Britt Berrett dives into solutions for reducing expenses for health systems as payers and providers move towards contract negotiations.
Payers and providers must come to terms at the negotiating table, and reducing expenses is an item that directly benefits both parties.
HealthLeaders spoke with Britt Berett, Managing Director and Teaching Professor at Brigham Young University, to hear his insights on what solutions payers and providers must work towards, and the options they will need to explore in order to reduce expenses this year.
Some states are hesitant to cover the popular drugs.
Weight loss drugs have soared in popularity; while some states have been hesitant to cover them, others have not. A recent JAMA study found that five states offer unrestricted coverage of GLP-1 drugs Wegovy and Saxenda that were approved for weight loss.
The data from this study comes from formularies for 47 state Medicaid programs from the first quarter of 2023.
The study found that a total of ten states cover Saxenda or Wegovy for weight loss, while five of those states offered restricted access through barriers like prior authorization, non-prefered status, or step therapy.
Some GLP-1 drugs approved for coverage to treat diabetes such as Ozempic, Victoza or Trulicity, are covered in 39 states.
Some states are hesitant to cover these popular drugs because of the hefty $15,000 price tag that accompanies them.
As 2023 these five states offer unrestricted coverage to Wegovy and Saxenda under Medicaid:
California
Delaware
Minnesota
Rhode Island
Virginia
These five states offer restricted coverage of Wegovy and Saxenda:
A new report shows strong potential for the Medicare Advantage market.
There are a number of items shaking up the Medicare Advantage space lately, from steeper star ratings to broker constraints. However, a new report has an optimistic outlook for MA, even as growth begins to slow down.
Findings in a recent report by Chartis show that Medicare Advantage growth seems to be slowing, despite enrollment gains. In 2023 MA grew by about 5%, or 1.7 million new members, slower than the year before which was at around 9%, or 2.7 million members. The rise comes from a growing senior population, yet has been overshadowed by factors like regulatory pressures, decreased star ratings, and soaring medical costs.
A majority (86%) of the market’s growth in the past year has come from for-profit insurers like Humana, Aetna and UnitedHealth. Collectively, these three giants captured 1.4 million new beneficiaries. This enrollment growth follows a big MA milestone of over 50% of Medicare-eligible persons enrolling in an MA plan.
According to the Chartis survey that looked at 19 insurers, even with a decrease in growth, almost 80% of health plan executives were optimistic about the next five years, and they are expecting neutral or positive outcomes. Roughly 84% also anticipate membership growth that is equal to or greater than this year, showing payer confidence in the stability and overall growth potential of the Medicare Advantage market.
Ratings
Medicare Advantage has wrestled with many different opponents, such as new methods of calculating star ratings. During the pandemic when relief provisions were high, MA ratings shot up. As regulators noticed this and pulled back on them, they started new methods of calculating ratings, which then fell for many insurers. Elevance even went through a lawsuit with HHS over their low ratings and managed to come out with new ratings and a hefty payout. Quality of plans remains a concern as plans struggle to maintain high quality ratings, with roughly one-quarter of beneficiaries enrolled in a plan with less than four stars, according to the report.
Special Needs Plans and Social Vulnerability
Special needs plans are also gaining more traction in the Medicare space. The Chartis report looked at SNPs which have recently surged, with an addition of over 1M new members. Almost 7 out of every 10 MA enrollees opted for SNPs.
The report also dug into another not-so-obvious factor, the relationship between MA enrollment and social vulnerability. It found the counties with higher vulnerability scores showed greater penetration rates, about 53%, when compared to counties with lower scores, about 45%. These statistics show how market dynamics are playing into the greater picture of MA.
Nick Herro is the Chartis Director in Strategic Transformation and co-author of the report. He says that although the MA market has matured a great deal over the last several years, demand continues mainly due to changing demographics and consumer preference over traditional Medicare.
"We are confident demand for Medicare Advantage will hold steady,” Herro said in a press release. “While plan executives acknowledge the headwinds facing the industry, the majority express optimism about the next five years."
Taking all of these factors into consideration, the Medicare Advantage market could gain even more traction and attention from payers as outlook reports seem promising. However, maintaining high quality ratings and keeping up with the demand and shifting market dynamics could outweigh the promise of stability and growth potential of the market.
U.S. officials are putting the pressure on payers to take more targeted action.
This week payers met with federal officials to discuss how they can advance timely payments to providers who are still struggling after the massive cyberattack on Change Healthcare.
Payers were asked to prepare details on how they plan to financially support providers, how they are working to meet the challenges, and recovery efforts that still need to be made.
Payers are concerned about how their money will be recuperated in the future, according to a report from Bloomberg.
HHS has urged payers since the beginning of the attack to help providers by removing or relaxing prior authorizations, but the pushback has been strong. AHIP President and CEO Mike Tuffin issued a statement on March 12 about insurers responding to the attack.
Since the impact varies across their system, United urged individual plans and providers to sort out payments in a timely manner, as they’re in the best position to do so.
“Further, broad exemptions in prior authorization at a time of advanced payments could expose patients and employers to fraud, waste and unnecessary costs,” said Tuffin.
In a press release, the organization announced it will be launching software for preparation of medical claims and announced that it has advanced $2B to providers who are still struggling after the attack. The software will be made available to thousands of customers over the next several days and it expects to have third-party attestations available before these services become operational. After this initial phase, other restoration services will continue until all its customers have been connected.
UnitedHealth has also been reported as offering substantial loans to some providers after the cyberattack. Stat News reported that this change comes as hospitals, doctors and lobbying groups have complained for weeks about United’s low offers, some less than 1% of their regular weekly billing. Now, some providers have seen their advances increase up to seven figures, but we’re not sure why or what prompted these specific loans.
But What About The Other Payers?
UnitedHealth seems to be making headway on helping their providers, but what about other payers? During the March 18 meeting, several payers said they would commit to advancing payments to providers, but these payers were not named.
According to Reuters an unidentified U.S. official said, "Claims are starting to flow and we have seen significant improvement between last week and this week, but we have a last mile to go.”
In a press release HHS said that it surveyed payers in their previous meeting to obtain data and information that showed the actions they are taking to resolve issues from the cyberattack. HHS reviewed the responses over the weekend of March 15. Payers then offered HHS updates on their resolution efforts towards providers and outlined specific actions they plan to take.
“HHS and White House leadership pressed insurers to be targeted and specific in carrying out solutions, including increasing advanced payments where needed to the providers and communities still most in need,” HHS said in the press release.
As health systems slowly begin to get back on track with payments and regular operations, it’s clear that payers have been slow to act in this crisis and give aid to their providers and patients. As payers look for a balance between advancing payments without advancing fraud in this difficult situation, some providers are still struggling to keep their systems operational without the cash flow.
The Change Healthcare ransomware attack has affected health systems nation-wide for almost a month now.
The attack on Change Healthcare spread far and wide to hospitals, pharmacies, and health systems across the country. Here’s a timeline of what has happened so far that you should know:
Here's a full breakdown:
Feb. 21: Optum reports “enterprise-wide connectivity” issues and later says Change Healthcare was experiencing a network disruption caused by a cybersecurity threat. Change’s system was disconnected.
Feb. 22: Health systems and pharmacies reported disruptions from the attack and the AHA urges facilities to disconnect from Optum’s network.
Feb. 26: Ransomware group BlackCat claims responsibility for the attack, reported by The Register. HHS later warns hospitals to be wary of the cyber group as it specifically looks to target hospitals.
UnitedHealth reports that 90% of the 70,000+ pharmacies in the U.S. that used Change’s network had to modify claims processing, the other 10% implemented offline workarounds.
Feb. 29: Change Healthcare confirms Blackcat is behind the attack. Change works with cybersecurity firms and law enforcement to address the attack.
March 1: Optum introduces a temporary funding assistance program for providers, and Change also implements a workaround system for pharamcies.
A McKinsey & Company report zooms in on the five trends set to shape Medicare Advantage.
Medicare Advantage has seen a lot of turbulence over the last six months. With high utilization and government intervention, among other factors, Medicare Advantage may not be as profitable for payers as it used to be.
Let’s look at the five main factors that are molding Medicare Advantage from an analysis from McKinsey & Company.
Product Reset: Medical costs are rising and payers are feeling the heat. As this continues payers may become more choosy about how many plans and benefits they offer. Regulators are also reconsidering the value of supplemental benefits for consumers. These factors may push payers to create more customized plans that offer a “concise narrative” and don’t try to cater to everyone by casting a wide net.
Aging Population: Some of the biggest upticks in medical costs that payers are seeing are procedures used by the aging population, particularly knee and hip replacements. Between this and the ongoing healthcare worker shortage, new care models will have to come into play. McKinsey analysts pose the question of vertical integration for payers as they see an influx of patients with higher needs.
Star Ratings: As CMS toughens the threshold for higher star ratings, payers will need to shift their focus to higher quality outcomes as beneficiary satisfaction ratings become deemphasized.
Opportunities In Special Needs Plans: Special needs plans, especially dual-eligible special needs plans are growth opportunities. However, payers will need to make strategic moves to prep for new contracting strategies from states for D-SNPs.
Broker Constraints: With increased regulation around third-party marketing and broker organizations, McKinsey analysts suggest that payers may need to upgrade their own marketing and sales endeavors.
President Biden has pushed out his budget for 2025, focusing on healthcare and cybersecurity.
As President Biden rolled out his $7.3T budget for 2025, a couple items caught our eye. Politicians usually use their budgets as a tool to direct their messaging towards voters, and President Biden has put healthcare front and center.
Compared with other budgets, this one puts heavy focus on healthcare and cybersecurity. In Biden’s budget he calls for expanding Medicare’s drug negotiation program as well as extending Medicare insulin caps and out-of-pocket costs to consumers with private plans. Both of these measures were seen in his 2022 Inflation Reduction Act passed by Congress.
Medicaid
The budget also renews Biden’s call to implement a federal coverage alternative for low-income individuals in states that have yet to expand Medicaid coverage under the ACA; only ten states have not adopted Medicaid expansion. The budget outlines a decade long $150B increase for Medicaid home and community based services. Biden also tried a major expansion like this in 2020, but it was dismissed by Congress.
This concept of nudging Medicaid expansion even further comes at a time when a handful of states have also extended coverage to immigrants. California and Oregon have already begun funding full Medicaid benefits for all low-income residents who wouldn’t be eligible for the program because of immigration status. Many undocumented individuals live just above the Medicaid income-eligibility threshold, and until recently, no states had looked at the affordability of complete coverage for them.
Biden’s budget also incentives for states to continue their Medicaid expansion and would permanently expand the ACA tax credits that are set to expire at the end of next year.
Biden made a similar call for “Medicaid-like” coverage in his proposed 2024 budget, which didn’t see through in Congress. His 2025 budget is predominantly similar to last year’s.
Notably, the budget also emphasizes healthcare cybersecurity, which everyone currently affected by the Change Healthcare attack should keep an eye on. Here the budget outlines $1.3B in new hospital cybersecurity initiatives and $141M to cushion the federal health department’s systems.
What This Means For Payers
As providers suffer from unprocessed claims payments and payers are being pressured to output advanced payments and relax prior authorizations, payers should pay close attention to cybersecurity budgets and initiatives. Payers have been reluctant to cooperate with these items, particularly the relaxing or removing of prior authorizations, which they claim could lead to increased fraud. While increased cybersecurity would help every organization, it could be especially beneficial to payers to not only protect their providers and health systems, but to avoid fraud and keep their bottom line steady.
The attack is rippling through the healthcare industry and affecting everyone, including payers.
News of the Change Healthcare ransomware attack is plastered everywhere.
Late last month the technology company that was purchased by UnitedHealth Group, saw a massive cyberattack that is still being felt by health systems across the country.
As we know, Change Healthcare, a company that processes medical payments, touches about one out of every three patients in the U.S. One of the main challenges from this attack has been for providers as they are struggling to access the data they need to process prior authorizations and claims in order to get paid.
It also had a great effect on pharmacies, hospitals and patients trying to access their prescriptions. Patients and their insurance coverage are also feeling the effects, with many consumers paying out-of-pocket to get their refills.
The attack has, overall, wreaked havoc, with some health care providers losing up to an estimated $100 million a day.
On March 5, HHS stated that it would expedite payments to affected hospitals and get other workarounds in motion. CMS is also stepping in, encouraging Medicare Advantage systems and Part D sponsors to relax or remove prior authorizations. It’s also asking MA plans to offer advanced funds to providers and encouraging providers to ask for new electronic data interchanges from their MA contractors to process claims, and to inform their contractors that they must accept these manually processed claims.
So far, Change Healthcare has been hit with six class-action lawsuits following the attack, including three in Tennessee and two in Minnesota where parent company UnitedHealthGroup is headquartered.
On March 12, AHIP released a statement response to the attack, saying:
“Given the very wide variability of impact across the system, individual plans and providers are in the best position to assess how to maintain appropriate payments in a timely manner—and also to minimize the need for reconciliation processes.”
The response goes on to note that exemptions from prior authorizations during this time when systems are making advance payments could expose patients and employers to “fraud, waste and, unnecessary costs.”
The American Medical Association was not impressed with AHIPA’s seemingly lackadaisical response; President Jesse M. Ehrenfeld MD, MPH called out the response as a dumbfounding “business as usual approach” after weeks of silence and lack of assistance by AHIPA.
“This approach is particularly galling since service outages have exacerbated the administrative burdens and care delays already associated with this process,” said Ehrenfeld. “Prioritizing profits over the stability and solvency of our care delivery system starkly contrasts with the Biden Administration’s appeal to health plans to “meet the moment.”
The Effect on Payers
As The Biden Administration and HHS dial up the pressure on payers to create a bridge by making advanced payments to providers, some are feeling the effects of the attack more than others.
Aetna sent a message to providers stating that it is aware that some of its providers are experiencing the lack of timely payments. The insurer said it is working to assess the impact on claims payments and recommended its providers to use other approved transaction vendors. Aetna said it would not “liberalize any prior authorization requirements at this time.”
Humana uses Change Healthcare’s system for about 20 percent of its provider claims before it reaches the insurer, thus making it difficult to examine the total medical expenses, reported Bloomberg. Humana also uses Change for their dental and D-SNP business and said it is still evaluating the effects of the hack. Humana, as well as Elevance have already moved to Change competitor Availity to process payments.
As for UnitedHealth, the insurer has announced two programs to advance funding to providers and has encouraged its rivals to do the same.
Insurance reps are on track to meet with U.S. health officials, reported Bloomberg. This meeting follows an earlier meeting this week attended by UnitedHealth Chief Executive Officer Andrew Witty, along with other industry executives and top US health officials.
The Aftereffect
As we see scrambling providers and frustrated payers, this event may even impact payer-provider relations down the road. How a payer handles this situation and whether or not they make these timely advanced payments to their provider may set the tone for future contracts.
When it’s time to renew contracts, will providers wave off their payers who didn’t provide timely payments or assistance during this crisis? It’s too soon to tell, but one thing is sure: the interdependence of the healthcare industry is vital, especially in times like these.
The 2024 HIMSS conference sparked several innovative discussions amongst leaders.
Tech solutions are taking off, and the 2024 HIMSS conference brought about many important conversations surrounding some of the industries biggest pain points. From ethical AI use to efficiently streamlining data, check out the main talking points.
AI is Taking Off. No longer grounded to the conception stage, AI is moving up to actual implementation and industry benefits. HIMSS24 brought about numerous AI announcements as vendors unveiled use cases and ROI examples.
As new AI centered partnerships spring up, providers are collaborating with EHR designers and digital health companies to streamline data for doctors and nurses to improve care and ultimately, their work-life balance. One popular case that tech leaders are zooming in on is that of ambient AI which has the ability to capture conversations and turn them into clinical notes, which could, in time, take the tedious process of note taking out clinicians hands.
AI Value and Governance. Already a familiar conversation, the governance of AI has turned everyone's head. Financial value vs clinical outcomes was a big conversation as the Coalition for Health AI (CHAI) released its newest collaborations aimed at creating guidelines for the ethical use of AI.
Conversations about the ethical use of AI have popped up everywhere with looming questions around value, AI use by payers in claims management, and government guidance.
Cyberattacks. Cybersecurity is obviously still a massive concern. As health systems continue to flounder in the recent cyber attack on Change Healthcare, which even limited attendance this year at HIMSS, industry leaders are focused on how their organizations can limit damage when the next inevitable cyber attack hits.
The Foundation of Data. HIMSS24 kept its longtime focus on interoperability. The innovation conversation is shifting from “how can these new gadgets help?” to “how can we gather, store and manage data better?” Connectivity seems to be the overarching solution, as health leaders examine solutions that create digital data highways from patient to care team.
Providers are looking at strategies and tech can help them take in, sort and efficiently use the data they want and need. To handle these massive amounts of data, providers will be looking at solutions that are fast and limit their manual labor, regardless of EHR platform and HIT framework.
A new release showed the Detroit-based insurer had a net income of $100 million in 2023, which was 0.2% of the insurer’s total revenue. This was up from a $777 million loss in 2022.
Driven by increased medical costs, the company reported a $544 million underwriting loss, but it was later offset by earnings in investments and subsidiary profits.
In the news release BCBSM CEO stated: “The health care economy, in Michigan and nationally, is experiencing an extreme wave of cost pressures brought on by surging utilization and skyrocketing demand for high-cost pharmaceuticals,” said BCBSM president and CEO Daniel J. Loepp. “Despite these extraordinary pressures, Blue Cross retained our membership, managed a positive financial margin, and continued our dedicated efforts to promote affordable health coverage for our members in 2023.”
A handful of specific items affected BCBS’s finances in 2023. Other payers can note the uptick in pharmaceutical expenses and how Medicare Advantage kept BCBS’s total membership strong.
Check out the infographic below to see four items to note about BCBS’s 2023 finances.