Health Plan Weekly

Washington became the first state in the country to implement a public option on its individual exchange, with plans launching in the 2021 plan year. Experts say that it’s not yet clear whether the plans, which are available through contracts with carriers including UnitedHealthcare, are slowing premium growth.

Washington’s legislature in July 2019 passed a law, S.B. 5526, creating the public option program, called Cascade Care Select. Democratic officials including Gov. Jay Inslee and Insurance Commissioner Mike Kreidler have said that the plans are meant to lower out-of-pocket costs and ensure that there is individual market competition in every county of the state. In 2019, 14 counties had only one option for exchange consumers.

Industry analysts say they expect the environment for mergers and acquisitions in the health insurance sector to be “favorable” this year, and thus they anticipate “robust M&A activity” among firms that are eager to diversify their assets and modernize their technology.

However, large, transformational deals, such as Cigna Corp.’s purchase of Express Scripts or CVS Health Corp.’s acquisition of Aetna, likely won’t be the norm in 2021, states a Healthcare Quarterly report published by Moody’s Investors Service in April.

✦ Humana Inc. received at least $197.7 million in net overpayments in 2015 because some of the diagnosis codes it submitted as part of the Medicare Advantage risk adjustment program were not supported by patients’ medical records, estimates a new report from the HHS Office of Inspector General (OIG). The watchdog agency recommended that Humana “enhance its policies and procedures to prevent, detect, and correct noncompliance with federal requirements for diagnosis codes that are used to calculate risk-adjusted payments.” The insurer, however, disagreed with the OIG’s findings and its recommendations, writing that a draft version of the report “reflects misunderstandings related to certain statistical and actuarial principles, and legal and regulatory requirements” underlying the Medicare Advantage program. Read the report at https://bit.ly/3xjvO80.

✦ Oscar Health, Inc., and Cigna Corp. said on April 21 that they are expanding their co-branded small-business plans to Connecticut starting July 1. The plans will feature benefits such as free virtual urgent care, $3 copays for the most commonly prescribed prescriptions and access to Cigna’s behavioral health network “for mental health resources and step-tracking rewards.” Previously, the two firms’ small-business plans were available only in Atlanta, Tennessee and certain California counties. On April 20, the startup insurer launched +Oscar, which it describes as a “tech-driven platform business” aimed at helping payers and providers engage members, drive administrative efficiency and manage medical costs. Read more at https://bit.ly/2RPLnUw and https://bit.ly/3gxkBKS.

Anthem, Inc. reported strong membership growth in its Medicare and Medicaid segments along with a lower-than-expected medical loss ratio (MLR) of 85.6% in its 2021 first-quarter earnings report. The MLR results, which handily beat analysts’ expectations of an 87.7% MLR, reflected lower utilization of non-COVID-19-related medical services, the company said.

The insurer isn’t necessarily expecting utilization to jump as the pandemic winds down, Chief Financial Officer John Gallina said April 21 during the company’s earnings conference call. “We continue to closely monitor our markets as vaccination rates increase,” Gallina said. “The senior population has been vaccinated sooner, and so we are seeing a significant decline in COVID inpatient [costs] associated with seniors, which means that the non-COVID [utilization] can rebound a bit faster. We believe that we’ve totally factored that in.” Members who needed care in 2020 mostly were able to obtain it, Gallina said, and so there likely isn’t “a giant backlog.” But Anthem did see some increased costs associated with COVID-19 testing and vaccine administration in the first quarter, he said.