"We also encourage HHS to work with a broader set of stakeholders to understand which levers may have the biggest impact on health equity, especially when myriad health equity issues are … outside the control of QHPs," noted one rule respondent
HHS put health equity front and center in its annual Notice of Benefit and Payment Parameters (NBPP) rule for the marketplace. Two proposals would require plans to include healthcare disparities in their Quality Improvement Strategies (QIS) and become accredited in health equity. HealthLeaders examines these proposals—including HHS' associated request for equity data insights—and payer stakeholder response. Of note is a question that is not new to the rule and the responses it triggered: how will health equity be operationalized across healthcare's delivery and reimbursement systems?
Aligning equity and quality
If finalized, the disparities QIS inclusion would begin in 2023 and would be in addition to another ACA-required topic of each plan’s choosing: improving health outcomes, preventing hospital readmissions, improving safety and reducing medical errors, or promoting wellness and health. Per the NBPP, the QIS is intended to be a "continuous improvement process" that health plans use to define needs, set goals, and design incentives to help achieve. A CMS fact sheet notes that "[i]n PY2020, an estimated 60% of QHP issuer QIS submissions … did address health care disparities."
Health equity data, measures, and accreditation
Like all stakeholders, HHS is eager to develop a data-driven understanding of social determinants of health (SDOH) that improves clinical and non-clinical outcomes. In the NBPP, the agency requires plans to submit five new data variables while requesting input on broader SDOH data types, their value, collection barriers, and related incentives. Payer response to these five variables—ZIP code, race, ethnicity, and Individual Coverage Health Reimbursement Arrangement (HRA) and subsidy indicators—and how they would be used is discussed in this HealthLeaders article.
HHS desires balance between population-based and individualized SDOH programs and seeks to understand obstacles that impact payer equity accountability. A few of its questions from the rule include:
"What health conditions or outcome variables should CMS analyze to identify gaps in … health care services?
What are some of the ways that CMS could measure QHP issuers' progress toward advancing health equity?
Are there ways that CMS could incentivize QHP issuers to advance health equity outside of the QHP certification requirement, such as through other federal reporting requirements, including MLR reporting?"
Payer response
The payer community naturally supports health equity, with their NBPP responses ranging from "spirit of the law" support for NCQA Health Equity accreditation to noting state-based nuances that prohibit select SDOH data collection. The following summarizes notable quotes and/or recommendation from nine of the largest health plans or plan associations. Note: While Blues plan operator Health Care Services Corporation (HCSC) did submit a comment letter, it largely agreed with the Blue Cross Blue Shield Association (BSBSA) and commented only on risk provisions.
"Addressing challenges related to health equity … will require an enterprise-wide engagement for plans to take advantage of all policy and operational levers that they have at their disposal, across multiple lines of business. We expect to have additional information for CMS on these topics as the project continues to evolve."
One of AHIP's recommendations illustrates the complexity of the linkage between healthcare services, outcomes, and reimbursement:
"Social determinants interventions are not considered 'medical services' under medical loss ratio (MLR) calculations and thus are counted as administrative costs. Allowing issuers to treat SDOH interventions as medical services would allow issuers flexibility to address the social needs of enrollees to reduce the upstream causes of healthcare disparities, encourage investment in addressing SDOH, and promote the sustainability of these interventions."
The statistic that health outcomes are 20% clinical and 80% non-clinical has helped put SDOH on the map. But only by officially classifying its interventions as "medical" will health plans realize an MLR-based incentive to deliver.
To other payer community SDOH data recommendations, Anthem adds the United States Core Data for Interoperability (USCDI). The USCDI July 2021 update included the addition of SDOH to three of 19 data classes/elements:
Assessment and Plan of Treatment should include assessment of SDOH risk
Problems (documented condition, diagnoses, or event) should include SDOH conditions, including those identified via ZIP code
In addition to USCDI, BCBSA also recommends Gravity Project SDOH data collection and standardization as a "a multi-industry effort to reduce current barriers to integration of social risk data into clinical decision-making to improve health outcomes." AHIP had recommended the CDC’s Social Vulnerability Index (SVI).
Centene summarizes well the "common challenge for all insurers," namely the "lack of interoperable data infrastructure and inconsistent data standards, as well as low consumer response rates, [that] make it difficult to obtain and utilize the data necessary to readily identify how inequities are impacting our most vulnerable members."
While not supporting health equity certification, Cigna notes that it is currently pursuing NCQA Health Equity Accreditation for its California marketplace plans (offered on the nation's first state-based exchange).
CVS Health made the important point that health plans alone cannot achieve equity: "We also encourage HHS to work with a broader set of stakeholders to understand which levers may have the biggest impact on health equity, especially when myriad health equity issues are inherently tied to the provider workforce, the social safety net and other social issues, and are therefore outside the control of QHPs."
Kaiser indicated its "strong support" for including disparities as a required QIS element. Other plans recommended delayed implementation or argued that health equity could not be siloed from other quality dimensions. Kaiser further recommended that NCQA accreditation be optional and noted in marketplace listings to test its influence on consumer decisions.
UnitedHealthcare (UHC)
UHC stated that it would "welcome NCQA's new Health Equity Accreditation as a means to measure and demonstrate the impact of our programs." It specifically identified its SDOH data sources (Monthly Membership Report, Full Enrollment Data File, 834, and other supplemental files as well as provider data), but identified their limitations.
In general, payers are an informed community—helping to lead the way through their regulatory responses and initiatives like the Strategic Health Information Exchange Collaboration (SHIEC). The SHIEC is participating in the aforementioned Gravity Project from H7, which is also facilitating a Bulk FHIR interoperability standard that allows "push button" access to population health data that will "change what payers expect from providers."
Operationalizing health equity
Organizations like the Institute for Healthcare Improvement (IHI) predict more outcomes-based measurement, SDOH data stratification, and public reporting. Conversely, there is still the question of whether health equity should be a distinct dimension of health outcome categories or embedded within all. While the Institute of Medicine and some payers argue that equity cannot standalone, current IHI leadership has begun to suggest that health equity—in addition to "workforce well-being and safety"—are distinct parts of a new Quintuple Aim of healthcare.
Given these and other factors, expect extensive revisions to the NBPP rule before HHS finalizes it in May 2022. As a result of payer feedback, the agency is highly likely to delay requiring additional SDOH data collection or health equity accreditation.
"AI allows Highmark to detect and prevent suspicious activity more quickly, update insurance policies and guidelines, and stay ahead of new schemes and bad actors," says one plan executive.
For 2021, Highmark reported that its Financial Investigations and Provider Review (FIPR) saved $245 million in fraud, waste, and abuse (FWA) prevention. Highmark added this sum to its total FWA savings haul of almost $1 billion since 2017. And while artificial intelligence (AI) may have factored less in Highmark’s efforts in the beginning, it is now central—along with close and diverse partnerships within and outside of the payer’s organization.
The savings breakdown spanned multiple lines of business and included:
$152 million from employer-sponsored coverage
$49 million from BlueCard, which provides out-of-network access
$19 million from Medicare Advantage (MA)
$16 million from marketplace plans
$9 million from the Federal Employee Program
Highmark, a member of the Blue Cross Blue Shield Association, operates plans in Pennsylvania, West Virginia, and Delaware—which generated the bulk of the savings—as well as western and northeastern New York.
That the employer-based plans should generate the largest savings is not a surprise. Nor is FWA detection within an extended Blue Cross Blue Shield network. The question is how much of the savings can be attributed to the same providers contracted across programs, with the answer revealing the repeat offenders whose activity may be more intentional than accidental.
Another question is what coding and what does and does not constitute proper practice, particularly in the MA program. As MedPAC has reported: "Documenting additional diagnosis codes increases enrollees' risk scores, which both increases the monthly payment amount a plan receives and increases the rebate amount a plan uses to provide extra benefits to enrollees." Not surprisingly, MA risk scores are continually higher than those of original Medicare fee-for-service claims.
AI provides new tools
FWA is not unique to healthcare. It's not even unique to the claims process. But the growing use of AI to ferret out preventable cost losses is.
"AI allows Highmark to detect and prevent suspicious activity more quickly, update insurance policies and guidelines, and stay ahead of new schemes and bad actors," said Melissa Anderson, EVP and chief risk and compliance officer, in the company's press release.
Highmark provided the following additional detail to HealthLeaders: "Highmark's AI solutions work in concert with our claims adjudication systems and data warehouses. AI algorithms are applied to claims and identify unusual activity within claims. Once identified, the claims and billing providers are reviewed by Highmark's FIPR department. Investigations are opened accordingly to help mitigate future issues and remediate the identified concerns."
Partnership also key for FWA prevention
According to its press release, Highmark's FIPR partnerships include "health systems, public health officials, law enforcement and other health stakeholders."
Working with these external partners are more than 80 dedicated internal personnel plus numerous Highmark vendors.
The first line of defense in bending healthcare's cost curve is combating FWA. And even as payers and providers seek to strengthen their relationships and collaborate in new ways, identifying fraudulent claims will always part of a health plan's strategy.
As a recap, the HHS proposal included the following:
Requiring new data collection to support health equity
Mandating standardized plans and benefit design based on clinical evidence
A new two-stage risk-adjustment calculation model
Reinstating discrimination protections and network adequacy reviews
Requesting payer input on health equity program design and quality strategy alignment
This analysis will focus on the first three bullets. A summary of payer health equity recommendations and a more in-depth look at CMS' proposed risk-adjustment changes will appear in separate articles. The information below includes responses from: the Association for Community Affiliated Plans (ACAP), AHIP, Anthem, the Blue Cross Blue Shield Association (BCBSA), Centene, Cigna, CVS Health, Health Care Service Corporation (HCSC), Kaiser Permanente, and UnitedHealthcare (UHC).
Telehealth as a form of discrimination?
Health plan support for HHS non-discrimination protections was predictably and consistently positive.
The same cannot be said for other proposals nor HHS' head-scratching suggestion that zero-copay telehealth benefits could be inadvertently discriminatory by steering enrollees away from in-person service delivery. BCBSA commented most strongly here, stating:
"CMS appears to suggest that some delivery models are inherently superior to others and that steering patients to a preferred delivery model based on quality and efficiency considerations may be inherently discriminatory. Telemedicine … has proved an invaluable tool in expanding access to care in difficult circumstances. It is not appropriate in all circumstances, but encouraging its use when it is appropriate should not be seen as inherently discriminatory."
UHC and others strongly echoed this sentiment.
Support for the "why" of more data, but not the how or when
To bolster health equity analysis and program design, HHS wants health plans to submit the following additional variables:
ZIP code
Race and ethnicity
Individual Coverage Health Reimbursement Arrangements (HRA) and subsidy indicators
Payer stakeholders understand HHS' purpose but note the added burden of collecting not only more data but select variables in sufficient volume to be valuable and fairly included for updated risk adjustment. HHS' ability to extract this data and use it for broader purposes raised multiple data privacy and security concerns.
Most of the previously referenced stakeholders opposed this data collection and use until standards and availability can be normalized. BCBSA recommended that the government "support industry standardization efforts, such as the Gravity Project, to develop data standards and appropriate data use prior to setting any government mandates around demographic and social determinants of health (SDOH) data collections."
HCSC did not address the item and Kaiser supported it provided the data is accurate, reliable, and serves a unique purpose and benefit that outweighs collection burdens. UHC supports the collection of all proposed data points with three caveats: recommended delay until 2024 or later, no extraction of additional data or for expanded use, and no collection of HRA. Multiple respondents objected to the latter, citing lack of payer involvement in this data collection and the potential for it to "cause abrasion" with the employers who do collect it.
Plans object to standardized design
Plans and their associations generally disagreed with HHS' proposal that they should offer multiple standardized plans, some expanded, at all metal levels to make consumer shopping easier. Most of these stakeholders requested a delayed, modified, or optional implementation of these plans, noting that standardization could curb innovations that help lower premiums, meet unique market needs, and support value-based care (VBC).
Again, AHIP, Anthem, BCBSA, Centene, Cigna, CVS Health, and UHC generally objected. Some advised that standardized plans be limited to one metal and one option only—with AHIP and Centene recommending a single silver plan and Kaiser recommending an expanded bronze plan. All plans agreed that no standardized plans should be listed preferentially on HealthCare.gov.
CVS Health recommended "that HHS use existing tools to improve the consumer shopping and coverage experience before mandating standardized plan offerings," adding that the ACA never intended to "fully commoditize coverage" and noting that the emergence of new payers and benefit designs indicate that HHS is already doing what it needs to protect innovation and competition.
Evidence-based, but according to whom?
To further support non-discrimination, HHS proposed a benefit design standard that is "clinically based, that incorporates evidence-based guidelines into coverage and programmatic decisions, and relies on current and relevant peer-reviewed medical journal article(s), practice guidelines, recommendations from reputable governing bodies, or similar sources."
While the payer community acknowledged the value of clinical evidence, which plans already integrate to some degree in benefit design, none supported exactly as proposed. Most recommended optional or delayed implementation until 2023 (Cigna) or 2024 (Centene). Two plans had opposing recommendations—with Centene requesting specific clinical evidence guidelines while BCBSA stated that these were not for CMS to "further define." Kaiser noted that some clinical frameworks could drive improper utilization inadvertently.
Risk-adjustment
There were three primary components to HHS' risk-adjustment proposal, all designed to improve the risk-adjustment predictions that help distribute more funding to plans with higher-risk members. This analysis focuses on the new two-stage weighting model HHS wants to implement, believing that the existing one underestimates how many low-risk members each plan has.
Rule respondents were concerned about bias as well, but with different objections and conclusions. ACAP, AHIP, and Kaiser generally supported while UHC fully supported. Centene, Cigna, and CVS Health did not specifically oppose or address.
Anthem, BCBSA, and HCSC were all opposed on the grounds that the new model would actually increase adverse selection. BCBSA suggested the proposed adjustment would overfit predictions plan, adding that "a two-stage weighted approach is not a standard procedure for risk adjustment" and suggesting that current administrative adjustment "already addresses some of the underprediction" HHS is seeing.
One payer's differences
Kaiser was a bit of an outlier compared to its competitors. It appeared to express broader support for SDOH data collection and use, clinically based benefit design, and HHS' new risk calculations.
The plan stated it was "generally supportive of the standardized options proposed" and recommended finalizing the proposal" with no implementation delays but, as mentioned, for the expanded bronze plan only. It also stated: "Based on the analyses presented in the Technical Paper and in the proposed rule, we support including the two-stage weighted approach and the enrollment duration factor changes in the risk adjustment models starting with the 2023 benefit year." It was the only plan to express support this clearly.
These differences are perhaps no surprise. Among the respondents named in this feature, Kaiser is the only fully integrated payer-provider. It is the largest such private organization of this kind in the U.S., with an EHR system and an ability to control its membership profile that are the envy of the industry.
Next steps
Respondents noted that the comment period for the NBPP was shorter than normal due to the holidays. Several plans also called on the HHS to withdraw and replace its document. The regulatory process guarantees that HHS will have a lot of work on its hands if it is to finalize the rule this May.
"We honestly believe that solutions in healthcare cannot be proprietary ... The best ideas won't come from any one company," says the head of CareFirst BlueCross BlueShield's venture affiliate.
This week, HealthLeaders speaks with Ricardo Johnson, head of Healthworx—the innovation and venture capital (VC) arm of CareFirst BlueCross BlueShield. Johnson details the plan's approach to venture decisions and how the best investments are those that increase equity and affordability while benefiting the entire healthcare delivery system.
HealthLeaders: What is driving traditional stakeholders to make VC investments?
Ricardo Johnson: A few things, including for Healthworx and CareFirst specifically. The industry is tackling a broad base of problems and must be able to test solutions that meet critical need to reduce risk. To be a future-focused company and payer, we must identify how to get our hands on more levers of the healthcare journey. The levers that any one enterprise has are not enough to affect real change. Other stakeholders are feeling the same way and are investing in ways that are complementary to their business models.
HL: What is needed for these investments to succeed?
Johnson: You need a dedicated focus; you have to be left alone to do the work. Another aspect is making sure you are seeding fertile ground so that the opportunities you invest in are responsive to innovation and can scale. Even as you begin to scale, some investments might still fail so then, how do you pivot? It takes nimbleness within an organization that you have to build from culture and process.
All of this is what we're trying to do. Healthworx is still in its beginning phases. On the tech side, we believe we offer an incredible amount of data and experience, and we look for companies where we can add value.
HL: How does Healthworx decide what to invest in and is there such thing as a non-tech investment?
Johnson: It's hard to find a company that doesn't have a tech component. Most investments and partnerships have underlying platforms that are a core piece of their value proposition.
How we decide what to invest in depends on the solution presented and our members' needs. At CareFirst, affordability is our North Star. We believe nothing threatens equity, access, and quality as much as cost of care.
HL: What is a specific example of this focus?
Johnson: Last year, we put a lot of weight on how to get more care out of hospitals, giving access to a quality of care that is more affordable because it's not burdened by brick-and-mortar fixed costs.
We have levers to affect this and CloseKnit was one of the results. [Note: CloseKnit is CareFirst's 24/7 "virtual-first primary care practice" with services ranging from online support chats and prescription refill access to urgent and chronic care with pathways to in-person and specialty services.]
We knew we had to have our hands on the lever of primary care access. Even here, services you don’t typically think of as tech driven, like home health staffing, benefit from platforms and analytics.
HL: How does Healthworx decide what to invest in?
Johnson: We look at three things. Again, number one is affordability. Here we search for ways that tech can deliver, while bringing efficiency, value, and needed quality.
Number two, we look at the largest-cost areas; and number three, are we placing bets there and how are they working? We have many levers that affect affordability and [we] also want to test levers we don't currently have.
HL: What areas does Healthworx invest in?
Johnson: Healthworx invests through both VC and partnerships. For our VC investments, we usually invest in Series A, take an equity position, and have shared subject matter experts with CareFirst. Through 1501 Health [a partnership with LifeBridge Health], we provide an incubator for early-stage companies, providing some seed and pre-seed capital but investing more intellectual capital and resources to help them build their business models.
When we decide to partner, we do so with companies that are combining unique resources and assets to create their products, businesses, or joint ventures. This includes Cityblock and Union Blue, the latter being an example of a larger-scale partnership.
We honestly believe that solutions in healthcare cannot be proprietary so a big part of how we work is through partnership. The best ideas won't come from any one company.
[Note: Cityblock is a provider-payer partnership that delivers integrated care and non-clinical supports to communities in need. Union Blue is a labor-union-focused insurance product jointly offered by payers CareFirst and Highmark. The Healthworx portfolio also includes numerous tech-based investments to support maternal and child health, medication adherence, mental health and multiple B2B companies that support data and workflow integration. The Healthworx podcast features more companies including Fabric Health, which uses the laundromat to connect with people about their healthcare and other needs.]
HL: What does the decision-making and assessment cycle look like?
Johnson: We start with an if-then process of whether to invest, partner, or build. And we created Healthworx to allow us to build with any stage of company. With investing, we look at high-potential companies that are, say, 40% there with the problem they're trying to solve and that we believe we can get them to 100% using our team and assets.
We don't want to just build things that CareFirst benefits from. We take the approach of looking at both member needs and market needs and ask, where are the intersections? This helps identify opportunities that are sustainable and help make things happen through a series of changes. Neither payers nor private equity firms alone can achieve that.
Editor's note: This story was updated to correct Ricardo Johnson's title. Updated on March 10, 2022.
"All of us are doing our best to implement the most transformational Medi-Cal initiative in state history, and to put all this together without a public process is very disconcerting." -- Jarrod McNaughton, CEO, Inland Empire Health Plan.
Kaiser Permanente has a new direct contract to provide care for California's Medicaid (Medi-Cal) enrollees. The issue? It didn't have to bid for it. The exception has angered other Medi-Cal MCOs and raised questions about not only the integrated delivery network's (IDN) close ties to state government officials but also the potential impact on Medi-Cal's massive reform initiative, CalAIM.
1. What is KP's arrangement with the state?
As reported by Kaiser Health News (KHN)* and beginning in 2024, Kaiser will provide care for additional Medi-Cal enrollees but only those who are current IDN members. The exception is children in foster care and those who are dually eligible for Medicaid and Medicare. Kaiser will hold the only statewide Medi-Cal contract and will be the only MCO permitted to limit who it cares for. The company currently covers Medi-Cal enrollees but through subcontracts with half of the state's other program plans (12 of 24).
2. Why does it matter?
Three reasons: Process exceptions, competitor losses, and potential reform impacts.
KHN notes that Medi-Cal's other MCOs "have spent many months and considerable resources developing their bidding strategies" for 2024. To KHN, the CEO of Inland Empire Health Plan (IEHP) Jarrod McNaughton stated that "to put all this together without a public process is very disconcerting."
The bidding process exception results in notable enrollment and financial losses for plans that Kaiser has historically subcontracted with: 144,000 members and $10 million in associated annual revenue for IEHP and 244,000 members for L.A. Care Health Plan. Citing Michelle Baass, Department of Health Care Services director, Kaiser Medi-Cal enrollment will increase 25% as a result of the contract.
KHN further reports that all of Kaiser's Plan Partners keep "a small slice of the Medi-Cal dollars earmarked for those patients" and that "[u]nder the new contract, KP can take those patients away and keep all of the money." That small slice was 2% which Kaiser noted in its response statement "is no longer effectively capped."
There is added concern that the Kaiser deal will jeopardize CalAIM, the state's new five-year Med-Cal transformation that includes new non-clinical benefits (e.g., social determinants of health), Enhanced Care Management, and data/infrastructure support. One of CalAIM's primary objectives is to make Medi-Cal "integrate more seamlessly with other social services." This could be disrupted if care decisions are made not by local health plans working closely with their community-based, safety net providers but by Kaiser.
3. How are stakeholders responding?
In short, with frustration.
"It has caused a massive amount of frenzy," said Jarrod McNaughton, IEHP CEO. In a prepared document, IEHP adds: "Awarding a no-bid Medi-Cal contract to a statewide commercial plan with a track record of 'cherry picking' members and offering only limited behavioral health and community support benefits not only conflicts with the intent and goals of CalAIM but undermines publicly organized healthcare."
Criticism is coming from other sectors as well. KHN quotes California State University-East Bay health policy faculty Andrew Kelly, who notes: "[T]here's a different type of power that comes from your ability to have this privileged position within public programs."
Kaiser counters that "nothing in this state contract should affect the current reprocurement process" and that its contract actually "levels the playing field to include only network model plans in the procurement."
4. What is KP's position?
As noted by KHN, Kaiser's CHO Dr. Bechara Choucair argues that because the company has no special profit motive—citing as evidence its significant nonprofit and safety net commitments—the sole-source contract should not be an issue. In its written statement, the IDN also addressed that its:
service area will include new and multiple counties;
member-only contract will exempt it from the Medi-Cal auto-enrollment process;
member-only contract includes people with a variety of health statutes and that its model is recognized as innovative; and
Medi-Cal performance and reporting requirements will be identical to other MCOs.
5. What now?
The state legisature and CMS must approve Kaiser's sole-source contract. State approval includes an exception that would allow Kaiser to contract in Medi-Cal County-Operated Health System service areas. Other Medi-Cal MCOs are preparing media statements, but they were not final at the time of publication.
*Kaiser Health News is not connected to Kaiser Permanente
MA market dynamics are becoming increasingly frenetic as overall enrollment and plan growth sets records.
The numbers from Medicare Advantage (MA) 2022 open enrollment are in. They offer expected results and a few surprises—some of which have already dominated the headlines. One thing is for sure: MA market dynamics are becoming increasingly frenetic as overall enrollment and plan growth sets records.
Three plans were the top performers compared to overall growth
Based on a comparison of CMS Monthly Enrollment by Plan data (January 2021 and January 2022), three large commercial carriers had the most year-over-year (YOY) growth. Centene; Aetna, a CVS Health company; and UnitedHealth Group grew 29%, 12%, and 11%, respectively—all of which eclipsed YOY overall MA market growth of 8.8%.
Highlights from the leading carriers include Centene's MA entry into three new states, with all three insurers—including UnitedHealth—grabbing enrollment from other plans (largely Humana and Cigna).
A tale of the next three plans
While Anthem and Humana failed to meet their projections, they grew enrollment nonetheless—by 24% and 7%, respectively. Cigna was the only large commercial payer to lose overall enrollment, a disappointment given the company's goal of 10%–15% recurring annual MA growth.
These MA competitors cited different and sometimes disputed factors. "It's been a competitive market. It remains a competitive market," said Anthem CEO Gail Boudreaux. Business Insider reports that Humana and Cigna "blamed heightened competition for older health-insurance customers. In Humana's case, multiple analysts believe the company priced too conservatively. Humana also cited aggressive competitor sales and marketing tactics while stating the company would be reexamining its value proposition.
A record-breaking number of plans in more counties and states
Plan growth tracked with enrollment growth, with a new high of 3,834 MA plans available in 2022 (an 8% increase from 2021).
Geography wasn't the only growth factor
Having a retail footprint was a driver that worked for Aetna, whose acquisition by CVS Health offers unique advantages for MA growth: retail chains with health clinics and pharmacies that offer an alternative site not only for lower-cost primary care but also customer-broker meetings. A reimagining of the sales process, including agent house calls, has been a significant challenge for all health plans during the pandemic.
New MA players identify other reasons, while denying their pricing helped them steal membership from incumbents. Alignment Healthcare, Bright Health, Clover Health, and Devoted Health were the top four MA startups this enrollment season.
The disrupters disrupted on cue, mostly
Devoted and Clover—like Aetna, Centene, and United—grew membership faster than the market and are part of the "flood of competition" traditional plans are facing. Alignment Healthcare also grew its MA membership, 16% according to Business Insider and with 90% of that number gained from established carriers. It is still an area to watch, however. Even with this number, Alignment did not meet its growth projections and there is talk that the MA startup market may be facing a bubble as stock prices for startups-gone-public like Alignment, Cano Health, Clover Health, and Oscar Health have dropped significantly since their IPOs.
Editor's note: This story was updated on February 16, 2022.
The biennial report on Mental Health Parity and Addiction Equity Act (MHPAEA) shows that health plans are not yet up to speed with new parity requirements.
The results are in, and they don't look good. On January 25, the biennial report on Mental Health Parity and Addiction Equity Act (MHPAEA) showed that health plans are not yet up to speed with new parity requirements. The focus was on the reporting of non-quantitative treatment limitations (NQTL), or plan-imposed limits that go beyond cost-sharing and allowable visits (quantitative). Providers and payers alike are reacting to the report, which includes multiple recommendations for parity compliance and enforcement.
Five key findings
The MHPAEA report was the first since health plans were required to "provide comparative analysis" of their NQTLs, which include "limitations or exclusions based on medical necessity, facility type, prior authorization, or standards for admission to a provider network" among others. The report—issued by the three federal agencies that have MHPAEA oversight (the Departments of Labor, Treasury, and Health and Human Services; "the Departments")—included the following key findings and recommendations:
A focus on NQTL enforcement. NQTLs are required by Consolidated Appropriations Act (CAA) as of February 2021. The report found that "[n]one of the [NQTL] comparative analyses EBSA or CMS have initially reviewed to date contained sufficient information upon initial receipt." (EBSA, the Employee Benefits Security Administration, and CMS are charged with MHPAEA enforcement.)
Lack of compliance ranged from inadequate details, accuracy, evidence, analysis quality, and scope to a complete lack of response.
Corrective actions and plan response. EBSA and CMS have notified plans of non-compliance, noting that "26 plans and issuers so far have agreed to make prospective changes to their plans."
Recommended penalties. The report recommends civil financial damages for non-compliance: "EBSA believes that authority for DOL to assess civil monetary penalties for parity violations has the potential to greatly strengthen the protections of MHPAEA."
Concrete definitions. Noting that the "MHPAEA affords plans and issuers great latitude in defining what constitutes a MH/SUD benefit, and therefore what is subject to parity," the report recommends "that Congress consider amending MHPAEA to ensure that MH/SUD benefits are defined in an objective and uniform manner pursuant to external benchmarks that are based in nationally recognized standards."
Making more resources available. The report was not without positives, including the extensive stakeholder engagement that has led to consumer assistance, state partnership efforts, and additional payer guidance including an updated MHPAEA Self-Compliance Tool and FAQs.
These results were in addition to a spotlight on findings related to existing parity requirements. They included health plan coverage exclusions for: 1) applied behavior analysis for autism spectrum disorder; 2) medication-assisted treatment for opioid addition; 3) drug testing for SUD; and 4) nutritional counseling for eating disorders.
Noting the relationship between stigma and parity, the report adds that "once individuals attempt to seek care, they often find that treatment for their mental health condition or substance use disorder operates in a separate, and often very disparate, system than treatment for medical and surgical care, even under the same health coverage."
MHPAEA generally applies to employer group health plans (including Medicare Advantage), managed care Medicaid, CHIP programs, and—through an Affordable Care Act amendment—individual marketplace plans.
Provider response
The elephant in the room is the nearly 15 years that have passed since the MHPAEA first required MH/SUD coverage parity. Given this, stakeholder response to this year's report varies widely beyond general and continued parity support.
The American Medical Association (AMA) stated the following in its response letter to Congress: "This report underscores two simple facts: insurers will not change their behaviors without increased enforcement and accountability, and patients will continue to suffer until that happens." The AMA added that "insurers do not care or do not know how to comply with the 2008 law." The organization echoed EBSA's call for financial penalties and continued MHPAEA enforcements.
The AMA also urged Congress to pass the Parity Implementation Assistance (PIA) Act. PIA would award state grants to support parity—noting that "[s]tates receiving the grants must request and review from private health insurance plans their required comparative analysis of NQTLs with respect to MH/SUD."
Payer response
For a payer response, HealthLeaders contacted AHIP, an industry association representing health insurance providers. AHIP SVP of communications Kristine Grow responded in part: "Since the passage of MHPAEA, health insurance providers have introduced many innovations and improvements to expand access to mental health services."
This is true.
A 2018 Yale School of Public Health study found "that the MHPAEA resulted in important changes to health plan coverage of MH/SUD treatments, including the elimination of differential annual limits, differences in many cost-sharing arrangements, and elimination of many treatment limits imposed on MH/SUD treatments." The report specifically noted that "differential financial requirements [for MH/SUD] were close to eliminated: and that some decline in out-of-pocket payments was paired with "modest increases in use and spending per enrollee."
The study results were not generally positive, however, and noted the importance of NQTL compliance. Returning to 2022 findings, the MHPAEA report stated that "many plans and issuers stated that they were unprepared to respond to the Departments’ [NQTL] requests and had not started preparing their comparative analyses."
AHIP's Grow agrees, noting that NQTL "is a new process for everyone" and that there were "just over 3 months from the time the [NQTL] certification process became law to requests being sent to health insurance providers." She adds: "It’s clear that more robust tools and templates that include examples of complex benefit analyses would be useful."
Added constraints
There is no doubt that the latest results fall short of MHPAEA requirements, and it is difficult to understand why after so many years. It is also important to understand additional barriers to parity. In a forum preceding the 2022 report release, Department of Labor Secretary Marty Walsh stressed that "when someone calls for treatment, that is the moment they need to receive it" and that "as a person in recovery, I know firsthand how important access to mental health and substance-use disorder treatment is."
But access doesn’t happen without MH/SUD providers and the shortage of them is well documented. This shortage results in either near-zero access, especially in rural areas, to appointments that cannot be scheduled for months.
In addition, parity applies to payers. But an increasing number of MH providers, particularly psychiatrists, no longer accept insurance and require patients to private pay. A 2015 JAMA Psychiatry study found that far fewer psychiatrists accepted insurance compared to other specialists: nearly 30% lower for private insurance, Medicare, and Medicaid.
What will turn the tide?
If the pandemic isn't enough reason to focus on better mental health parity, what is? COVID-19 has put MH/SUD front and center, particularly equity for people of color. Payers are focused on this issue alongside another: including behavioral health in value-based total cost of care.
Perhaps the combination of these factors—along with compliance support and penalties—will be the tipping point.
Is it time to put healthcare's frenzied dynamics in perspective—Medicare Advantage specifically—so that an industry charged with generating better, more affordable outcomes does not confuse Wall Street's frequently fickle ticker with long-term value?
About a month ago, Humana's stock price dropped more than 18% following the company's significantly reduced Medicare Advantage (MA) enrollment growth projections. Financial news outlets reported hourly on Humana and its competitors. Over that same period and in contrast, big tech was abuzz with healthcare's growing strength in the digital consumer space at CES 2022—an annual conference at which Humana (in past years) has been the only health insurer to present and is still the CES organization's only health plan member.
But Humana and CES introduce a broader question beyond their recent headlines. Is it time to put healthcare's frenzied dynamics in perspective—Medicare Advantage specifically—so that an industry charged with generating better, more affordable outcomes does not confuse Wall Street's frequently fickle ticker with long-term value?
The stock price story and Wall Street competitor impact
Humana is the second-largest insurer of MA plans, which generate the bulk of its enrollment. So when the company cut its 2022 growth projections nearly in half, it mattered. And while it is true that Humana's market dip was the most precipitous—and that its stock price is still well below its former value—most of its competitors are still rebounding as well.
But rebounding from what? Most other MA plan projections had remained strong and early 2022 Annual Enrollment Period (AEP) numbers showed gains from the same plans whose stocks had dropped alongside Humana's. How does one plan bring its competitors down when they are growing against the same headwinds in an MA market whose overall annual enrollment grew nearly 9%. It's a complex picture and over the past couple of years, every piece of it has shifted—at times in opposing directions.
Complex market dynamics
It starts with all of that MA growth to be had. Within these lush green fields, competition and shifting market share are a consistent story. Medicare is, in the words of Anthem CEO Gail Boudreaux, a very consistent competitive environment.
Competitive factors include market and plan expansion to meet Medicare age-in volumes as well as a dicey subject during this AEP: pricing. Discussing results, Humana and Cigna cited competitor low-balling, with Humana CEO Bruce Broussard adding aggressive marketing and sales tactics. Broussard noted to analysts that the market "was becoming commoditized … [and] we're not going to play that game."
Analysts disagreed while affirming Humana's emphasis on the importance of value delivery and the long view, and with Fitch Ratings Senior Director Brad Ellis adding that "pricing discipline" is a bigger concern than enrollment projections.
Disruption fever?
The pricing and commoditization chatter are linked to some degree to another MA dynamic: the threat startup insurers pose to incumbents. And while these new entrants have taken some market share from established players, those incumbents also regularly steal market share from another. This AEP, MA disrupters lost enrollment to their larger competitors as well with some also falling short of their projections.
About these dynamics, UnitedHealthcare's CEO of Medicare and retirement Tim Noel also noted: "The trend of more entrants, [and] better benefits has really been a multi-year one … And we see this trend as being one that's very good for seniors and also one that's very good for the overall growth of the Medicare Advantage industry."
These perspectives are what healthcare needs: long views that balance all the "red-hot" things coming out of the aforementioned CES conference and the massive amounts of venture capital (VC) that is funding them.
Red-hot can quickly cool. Countless healthtech stocks have dropped significantly following massive valuations and IPOs. It's worth asking if there might be a touch of irrational exuberance in both the public and private MA markets.
Value versus valuation
There are concerns that MA startup valuations are too inflated. And as for the flush MA market in general, a caveat has begun to creep. MA enrollment is expected to surpass traditional Medicare by 2030, but most of that growth will be captured by 2025—around the same time that Medicare's hospital trust fund is projected to be insolvent and U.S. healthcare spending is expected to surpass 20% of GDP.
Hence, the MA urgency and a return to the question: as competition increases and more publicly traded healthcare companies expand their VC arms, are the distinctions between valuation and actual value starting to blur—if not operationally than psychologically? Projections of "double-double" growth are not uncommon, even among healthcare payers. But how advisable is this from an industry charged with saving lives and when health equity lags so desperately?
Market forces
To ask these questions is to question the free market itself. Lest that seem naïve, one of the founders of the Lean Startup method has done just that. Eric Ries launched the Long-Term Stock Exchange (LTSE) in September 2020 with a powerful statement: "Modern companies measure progress over decades, not financial quarters." In June 2021, growth companies Asana and Twilio joined the LTSE, which requires strategic transparency and value-based executive compensation tied to outcomes.
It usually takes a major market correction for changes like these to happen (e.g., 2008) and we are in one: the pandemic. Health plans have had to adapt rapidly, finance COVID-19-related care unexpectedly, and weather revenue losses patiently. They've largely managed to do it. But the pandemic isn't over, and neither is its impact on the healthcare industry or the stock market at large.
Healthcare's mindfulness moment
In 1971, the dollar's gold standard fell to the underlying barometer that's been present all along: the hopes-and-fears standard, otherwise known as market forces. This system gives greater flexibility but is based on escalating risk and reward. This description resembles the value-based design approach that healthcare is attempting to reform reimbursement, improve care, and deliver value.
So where does that leave things? If we come full circle, Humana's stock is now steadily rebounding after a positive fourth-quarter earnings call. Expect also for the company to return to a future CES conference, joined by its competitors. In the meantime, wait and see. And while that isn't something the stock market likes to do, perhaps just like the myriad digital meditation apps healthcare is investing in, the industry could use a mindfulness moment.
"[W]e expect continuing to improve access to care will play a crucial role in the health care delivery system post-pandemic," says Evernorth's behavioral health CMO.
Cigna has expanded its virtual offerings by expanding its partnership with Meru Health, a provider of app-based digital mental health services. What began as a three-state pilot in 2020 has now grown, with Meru Health now the national health network of Cigna's health services division, Evernorth. The addition marks Cigna and Evernorth's growing digital offerings, which begin with MDLive online provider services and now include virtual-first health plans in selected markets.
In a press release, startup Meru Health's CEO and Founder Kristian Ranta stated: "It’s exciting to see the rapid adoption of online services like Meru Health. Our research shows we can deliver better results than traditional care, and continuing to do so is our top priority—while the pandemic drags on and beyond."
Meru's addition reflects the changing face of payer provider network definitions to include digital therapeutics (DTx). While most DTx applications include human support—on-demand clinicians in the case of Meru—they represent a growing "front door" to treatment that have improved care access during the pandemic and beyond. Whether these solutions are able to lower costs and improve quality over time remains to be seen.
Data from trials and real-world evidence are the life's blood of these DTx ventures, encouraging payer uptake and, where required, supporting FDA clearance. Meru is one of many DTx companies courting health plan clients and using research outcomes to do it. In one peer-reviewed study, participants responded more positively to Meru's intervention than use of antidepressants (60% at 12-month follow-up compared to 30%).
Meru Health is not the first company to join Cigna and Evernorth's digital portfolio. Cigna first partnered with MDLive pre-pandemic to offer members virtual wellness visits. Evernorth acquired MDLive in April 2021, which has allowed the company to expand its virtual services beyond primary to dermatology, behavioral, and urgent care. The service is available to all Cigna employer-sponsored plans and is the foundation of Cigna's new virtual-first $0 copay plans.
In the Meru release, Evernorth CMO of Behavioral Health Doug Nemecek, MD stated: "Virtual care has been key to helping people address mental health needs, and we expect continuing to improve access to care will play a crucial role in the health care delivery system post-pandemic."
In calling out the burnout support aspect of Meru Health, Nemecek highlighted the rarely discussed expansion of healthcare's Triple Aim. Before the COVID-19, the Institute for Healthcare Improvement (IHI) began a conversation on the Quadruple Aim, a fourth aspect of better care defined differently by different groups. The IHI noted: "For many organizations, the fourth aim is attaining joy in work. For others, it's pursuing health equity." The pandemic has revealed a powerful intersection of these aims—burnout among not only corporate employees but healthcare workers. The Cigna/Evernorth and Meru Health partnership is but one example of the innovations stakeholders are pursuing.
'If tech companies can help bring the insurance industry up to speed with the use of data and predictive analytics, then consumers are all for it,' says one insurtech leader.
Are consumers ready to buy health insurance from Jeff Bezos? Maybe not the man but quite possibly his company. A January 2022 survey by insurtech provider Breeze suggests yes. While hypothetical and based on a small population, answers like these are one of many reasons why healthcare is making up for lost time on digital transformation. The gravity of its challenges and just how far behind other industries healthcare is are driving a rapid pace of innovation led by incumbents, startups, corporate investors, and yes, non-traditional competitors.
But who would consumers trust most? For health insurance, the answer was Amazon. The Breeze survey found that:
55% of respondents would buy a hypothetical insurance product from Amazon over traditional carriers.
This compares to 46% from Google.
Only 38% would buy health insurance from Meta (Facebook).
Google parent Alphabet is already a player, launching Coefficient Insurance (now Granular Insurance Company) through one of its subsidiaries. But it's Amazon that has the most street cred. True, the company has tried and failed twice with health insurance, first with Amazon Care, then its Haven joint venture. But Amazon Care is still around as a virtual care platform, one that is finding traction with payers and providers.
The company is also a player in the one area most healthcare consumers can agree on, and that the federal government is struggling to do anything about: controlling skyrocketing prescription drug prices. And while some analysts question whether Amazon Pharmacy will truly be a disrupter, it's clear that the company's medical services wants to make substantial investments in multiple aspects of healthcare delivery.
Breeze's Director of Communications Mike Brown puts it this way: "Consumers are very receptive to the idea of tech companies and other outsiders getting into the insurance industry. The modern shopper wants things fast, streamlined, and completely online, and that applies to financial products too. If tech companies can help bring the insurance industry up to speed with the use of data and predictive analytics, then consumers are all for it."
Conversely, would consumers buy a new type of insurance product from an existing healthcare provider? Nearly 60% said yes, favoring CVS Health or Walgreens as a provider of life as well as health insurance. Aetna customers may not realize they are already doing so. The insurer merged with CVS Health in 2018 and their affiliation has tightened through Aetna products linked to CVS' HealthHUB services.
To this, Brown adds: "Whether it be for disability, life, or auto insurance, the majority of Americans would be interested in buying these insurance products from non-traditional sources that could help simplify the process."
