Tag: ACA

In rebound, ACA marketplace to offer more payer options in 2019


Highmark Health turns first-time ACA Exchange Profit in 2017 | DAS Health


Dive Brief:

  • The Affordable Care Act exchanges will see more competition in 2019, according to a new Kaiser Family Foundation report, in a rebound from prior years.
  • An average of four payers per state will participate in the ACA marketplace in 2019, an increase from 3.5 in 2018. Less than one-fifth of enrollees will have one payer option, which is the lowest level since 2016. Despite those increases, the ACA exchanges’ market remains smaller than in the early days of the marketplace.
  • Meanwhile, CMS announced on Wednesday that 804,556 people signed up for a plan through Healthcare.gov in the second week of open enrollment. Nearly 1.2 million Americans have signed up for health insurance so far. Enrollment is trending below the 2018 numbers.


Dive Insight:

Recent years have seen major payers drop out of the exchanges. However, more insurance companies are entering the marketplace and expanding their footprints for next year.

That’s despite Congress spiking the individual mandate penalty in 2019 and the Trump administration expanding low-cost offerings beyond the exchanges. The market stability is evident in the modest premium increases planned in most states in 2019. For the first time, ACA federal exchange premiums for the second-lowest cost silver plans are expected to decrease an average of 1.5%.

In its new report, Kaiser Family Foundation said the state average was five payers in the ACA marketplace in 2014, including only one in New Hampshire and West Virginia and 16 in New York. That average increased to six per state in 2015 before falling to 5.6 in 2016 and then 4.3 in 2017, as multiple payers left the marketplace because of losses and market instability. That average dropped even further to 3.5 in 2018. Slightly more than half of enrollees were limited to fewer than three payer options this year.

Despite concerns of more problems in 2018, ACA payers have actually found their footing — and are even enjoying profits now. Payers, such as Centene, Cigna, Oscar Health, Anthem and Wellmark are moving back into the market or expanding to more counties in 2019.

More than half of enrollees will once again have a choice of at least three payers in the exchanges in 2019.

There are still wide discrepancies though. Three states will have more than 10 payers and five will only have one option. Rural areas will again see fewer payers, KFF said.

For 2019, most payers will still practice silver loading. This practice lets insurance companies move costs associated with losing cost-sharing reduction (CSR) payments onto silver plans. Subsidies are tied to the cost of silver plans, which increases financial assistance to members. Silver loading means lower member costs.

Though consumers have more payer options in 2019, so far there has been little interest in open enrollment. Critics worry that 2019 will see even fewer people in the exchanges as Americans are no longer required to have health insurance.

CMS reported last week that only 371,676 people selected plans on Healthcare.gov during the first days of open enrollment. The second week saw enrollment numbers of more than 800,000 people. Of the roughly 1.2 million that have signed up so far, more than 270,000 are new enrollees.

WellCare closes $2.5B acquisition of Meridian


Handshake business deal executives


WellCare completed its $2.5 billion acquisition of Meridian on Tuesday, the latest in an ongoing string of acquisitions by major insurance providers.

The Tampa, Florida-based insurer acquired Meridian Health Plan of Michigan, Meridian Health Plan of Illinois and pharmacy benefit manager MeridianRx.

WellCare will now cover 6,000 people through the individual market in Michigan. With this move, WellCare is re-entering the marketplace: It hasn’t offered exchange plans since 2016.

WellCare CEO Ken Burdick acknowledged the ACA re-entrance in the announcement, adding that it positions the company “for further growth within government-sponsored programs.”

This also increases its Medicaid membership by 40% and expands its presence in Medicare Advantage (MA), he said. About 1.1 million people were enrolled in Meridian’s Medicaid, MA and Marketplace plans.

WellCare financed the deal using more than $2 billion in stocks and bonds, including $4.5 million in common stock to generated the cash necessary to fund the purchase.

The insurer expects to generate $4.8 billion in revenue from this acquisition. It expects accretion to its adjusted earnings of $0.40 to $0.50 per share in 2019, climbing over the next few years to more than $1 per share in 2021.

Burdick said WellCare and Meridian have “a shared commitment to quality,” and they will be “leveraging best practices across the entire company in order to improve quality for all of our members.”

Premiums rise when hospitals buy doctor practices, study finds



Dive Brief:

  • When hospitals purchase physician groups in already highly concentrated markets in California, marketplace premiums were likely to rise 12%, according to a new Health Affairs study that measured premium data from 2014 to 2017.
  • Prices were likely to rise for outpatient visits as private practices were acquired or vertically integrated with hospital systems. Researchers found in these instances prices were likely to rise 5% for primary care practices and 9% for specialty services, according to data analyzed from between 2011 and 2016.
  • Hospital acquisition of private practices dramatically increased in a six-year span. In 2010, the percentage of physicians in practices owned by hospitals was 25%, but that figured spiked to more than 40% by 2016. Specialty practices owned by hospitals increased from 20% to 54% over that same period.

Dive Insight:

Payer monopolies have already been found to result in higher ACA premiums. Authors of the new study suggest their findings should serve as a warning to regulators in states across the country.

Red flags should be raised when hospitals continue to buy up private practices because the effect on premiums became larger as vertical integration increased. However, these types of acquisitions tend to fly under the radar of state regulators and don’t draw as much attention as horizontal mergers, or when a hospital buys another competing hospital.

The reason purchases of smaller doctors’ groups don’t get much attention is because they tend to be smaller acquisitions over time that eventually add up, study author Richard Scheffler of the University of California at Berkeley told HealthCare Dive.

Nevertheless, each state regulator should assess its individual healthcare markets along with the level of concentration and increased attention should be placed on these types of acquisitions, he said. “When you’re highly concentrated even a small purchase can have a huge affect,” Scheffler said.

Another recent report bolsters the findings of increased hospital-owned physician practices. Avalere found a 100% increase in such practices between July 2012 and July 2016, when there were 72,000 physician offices employed by hospitals.

This latest study is particularly interesting in light of the legal fight between California’s attorney general and health care giant Sutter Health over anti-competitive practices. Healthcare prices in northern California are far higher than the rest of the state and that’s due to Sutter’s market concentration, the lawsuit alleges.

As M&A continues its steady pace in the industry, federal and state regulators are turning a more careful eye on the potential effects of oversaturated markets. A separate Health Affairs report from earlier this year found that highly-concentrated markets in northern California caused higher prices for hospital and physician searches and for Affordable Care Act premiums.

Payers transition to government health plans despite risks



Dive Brief:

  • Health insurance companies continue inching away from employer-sponsored plans to government-sponsored business. Medicaid managed care and Medicare Advantage plans now make up more than half of health plans’ premiums combined, A.M. Best said in a new report.
  • Employer plans once dominated the private market, but they dropped to just 38% of total net premiums written (NPW) in 2017.
  • Medicaid’s NPW grew the most of any health insurance sector over the past 10 years. The Affordable Care Act’s Medicaid expansion pushed Medicaid managed care’s NPW from $43.1 billion in 2007 to $224 billion last year, A.M. Best said.

Dive Insight:

Despite payers’ finding success in government plans, the move generally means lower margins with private insurers relying more on state and federal funding. That’s a potential downside.

A.M. Best said greater reliance on government payments “could lead to short-term liquidity pressure because of the timing of the receipt of funds and possible delays related to budgetary issues.”

Regulations and legislation could lead to unpredictability, especially in the ACA exchanges. “With healthcare remaining a controversial political issue, the regulatory regime is likely to remain volatile over the near to medium term, especially as it relates to the individual exchange segment,” A.M. Best said.

Nevertheless, private payers are increasingly embracing offering public plans. Medicaid’s NPW share increased from 10.2% in 2007 to 27.1% in 2017. Most of that growth came in 2014 and 2015 after states could expand Medicaid to 138% of the federal poverty line. Medicaid expansion added more than 14 million Medicaid recipients.

Medicare Advantage has grown from $69.9 billion in 2007 to $202.7 billion in 2017. It represented 24.5% of overall industry premiums in 2017. Both Medicaid and Medicare Advantage have seen flat business over the past few years, A.M. Best said.

However, more payers are interested in testing the Medicare Advantage market. One reason is that aging Baby Boomers are a fresh market for MA payers.

UnitedHealthcare and Humana still make up the two largest Medicare Advantage payers, but Aetna, Anthem, WellCare and Centene have all grown MA membership this year. Oscar Health also announced this week that it’s expecting to expand to MA in 2020.

Commercial premiums still make up the largest percentage of single sector premiums. That’s dropped from 58% in 2007 to 38% in 2017.

Things aren’t all negative in the commercial market, though. In fact, insurance companies’ cost-containing policies and benefit design have brought stability. Payers have been able to maintain low single-digit annual premium increases in the employer market this decade. Mercer’s recent National Survey of Employer-sponsored Health Plans said those plans’ premiums have increased about 3% yearly since 2012.

Primary care docs easier to find in ACA plans than Medicaid, study finds


Dive Brief:

  • Primary care physicians accept Affordable Care Act exchange plans more often than Medicaid, but not as much as employer-sponsored health insurance, according to a Health Affairs study.
  • The analysis found that PCP in-network participation was 91% in the ACA marketplace. That’s compared to 75% in Medicaid and 100% for employer-sponsored plans.
  • The researchers also discovered that one-third of in-network physicians don’t have appointments available for new Medicaid patients.

Dive Insight:

Narrow networks have become commonplace in both ACA plans and Medicaid, used by payers to control costs and ensure physicians provide quality care by meeting specific measures. Those networks remain rare in the employer-sponsored market, though.

Members usually prefer broader networks, and narrower networks can increase frustrations and disrupt continuity of care.

The study authors suggested that the results provide insight into the challenges that patients face. The findings can also “assist policymakers in recognizing the trade-offs involved in allocating scarce resources while improving access to high-quality healthcare.”

The report looked at the in-network rate for PCPs for 10 states: Arkansas, Georgia, Illinois, Iowa, Massachusetts, Montana, New Jersey, Oregon, Pennsylvania and Texas.

The 10-state appointment availability average was 73% for ACA plans, 83% for employer-based coverage and only 63% for Medicaid. Those rates were consistent across all states studied. The only state where ACA plans had worse numbers to Medicaid was in Massachusetts (51.9% for ACA plans; 55.3% for Medicaid).

Study authors said the differences in choice of providers for each insurance type shows “inherent trade-offs in increasing coverage.”

“Policies to expand physicians’ participation in the marketplaces will depend on policy priorities, beneficiaries’ preferences and whether the benefits outweigh the costs of expanding physician participation in various insurance market segments,” they added.

An Avalere report last year found that more restrictive networks make up 73% of ACA plans. That’s an increase from 68% in 2017 and 54% in 2015.

In comparison, Kaiser Family Foundation said only 8% of companies offering health benefits had narrow networks in 2017. That was the same percentage as the previous year. A mere 6% of companies said they eliminated hospitals or health systems from a network over the past year to reduce cost.

Medicaid managed care plans also offer narrow network plans. However, a Health Affairs report warned about physician turnover in those plans. That report found that Medicaid narrow networks had a three percentage point higher turnover rate in one year and 20 percentage point higher rate through five years compared to non-narrow network plans.

Trump administration freezes risk adjustment payments

The Trump administration is halting billions of dollars of payments to insurers under the Affordable Care Act’s risk-adjustment program, a move that further disrupts the insurance market and could lead to more premium increases next year.

Citing conflicting federal court decisions on the program, the CMS said it cannot collect or disburse funds under the risk-adjustment program. All in all, the program was slated to shift $10.4 billion among insurers in 2017, according to the agency.

The permanent program was meant to reduce the incentive for health insurers to cherry-pick healthy members. It shuffles money from plans with healthier-than-average members to those with larger numbers of sicker, higher-cost members. The program is based on a patient’s risk score, which is determined by a person’s demographic information and health condition.

But U.S. District Judge James Browning of New Mexico ruled in February that HHS couldn’t use statewide average premiums to come up with its risk-adjustment formula because the agency wrongly assumed the ACA required the program to be budget-neutral.

“CMS has asked the court to reconsider its ruling, and hopes for a prompt resolution that allows CMS to prevent more adverse impacts on Americans who receive their insurance in the individual and small group markets,” CMS Administrator Seema Verma said in a July 7 statement.

America’s Health Insurance Plans said it was “very discouraged” by the CMS’ decision, which comes as insurers determine their premiums for 2019 and states review those proposals.

“The decision will have serious consequences for millions of consumers who get their coverage through small businesses or buy coverage on their own,” the group said. “It will create more market uncertainty and increase premiums for many health plans—putting a heavier burden on small businesses and consumers, and reducing coverage options. And costs for taxpayers will rise as the federal government spends more on premium subsidies.”

The risk-adjustment program has been a source of frustration for small insurers and ACA co-ops that claim the formula makes their membership bases look healthier than they are. One reason could be that newer insurers have limited information on their members’ health status and claims history. Legacy insurers that have a wealth of patient data may have a leg up on coding. Small health plans also have far less capital than more established insurers to comfortably make large risk-adjustment payments.

The CMS has asked Judge Browning to reconsider his ruling and is awaiting a decision. The agency said it will release additional guidance for insurers on issues related to the risk-adjustment program, including appeals and how this will affect medical loss ratios.