Now available for public comment: 429 pages of proposed ACO rules from HHS.
Aetna Inc. (Hartford, CT) will use the acquisition of health information exchange company Medicity as a platform for pushing clinical decision-support applications to providers – a cornerstone of the company’s ACO strategy – according to Meg McCarthy, executive vice president of innovation. McCarthy made the comments at the Next Generation in Managed Care IT forum in New York this week, noting that while Medicity has a “good, strong core business,” the strategy is to leverage the Medicity platform to offer applications from Aetna’s ActiveHealth clinical decision-support division. Expanded coverage appears in this month’s ACO Market News.
Babette Apland, senior vice president of health and care management at HealthPartners in her keynote address at the New Directions for Health Plans conference, Friday, March 25:
If ACOs are going to take risk then why do we need health plans?
A Deloitte study estimates that the hidden cost of healthcare in the U.S. in 2009 was $363 billion — most of which is the imputed value of “supervisory care,” i.e., taking care of a sick or disabled spouse, family member or friend. The rest is for products and services not counted in the annual government tally of healthcare expenditures, like spending on nutritional supplements, mental health and substance abuse facilities, alternative medicine, certain ambulatory and ambulance services and weight-loss centers.
Source: Deloitte. Based on $363 billion in estimated hidden U.S. healthcare costs in 2009.
Here’s an interesting chart from the San Francisco Health Service System illustrating a steady migration among enrollees to Kaiser’s staff-model health plan and away from Blue Shield of California. In an attempt to stem the loss of share, Blue Shield-CA has entered into an ACO with Brown & Toland and Sutter’s California Pacific Medical Center. Complete coverage in ACO Market News.
According to McKinsey Quarterly, a six-year-old type 2 diabetes disease management program instituted by Germany’s national statutory health insurance system is showing signs of success. In 2009, the program had nearly 3.2 million enrollees. McKinsey argues that successful disease management programs tend to have five common traits: large size and scale, simple design, a focus on patients’ needs, the ability to collect data easily, and incentives that encourage all stakeholders to comply with the program.
Here are three slides from Cigna’s annual investor conference last week. The first shows how the company’s expatriate healthcare benefits business stacks up against the competition. The second is a breakdown of international membership by region. The third is meant to suggest growth opportunities in China. Overall, Cigna says it expects earnings growth of 10% to 13% annually over the next three to five years. (Clarification, 3-15-11: The first slide shows expatriate premium equivalents for Cigna’s international business, including the ASO lines of the acquired Vanbreda business. Separately, Cigna also claims to have the largest number of expatriate members at 740,000).
How does no HMO premium rate increase sound? That’s what the city and county of San Francisco will get for the plan year ending June 30, 2012 for 26,000 employees, dependents and retirees as part of two ACO initiatives involving Blue Shield of California, local hospitals and physician groups. The initiatives will commence July 1, 2011 and run at least 12 months. Complete details appear in ACO Market News.
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From a Citi analyis of financial data for 190 Medicaid health plans:
In one of the tougher years in recent memory, it appears Medicaid plans were just barely profitable in 2009, as loss ratios deteriorated about 100 basis points, to 88.4%. There continues to be a big difference in the loss ratios of publicly traded and private Medicaid plans, as the publicly traded plans reported an overall MLR of 86.7%, 320 basis points better than the 89.9% MLR reported by private plans.
Here are the headlines from last month’s issue of ACO Market News.
- Qliance to Expand Number of Direct Medical Home Clinics in 2011
- Blue Shield in ACO Arrangement Serving 26,000 San Francisco Employees
- WellPoint Sees Clinical Quality Improvements at CO, NH Medical Homes
- Reform, Competition – Not Employers – Are Driving ACOs, Survey Says
- 47% of Physicians Think ACOs will Reduce Profits
No big surprise here. Walgreen Co. (Deerfield, IL) has reached a definitive agreement to sell its pharmacy benefit management operation to Catalyst Health Solutions (Rockville, MD) for $525 million in cash — yet another example of a drugstore chain or health plan exiting the PBM business. The deal will more than double Catalyst’s membership to more than 18 million from about 7 million and increase prescription volume to more than 165 million from about 80 million. Catalyst agrees to provide PBM services to 244,000 Walgreens employees (plus retirees and dependents) and to administer the Walgreens Prescription Savings Club. More details will appear in this week’s Health Plan Market Trends.
Qliance Medical Management (Seattle) typically charges patients about $65 per month for unlimited access to the 12 physicians in its three clinics — generating three times the per member payments a clinic typically gets from traditional insurance, reports Kaiser Health News:
Bruce Henderson joined Qliance when its first clinic opened in 2007. Although at the time he had health insurance through his job, Henderson, now 63, was soon laid off. Now he pays Qliance $79 a month for primary care and carries a catastrophic medical plan with a $10,000 deductible, for which he pays $225 a month.
Henderson has high blood pressure, high cholesterol and Type 2 diabetes. Working with his Qliance doctor, he switched to lower-cost medications and reduced his monthly out-of-pocket costs from $500 to $100. He goes in regularly for blood work and exams to keep his diabetes in check. Periodically he also has early skin cancers removed and last month was in three times for a cyst removal
CMS Administrator (for now) Donald Berwick in a speech comparing the U.S. and U.K. healthcare systems:
Excellent healthcare is by definition redistribution…
…of wealth, that is.
Berwick, a recess appointment who requires Senate confirmation to keep his job, seems like a decent enough guy with ideas worth trying to address rising cost and lagging quality in the U.S. healthcare system. Unfortunately, he won’t get much more of a chance. Last week, 42 Republican senators sent a letter urging President Obama to withdraw the Berwick nomination.
According to Politico, “Democratic senators and the White House are backing down.”
This surprises me a bit. Not that I had any inside information, but combinations of this sort do seem logical for health plans going forward. But it looks like things got a bit messier than expected when the two organizations sat down to hammer out the details of a merger.
During the due diligence period it became apparent that the savings and efficiencies both organizations were seeking would be more complex to achieve than initially envisioned and the integration of the two organizations would be more costly and time-consuming than anticipated when discussions first began.
In announcing a non-binding agreement in January to explore a merger, Harvard Pilgrim and Tufts had cited the potential for economies of scale on administrative expenses and information technology investment among the rationale for a possible deal.
Healthcare reform and competition — not pressure from employers — are driving ACO development, according to a survey of commercial payers. The survey, sponsored by technology company MedeAnalytics (Emeryville, CA), also finds that “there is a general uncertainty about how funds will be distributed from the payer to the ACO, as well as within the ACO.” (Addition: March 2, 2011: the data is based on survey responses from about a dozen top commercial payers).
Christine Arnold of Cowen & Co. remains bullish on behavioral health facility and hospital operator Universal Health Services (King of Prussia, PA), which yesterday reported a decline in fourth-quarter 2010 profits related to certain charges; however, the company also noted a 5% increase in behavioral health admissions. Arnold points to broader favorable trends for behavioral healthcare utilization:
Recent studies suggest that both employer benefit changes and consumer awareness should drive behavioral health volume. Only 5% of employers that changed mental health coverage in 2010 dropped benefits while 66% eliminated limits on coverage. Fewer than 10% of Americans have heard of mental health parity.
What’s this mean for health insurers? It’s yet another sign that healthcare utilization is on the rise.
Yes, according to an analysis by T. Rowe Price. But there are a couple of catches, Yahoo! Finance points out. One is you have to work until age 70 instead of retiring at 62. Another thing, Yahoo! Finance says: “Some 40% of retirees never make it to their intended retirement age because of illness or layoff — and their intended retirement age is usually 65, let alone 70.”
So as long as you don’t get fired, sick or tired of working you’re golden.