Health Plan Weekly

CVS Health Corp., the parent company of health insurer Aetna, reported higher than expected profits in the second quarter of 2021. The pharmacy, health insurance and retail giant took in $2.42 in earnings per share, beating Wall Street’s estimated EPS of $2.07.

CVS reported $72.6 billion in overall revenue in the second quarter, an 11.1% increase from 2020. Citi analyst Ralph Giacobbe wrote in an Aug. 4 note to investors that the results were “well ahead” of the consensus projection of $70.2 billion in revenue.

In recent comments submitted to CMS, the two major insurer trade groups — who thus far have mostly been on the same page as the Biden administration — object to proposals that would lengthen the annual enrollment window for Affordable Care Act exchange plans and add a new, monthly signup period for low-income individuals.

Underpinning the trade groups’ objections are concerns about adverse selection, which occurs when people wait until they’re sick or otherwise need costly health care services to purchase insurance. Similar to practices in the employer-sponsored insurance world and Medicare, the ACA marketplaces curb adverse selection by limiting enrollment to an annual signup window known as the open enrollment period (OEP). To sign up during a midyear special enrollment period (SEP), people generally need to have experienced a qualifying life event such as a job loss or marriage.

To health insurers, a new Texas law that significantly limits prior authorization practices will effectively eliminate health care providers’ accountability to offer safe, high-quality and cost-effective care. To Texas providers, the measure is a long-awaited first step toward having clinicians spend less time on arduous paperwork and more time on patient care.

Industry observers say both sides have valid arguments, but they also worry that Texas’ legislation may be so difficult to implement that even its best intentions could fall flat.

✦ The bipartisan infrastructure package that U.S. senators are currently negotiating will further delay a never-implemented regulation that would restructure the Medicare Part D drug rebate system, various news outlets reported. The Biden administration had already delayed the so-called rebate rule until 2023, a move hailed by PBMs and health insurers but criticized by the pharmaceutical industry. Because the CMS Office of the Actuary had predicted that banning PBMs and plan sponsors from pocketing rebates would cause Part D premiums to rise, delaying the rule allows the government to generate budgetary savings.

✦ Humana Inc. and Anthem, Inc. unveiled a new PBM joint venture with SS&C Technologies dubbed DomaniRx, according to a document filed with the Securities and Exchange Commission (SEC). The SEC filling states that SS&C holds an 80.2% interest in the joint venture and Humana and Anthem each hold a minority interest. Assets invested in the PBM add up to “an aggregate of approximately $925,000,000,” per the filing. A press release from SS&C pitched the new PBM as more transparent and technically advanced than the competition. “DomaniRx will focus on disrupting the industry through open source technology to interface with other systems quickly,” said Danny Delmastro, DomaniRx’s general manager, adding the firm “will draw from hundreds of millions of claims transactions, powered by DomaniRx’s advanced processing platform.” Anthem launched its own in-house PBM, IngenioRx, in 2019.

Centene Corp. and Humana Inc. both reported slightly better-than-expected second quarter 2021 results, which Wall Street met with cautious optimism. While executives from both health insurers preached caution due to the Delta variant-driven resurgence of the COVID-19 pandemic, analysts projected both firms to be profitable for the rest of the year.

Centene generated $1.25 in adjusted earnings per share, which beat Wall Street’s consensus EPS projection of $1.21. Meanwhile, Humana reported adjusted EPS of $6.89, exceeding Wall Street’s projected EPS of $6.83.