Tuesday, June 30, 2015

According to a recent study of almost 400 physician networks in silver-level plans sold nationally in 2014:

  • 11% of the plans covered fewer than 10% of physicians in the plan’s region
  • 30% of the plans covered between 10% and 25% of physicians in their region
  • Only 11% of the plans covered at least 60% of physicians in their region

 Source: "The Skinny on Narrow Networks in Health Insurance Marketplace Plans," The Robert Wood Johnson Foundation, June 2015, http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2015/rwjf421027

With PPACA intact, path to carrier deals is clearer

By Zachary Tracer

June 26, 2015

 (Bloomberg) -- With Thursday’s Supreme Court ruling on President Barack Obama’s health care overhaul out of the way, health insurers and hospitals can get back to making deals.

The court’s 6-3 ruling in the King v. Burwell case keeps U.S. subsidies flowing to more than 6 million people to help them afford health insurance. That means more paying customers for hospitals and insurers and lifts a cloud hanging over the health care sector.

Uncertainty over the case “was the biggest obstacle to M&A that existed in the health care industry,” said Bill Bithoney, a managing director in the consulting firm BDO USA’s health care advisory practice. “People didn’t know what was going to happen.”

Now that they do, consolidation may speed up. Aetna Inc. is said to be nearing an acquisition of Humana Inc., Bloomberg reported Thursday after the court ruling. And on June 20, Anthem Inc. went public with a bid for Cigna Corp.

Among large insurers, Aetna and Humana had the most riding on the court’s ruling, said Ana Gupte, an analyst at Leerink Partners. As much as 2 percent of their 2016 earnings were at stake, she estimated.

If deals for Humana and Cigna are consummated, the U.S. would be left with three giant health insurers in control of much of the market. So far, Cigna has rejected Anthem’s $184 cash-and-stock bid, and said its concerns included governance and a data breach at Anthem. Anthem has said it still wants to do a deal.

The exact terms of Aetna’s offer for Humana weren’t reported. Representatives of Aetna and Cigna declined to comment on Thursday. A Humana spokesman didn’t return requests for comment.

Hospital Deals

The health care industry has been leading M&A activity in the past year. A record $400 billion of deals had been announced in the 12 months ended May 31. That figure includes drug and biotechnology transactions.

The ruling could also clear the way for hospital acquisitions, and stocks of the companies rose Friday, extending Thursday’s jump following the ruling, which kept millions of potential patients insured instead of showing up in the emergency room without coverage. The industry may also need to bulk up to compete with insurers in negotiations over medical services.

HCA Holdings Inc. rose 1.6 percent to $92.20 at 10:21 a.m. in New York. Community Health Systems Inc. gained 2 percent to $63.70, and Tenet Healthcare Corp. advanced 2.7 percent to $57.75.


“You’re going to see dramatic consolidation within the hospital industry because they already have very thin margins,” said Chris Sassouni, a portfolio manager at Eagle Asset Management. “Scale will win.”

Overall, about 10 million people have purchased health insurance on the exchanges set up by the health-care overhaul. That figure is projected to double next year, leaving plenty of expansion potential for both sectors.

“Most insurers are breathing a sigh of relief and getting on with their business,” said Dan Mendelson, chief executive officer of Avalere Health. The ruling is “good news for insurers who have invested in these markets and in the process of making a go of it commercially.”

--With assistance from Doni Bloomfield, Ryan Sachetta and Ed Hammond in New York and Matthew Campbell in London.

"When done effectively

... exit interviews identify risks and provide valuable insights into [the effectiveness of compliance programs] and an organization's culture."

— Maureen Weaver, an attorney with Wiggin and Dana in New Haven, Conn., told the audience at a recent Health Care Compliance Association webinar.

Today's Datapoint

More than 80 managed care firms offer Medicaid and also sell qualified health plans through public exchanges, according to AIS's Directory of Health Plans: 2015.

Value-Based Reimbursement Trends and Attitudes

Black Book recently published a survey of over 200 ACOs and 1000 provider organizations regarding ACO infrastructure. Here are some key findings from the report:

·         95% of ACO and provider-based plan executives ranked financial solutions as the top infrastructure priority.

·         1 in 5 ACOs and 8% of others believe they have the financial technology to be successful long term.

·         59% of CFOs are caught between management that sustains FFS reimbursement and ACO solutions.

·         Three quarters of new ACOs don't have enough capital to become competitive in value-based care in 2015.

·         40% of hospitals use population health solutions but only 14% have ACO risk management tools.

·         By 2019, 50% of payments will be made through a value-based program, up from 12% of payments now.

Source: Black Book, June 17, 2015

CMS’ Open Payments posts full year of 2014 financial data




June 30, 2015                                                                                                                          


Contact: CMS Media Relations

(202) 690-6145 | CMS Media Inquiries

CMS’ Open Payments posts full year of 2014 financial data

Financial transactions between doctors and medical manufacturers total $6.49 billion


The Centers for Medicare & Medicaid Services (CMS) today published 2014 Open Payments data about transfers of value by drug and medical device makers to health care providers. The data includes information about 11.4 million financial transactions attributed to over 600,000 physicians and more than 1,100 teaching hospitals, totaling $6.49 billion.


Acting CMS Administrator Andy Slavitt said, “Consumer access to information is a key component of delivery system reform and making the health care system perform better. In year 2, Open Payments is now a highly searchable resource to provide transparency to over 1 1/2 years’ worth of financial transactions between drug and device companies and physicians and teaching hospitals. This is part of our larger effort to open up the health care system to consumers by providing more information to help in their decision making.”


For all 2014 and 2013 data, CMS was able to validate that 98.8% of all records submitted in the Open Payments system contained accurate identifying information about the associated covered recipient. Records that could not be verified to align to an individual covered recipient were rejected and were not processed by the system. CMS will continue to update the Open Payments website annually with data collected from the previous year.


Dr. Shantanu Agrawal, CMS deputy administrator and director of the agency’s Center for Program Integrity, said the agency has improved the Open Payments’ user interface to highlight valuable information for people who want to view payments and other financial transactions involving doctors, hospitals, and drug and medical device makers. Other consumer website upgrades are expected in late summer.


“CMS’ role is to facilitate discussion and analysis of the data by making it publicly available for consumers and researchers,” Agrawal said. “CMS has improved our interfaces for both collecting and reporting this data about compensation and other payments between drug and medical device manufacturers and physicians and teaching hospitals.” 


The Open Payments program, created by the Affordable Care Act, requires drug and device manufacturers to report transfers of value (i.e., payments, honoraria or research grants) to health care providers, as well as other industry-related investments providers may have. The program relies on voluntary participation by physicians and teaching hospitals to review the information submitted by these companies. Registered physicians and teaching hospitals reviewed nearly 30% of the total value of the reported data. “We are pleased that so many providers participated this year, but will continue to work with doctors and hospitals to increase their review rate,” Agrawal said.


An analysis of the physicians and teaching hospitals included in reported data reveals that there are distinct differences between those that have registered and those that have not. For example, the median value of total payments made to registered physicians is $3,644, compared to $747 made to non-registered covered recipient physicians.


Today’s data posting also includes a group of 2013 submissions that could not be verified before the first data publication last September, 2014.


“We expended a tremendous level of effort to resolve inconsistencies in the reporting of these 2013 transactions and are very pleased to be able to align them with the rest of the payments,” Agrawal said.


CMS will update the Open Payments data at least annually to include updates to data disputes and other data corrections made since the initial publication. The financial data available through Open Payments was submitted by applicable drug and device manufacturers and applicable group purchasing organizations (GPOs). The accuracy of all data included in Open Payments reporting is attested to by the submitting manufacturer or GPO.


Prior to publication of any Open Payments data, physicians and teaching hospitals are given the opportunity to register with the Open Payments system to review and dispute data submitted about them by applicable manufacturers and applicable GPOs. With this data release, both the 2014 and 2013 financial records are now available as part of the Open Payments dataset.


CMS will refresh and publish an update to the full calendar year of 2014 financial data in early 2016. For more information, please visit: https://www.cms.gov/openpayments/index.html and https://openpaymentsdata.cms.gov.

CMS continues to implement the premium stabilization programs




June 30, 2015                                                                                                                          


Contact: CMS Media Relations

(202) 690-6145 | CMS Media Inquiries


CMS continues to implement the premium stabilization programs


Today, the Centers for Medicare & Medicaid Services (CMS) took the next steps in implementing two of the Affordable Care Act’s premium stabilization programs – risk adjustment and reinsurance – that help keep premiums affordable and provide consumers with a range of coverage choices. CMS released a report detailing the estimated reinsurance payments by issuer and providing additional information on the premium stabilization programs.


“These important programs are protecting consumers’ access to a wide range of affordable coverage choices in a new health insurance market in which no one can be denied coverage or charged higher premiums simply due to a pre-existing condition,” said Kevin Counihan, CEO of the Health Insurance Marketplaces. “The early results for the risk adjustment and reinsurance premium stabilization programs demonstrate that these programs are working as intended, which will help keep premiums stable and encourage insurance companies to compete on quality and price, not who can attract the healthiest enrollees.”


Before the health care law, the individual markets in most states allowed issuers to deny coverage to people with pre-existing conditions, preventing many Americans from accessing quality, affordable health coverage. The Affordable Care Act changed that by guaranteeing people who may have a medical condition with access to such insurance plans. The premium stabilization programs are designed to stabilize the market as guaranteed access is implemented and reduce the incentive to enroll only healthy and low-risk individuals.


The transitional reinsurance program helps keep premiums stable and affordable for consumers by protecting against high-cost claims from individual market consumers, which could otherwise force insurance companies to raise their premiums. The permanent risk adjustment program protects consumers’ access to a range of affordable coverage options by reducing the incentive for insurance companies to seek to insure only healthy individuals. The temporary risk corridors program, which is not covered in today’s report, keeps premiums affordable and stable for consumers by mitigating uncertainty in claims costs during the first three years of the Marketplaces, which encourages issuers to price competitively. Risk corridor payments will be calculated later this year.


CMS has worked with issuers for months on the data submissions for the premium stabilization programs, providing technical assistance to make sure that insurance companies submitted complete data. After analyzing the data submitted by issuers of their reinsurance contributions and requested reinsurance payments, CMS determined that the number of eligible high cost claim expenses were lower than expected for the 2014 benefit year. Because of these lower than expected claims, CMS recently announced that, consistent with its regulations, instead of paying 80 percent of eligible high cost claim expenses (that is, expenses between $45,000 and $250,000), all eligible claim expenses for the 2014 benefit year would be paid at 100 percent.


The report released today details the total estimated reinsurance payments by issuer and also provides summary level information on the program. The report includes issuers’ risk adjustment charge or payment information. In addition, the report includes an early assessment of the risk adjustment program that shows the program is working as intended by compensating issuers who enrolled higher risk individuals, helping protect against adverse selection within a market. Issuers will use the reinsurance and risk adjustment amounts to calculate their risk corridor payments and medical loss ratio rebates, if any. 


Monday, June 29, 2015

Aetna is said to be closing in on acquisition of Humana

 (Bloomberg) — Aetna Inc. (NYSE:AET), the second-largest U.S. health insurer by market value, is closing in on an acquisition of Humana Inc. (NYSE:HUM) and could reach a deal as early as this weekend, several people with knowledge of the matter said.

Humana shares rose 8 percent to $198.99 at 1:47 p.m. in New York, the biggest intraday gain since May 29. Aetna shares rose 2.8 percent to $131.07.

Discussions between the two companies have intensified during recent days, after it emerged over the weekend that rivals Anthem Inc. (NYSE:ANTM) and Cigna Corp. (NYSE:CI) had held merger talks of their own, said the people, who asked not to be identified discussing private information.

Efforts to protect insurers could make sitting alone increasingly uncomfortable.

Aetna made a formal bid this week in the form of cash and stock, the people said. While the exact offer details weren’t available, any proposal would probably value Humana above its $28 billion market capitalization as of Wednesday’s close.

Humana has received two offers, one from Aetna and another from Cigna, said another person. The Humana board prefers the offer from Aetna, the person said.

A representative for Humana didn’t respond to requests for comment. Representatives for Aetna and Cigna declined to comment.

Should Humana agree to sell itself to Cigna, it would run the risk of Cigna’s shareholders voting down a deal to try and persuade the company to sell itself to Anthem, which last weekend said it had offered to pay $184 a share for Cigna.

No agreement yet

No agreement between Humana and Aetna has been reached, the people cautioned, adding that Humana could still agree to a different transaction, such as selling itself to Anthem, which has also previously expressed interest, or Cigna, the person said.

UnitedHealth Group Inc. (NYSE:UNH), the largest U.S. health insurer, could also make a bid for Aetna, complicating the situation even further. The U.S. health insurance sector is undergoing a period of intense deal activity, with the five largest insurers based on market value all working either to sell themselves or buy a rival.

Humana’s 3.2 million Medicare Advantage members have made it a target, as more Americans turn 65 and become eligible for the health program for the elderly and its private insurer-run version.

“Medicare Advantage is a coveted space,” Michael Bernstein, a partner at Baird Capital’s U.S. private equity team who focuses on health care, said in an interview. “To develop a similar scale in Medicare would take a great deal of work and time, which would be bypassed by making that transaction happen.”

Medicare business

Medicare Advantage membership is expected to rise to 68.4 million in 2023, up 26 percent from this year, according to the Centers for Medicare & Medicaid Services (CMS). Humana, based in Louisville, Ky., insures more than 14 million people through commercial, Medicare and Medicaid plans.

Some of the consolidation talk has been fueled by the Patient Protection and Affordable Care Act (PPACA). The 2010 law overhauled the U.S. health care system with new rules that force insurers to look for efficiencies. The law also provided subsidies to help people afford insurance, creating millions of new customers that the companies are racing to capture.

Today’s Supreme Court decision upholding a key piece of the PPACA helps remove a potential obstacle. The decision keeps U.S. subsidies flowing to more than 6 million people who use the PPACA health insurance exchanges operated by the U.S. Department of Health and Human Services (HHS).

—With assistance from Ryan Sachetta in New York

Copyright 2015 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

And Then There Were Two: Mass. Struggles to Make Duals Demo Succeed

By James Gutman - June 24, 2015

Massachusetts had probably the toughest assignment in making a CMS-backed demonstration for Medicare-Medicaid dual eligibles work — and it’s about to get even harder. Fallon Total Care, one of three chosen plans that actually started the demo (three others dropped out before the demo started in late 2013), said on June 16 that it would leave the program Sept. 30. It had tried to find a way to stay, Fallon said, but ultimately had to decide that continued participation was “not economically feasible.”

This will leave only Commonwealth Care Alliance and the Network Health unit of Tufts Health Plan as participants, and CCA last August told staff members it was losing $1 million a month because of such issues as difficulties finding cost-effective outpatient care and services for duals with major behavioral health disorders. Losses have declined since then, CCA CEO Bob Master, M.D., told The Boston Globe, but he added that “we do not think we will get to break-even until 2016.” And this is even after the federal and state governments acted to add risk corridors for years two and three and a higher-than-previous corridor in year one to aid the Massachusetts demo plans. They also reduced the expected savings percentages, thereby in effect boosting pay for the demo insurers.

So what is the problem in Massachusetts, and what does it mean for the rest of the demo? For one thing, the state is the only demo participant serving only duals under age 65, a population known to have very high rates of serious behavioral health disorders and homelessness. For another, it was the first demo out of the gate and therefore the most susceptible to scare tactics that contributed to very high opt-out rates. The May 2015 state-issued enrollment report shows there were 27,396 duals opt-outs as of May 1, well above the 17,637 duals enrolled in the plan. And this is despite a state survey finding a 94% satisfaction rate among duals who stayed in the demo.

There have been some plan pullouts in other demo states, and a few of the demos are just getting started, so it’s not clear yet to what degree they are experiencing the same problems as in Massachusetts. The other demos have mainly over-65 populations who, perhaps counterintuitively, are less expensive than the under-65 duals, but many of the problems that the Massachusetts plans are experiencing seem likely to be replicated elsewhere.

What do you think will happen with the duals demos in Massachusetts — and elsewhere — in light of the slow-to-develop cost savings? Since seemingly everybody agrees that the goals of the demo, especially true coordinated care for one of the nation’s most vulnerable and costly populations, are absolutely correct, what is the major problem, and how can it be solved? What can be done to keep health plans in these programs without giving away more than anyone can afford? How do we prevent what was conceived of as a great opportunity for both plans and beneficiaries from becoming just a footnote in a history book about well-intentioned failures?

On integrating social tools

The Lead

Jun 29, 2015 | By Anthony Iannarino

You’ve probably heard about social selling by now. But how you use social tools can affect their value.

The proponents of social selling are right about its benefits and wrong in their criticism of other methods of prospecting. And the critics of social selling are right about the far greater benefits of what I call “traditional selling” and wrong in some of their criticism of social selling. The key to good prospecting is, was and always will be an integrated approach.

Proponents of social selling suggest that cold calling is dead, that selling is only serving (providing information) and that the way buyers buy has changed so radically that you can no longer ask for a sale without alienating your prospect. Their criticism of traditional selling is both wrong and self-serving.

Cold calling still works, as do all the other methods of prospecting (such as asking for referrals, for example). Providing the right information at the right time has always been helpful to buyers and a good strategy for salespeople. But if that is all the value you bring, you are already being beat out by Google and YouTube.

The social selling proponent’s worst and most harmful critique is that asking for any kind of commitment is too aggressive—too “sales-y”—and will irreparably damage your relationship with your prospect. Nothing could be further from the truth. Selling is conversations and commitments.

This criticism is self-serving. It’s easy to sell struggling salespeople the hope that they can acquire the prospects they need without picking up the phone. And it’s easy to sell them your solution if they believe that cold calling doesn’t work. Furthermore, a lot of salespeople (especially young ones) would love to believe they can create and win new opportunities without asking for the commitments they need.

Some of the criticism of social selling is that it doesn’t work, that it is really just salespeople wasting time online and that it doesn’t have a place in a struggling sales organization. The way social selling proponents talk about selling, you can understand the criticism. They talk about an accepted connection request on LinkedIn as if it is as valuable as a booked appointment. 

The right answer when it comes to prospecting is an approach that integrates the best methodologies for what you sell, how you sell, what your buyers buy, where they are and how you best engage with them. This is most likely some combination of new tools for research, connecting, and nurturing relationship combined with the old tools and methods for getting face-to-face appointments.

Use social tools in the most effective way — by combining them with traditional approaches.

In 2014, 95% of those with Medicaid health coverage all year

... had a regular doctor, and 55% said their care was excellent or very good; while only 77% of people without any health insurance said they had a regular doctor and 40% said they were given good care.

Source: "New Report: Experiences with Medicaid Coverage as Good or Better Than Private Coverage, Beneficiaries Say," The Commonwealth Fund Press Release, June 24, 2015, http://www.commonwealthfund.org/publications/press-releases/2015/jun/medicaid-coverage-release

CMS Might Take Deeper Dive Into Outlier Drug Costs to Find Discriminatory Designs

Reprinted from INSIDE HEALTH INSURANCE EXCHANGES, a hard-hitting newsletter with news and strategic insights on the development and operation of public and private exchanges.

By Steve Davis, Managing Editor

June 2015 Volume 5 Issue 6

CMS is now reviewing 2016 plan designs for individual policies sold on and off of exchanges, and is expected to send deficiency notices to some carriers by the end of June. Recent actions in Florida and California to eliminate potentially discriminatory pharmacy benefits could prompt CMS to pay closer attention to qualified health plans (QHPs) that might create financial barriers for populations with costly chronic diseases, industry observers tell HEX.

On May 21, the board of California’s state-run insurance exchange voted to cap prescription drug copays between $150 and $500 per month, with the majority capped at $250 (see story, p. 8). Last fall, the Florida Office of Insurance Regulation (FOIR) called on several insurance carriers to reclassify certain HIV/AIDS medications.

As a result, most HIV/AIDS drugs previously categorized as specialty drugs in the highest-cost tier of the drug formulary have been reclassified as either generic or non-preferred brand drugs and moved into the lower cost tiers. The ACA requires the public exchanges to assure that QHP benefits are non-discriminatory.

Industry observers contacted by HEX say state regulators and carriers need more guidance from CMS outlining what is considered discriminatory.

CMS May Look for Rx Outliers

In its Final 2016 Letter to Issuers in the Federally-Facilitated Marketplaces, CMS said it is “considering” a review of each QHP to identify out-of-pocket-cost outliers for five chronic conditions: bipolar disorder, diabetes, HIV, rheumatoid arthritis and schizophrenia.

The review will be based on estimated out-of-pocket costs associated with standard treatment protocols. Potentially discriminatory practices, it noted, include “placing most or all drugs that treat a specific condition on the highest tiers.” Carriers with products flagged as potentially discriminatory will have time to either alter the design or submit justification with supporting documentation to CMS or the state explaining how the plan design is not discriminatory, according to the agency.

In a May 15 letter to HHS Sec. Sylvia Burwell, a group of more than 200 patient and community advocacy groups — dubbed the I AM (Still) Essential coalition — advocated for changes in essential health benefits for the 2016 plan year. The timing of the letter coincided with the deadline by which carriers were required to submit their plan designs and rates for the 2016 plan year.

Issue Is Challenging for CMS

Benefit-design discrimination is a new issue for CMS, as well as for state regulators. “And it’s a challenging one,” notes Joel Ario, managing director at Manatt Health Solutions. “I think [CMS] certainly will scrutinize [2016] plan designs, but where exactly the line is to be drawn is an open question,” he says. “If it’s clear cut that all drugs are treated equally, with the exception of a few drugs that have a very specific applicability for a very specific population, then I think you would see action on it. But if there’s a wide range of drugs, and the argument is whether a particular set of drugs is treated differently, then it’s harder to draw that line.” Ario was the first director of CMS’s Office of Health Insurance Exchanges.

For shoppers with a chronic condition, choosing the most cost-effective plan can be daunting because many QHPs require coinsurance for the highest tier on the formulary. “Patients have found it difficult to translate coinsurance percentages into an actual dollar value,” says Elizabeth Carpenter, a director at Avalere Health LLC.

The motivation for caps on drug copays is to protect the patient from costs and to ensure medication adherence. But there are tradeoffs. Caps or other rules that restrict pharmacy design could boost premiums and reduce the level of flexibility carriers have in developing plan designs that hold down premiums, she adds.

While the ACA prohibits discrimination through benefit design, it also notes that insurance carriers shouldn’t be prevented from encouraging efficient utilization and medical management through strategies such as exclusions, cost sharing, drug formularies and utilization management.

In May 2014, The AIDS Institute and The National Health Law Program (NHeLP) filed an administrative complaint with the Office for Civil Rights (OCR) concerning four silver-level QHPs in Florida. An analysis by The AIDS Institute of 36 plans in the state showed that QHPs offered by four plans — Aetna subsidiary Coventry Health Care, Inc., Cigna Corp., Humana Inc. and Preferred Medical Plan, Inc. — “charge inordinately high co-payments and co-insurance for medications used in the treatment of HIV and AIDS.”

That prompted FOIR to conduct an in-depth review of potentially discriminatory practices among carriers in the state. Last fall, Insurance Commissioner Kevin McCarty reached an agreement with those carriers to implement short-term measures limiting cost-sharing responsibility for HIV/AIDS drugs in the highest tier of their drug formularies, to eliminate prior authorizations or step therapy for such prescribed medications or treatments, and to look for long-term solutions that would better address the affordability and accessibility of HIV/AIDS medications for Floridians.

Florida state law specifically prohibits discrimination based on whether a person is living with HIV/AIDS, says FOIR spokesperson Amy Bogner.

“The opinion of the commissioner was that the plans were designed to encourage people with HIV/AIDS to select a different carrier. While the drugs can be expensive, the cost of acute care for those patients can be substantial,” says Mike Adelberg, a former senior official in CMS’s Center for Consumer Information and Insurance Oversight (CCIIO), now at FaegreBD Consulting in Washington, D.C.

As of June 1, Floridians covered by an individual policy from Aetna Inc. or its subsidiaries can purchase all non-invasive, oral HIV/AIDS drugs as generic or non-preferred brands for individual policies sold on and off of HealthCare.gov. The change will lower patient cost-sharing for those products to fixed dollar copays of between $5 and $100 after applicable deductibles are met, Aetna spokesperson Cynthia Michener told HEX sister publication Specialty Pharmacy News in April.

The formulary coverage will extend to individual health plan members in 2016 for policies sold both inside and outside of the exchange. Group products issued by carriers that don’t already include that formulary coverage are being evaluated for similar changes, according to McCarty’s office.

The outlier is Fuzeon (enfuvirtide), which will stay on the specialty tier, because it is a self-injectable and requires greater care management. Michener said that Aetna “made the change after an evaluation of our plans and coverage. We will continue our ongoing evaluation of our plans and formularies to ensure they align with current standards of care and deliver the best value to our members.”

Last November, Cigna voluntarily moved its generic HIV/AIDS drugs from the specialty tier to a lower tier in Florida’s federally run exchange, as well as capped member out-of-pocket costs for several drugs. In addition, the insurer removed the 30-day supply limit for a prescription of an HIV therapy.

CMS Has Tools to Find Outliers

CMS has tools that can identify formulary outliers. They also can dig into whether a benefit covers clinically appropriate care for a specific disease, such as diabetes. But the tools might not be enough to determine whether a plan design is discriminatory. It’s typically not until claims are paid that it can be determined how much someone with a specific disease is paying for care. And while it has sophisticated tools, CMS hasn’t indicated how, or if, they will be used.

When it comes to regulating carriers, CMS typically shows deference to state insurance commissioners. Although the issue of discriminatory plan design is on the radar of the National Association of State Insurance Commissioners, few, if any, states have the qualitative rigor needed to conduct a sophisticated analysis of benefit designs. Moreover, they generally don’t have clinicians, pharmacists or statisticians on staff. Identifying outliers might be easier for states where only a few carriers compete.

More Plans Put Chronic Condition Drugs on Specialty Tier

Some health plans sold on public insurance exchanges place all drugs used to treat complex diseases — such as HIV, cancer and multiple sclerosis — on the highest drug formulary cost-sharing tier, according to Avalere Health LLC.

SOURCE/METHODOLOGY: Avalere Health, February 2015. Based on a sample including silver-tier plans in six federally facilitated exchange states (Fla., Ga., Ill., N.C., Pa. and Texas) and in California and New York, which operate state-based exchanges. Avalere analyzed brand and generic drug coverage in 20 classes, including a mix of specialty and primary care drugs. See the report at http://tinyurl.com/on2z7b9.

Seven Numbers to Consider After The SCOTUS King v Burwell Decision

1.    6.4 Million - the number of people whose subsidized coverage was at stake in the decision

2.    6,470 - the number of words in the Chief Justice's Opinion (including footnotes)

3.    329 - the number of days elapsed since the Petition for a writ of certiorari was filed with SCOTUS

4.    113 - the number of days elapsed since arguments commenced with the the case

5.    34 - the number of states affected by the decision (unless you count 3 more - OR, NV & NM who's impact was in question)

6.    6 - the Justices voting in the majority, including Roberts, Kennedy, Ginsburg, Breyer, Sotomayor & Kagan

7.    3 - Dissenting Justices, including Scalia, Alito and Thomas

Source: MCOL Research

36 Million Americans Lacked Health Insurance in 2014

The Centers for Disease Control and Prevention recently released estimates from the National Health Interview Survey of 2014. Here are some key findings from the report:

·         In 2014, 36 million people (11.5%) were uninsured.

·         The uninsured rate for people under age 65 in was 13.3%, or 35.7 million.

·         4 million children aged 0-17 were uninsured (5.5%).

·         16.3% (31.7 million) of adults aged 18-64 were uninsured.

·         19-25 year olds had an uninsured rate of 20% (6 million).

·         Adults aged 18-64 were nearly three times as likely as children to be uninsured.

Source: Centers for Disease Control and Prevention, June, 2015

41% of employees

say they witness misconduct at work, but 33% don't report it, according to the 2013 National Business Ethics Survey.

"Words no longer have meaning

meaning if an Exchange that is not established by a State is 'established by the State.' It is hard to come up with a clearer way to limit tax credits to state Exchanges than to use the words 'established by the State.' And it is hard to come up with a reason to include the words 'by the State' other than the purpose of limiting credits to state Exchanges. '[T]he plan, obvious, and rational meaning of a statute is always to be preferred to any curious, narrow, hidden sense that nothing but the exigency of a hard case and the ingenuity and study of an acute and powerful intellect would discover.' Lynch v. Alworth-Stephens Co., 267 U.S. 364, 370 (1925). Under the usual rules of interpretation, in short, the Government should lose this case. But normal rules of interpretation seem always to yield to the overriding principle of the present Court: The Affordable Care Act must be saved."

— U.S. Supreme Court Justice Scalia, in his dissenting opinion in King v. Burwell, which was joined by Justices Thomas and Alito.

Friday, June 26, 2015

According to a recent analysis, in 2013 (the most recent year that data is available):

  • 37.6% of private-sector employers self-insured at least one of their health plans, up from 26.5% in 1999
  • 58.2% of workers with health coverage were in self-insured health plans, up from 40.9% in 1998
  • 83.9% of employers with 500 or more employees self-insured at least one health plan, up from 66.2% in 1999
  • 64.6% of firms with 50 or more employees offered at least one self-insured plan, compared with 13.2% among firms with fewer than 50 employees
  • 13.2% of workers in firms with fewer than 100 employees were in self-insured plans, down from 20.7% in 1997

Source: "Self-Insured Health Plans: State Variation and Recent Trends by Firm Size, 1996–2013," Employee Benefit Research Institute (EBRI), June 2015, http://www.ebri.org/pdf/notespdf/EBRI_Notes_06_June15_SI-AutoIRAs.pdf

45 years in prison

...was the sentence handed down on June 9 to the former president of Riverside General Hospital in Houston, for his role in a Medicare fraud scheme.

"What [Humana's decision to not speak publicly for six weeks] tells

... me is that there is something going on here. The timing is still a little bit uncertain but the players remain the same: Cigna, Aetna and Anthem. All three, from what I understand right now, are bidding for Humana."

— Vishnu Lekraj, senior health care analyst for Morningstar Inc. in Chicago, told AIS's Health Plan Week.

About 72.1 million wearable devices

... will be shipped this year, a new report estimates, a clear sign that the market will not be slowing down anytime soon. There were 26.4 million wearables shipped last year; if its estimate holds true for 2015, that will be a growth of 173.3 percent.
Source - International Data Corporation

Accountable Care Organization (ACO) Investment Model



June 25, 2015                                                                                                                          


Contact: CMS Media Relations

(202) 690-6145 | CMS Media Inquiries

Accountable Care Organization (ACO) Investment Model


Accountable Care Organizations (ACOs) are groups of doctors, hospitals, and other health care providers, who come together voluntarily to provide coordinated, high-quality care to their Medicare patients to help them deliver better care at lower cost.

The goal of coordinated care is to ensure that patients, especially people with chronic conditions, get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors.

ACOs represent one part of a comprehensive series of initiatives in the Affordable Care Act that are designed to lower costs and improve care. When an ACO succeeds in both delivering high-quality care and spending health care dollars more wisely, it will share in the savings it achieves for the Medicare program.

Medicare currently offers or is planning to offer several ACO initiatives:

  • Medicare Shared Savings Program
  • Pioneer ACO Model
  • Next Generation ACO Model
  • Advance Payment ACO Model
  • Comprehensive End Stage Renal Disease (ESRD) Care Initiative

This fact sheet provides a general description of the ACO Investment Model, a new ACO model being offered to support the Medicare Shared Savings Program ACOs. 

Summary of the ACO Investment Model

The ACO Investment Model is an initiative developed by the Center for Medicare & Medicaid Innovation (Innovation Center) for organizations participating as ACOs in the Medicare Shared Savings Program (Shared Savings Program). The ACO Investment Model is a new model of pre-paid shared savings that builds on experience with the Advance Payment Model to encourage new ACOs to form in rural and underserved areas and current Medicare Shared Savings Program ACOs to transition to arrangements with greater financial risk.

The ACO Investment Model will be available to:  

1) New Shared Savings Program ACOs that joined in 2015 or are joining in 2016. The ACO Investment Model seeks to encourage uptake of coordinated, accountable care in rural geographies and areas where there has been little ACO activity, by offering pre-payment of shared savings in both upfront and ongoing per beneficiary per month payments. CMS believes that encouraging participation in areas of low ACO penetration may spur new markets to focus on improving care outcomes for Medicare beneficiaries. 

2) ACOs that joined the Shared Savings Program starting in 2012, 2013 or 2014. Here, the ACO Investment Model will help ACOs succeed in the Shared Savings Program and encourage progression to higher levels of financial risk, ultimately improving care for beneficiaries and generating Medicare savings.


CMS is encouraging providers to participate in ACOs through the Medicare Shared Savings Program, which creates financial incentives for ACOs that lower growth in health care costs while meeting performance standards on quality of care and putting Medicare beneficiaries first. 

The Innovation Center

The Innovation Center was created by the Affordable Care Act to test innovative payment and service delivery models to reduce program expenditures while preserving or enhancing the quality of care. It is committed to transforming the Medicare, Medicaid and Children’s Health Insurance Programs and is expected to help deliver better care for individuals, better health for populations, and lower growth in expenditures for Medicare, Medicaid and CHIP beneficiaries.

Working in concert with the Shared Savings Program, the Innovation Center is testing the ACO Investment Model and the Pioneer ACO Model, and has sponsored learning activities that help providers form ACOs and improve their results.  More information on all of these initiatives is available on the Innovation Center website athttp://innovation.cms.gov.   

The ACO Investment Model was developed in response to concerns and available research suggesting that some providers lack adequate access to the capital needed to invest in infrastructure necessary to successfully implement population care management.

Structure of Payments

New ACOs

Under the ACO Investment Model, ACOs that will begin participating in the Medicare Shared Savings Program on January 1, 2015 or January 1, 2016 will receive three types of payments:

  • An upfront, fixed payment:  Each ACO receives a fixed payment.
  • An upfront, variable payment:  Each ACO receives a payment based on the number of its preliminarily prospectively-assigned beneficiaries.
  • A monthly payment of varying amount depending on the size of the ACO:  Each ACO receives a monthly payment based on the number of its preliminarily prospectively-assigned beneficiaries.

The structure of these payments addresses both the fixed and variable costs associated with forming an ACO. 

Existing ACOs

Under the ACO Investment Model, ACOs that began participating in the Medicare Shared Savings Program on April 1, 2012, July 1, 2012, January 1, 2013, or January 1, 2014 will receive two types of payments:

  • An upfront, variable payment:  Each ACO receives a payment based on the number of its preliminarily prospectively-assigned beneficiaries.
  • A monthly payment of varying amount depending on the size of the ACO:  Each ACO receives a monthly payment based on the number of its preliminarily prospectively-assigned beneficiaries.

The structure of these payments addresses both the fixed and variable costs associated with making ongoing investments to improve care coordination for existing ACOs. 

Recovery of ACO Investment Model Payments

For ACOs already participating in the Shared Savings Program, CMS will recover the ACO Investment Model payments through an offset of an ACO’s earned shared savings. ACOs selected to receive ACO Investment Model payments will enter into an agreement with CMS that details the obligation to repay ACO Investment Model payments. 

If the ACO does not generate sufficient savings to repay the ACO Investment Model payments as of the first settlement for the Shared Savings Program, CMS will continue to offset shared savings in subsequent performance years and any future agreement periods, or pursue recovery where appropriate.

For ACOs new to the Shared Savings Program in 2015 and 2016, CMS will recover payments from earned shared savings for as long as the participant remains in the Shared Savings Program ACO. CMS will pursue full recovery of pre-paid shared savings from any ACO that does not complete its initial Shared Savings Program agreement period or the full term of the ACO Investment Model agreement.


The ACO Investment Model is expected to help provide support to organizations whose ability to invest in infrastructure and redesigned care processes would be improved with additional access to capital.

In order to be eligible for the ACO Investment Model, an ACO already participating in the Shared Savings Program must meet the following criteria:

1) The ACO must be accepted into and participate in the Shared Savings Program. The ACO’s first performance period in the Medicare Shared Savings Program must have started in 2012, 2013, 2014, or 2015 or will start in 2016.

2) If the ACO started in the Medicare Shared Savings Program in 2012, 2013 or 2014, it has completely and accurately reported quality measures to the Medicare Shared Savings Program in the most recent performance year, excluding ACOs that started in 2015 or that will start in 2016.

3) The ACO has a preliminary prospective beneficiary assignment of 10,000 or fewer beneficiaries for the most recent quarter, as determined in accordance with the Shared Savings Program regulations.  However, ACOs that started the Medicare Shared Savings Program in 2015 or will start in 2016, and are determined to be from a rural area using the application selection criteria, are permitted to exceed the 10,000 beneficiary assignment limit.

4) The ACO does not include a hospital as an ACO participant or an ACO provider/supplier (as defined by the Shared Savings Program regulations), unless the hospital is a critical access hospital (CAH) or inpatient prospective payment system (IPPS) hospital with 100 or fewer beds.

5) The ACO is not owned or operated in whole or in part by a health plan.

6) The ACO did not participate in the Advance Payment Model.

During the selection process, the ACO Investment Model will target new ACOs serving rural areas, areas of low ACO penetration, and existing ACOs committed to moving to higher risk tracks. CMS will also give preference to ACOs that provide high quality of care, achieved their financial benchmark, and demonstrate exceptional financial need.

Application Process

The application period for ACOs that started in 2014 and 2015 -- or will start in 2016 -- will open July 1st, 2015 and close July 31, 2015.

CMS staff will review applications for the applicant organization’s ability to meet criteria identified in the solicitation. All applicants are also required to be accepted into the Shared Savings Program, in accordance with program rules. 


In the first round of applications for ACOs that started in the Medicare Shared Savings Program in 2012 and 2013, the ACO Investment Model has accepted six ACOs into the model.

Additional Resources

More information about the ACO Investment Model, including the Request for Application, is available on the Innovation Center website athttp://innovation.cms.gov/initiatives/ACO-Investment-Model/.  Any questions about the program can be directed to AIM@cms.hhs.gov

For information about the Shared Savings Program, please see: www.cms.hhs.gov/sharedsavingsprogram/.