response to a 2013 lawsuit from Aetna alleging
improper referrals stemming from kickbacks. In
granting Aetna a win on the ERISA part of its argu-
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8 Health Plan Week
May 11, 2015
HEALTH PLAN BRIEFS (continued)
ment, Yohn ruled that Huntingdon Valley wrongly
failed to use all of its possible administrative remedies before bringing its claim. Visit http://tinyurl.
com/797xzrm.
u Health insurance premiums on the Small Business Health Options Program (SHOP) exchanges
were 7% less on average than premiums offered
outside the exchanges, according to a study in the
May issue of Health Affairs. The journal cited the low
premiums and high provider participation rates as
indicators of continued success in the program, but
said complicated enrollment procedures and the lack
of broker participation could be causes for concern.
Visit http://tinyurl.com/k9auwqf.
u CMS on May 4 released an interim final rule (42
CFR Part 423) requiring Medicare Part D insurers
to cover prescriptions written by all state-licensed
prescribers, even if they are not enrolled in Medicare. A previous rule set to take effect in December
specifically required insurers and pharmacy benefit
managers to reject prescriptions from prescribers
not enrolled in Medicare. The new interim rule includes state-authorized prescribers unable to enroll
in Medicare, who essentially fall into a loophole of
the program, and also provides provisional coverage
and individualized written notices to members who
fulfill a prescription from non-Medicare physicians.
Visit http://tinyurl.com/noe3l9g.
u Approximately 75% of emergency-room doctors
said ER visits have increased since January 2014,
when major provisions of the Affordable Care Act
took effect, according to The Wall Street Journal. That
number is up from a survey in 2013, when less than
half of ER doctors said visits had grown. The new
study, conducted by the American College of Emergency Physicians, said new Medicaid patients are
failing to find doctors and instead seek help through
the ER. Twenty-eight percent of respondents said
visits had increased greatly, while 47% said they had
risen only slightly. Visit http://tinyurl.com/op3kzso.
u Medicaid and the Children’s Health Insurance
Plan (CHIP) added more than 560,000 lives to
their rolls in February, CMS said on May 1. The
Affordable Care Act extended Medicaid or CHIP
coverage to 11.7 million additional individuals total
since enrollment efforts for the federal marketplace
launched in October 2013. The total for Medicaid and
CHIP enrollment across the U.S. is more than 70 million. Expansion states experienced a 27% enrollment
bump compared with the period from July to September 2013, whereas enrollment in non-expansion
states grew by 8%. Visit http://tinyurl.com/lcjgxy9.
u The National Association of Insurance Commissioners has adopted new guidelines regarding
cybersecurity and patient privacy. The document
released last month details eight principles governing insurance commissioners’ responsibilities in the
defense of protected health information, including
conducting risk reviews, establishing incident response procedures, verifying third-party security
controls and collaborating with insurers to develop
regulations. Visit http://tinyurl.com/oaa8w9h.
u Medicare star quality ratings have little impact
on seniors’ choices in Blue Cross Blue Shield
plans, according to data released by HealthPocket
Inc. The April study found seniors paid little attention to star ratings, instead choosing plans based on
brand familiarity, premiums, out-of-pocket costs and
provider access. The Blues plans’ branding power
and wide variation in star ratings led HealthPocket
to suggest seniors should be more aware of quality
when selecting coverage. Visit http://tinyurl.com/
prgseww.
u PEOPLE ON THE MOVE: Aetna Inc. named Cain
Hayes president of Mid-America operations. He is
based in Columbus, Ohio. Previously, Hayes was
president of Aetna’s government-sector business….
Minnesota’s state-based public exchange, MNsure,
said CEO Scott Leitz is resigning to become the
chief transformation officer with the Health Care
Cost Institute, a Washington, D.C.-based think tank.
Allison O’Toole, the exchange’s deputy director of
external affairs, will take over as MNsure’s interim
head starting on May 22....Centene Corp. named
Ken Yamaguchi, M.D., executive vice president and
chief medical officer. Yamaguchi is the founder of
the Shoulder and Elbow Service at Washington University in St. Louis. The insurer also appointed Mary
Mason, M.D., senior vice president and chief medical officer of specialty companies. For the past nine
years Mason has served as Centene’s chief medical
officer….Gold Coast Health Plan in Camarillo, Calif.,
named Dale Villani CEO. Before Gold Coast, Villani
was chief operating officer for Arizona Priority Care,
a physician network in the Phoenix area.
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