"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."
"Supporting providers versus just providing them with data is how value-based design has evolved," says Anthem's Chris Day.
When asked about Anthem's five-year strategy to evolve value-based design (VBD), Anthem's Chris Day doesn't hesitate. "We have to do three things: create more meaningful incentives, enable providers with data, and reward providers to do well by doing good."
Day, president of value-based solutions for Anthem, added detail and examples to each of these components in his interview with HealthLeaders.
What providers need
Anthem's VBD approach centers on independent PCPs and those aligned with larger health systems. While some needs differ by market, most providers need the following, says Day:
Timely accurate data, available at point of care and at the lowest total cost possible
Real-time referral optimization, from specialist data to digital appointment scheduling
Easier ways to do business, including with payers
"We're getting better at identifying problems and collaborating with providers more closely on their needs and priorities." About referrals, Day adds: "It's surprising how little information PCPs have had to make those decisions." As part of its Vim-designed platform, Anthem provides real-time specialist data including network status, clinical experience, proximity to the patient's home, and historical cost and quality performance. Anthem is also among the growing ranks of plans that are automating prior authorization.
Actionable data meets integrated technology
Day adds that more advanced and integrated technology helps Anthem deliver on provider need while meeting multiple objectives as efficiently as possible. Anthem has deployed the above-referenced Vim platform in its leading market, California, with plans to expand to New York City and to Nevada—the latter as part of a digital HMO pilot with incentives for virtual-first primary care.
"These initiatives help us close the loop, to go from contracting expectations to what providers need for workflow."
The evolution of value-based design
The many names associated with VBD suggest the progress made in the shift from volume to value. What began as value-based contracting and reimbursement is evolving into value-based care and holistic design.
Day identifies the way that Anthem thinks about VBD: a model that helps providers do the right things while expecting greater accountability linked to fully implemented measures that matter—and not only cost and quality, but regulatory and customer experience metrics.
Downside risk and market dynamics
Day says that when payers empower independent providers and coach them toward downside risk, both sides benefit. He also understands that a willingness to take on downside risk often depends on the market and requires a collaborative process to help providers get there.
"There are places where more providers have an appetite for risk. Where the dynamics don't translate, we don't ask providers to be ahead of their market," says Day.
For those that want to make the jump, Anthem offers a "multi-year glidepath" based on achievable targets that help providers take increased accountability for managing population health over time." If providers are not making progress, next steps range from corrective action plans to "turning it off" and sending members to higher performers.
Incentivizing through plan design
At Anthem, higher risk leads to higher rewards. One of the highest is identifying the providers who make up their high-performance networks and linking them to the best benefit designs. "We'll use benefit design, marketing, referral steerage—multiple tactics for these providers," says Day.
He adds that it doesn't take long to identify who those providers are.
"For cost, you can see it almost immediately—generally within a year. Quality sometimes takes longer, around 12–18 months," he adds. "But some things we can see even after the first quarter, like the increased primary care use and fewer ER visits that reflect use of lower-cost, higher-impact services."
Even with these strategies, Day acknowledges that the industry "still struggles to do more than create payment policy," adding that "supporting providers versus just providing a contract and data and saying, 'Here you go' is one part of how VBD has evolved."
The proof is in the pudding
Anthem's strategies are yielding strong results. In a press release, the company reports that its fourth quarter operating revenue grew 14.2% to $36 billion (compared to Q4 2020) and that 2021 operating revenue grew to $136.9 billion, a 13.4% year-over-year increase.
As part of the release, Anthem President and CEO Gail K. Boudreaux stated: "2021 was another year of strong growth for Anthem as we continued our transformation from a health benefits company to a lifetime trusted partner in health … We begin 2022 with ongoing momentum across all our businesses."
That momentum includes enrollment growth. Anthem added 2.4 million medical plan members in 2021, putting the company's enrollment at 45.4 million. The company expects that number to grow to between 45.6–46.2 million in 2022, with nearly half of that (19.5–19.9 million) membership being "risk-based." While this presumably includes upside risk given Anthem's Drive to 25 initiative, it's clear that VBD will continue to be essential to its growth strategy.
These actions include substance abuse and community health center initiatives from BCBS plans and CVS Health's housing and workforce investments.
As health equity and social determinants of health (SDOH) become a growing anchor for health plan strategy, AHIP has released new updates on the actions its payer members are taking.
These actions include substance abuse and community health center initiatives from Blue Cross Blue Shield plans and CVS Health's housing and workforce investments.
These and other updates are a part of AHIP's Project Link, which includes insurer actions related not only to SDOH but also COVID-19 throughout the pandemic. AHIP notes that payers "are committed to building solutions to address the social barriers to health that can harm a patient’s overall health."
SDOH definitions, domains, and metrics vary widely but HHS and World Health Organization (WHO) definitions share the common thread that social determinants represent the conditions under which people are born, live, work, and age. While the WHO definition focuses primarily on SDOH as a cause of health inequity, HHS notes that social determinants "affect a wide range of health, functioning, and quality-of-life outcomes and risks," including:
Economic stability
Education access and quality
Healthcare access and quality
Neighborhood and built environment
Social and community context
HealthLeaders notes these differences and how risks are categorized—e.g., the HHS includes food and housing insecurity under economic stability—to highlight that healthcare stakeholders may grapple with how to create a common, accepted language around SDOH, within their organizations and across partners. A lack of shared understanding may impact not only initiative design but may differ entirely from what people in communities in need believe their most pressing challenges are.
The following from AHIP summarizes how a variety of payers are addressing these challenges:
AmeriHealthCaritas: This government programs-focused plan, located in 12 states and Washington, D.C., is making SDOH investment via the venture capital (VC) world. Its new subsidiary Social Determinants of Life, Inc. is the lead investor in Wider Circle, a startup that builds tech-enabled, hyper-local health programs and peer-to-peer social networks.
Blue Cross Blue Shield of Michigan: The plan is one of four community partners in the Michigan Opioid Partnership, which will use nearly $500 million in grant funding to close care gaps for people with substance use disorders (SUD) in the Upper Peninsula.
CVS Health: The retailer, which has expanded to not only provider but payer (acquiring Aetna), is partnering on a $6.5 million investment to help build supportive housing in Denver for individuals who are homeless or struggling with disability.
Independence Blue Cross: The regional Pennsylvania payer is targeting student loan reduction and financial well-being. The plan is one of the first to partner with GradFin for these services, which are free not only to Independence members but anyone in the member's household, regardless of enrollment status.
L.A. Care Health Plan and Blue Shield of California: These two payers are enhancing services as their jointly operated Community Resource Centers, which offer a variety of health and education services as well as food pantries and school supply programs.
In addition, a number of plans are investing in an aspect of SDOH that is often less discussed: digital literacy. These plans include Blue Cross Blue Shield of New Mexico, CareSource, EmblemHealth, Humana, and SCAN Health Plan. Their investments range from helping to build internet infrastructure in rural areas to teaching community-based tech classes.
Nearly every payer SDOH initiative involves multiple and diverse community partners as insurers understand that health equity is a long-term investment that requires subject matter expertise beyond their realm.
"Where plans compete is how data is used—the quality of the insight, not the availability of the data itself," says one plan executive.
As the healthcare industry speeds toward digital transformation, every solution must deliver scale while linking to larger strategy. Anthem Blue Cross' deployment of a new provider clinical workflow is one example. The platform connects health plan data at the point of care, primarily for independent physicians, through an EHR-integrated solution. But it also uses a platform first implemented by a competitor while supporting three components of Anthem's broader market, provider, and value-based strategies. Below are five reasons why Anthem's platform selection achieves multiple goals.
1. Anthem chose a platform its providers were already using.
Anthem chose Vim as its technology partner. The vendor's press release describes the provider clinical workflow platform as "an EHR-integrated application suite that includes Digital Scheduling, Care Gaps, … Referral Guidance solutions, and more." Anthem's regional VP for Provider Solutions, John Pickett, adds: "As the urgency increases for quality and cost performance in healthcare, Anthem is committed to supporting our provider partners with innovative enablement technology."
UnitedHealth Group chose Vim for the same reasons, and Anthem capitalized on that choice.
"We needed to get our information into the hands of providers quickly and in a place where they would use it," says Chris Day, Anthem's president of Value Based Solutions. "Vim had started in California with United and we asked those same providers, 'Would you expand to include us?' " Providers were already having a good experience, and it gave us a faster time to implementation."
2. The solution integrates actionable health plan data at point of care.
There are multiple types of health plan data that are part of the platform exchange between Anthem and its providers. This includes data that facilitates discharge coordination, referral optimization and digital scheduling. Supporting this is a plethora of specialty care physician (SCP) intelligence, such as network status; SCP proximity to patient; and relevant clinical, experience, cost, and quality performance data.
Day describes the benefit: "Our goal is to get existing information to providers at point of care at the lowest total cost possible," adding that "with this data, a referral appointment can be scheduled right there." The desired outcome is a better experience for both patient and provider.
3. The platform is part of Anthem's California strategy.
Anthem operates plans in 13 states, including California, but the Golden State holds a unique place. "Thirty percent of our opportunity is represented by California. It's a strategic market that strengthens our strategy and results overall," Day says.
Such decisions are particularly important in light of the pandemic. "With the impact of COVID, we had to look at our company and use lots of information in how we make forecasts and assess outcomes and variability," he says.
4. It further supports their independent provider strategy.
"We want to empower independent providers," says Day. "We asked them, if they could only have two or three things, what would they be and how would they use them to make a positive impact on members and the business?" The VP adds: "Our overall strategy involves investing to keep independent physicians independent."
The strategy is anchored in independent primary care physicians, but Anthem is also partnering with select health systems. In October 2021, Anthem partnered with Providence St. Joseph Health System in Southern California to begin implementing Vim's solution.
5. Crafted as part of a broader VBC strategy.
Add leverage, integration, and a scalable market-specific independent provider strategy together and you get a peek into Anthem's five-year value-based care (VBC) strategy. That strategy, which HealthLeaders will profile in the coming weeks, expands beyond contract incentives. Day notes: "We want to reward providers to do well by doing good."
As for choosing the same platform as their competitor, he says: "People asked us, 'Aren't you just helping United?' No. We're making it easier for our providers and reducing abrasion."
Day adds: "Where plans compete is how data is used—the quality of the insight, not the availability of the data itself. It makes us all better and is important for the industry as a whole."
"Employer health insurance is taking a big bite out of many working families' incomes, leaving them with less money to spend on housing and food, and saddling millions with medical debt." — Sara Collins, The Commonwealth Fund.
The Commonwealth Fund reports that the burden of healthcare costs has risen for American workers over the past decade. Their findings—published this month in State Trends in Employer Premiums and Deductibles, 2010–2020—show premiums and deductibles taking up a larger share of employee income.
The result are cost-shares that are leaving them "underinsured and exposed to higher out-of-pocket costs" over time. The following are four key findings from the report, which includes a state-by-state breakdown.
The percentage of median income spent on premiums and deductibles has risen to 11.6%. This is an increase from 9.1% in 2009. The 2020 total includes an average of 6.9% for premiums and 4.7% for deductibles. The total average cost was $8,070, with state-specific amounts ranging from approximately $6,500 to more than $9,000.
Of note, the 2020 premium figures for employer-sponsored coverage exceed those of marketplace plans, which were capped at 8.5% of income for 2021 and 2022.
Employees in 37 states spend more than 10% of their income in premiums and deductibles. This is up significantly from 10 states in 2010. Mississippi and New Mexico ranked highest among states, with these costs representing 18%–19% of worker salaries.
Employees in 22 states are considered underinsured and at risk for deferred care and medical debt. TCF defines a person as underinsured whose plan "does not provide adequate protection from high out-of-pocket costs and deductibles, excluding premiums." In 2010, only one state met this measurement threshold, which includes deductibles that are at least 5% of a person's income.
"Employer health insurance is taking a big bite out of many working families' incomes, leaving them with less money to spend on housing and food, and saddling millions with medical debt," says Sara Collins, study lead author and TCF vice president for Health Care Coverage, Access, and Tracking.
Not surprisingly, companies that offer higher wages pay a higher portion of employee premiums. This creates disparities among even insured workers, including the working poor—and a divide between those whose benefit costs keep services accessible and those who are left with coverage without care. The Commonwealth Fund reports that this is increasingly the case for middle-class workers as well.
