Health Plan Weekly

Commercial health plans pay two to three times higher rates than Medicare Advantage plans for the same services delivered in the same hospital, even when those rates are negotiated by the same insurer, according to a recent study published in Health Affairs.

The researchers studied 2022 price information disclosed by almost 2,500 hospitals and 118 insurers. The results showed that on average, commercial prices were between $660 and $707 more expensive than MA prices. The largest price differences were seen in the “surgery and medicine” category, where the median commercial price for services was $1,702, while the MA median price was $928.

The commercial-to-MA price ratio varied significantly across states, with many of the most populous states seeing higher ratios. The ratio was the highest in the Southeast and lowest in the Pacific Northwest and Midwest.

Three of the four startup “insurtech” health plans made progress toward profitability in the second quarter of 2023, according to Wall Street analysts and one health care industry insider. But Bright Health Group, Inc., the highly leveraged firm that is winding down its health plan operations, has significant liquidity problems, massive outstanding risk adjustment debt and may lose the lifeline of its deal to sell its remaining health plan assets to Molina Healthcare, Inc. 

Bright Health  is in the process of winding down all of its health insurance operations. The firm posted a net loss of $251 million in the second quarter.  

On Aug. 7, two days before Bright’s quarterly earnings call, it secured a $60 million credit facility from one of its largest creditors, venture capital firm New Enterprise Associates (NEA). In a press release announcing the loan agreement, Bright added that it “has entered into a permanent waiver of default on its existing credit facility, which expires in February 2024.” That agreement, made with a consortium of banks led by JPMorgan Chase Co., extended Bright a $350 million line of credit earlier this year. 

Although health insurers have been vocal about their desire to transition people into Affordable Care Act marketplace plans if they lose Medicaid during the resumed redetermination process, a new “secret shopper” survey suggests those customers will encounter a thicket of aggressive marketing for limited-benefit plans that could ultimately leave them on the hook for massive medical bills. 

Researchers at Georgetown University Center on Health Insurance Reforms (CHIR) conducted their survey between June 9 and June 30, 2023, creating two profiles for hypothetical Texas residents who were informed they’d be losing Medicaid due to income ineligibility. “Terri” is 22 years old with no pre-existing conditions, and “Lorraine” is 36 with high cholesterol. Both live in a two-person household and have an annual income of $25,000 — qualifying them for the maximum premium and cost-sharing subsidies the ACA marketplace can offer. That means they can access, theoretically, silver plans with a $0 monthly premium that cover an average of 94% of the cost of covered benefits. 

Health care operators such as hospitals or providers that are owned by private equity companies often have higher costs for payers and patients, according to a systematic review of research studies that was published on July 19 in BMJ. Alexander Borsa, one of the review’s authors, tells AIS Health, a division of MMIT, that the increased costs are primarily due to the groups’ rate negotiating skills as well as the trend of private equity companies looking to consolidate clinical practices, leading to less competition in certain markets. 

The researchers also found that private equity ownership was associated with mixed to harmful impacts on health care quality, while they noted there were not enough studies to make conclusions about private equity ownership’s effect on health outcomes and costs to operators.  

They wrote, though, that “no consistently beneficial impacts of [private equity] were identified” in the studies they examined.