Healthy Alliance is one of the few companies that has adapted the medical independent practice association model to meet social needs.
As payers and other stakeholders attempt to address the social determinants of health (SDOH), one question, with many answers, remains: how?
Beyond identifying and prioritizing need, allocating investments, and demonstrating ROI, there is the challenge of creating an entirely new infrastructure of contracting, "claims," and reimbursement that involves community-based organizations (CBOs).
In New York, Healthy Alliance is leading these innovations. It has created one of the first social independent practice associations (social IPA) in the nation, taking the traditional IPA model—i.e., allowing independent providers to share resources and gain collective contracting power with payers—and applying it to CBOs instead of medical providers.
HealthLeaders interviewed Healthy Alliance leadership to discuss how social IPAs support different stakeholders, how they contract with payers, the steps required to become a social IPA, and why Healthy Alliance believes their model is better for payers.
Creating a social IPA
"We created the entity, were awarded the IPA designation in late 2018 [from New York state government agencies], and built it from there," says Erica Coletti, CEO of Healthy Alliance.
"We were one of the first," she notes, adding: "Other IPAs that have emerged since are often focused on subpopulations such as individuals with mental health or intellectual and developmental disabilities. We want to work with those IPAs and more broadly, help everyone with essential needs."
Coletti states that the organization's "referral network and IPA convene and collaborate with community partners—from regional hospitals to local food pantries—to address social needs before they evolve into serious and costly medical problems."
The social IPA is one of three affiliates of Healthy Alliance, which connects the underserved to a growing network of organizations—big and small—that provide services that are essential for a healthy life. Healthy Alliance partners with more than 580 organizations across 22 New York counties. The goal is to ensure that every New Yorker has consistent access to the resources they need to enjoy the same opportunity to be healthy.
Coletti adds that "the mission/business model is the same throughout—laying the foundation for Healthy Alliance to improve health and empower the underserved."
Contracting with payers
Independently or as a hospital subcontractor, Healthy Alliance can deliver its social service provider network to New York payers in a streamlined way.
"The IPA was formed so that we can enter contracts with Managed Care Organizations [MCOs] on behalf of our network of social care providers," said Coletti.
Contracting is just the starting point.
Michele Kelly, the organization's CFO/CAO, notes: "We're able to provide backbone infrastructure and analysis to work with payers, CBOs, and other entities on individual costs and services—to evolve a new model that starts to project volume."
Coletti adds that, for SDOH: "Claims don't exist in social services today and we need to work with CBOs to determine how to charge for the services, like establishing a case rate, fee schedule, and how they can cover their costs."
"Health plans have enough to do"
"Health plans are already forming and starting to contract with social care provider networks," says Kristen Scholl, VP of strategic partnerships for Healthy Alliance.
She notes that this is required for the Medicaid value-based payment (VBP) program in New York and that national players like Kaiser Permanente and Aetna, a CVS Health company, are creating their own closed-loop referral networks. Scholl believes, however, that social IPAs convened on behalf of payers, CBOs, providers, and other stakeholders is the better way.
"Health plans have enough to do," adds Scholl. "They're trying to meet so many state and federal regulatory requirements, Medicare Star Ratings, Medicaid quality NCQA/HEDIS—so many requirements and standards"
"You want your membership to be healthy in part to watch your bottom line," says Scholl. "It involves reducing unnecessary hospitalizations and managing total cost of care to improve the health of the people you're covering with downstream benefits."
A better model
Healthy Alliance believes its model allows health plans to move beyond a philanthropic approach to SDOH to one that unifies and streamlines.
It is for these reasons that Healthy Alliance's social IPA model is intentionally payer and population agnostic. Scholl believes this is the direction payers should go instead of creating their own social provider networks.
"MCOs are in an exciting position to develop social care strategy that leverages referrals, data, and resources in a meaningful way," adds Scholl. "This makes a difference for CBOs, who often get stuck in the middle between payers and members."
Kelly adds: "Health plans don't have the resources to provide CBO infrastructure either. They're not set up for that. Healthy Alliance provides monthly, high-touch support."
Kelly also states: "CBOs are being asked to move into space they've never been involved in. Healthy Alliance is helping build the knowledge and infrastructure related to billing, data, and analysis. Why have them take the time to build this on their own?"
Government approval
Becoming a social IPA requires state government approval. In New York, it is the same process by which medical IPAs are authorized: first, by the Department of Health; next, the Department of Financial Services; and finally, the Department of Education. For example, the Department of Health requires that:
The IPA delivers services following the contracts and compensation agreements it has with MCOs.
The IPA can be a business, limited liability (LLC), or non-profit corporation that must identify its leadership, members, and their affiliations (e.g., health plans, healthcare companies).
The states in which the principals (if the IPA is a corporation or LLC) may be "licensed or approved to operate an HMO, IPA, PPO, or to provide health services or insurance."
Unique and shared benefits
Healthy Alliance's stakeholders span MCOs, clinical providers and health systems, and community organizations—the latter ranging from CBOs to schools and government agencies. Scholl notes that Healthy Alliance's core advantages are common to multiple stakeholders.
"In some ways, the social IPA doesn't need to be framed differently for hospitals or payers since the purpose is to contract with HMOs," she says, adding: "Hospitals will have VBP agreements with MCOs that have SDOH components so the IPA can provide social care services as a subcontractor to the hospital VBP contract."
Benefits common to payers, providers, and CBOs include:
Mutual accountability and better alignment
A platform to identify need, track referrals, and outcomes
Improved outcomes and better care delivered at a lower cost
More sustainable, VBP SDOH investments with demonstrable ROI
Streamlined approach that frees each stakeholder to focus on what they do best
Kelly adds: "The goal is to bring up the whole network together."
The ONC has provided a primer summarizing this scope.
ONC speakers noted the inclusion of SDOH in USCDI
The ONC's United States Core Data for Interoperability (USCDI) included new SDOH data classes and elements as part of a version two, July 2021 release. Per the release document, the USCDI "is a standardized set of health data classes and constituent data elements for national, interoperable health information exchange."
At the forum, ONC speakers highlighted the importance of the addition of SDOH assessments, problems, goals, and interventions in addition to data on race, ethnicity, and language, sexual orientation, and gender identify.
Speakers highlighted the medical-social fragmentation challenge
During the webinar, Paul Sorenson, director of the St. Louis Regional Data Alliance, noted that SDOH infrastructure and interoperability do not involve "a simple pairing of sectors." Examples include disparate funding sources, intervention approaches, system and tech integration maturity, and even how data is considered—as part of "robust communities of practice in healthcare" versus data as a "burden/afterthought" in the social sector.
What interoperability and infrastructure questions should be asked
The ONC highlighted six areas that organizations should address before SDOH-related software decisions are made:
Assessments to understand existing landscape
Hardware and software that can be funded, scaled, and targeted appropriately
Health IT standards applicable to community need
Interoperability as a key consideration
Infrastructure, data standard, and capacity needs
Security and privacy requirements
Field insights from Missouri, Michigan, and the Gravity Project
The ONC webinar featured three initiatives with a common message: the importance of both customizing and generalizing SDOH interoperability. Efforts must balance individualization (programs, populations, priorities) with silo-proofing—and ensure that interoperability applies not only to data and technology but collaborator thinking.
To his previous comments, Paul Sorenson added that by using open-data interoperability standards, the state's aging services can be a launching off pointlinking affiliated state agencies, home and community-based service providers, referral platforms, and hospital associations.
Senior director of Health and Basic Needs Sara Gold noted the lessons learned from "sitting in the middle of multiple, competing challenges … Where do we start? And moving from paralysis and endless questions to action."
Bob Kreha, a technical consult for the project, added that "in interoperability workflow, you have to anticipate that something is going to get stuck." Kreha emphasized the "never-ending permutations" that can occur with implementation and that "looking very hard at centering partner voices as well as resources and funding" is essential.
Gravity Project – Continues to advance "consensus-driven data standards to support the collection, use, and exchange" of SDOH data. Gravity's contributions have appeared in USCDI version two and CMS' fiscal year 2023 rules relating to inpatient prospective payment, Medicare Advantage, and Part D drug plans.
Aaron Seib, who serves on Gravity's Executive and Governance and Finance Committees, notes: "It's really about implementation at scale for the best outcomes … The biggest message is getting engaged with social services partners."
Including deadlines and addressing the ostrich effect are among the changes that improve outcomes.
HealthLeaders recently reported on BCBS-MA's Nudge Unit, a first-of-its kind initiative that "uses behavioral insights to present information in new ways." This information, deployed in multiple customer communications, "can lead to improved decision-making and better health outcomes."
In addition, here are specific Nudge Unit examples—provided by BCBS-MA—that illustrate the small wording changes. The plan reports that these updates increased at-home colorectal cancer screening by 3%, with 500 more test kits returned.
The plan's Nudge Unit initiative involved the mailing of a revised letter and fecal immunochemical test (FIT) to complete the home-based screening. The revisions incorporated behavioral science research on the importance of deadlines and the unintended impact of communicating health risks.
Revision 1: Deadline language
"Procrastination impacts us all," says Rebecca Oran, director of the Nudge Unit and Behavioral Insights at BCBS-MA. "Deadlines help to solidify next steps and avoid planning fallacy, or our tendency to underestimate how long it will take to complete a task. The most effective deadlines are often far enough away that individual has time to act, but not so far away in the future that it could lead to procrastination."
Oran cites research (example one and example two) that has found that individuals are more likely to complete an action if there are deadlines included. As a result, BCBS-MA updated the following language in its FIT test mailing:
Usual letter: No deadline language
Nudge letter: Added "Please return the included kit in the next 3 weeks."
Revision 2: The ostrich effect
Another BCBA-MA letter revision tapped into avoidance behavior.
"People often avoid taking actions that could result in unpleasant or negative news, such as positive test results," says Oran.
"Medical communications often include information about risk as a way to encourage patients to consider the consequences of not taking action and encourage them to do. However, that information sometimes has the opposite effect—patients feel more apprehensive about completing preventative screenings and in turn, avoid the screening all together (or "ostrich").
Oran adds: "Although it may seem counterintuitive, the ostrich effect has been empirically documented across various contexts from goal setting to investing."
The following was an additional change to the BCBS-MA FIT test mailing:
Usual letter: "Colorectal cancer is the second-leading cause of cancer deaths in the United States. However, it's also one of the most preventable and, when diagnosed early, survival rates can be as high as 90%."
Nudge letter: Removed this language.
Beyond letters
Getting customers to open a letter from their health plan, much less read it, is an ongoing payer challenge. For other Nudge Unit interventions, BCBS-MA has varied the outer envelope to get better results.
BCBS-MA's Nudge Unit is updating other communication vehicles as well.
"More broadly," says Oran, "the Nudge Unit has applied behavioral science across a variety of communication channels (emails, letters and faxes) as well as through digital channels (such as our member portal and public-facing website)."
These are among the Nudge Unit wins that BCBS-MA aims "to refine and scale," per Oran.
The partnership with Happify Health reflects stakeholders' continued expansion of telehealth applications while embedding digital therapeutics (DTx) into more treatment approaches.
Anthem has partnered with Happify Health to offer digital-first support for expectant mothers. Availability for the service, Happify Health Pregnancy Sequence, is planned for eligible members in select affiliated plans and markets before the end of 2022.
The following are highlights from the planned services from Anthem, which will re-brand as Elevance Health on June 28.
The new platform will reflect a Sequences approach.
A press release for the partnership notes that the Happify Health platform "is anchored in Sequences … digital experiences configured to support specific medical conditions [that] … weave together, in one unified platform." These experiences include online support from other women, coaching, and resources. Services and recommendations are localized and personalized for users.
Expert access augments peer support.
In addition to peers, Happify Health Pregnancy Sequence will be able to connect online with mental health, OB/GYN, nutrition, and other experts.
DTx is embedded.
The platform will include digital therapeutics to support non-prescription, mental health needs during pregnancy. DTx is a unique component of Happify Health's platform, which the company states "integrates AI with empathy, making healing more personal, precise, and connected for the entire care journey" as part of a "full spectrum of clinical-grade care solutions … for pharma, health plans, enterprises, and individuals."
An open-design platform.
Happify Health notes that its platform was created to "integrate with existing systems and point solutions" for a better user experience that also aids health plan technology strategy.
An Anthem leader's personal connection.
"As a mother to three, I felt what all moms feel — that pregnancy is a roller coaster ride, from preconception to postpartum care," said Bryony Winn, president of Health Solutions at Anthem. "Our partnership with Happify is about improving every aspect of the pregnancy experience — whether it pertains to physical or behavioral health — and meeting all the various needs of moms."
Part of Anthem's whole health approach to women.
The Happify Health Pregnancy is the planned first deployment for an Anthem strategy designed to span women's physical and mental health — from motherhood to menopause, and the personal and to the professional.
Ofer Leidner, president of Happify Health, states: "We are thrilled to partner with Anthem and continue to support women's health journeys and ultimately create better health outcomes."
A response to research on women and depression.
Anthem's decision to partner with Happify Health was rooted in women's health research, including data from the National Center for Health Statistics Data Brief that show women are more likely to suffer from depression (10.4%, compared to 5.5% of men) and the Centers for Disease Control and Prevention on the prevalence of postpartum depression (nearly 13% of women).
States now have through March 2025 to use American Rescue Plan dollars.
Home and community-based services (HCBS) allow Medicaid members in need of long-term services and support to receive care in their homes. Members who are older or have disabilities are the most impacted, with COVID-19 exacerbating not only these challenges but states' abilities to respond.
How states will use the funds
Specific program strains have included HCBS workforce shortages, pay and benefits for these workers, and infrastructure weakness. States can use the American Rescue Plan (ARP) funds to:
Deliver services to members who are currently on waitlists
Create more tailored service for all members
Provide added support for members with higher COVID-19 risks
Help members' families, who often provide HCBS care
In a press release, HHS and CMS report that this extended ability to use funds "marks the latest action by the Biden-Harris Administration to strengthen the health care workforce, help people receive care in the setting of their choice, and reduce unnecessary reliance on institutional care."
In the same release, HHS Secretary Xavier Becerra comments: "Everyone deserves the dignity to live in their own homes and communities, and the Biden-Harris Administration is committed to protecting that right … Thanks to extended funding from President Biden's American Rescue Plan, we are expanding home- and community-based services for millions of aging Americans and people with disabilities across the country. We are working hand-in-hand with states to ensure they have the time and support they need to strengthen their home care systems and workforce."
CMS administrator Chiquita Brooks-LaSure adds: "Thanks to the American Rescue Plan, these additional funds will help people with Medicaid to live and thrive in the setting of their choice … With this extension, we are addressing states' concerns, giving states the time and resources to strengthen connections to care at home and in communities."
Executive Cara McNulty outlines the multi-point strategy—partnering with Aetna and beyond—that is helping improve quality access, equity, and treatment outcomes.
A recent commercial for Coors reflects much about pandemic coping and culture, including the role that technology plays.
In the ad, a young woman's fingertip hovers over the "I quit" email she's crafted to her boss as she prepares to join The Great Resignation. She hesitates. Her friend fetches her a beer. Liquid courage in hand, she hits send. Relief and celebration ensue.
HealthLeaders discussed the ad with Cara McNulty, DPA, president, Behavioral Health & Mental Well-Being at CVS Health, as part of our interview on the growing role of technology in mental health and substance use disorder (SUD).
"The message in that commercial is that you need to take a drink before you can take a bold step," McNulty responds. "During the pandemic, for many, self-soothing has become a dangerous equation. People are relying on substances more. They're self-medicating and need help."
Sobering statistics and the role of technology
A CVS Health/Morning Consult survey published in May revealed just how much help Americans need. Some 59% are concerned about their mental health—a number that increases to 74% for people who identified as LGBTQIA+, black, or who are among the younger and older. These and other numbers are up since the last survey in April 2020.
"We've had mental health, alcohol, and substance abuse concerns long prior to pandemic, but they've been exacerbated," notes McNulty. "Everyone has been impacted in one way or another but some populations more profoundly."
Fortunately, the survey also found that more Americans feel comfortable seeking mental health support and using technology to do it. CVS—with and beyond its employees and the members of Aetna (a CVS Health company)—has deployed multiple solutions.
CVS's Aetna programs include:
WorkIt – Comprehensive, evidence-based virtual treatment program for SUD, including personalized therapy, coaching, MAT, digital learning, and peer support. Specialized adolescent programs are also available.
Eleanor Health – Holistic, in-person SUD treatment in which providers proactively coordinate care related to physical, mental, and social determinants of health (SDOH). Technology is used to identify risk and supports.
MAP – Peer support foryear-one SUD recovery to help prevent relapse and promote long-term health. MAP also supports family members.
About these solutions, McNulty says: "We evangelize working on our physical health—how we eat, sleep—but we need to work on mental health, treating the head and heart together need the same attention."
Shatterproof and ATLAS
CVS, Aetna, and other health plans are also investors in Shatterproof, a nonprofit founded and helmed by Gary Mendell, who lost his own son to addiction.
Those plans are Anthem, Blue Cross Blue Shield (BCBS) of North Carolina, Cigna, Horizon BCBS-NJ, and UnitedHealth Group. Additional investors include Beacon Health Options, GuideWell/New Directions Behavioral Health, and Magellan Health.
One of Shatterproof's specific solutions is ATLAS (Addiction Treatment Locator, Assessment, and Standards), "a free online tool that helps people find high-quality addiction treatment programs."
The Robert Wood Johnson Foundation is another investor in ATLAS, which launched in July 2020 in six states (Delaware, Louisiana, Massachusetts, New York, North Carolina, West Virginia) and expanded to 10 by June 2021 (Florida, New Jersey, Oklahoma, Pennsylvania). A winter 2022 rollout is planned in California, which Shatterproof states will make ATLAS available "to just over 40% of the US population."
McNulty stresses that Shatterproof and solutions help "democratize quality access—not just access but quality access."
She adds: "The goal is to validate quality providers in specific markets and with specific areas of expertise. It's not enough to get someone in the door; they need the best person.
Shatterproof's effectiveness will be studied by validating quality outcomes while assessing both patient feedback and the broader ecosystem.
Changing payer strategies
In addition to democratization, the approaches of CVS Health, Aetna, and other stakeholders reflect shifting mental health strategy. McNulty identified the role of stigma and the importance of right speech as examples, noting the unique role large companies can play to create change.
"How we talk about things matters," says McNulty. "Saying mental well-being is so much more empowering than behavioral health, which sounds more clinical. If we want people to be healthy, we have to address it, talk about it, and normalize it."
"It's okay to not be okay," says McNulty, adding: "Companies have the power and agility to talk about and normalize mental health. COVID aside, employers, companies, and communities were already realizing the importance of destigmatizing mental health and substance abuse—why upstream solutions are better than waiting until someone is in crisis."
McNulty cites CVS Health's own employee health efforts, including a mental well-being Colleague Resource Group that began less than year ago and now includes 3,000 active employees."
"Things are so different than they were three to five years ago," says McNulty. "It's also really important to also reach beyond health plan members and employees—to have partnerships to help deploy tech solutions virtually and in person while also investing in the larger community."
In addition to Shatterproof, CVS works with multiple organizations to reach underserved and underrepresented populations in the United States. CVS notes that this support "is focused on equitable, quality access to mental health care services and resources, particularly among the Black, Indigenous and People of Color (BIPOC) community. Its specific partners include:
American Foundation for Suicide Prevention – Includes a "first-of-its-kind education program … specifically for Black and African American communities" that will be piloted and evaluated.
Mental Health America – Aims to "increase the number of BIPOC individuals directly served by [MHA, including] … screenings and follow-up support for two million individuals.
National Association of Free and Charitable Clinics – Seeks to "increase the number of licensed mental health clinicians providing services to the underserved," including student training opportunities.
This latter investment is in addition to the role CVS Health's own clinic plays in providing accessible resources to support mental well-being.
"We have a large footprint and can offer screening and care navigation in our retail and MinuteClinics," says McNulty. "Some of these locations include licensed clinical social workers who can help identify resources."
She adds: "Health is contiguous. Our motto is to bring our heart to your health. Our goal through all of these initiatives is to meet you where you're at."
The story behind the story includes added insights from J.D. Power's Christopher Lis, a health plan success story, and the questions that linger.
The J.D. Power 2022 U.S. Commercial Member Health Plan Study identified call center support and digital tools as two key areas of customer dissatisfaction. Simultaneously, communication innovation is among the health plan approaches yielding results.
But key questions linked to customer experience, workforce, and other areas remain.
Results
There were four key findings from the J.D. Power responses, recorded January through April:
No change in customer satisfaction. Year-over-year results were flat, with no impact to the 17-point customer satisfaction increase over the past five years. Customer service, coverage, and network providers contributed to member dissatisfaction.
Respond and innovate for better results. Satisfaction was lower where customers rated their health plans as slow and conventional. Only 22% of members consider their health plans innovative, a number J.D. Power notes "has not changed in the past three years."
Call centers must do better. As part of an overall five-point decline, health plan member satisfaction hinged on customer service representative (CSR) engagement, knowledge, and response speed.
Traditional engagement is not enough. Health plan customers are dissatisfied with health plan text messaging (-14 points) as well as websites and mobile apps (both -6 points).
J.D. Power reports these takeaways from the responses of 36,366 members of 147 U.S. health plans and based on, but not limited to, six categories: billing and payment, cost, coverage and benefits, customer service, information and communication, and provider choice.
Health plan standouts
Amidst these results, a small group of health plans rated highly in their markets:
Among these plans, HealthLeaders highlights BCBS of Massachusetts (BCBS-MA) and its behavioral-science-driven customer communications.
Success story: The BCBS-MA Nudge Unit
Both anecdotal and empirical evidence support that small wins matter.
The importance of nudges toward better outcomes is well documented. Nobel prize winner Richard Thaler, and co-author Cass Sunstein define nudge as "any aspect of the choice architecture that alters people's behavior in a predictable way without forbidding any options or significantly changing their economic incentives."
Health Affairsreports that BCBS-MA is one of the first health plans to apply this approach, establishing a Nudge Unit that, per the plan's recent press release, "uses behavioral insights to present information in new ways that can lead to improved decision making and better health outcomes."
Rebecca Oran, director of the Nudge Unit and Behavioral Insights at BCBS-MA, states: "Behavioral science techniques, such as framing or modifying the context in which choices are presented (choice architecture) to highlight the most critical information or make it easier to identify the possible options, can be particularly useful for helping consumers make decisions."
Hired to expand the plan's behavioral insight capabilities by working with internal teams and academic institutions, Oran adds: "To date, our Nudge Unit has had some initial wins that we aim to refine and scale."
Those wins include:
A revised member letter that increased at-home colorectal cancer screening via test kits by 3%, with 500 more kits returned.
A revised provider letter that increased PCP statin prescriptions by nearly 14% for patients with diabetes.
An update to the MyBlue app led more than 300,000 members to report the race and ethnicity data that CMS will increasingly require for health equity initiatives.
These are among the 53 interventions that BCBS-MA reports the Nudge Unit has implemented.
It is a balancing act. Oran notes that "like many health plans, BCBS-MA has long used industry standard tools (e.g., prior authorization, education, economic incentives) to influence member and provider decision making."
She adds: "Behavioral insights … can complement or even substitute for some of these traditional approaches without restricting freedom of choice or creating member or provider abrasion."
Meeting the needs of a unique customer
The J.D. Power results present "a complex set of challenges and opportunities for health plans, which have been struggling to win member trust and loyalty."
Trust and loyalty are difficult to earn in our most intimate, daily relationships. Payer challenges are even greater, amplified by the fact that the healthcare and health plan customer are unlike any other.
"Healthcare decisions can be complicated," says BCBS-MA's Oran. "Many patients can make suboptimal decisions (i.e., decisions that don't align with their values and preferences) when they receive an overwhelming amount of information—especially when less-relevant information makes it hard to find the most critical information about a decision."
Christopher Lis, PhD, J.D. Power's managing director of global healthcare intelligence, notes the importance of trust. "The good news is, there has been a lift in satisfaction related to cost, communication, billing and payment so some areas moving in right direction."
Questions raised
The J.D. Power results suggest additional health plan challenges:
Do customers know what kind of experience they want to have? Members want their questions answered quickly. But if fast answers lack clarity and/or accuracy and require additional customer service calls, what is the value of speed?
How can front-line staff be supported? CSR salaries are among the lowest on health plan (and any industry) teams. What can payers do to better compensate them for providing critical, first-line information?
Do customers assess digital innovation fairly? Humans use texting, websites, and apps every day. What then would customers prefer?
To this last question, Lis points out the importance of what different customers value: "Plans are all trying to be mindful of generational differences in customer communication. Maybe several decades ago, you could have more of a one-size-fits-all approach, but not now given rapid advances in technology and the number of new digital entrants."
Regarding the overall uniqueness of the healthcare consumer compared to other industries, Lis says: "Compared to other sectors of the economy, healthcare still has Information Age immaturity. There isn't full transparency on cost. There is growing but still not full transparency on quality and certainly not on outcomes and the ability to get good information."
He adds: "Despite this asymmetry of information, there has been significant improvement by plans and providers."
EBITDA and Medicaid growth, commercial loses, higher medical loss ratios (MLR), and consolidation and subsidy doubts marked the quarter.
Moody's Investor Service has reported first quarter (Q1) 2022 earnings for the seven publicly traded health insurers that are included in its ratings. The result was on overall stable outlook for 2022 based in part on lower projected COVID-19 costs, better insurer credit strength, and continued Medicare Advantage (MA) growth—despite inflationary threats and the war in Ukraine.
The status of these events, as well as the public health emergency, will determine much across commercial, Medicaid, and MA markets as the year progresses.
Growth: 3.7% average EBITDA
Moody's notes that while "enrollment growth was partly offset by increased medical costs, reflecting Omicron and increasing non-COVID utilization," EBITDA growth was actually higher (10.3%) when investment gains and market-based gains/losses are excluded.
Among the seven publicly traded plans that Moody's rates, EBIDTA ranged from losses by Aetna and Cigna (down 2.7% and 2%, respectively) to 8.6%-9.8% growth from most of the remaining insurers—Anthem, Centene, Humana, and Molina. UnitedHealthcare Group's EBITDA growth was at 3%.
Projections: Continued 2022 growth in the low double-digits, with the observation that "the growing diversification of the industry with the increasing investment in unregulated health services has boosted companies' credit strength, despite incrementally higher leverage."
Growth: Medicaid and Medicare Advantage enrollment up
On historical trend, economic downturns continue to benefit Medicaid enrollment. Membership was up 23% year-over-year (YOY). Also on trend, MA continues its enrollment growth with a YOY increase of 13.2%. Organic age-in factors were aided by increasingly intense competitive practices.
Projections: For Medicaid, 4 million disenrollments after redeterminations—approximately 10% of the population—would make the largest Medicaid plans, Centene, and Molina the most vulnerable. For MA, Moody's notes: "As competition heats up, our rated companies will have to be more focused on the trade-off between margin and growth."
Loss: Medicaid's gains are commercial's losses
The pandemic has helped redistribute enrollment to Medicaid from commercial rolls, which were down 3.4% Q1 2022 and 1% YOY.
Projections: Expect declines in Medicaid enrollment but the fate of extended marketplace subsidies will determine growth shifts to commercial markets.
Loss: MLR increase averaged 84.8%
Pandemic costs, including hospitalization spikes due to Omicron, continue to bear the blame, although these are trending down.
Projections: Moderate COVID-19 costs should be countered by utilization from deferred care. Related to the latter, however, Moody's notes that cost uptick fears "have yet to materialize in a significant way, although this remains a risk."
Uncertainty: Subsidy expirations would turn gains into losses
Moody's notes that marketplace enrollment reached a record 14.5 million, up 2.5 million from 2021.
Projections: "Without new legislation to extend these subsidies, we expect much of the enrollment gains to reverse."
Uncertainty: More M&A scrutiny
The blocking of UnitedHealthcare's acquisition of Change Healthcare could be the first of many Department of Justice actions that limit M&A in 2022.
Projections: Moody's notes consolidations pros and cons, its capacity to grow capabilities and reduce costs, but its negative impact on leverage.
Congress, purchasers, and industry analysts weighed in on the role pharmacy benefit managers play in prescription drug costs.
In the final days of May, the pharmacy benefit manager (PBM) market was in the wrong kind of spotlight. A new federal bill and calls for Federal Trade Commission (FTC) action revealed the story that's been hiding in plain sight: that an increasingly small number of PBMs control the market and are themselves controlled by large insurers.
The following quotes relate to new Congressional action taken, responses to that action, and one pharmaceutical industry analyst who notes how alternative strategies often remain hamstrung.
"It is critical for Congress to direct the Federal Trade Commission to go after these arbitrary, unfair and deceptive practices while also establishing more transparency and accountability." — Sen. Chuck Grassley (R-Iowa)
"PBMs are the middlemen in the prescription drug supply chain and it's time for Congress to give the FTC the ability to shine a brighter light" — Sen. Maria Cantwell (D-Wash.)
Employers are among the groups impacted by PBM practices. On the same day the bipartisan Grassley-Cantwell bill was announced, EmployersRx—or Employers' Prescription for Affordable Drugs—a coalition of the largest employers in the U.S. sent a letter to the FTC urging action.
"Today, many PBM contracts with employer purchasers prohibit the disclosure of data regarding gross and net prices, rebates, and other financial information." — EmployersRx
The EmployersRx letter — penned by leading member organizations such as the Purchaser Business Group on Health (PBGH) — adds that "PBM contracts also contain unnecessarily complex definitions of commonly used terms, including 'generic' and 'specialty' drugs, that are often different from how those terms are used in regulation."
In an exclusive quote to HealthLeaders, PBGH's Executive Director for Health Policy Bill Kramer added his group's insight on how vertical PBM market integration has led to "inside dealing."
"These companies also own their own drug wholesalers, specialty pharmacies, mail-order pharmacies, group purchasing organizations, co-pay accumulators, and—in some cases—physician practices … The FTC has a responsibility to follow the money from initial sale of drugs from drug makers to wholesalers all the way to the final sale of drugs to consumers." — Kramer
Other stakeholders request that multiple avenues beyond the FTC be taken to strengthen PBM oversight.
"There are plenty of PBM actions for policymakers and regulators to address in order to ease the havoc they have wreaked on patients and small business independent pharmacies." — B. Douglas Hoey, CEO, National Community Pharmacists Association
Hoey adds that controlling PBMs allows insurers to "set their competitors' prices, dictate their competitors' reimbursements, use competitors' data to steer patients to PBM-affiliated retail, specialty and mail-order pharmacies, and limit where and what consumers can buy."
"Large employers, health plans, and government payers have shown limited appetite for change and continue to rely on the largest companies for PBM services." — Adam J. Fein, CEO, Drug Channels Institute.
While noting that "smaller employers have grown more willing to embrace small players by carving out PBM services from their health plan," Fein concedes the abiding challenge that smaller PBMs are often still dependent on the larger managers to perform the full cycle of business operations.
Participants, supporters, and opponents weigh in on the role of Medicare Advantage subsidiaries as program design evolves.
Direct contracting (DC) is an interesting name for a CMS model that permits private health plan subsidiaries to be part of Medicare fee-for-service (FFS) care reimbursement.
DC normally refers to the disintermediating of payers. Common examples include employers who contract with centers of excellence, ACOs, health systems, and integrated delivery networks—leaving health plans or other entities to act as administrative service organizations.
This DC trend is growing in the private sector.
A January 2022 HealthLeaders story noted that 73% of employers intend to adopt these strategies in the next three years. An American Journal of Accountable Care analysis added that the rising importance of social determinants of health (SDOH) linked with alternative data is driving purchasers toward "high-performance solutions" that are more innovative and disruptive.
The trend is also growing in the public sector via CMS.
The agency, the largest national healthcare purchaser, is to some degree disintermediating itself: allowing Medicare Advantage (MA) affiliates to manage Medicare FFS lives through the Global and Professional Direct Contracting (GPDC) model. GPDC will be retooled and relaunched in January 2023 as ACO REACH but with at least some of its current players.
Now that the April ACO REACH program deadline has passed, HealthLeaders looks at a slew of participants—including tech-driven, health-plan affiliated direct contracting entities (DCEs)—that want to continue their GPDC involvement, and the industry voices for and against the direct contracting design that ACO REACH will continue.
Health-plan subsidiaries proliferate: Two perspectives
Health Affairsreports that 28 of the first 52 GPDC participants announced in January 2021 were "investor-, not provider-, controlled [DCEs], most with roots in MA. Six of these, owned by four different MA insurers, are approved to operate in 19 states, with potential access to over 20 million traditional Medicare beneficiaries, over 60 percent of the national total."
Some of these entities continued with the deferred January GPDC 2022 cohort including Clover Health Partners, a subsidiary of Medicare Advantage (MA) plan and physician support services company Clover Health, and ActiveHealth Management, a subsidiary first of Aetna and now its parent company, CVS Health.
Both Clover and Active intend to apply for ACO REACH, which has evolved to prioritize health equity, support underserved patients and providers, and strengthen provider governance.
In a recent HealthLeaders interview, Clover Health president Andrew Toy emphasized his commitment to serving both MA and Medicare FFS populations: "Serving all people is the right thing to do morally," Toy says.
The company's Clover Assistant, a "digital on-ramp for value-based care" as highlighted in a 2021 HealthLeaders interview with Toy, gives PCPs the tools for better, more personalized, data-driven care. Toy adds that Clover Assistant's scalability is one component of its DCE expansion into GPDC and now ACO REACH.
"We applaud and welcome CMMI's evolution of ACO REACH to focus on advancing health equity for America's most vulnerable by making value-based care accessible to more physicians."
Mohamed Diab—former president and CEO of ActiveHealth Management and now an ACO CEO for CVS Health—also believes that CMS and CMMI are taking the best path toward. Diab further supports that these approaches remain provider friendly and are designed to physician achieve VBC success, aided by technology.
"Physicians don't have these resources," notes Diab.
"I've been in healthcare more than 25 years. I'm a physician by training, and do not believe that FFS works for the beneficiary or the provider," he adds, noting that the most rewarding part of his work is helping both.
"Yes, this work involves population health and technology. But we're talking about someone's mother or grandfather," says Diab. "The most enjoyable part of my work is reviewing patient cases and seeing that we are making a difference in their lives. It makes waking up on Monday morning an enjoyable experience."
DCE proponent positions
The mission drive of Clover and Active are apparent, as are their tech capabilities and feelings about FFS: "Nobody has benefitted from a transactional, fragmented system," says Diab.
Francois de Brantes agrees. He is also a strong DCE proponent and is SVP of Signify Heath, which "activat[es] the home as a key part of the care continuum" through a healthcare platform that supports provider VBC. Like Clover, Signify's business applies to both Medicare managed care and FFS beneficiaries. De Brantes believes that providers want these models just as much as other stakeholders.
He notes that MA-affiliated DCEs have to operate differently under GPDC and ACO REACH, moving toward the VBC and population health models—back by tech and health equity—that he believes the new CMS models exemplify.
To help make this point, de Brantes cites a January 2022 Health Affairs article co-authored by MedPAC Commission chair Dr. Michael E. Chernew who argues that ACOs—including GPDC—promote efficiency and equity better than FFS without compromising quality.
Chernew and his co-author, Dr. J. Michael McWilliams, refute circulating criticisms by arguing that ACOs and GPDC:
Do not limit patient choice, noting that beneficiaries can still see any provider and without adverse effects
Remain provider-centric
Continue to promote VBC objectives
Maintain Medicare guardrails against bad actors and code gaming, the latter more strongly than MA or Medicare Shared Savings Program (MSSP) models
Do not represent an MA colonization of traditional Medicare
DCE opposition
Others disagree with these positions—namely Dr. Donald Berwick, President Emeritus and Senior Fellow of the Institute for Healthcare Improvement and a former acting head of CMS under the Obama Administration.
In part two of a September 2021 series, also in Health Affairs, Berwick and co-author Dr. Richard Gilfillan argue that direct contracting:
Does limit patient choice in a larger sense "as millions of traditional Medicare beneficiaries, who made a specific choice not to enroll in MA, will find themselves in an MA-like managed care environment"
Is not provider-centric, if more providers are pressured through perverse incentives to join ACOs with MA-like controls
Undermine VBC objectives by involving the MA firms that are "so expert at driving up costs"
DCEs will "bring their MA-based medical, claims payment and possibly other managed care administrative practices" to the program
Represents a privatization of traditional Medicare in just about every way
More success through more complexity?
In a statement that might strain credulity, Chernew and McWilliams write that while an intermediary between CMS and providers "may seem analogous to MA … it is better understood as allowing cash flows conducive to transmitting incentives to partnering providers." The authors cite this as further evidence that direct contracting reaffirms patient choice.
Berwick and Gilfillan call this relationship anything but direct or empowering to physicians. It is also difficult to understand how adding a layer of payment complexity will make direct contracting VBC models more successful than 40-plus that have failed to produce "statistically significant savings to Medicare and to taxpayers.
Something better, but what?
In part one of the Health Affairs series, Berwick and Gilfillan reserve their strongest DCE criticisms for the model's resemblance to Medicare Advantage—calling MA a "perverse business model" that is responsible for chronic overpayment, "risk-score gaming," and for producing a "money machine" controlled by small number of individual plans.
And while "the tyranny of fee-for-service," as de Brantes terms it, "needs dislocation," it remains to be seen whether DCE and ACO REACH will be the best path to get there.
