Quote of the Day

“Everywhere I go, I get a group of people telling me we’re moving too slow [in getting dual Medicare-Medicaid eligibles into integrated programs] and a group of people telling me we’re moving too fast. We’re not going nationwide in these two years, but we do feel some urgency.”
— Melanie Bella, director of the CMS Medicare-Medicaid Coordination Office established by the reform law, told an audience at a recent American Enterprise Institute panel discussion.

Waiting for Employers: Is the Train Finally Leaving the Station?

By James Gutman - May 18, 2012

It has been an article of faith, but now it may finally become an article of fact. Employers that still offer retiree medical benefits — a vanishing but not yet vanished breed — seem at last to be doing what the Medicare health plan industry has been predicting for years. They are, in growing numbers, shifting post-age-65 retirees who have company medical benefits to Medicare Advantage (MA) and stand-alone Prescription Drug Plans (PDPs).

Some of the evidence comes from first-quarter financial reports and earnings calls. Aetna Inc., for instance, said April 26 that of the company’s 44,000 increase in Medicare members in the 2012 first quarter, 75% came from group business. Humana Inc. reported April 30 that it had 385,800 MA members on March 31, up 25% from the 308,600 one year earlier. With figures like this as a backdrop, it did not seem to surprise anyone when employee benefits consulting firm Towers Watson on May 14 agreed to pay $435 million to acquire Extend Health Inc., which runs the largest private Medicare plan exchange.

The reason for the employer sector’s moves now seems to come down to — no surprise — money and convenience. The money stems from a combination of the pure cost of furnishing retiree medical benefits, the impending loss in 2013 for employers that furnish retiree drug benefits of the tax-favored status of the federal Retiree Drug Subsidy and the coming excise tax on insurers, which also applies to self-insured employer plans. The convenience comes from the relative ease of giving retirees a fixed contribution and having them purchase coverage on a private exchange.

With those factors in the forefront, are we now finally in a climate when historically slow-to-decide employers will “push the button” and move retirees to MA plans or PDPs? Or are such factors as inertia, fear of disruption and labor-union contracts going to continue inhibiting these moves? What would happen to this trend if the Supreme Court strikes down the reform law? Would that derail the train before it leaves the station?

http://aishealth.com/blog/medicare-advantage-and-part-d/waiting-employers-train-finally-leaving-station

Today's Datapoint

33% … of consumers are using social media for health-related matters, according to a recent survey by PwC’s Health Research Institute.

Reports Describe Spending Trends and Competition in Medicare Part D

The Kaiser Family Foundation (KFF) released two reports this month that discuss the role of competition in Medicare spending under the Medicare prescription drug benefit (Part D), as well as proposals to address areas of limited competition, which could yield federal savings in the Medicare program.

According to one report, “Medicare Part D Spending Trends: Understanding Key Drivers and the Role of Competition,” net spending in Medicare Part D has been about 30 percent lower than initial projections, which were made when the program was first enacted into law. While many argue that the lower-than-expected spending is a direct result of competition among many Part D plans, the KFF report, “Prescription Drug Procurement and the Federal Budget,” finds that in a couple of key areas of the Medicare prescription drug market, competition is actually quite limited. For instance, because Medicare Part D is unable to efficiently purchase drugs for low-income beneficiaries, the program is not getting the best deal on prescription medications. Rebates from drug companies are generally lower under Part D than they are under Medicaid, resulting in higher drug costs throughout the Medicare program. One KFF report suggests that by applying Medicaid rebates, rather than those prices negotiated by Part D plans, to drugs purchased by low-income beneficiaries, the federal government could save over $100 billion over 10 years without shifting costs onto people with Medicare.

According to both reports, lower Medicare Part D spending is more likely attributed to a number of factors other than competition, including increased utilization of generic drugs. This trend may be influenced in part by private plan benefit designs, such as tiered copayments, that restrict beneficiaries’ access to brand-name medications.

46 Insurers Included in 2012 Fortune 500 List

Berkshire Hathaway cracks top 10 for second year in a row; 14 insurers land in the top 100.

Insurance Networking News, May 10, 2012

Justin Stephani

While the number of overall insurers included in the Fortune 500 diminished slightly yet again—from 49 in 2010 to 47 last year to 46 this year—Nationwide provided insurers with one more top-100 slot by moving up 27 spots.

Berkshire Hathaway earned the top spot among insurers, being placed seventh overall for the second year in a row.

Fortune categorizes all companies in the list, including five categories for insurers: Health Care: Insurance and Managed Care; Insurance: Life, Health (mutual); Insurance: Life, Health (stock); Insurance: Property and Casualty (mutual); and Insurance: Property and Casualty (stock).

The first and last categories listed above—Health Care and P&C (stock)—received the most attention; each had four companies in the top 100, while the former placed 11 companies overall and the latter 15.

For the Health Care category, UnitedHealth Group ranked the highest at 22, followed by WellPoint (45), Humana (79), Aetna (89) and Cigna (130). UnitedHealth Group also ranked second overall among insurers, as AIG dropped from 17 to 33 this year, good enough for third overall and second in the P&C (stock) category behind Berkshire Hathaway. That category also placed Liberty Mutual (84), Allstate (93), Travelers (112), The Hartford (131), USAA (144), Progressive (169), Loews (190) and Chubb (202) in the top-half of the full list.

The P&C (mutual) category placed three insurers overall—State Farm (43), Nationwide (100) and Auto-Owners (429).

Topping the life/health categories were, on the stock side, MetLife (34), followed by Prudential (55), Aflac (128), and on the mutual side, New York Life (86), TIAA-CREF (88), Northwestern Mutual (116) and MassMutual, who dropped 20 spots from last year to 121.

Aflac was also ranked in Fortune’s list of best employers at 77, making itself and USAA, who was ranked 20 among best employers, the only insurers to make both lists.

American Financial Group and Universal American dropped out of the list this year, after placing 489 and 401 in 2011, respectively.

Below is the full list of 46 insurers included in 2012’s Fortune 500 List, with last year’s rankings in parentheses:

7. Berkshire Hathaway (7)

22. UnitedHealth Group (22)

33. AIG (17)

34. MetLife (46)

43. State Farm (37)

45. WellPoint (42)

55. Prudential (64)

79. Humana (79)

84. Liberty Mutual (82)

86. New York Life (71)

88. TIAA-CREF (87)

89. Aetna (77)

93. Allstate (89)

100. Nationwide (127)

112. Travelers (106)

116. Northwestern Mutual (112)

121. MassMutual Life Insurance (101)

128. Aflac (125)

130. Cigna (122)

131. Hartford Financial Services Group (117)

144. USAA (145)

169. Progressive (164)

190. Loews (168)

202. Chubb (185)

219. Coventry Health Care (212)

221. Health Net (179)

247. Lincoln Financial (235)

250. Guardian Life Insurance Co. of America (245)

258. Genworth Financial (243)

260. Unum Group (239)

289. Reinsurance Group of America (290)

295. Principal Financial (268)

310. Assurant (285)

332. Thrivent Financial (318)

382. American Family Insurance Group (358)

385. Amerigroup (396)

401. WellCare Health Plans (420)

411. Mutual of Omaha Insurance (399)

420. Pacific Life (405)

429. Auto-Owners Insurance (425)

453. Centene (493)

471. W.R. Berkley (475)

472. Fidelity National Financial (398)

482. Western & Southern Financial Group (456)

497. Erie Insurance Group (461)

500. Molina Healthcare (—)

Requiem for an Earnings Reporting Season

By James Gutman - May 11, 2012

For those of us crazy enough to listen to all the quarterly earnings calls of publicly held Medicare Advantage and Part D plan sponsors, there always are a few "rewards" in the form of especially quotable remarks of company executives. And the just-completed first-quarter 2012 round of calls was no exception. Beyond the corporate-speak of being "pleased" with their results, as most of the companies said, there were some examples of picturesque speech and candor that seem worthy of special mention.

In the category of imagery use in financial-results comments, consider first Humana Chairman and CEO Michael McCallister's response to a question about companies repositioning themselves to gear up for expected business managing Medicare-Medicaid dual eligibles. "There are a lot of chairs moving around," observed McCallister. On the overall climate facing health plans in 2012, UnitedHealth Group President and CEO Stephen Hemsley said, "We greatly respect the headwinds facing us this year." And in a comment that would make Yogi Berra proud, Health Net, Inc. CEO Jay Gellert, answering a question about the pricing climate in its California market, said, "We're comfortable that we've been able to figure out what's going on with us."

In the candor category, Universal American Corp.'s Greg Scott, CEO of APS Healthcare, which Universal just acquired, gets an honorable mention for "Exchanges are still a 'TBD' for us." Another honorable mention goes to WellPoint, Inc. Chief Financial Officer Wayne DeVeydt for acknowledging that "the senior business is really a long-term turnaround focus." For pure humility, it's hard to top Gellert of loss-reporting Health Net, Inc., who said that "we're deeply disappointed in the first-quarter results and know we'll have to execute for the rest of the year to regain your trust."

But probably the winner and still champion in both categories is the always colorful Coventry Health Care, Inc. Chairman and CEO Allen Wise, who, when speaking of the company's results so far in the Kentucky Medicaid market, said, "Actually, we're getting our tails kicked" and "It's ugly, but it's going to get better." Do you have any other nominees that can top this?

As Generics Wave Continues, Plans Seek Tools to Track and Manage Copay Card Use

Reprinted from DRUG BENEFIT NEWS, biweekly news, proven cost management strategies and unique data for health plans, PBMs, pharma companies and employers.

By Lauren Flynn Kelly, Editor

May 11, 2012 Volume 13 Issue 9

Managed care organizations are increasingly being put in a position of subsidizing consumer copay coupons as pharmaceutical manufacturers attempt to maintain market share of brand-name drugs. And while coupons may be considered beneficial by certain stakeholders outside the pharma industry, there are ways plans can curtail their use without negatively impacting the patient-clinician relationship, suggested two pharmacy benefit experts.

“These cards are coming fast and furious and as we see a record introduction of generics, there’ll be a very close correlation to the number of cards being introduced,” predicted Rob Noel, practice leader, managed care market, at Pharmaceutical Strategies Group, LLC, speaking at the April 26 AIS webinar, “Health Plan Strategies to Combat Consumer Drug Copay Coupons.” As of November 2011, there were 362 cards being offered, compared with just 86 in July 2009, he said, citing a study released by the Pharmaceutical Care Management Association (DBN 11/11/11, p. 7).

While opponents of the cards argue that they raise plan sponsors’ drug costs by steering patients toward high-cost, nonpreferred drugs, pharmacists and physicians are fans of the cards, and consumers know little about their impact on plans, explained Brent Eberle, R.Ph., vice president of health strategies at Wisconsin-based PBM Navitus Health Solutions, LLC, who also spoke at the webinar.

Eberle pointed out that pharmacists are in favor of the cards because they receive a secondary dispensing fee paid by the pharmaceutical company sponsoring the copay card. The drug company essentially acts as the secondary payer because pharmacists submit claims to both the drug company and the insurer. “And if the copay has been a barrier to refill and adherence, it does contribute to increased business as well,” he observed.

Physicians like the cards because they not only enhance access to medications that patients might not otherwise be able to afford, but they come with toll-free numbers and Web sites with a great deal of information about the medication and the patient’s condition, which saves the physician time, added Noel.

Recognizing that there are two sides to the copay coupon debate, Eberle said one of the challenges in looking at ways to manage these cards is determining when it’s appropriate to work against them and when it might be to an insurer’s advantage to work with them.

Aside from traditional plan design strategies such as increased cost sharing for brand and specialty tiers or the more aggressive approach of implementing a closed formulary, Eberle advised that payers consider a more targeted method of removing certain brand products from specific categories that have ample generic options as opposed to eliminating coverage of an entire tier. “This is more of a scalpel approach and can be targeted to specific products and help drive utilization to preferred products, which can lead to increased generic utilization and also can lead to increased rebates on preferred products as your formulary compliance is improved,” suggested Eberle.

Supporters of copay cards have argued that PBMs want to combat their use simply because they’re concerned about losing rebate revenue (DBN 12/16/11, p. 6), but Eberle argued that from Navitus’s perspective, that’s not the case. “100% of all rebate revenue goes directly back to our clients, so we do not benefit in any way, shape or form from rebate revenue. And we combine that in when we do our pharmaceconomic modeling to determine our net cost,” he maintained. “I think if you have a different model or your incentives are different, any spillage away from preferred products does decrease revenue and drive up the plan cost but also could potentially take money away from the PBM if they’re generating revenue from that perspective. Whether it’s being done to increase PBM revenue in those traditional models or decrease plan costs, the end result I think is similar.”

Plans Can Work With Pharmacies, Prescribers

Some additional payer strategies outlined by Eberle are:

·         Utilization edits. “If your hands are tied from a plan design perspective and don’t have the ability to remove specific products from the formulary, the next approach is to get at a similar end result by applying prior authorization and step edits across the brand and specialty products that you are concerned may be targets of copay cards.…And using your step therapy and prior authorization rules, you can work with prescribers to get those policies adopted quickly.”

·         Partnering with the pharmacy network. If plans have an opportunity to work with a more limited pharmacy network, that may be a good opportunity to drive and dictate how these cards are used, such as implementing language in the pharmacy contract that limits the use of cards to only those products that are on formulary. Other options are to mandate plan approval prior to those cards being used or require that the information be provided back to the plan so it can track how many cards are being used and who’s using them. This may not be as doable with a broad network, he added.

·         Member and prescriber education. “It’s pretty clear that members are only hearing one side of the debate in terms of the savings that can be available to them. So it’s really about educating the members on the purpose of the cards, the true cost of the products that the cards are being used for and making sure the members understand there may be times where it’s completely appropriate or where it’s really working against the payers’ true cost, and that includes being prepared with specific examples.” Employers can get involved in this as well through various forums, he suggested. Depending on the relationship that a plan has with its prescriber network, there may also be an opportunity to educate the physician around how the cards are shielding members from true drug costs and the potential negative impact down the road once the cards expire.

Tracking Copay Card Use Is Difficult But Doable

One of the biggest challenges for insurers and PBMs looking to manage copay cards is tracking their use and figuring out which ones are impacting a plan’s membership. That’s particularly difficult because the card is processed after the claim is adjudicated to the PBM, asserted Eberle. “The data that is shared is really limited in most cases to between the sponsor of the card and the pharmacy, and it’s really hard for the payers to get any access to that,” he sighed.

Nevertheless, Eberle said there are several methods a plan can adopt to identify situations where those cards are being used:

·         Monitor tier 3 utilization or utilization of particular products. “If you start to see a spike despite a benefit change such as an increase in copay and you’re still seeing utilization that’s higher than what you’d expect, then it’s very likely that the copays are being offset with some type of discount card.”

·         Develop tracking reports for products being heavily promoted with cards.

·         Ask manufacturers to supply data on the number of cards being used in your market through your rebate contracting group and industry relations team.

There may also be opportunities to partner with a brand manufacturer on a copay card, such as looking to improve adherence in situations where cost is a barrier or offering copay cards for over-the-counter products, he added.