Health Plan Weekly

Since acquiring Aetna, CVS Health Corp. has touted its HealthHUB stores — which include expanded clinics, labs for health screening, and space for wellness pursuits like yoga — as the linchpin of its plan to stand out among other large, diversified firms that include a health insurer. Yet as one analyst pointed out during CVS’s first-quarter 2020 earnings call on May 6, that strategy could face new challenges amid the COVID-19 pandemic, “a time where the entire world is rethinking how much time they want to spend outside their house.”

CVS executives said that while the company is indeed seeing less foot traffic at its brick-and-mortar locations, it is still leveraging the power of having a vast retail footprint by offering testing for the new coronavirus — a use case that could persist long after the current public health crisis. As CEO Larry Merlo put it: “We’re focused on COVID testing today, but there is a broader universe of diagnostics and monitoring that we see becoming an important part of our HealthHUB strategy.”

Although use of telehealth services has surged in recent months, experts say that the permanence of a shift to virtual care is far from certain, unless regulations and the industry’s reimbursement model change dramatically.

Emergency measures adopted by the Trump administration and states have allowed telehealth providers to significantly scale up in recent weeks. Using waiver authority, HHS temporarily relaxed the rules surrounding Medicare reimbursement for telehealth, which had included limits such as requiring the patient to live in a designated rural area. The Coronavirus Aid, Relief, and Economic Security (CARES) Act includes a $200 million appropriation to the Federal Communications Commission to expand telehealth services, and in April the FCC announced a $100 million program to build out broadband capacity for health care providers. And according to a recent paper from two think tanks, the Brookings Institution and the John Locke Society, many states have moved to waive in-state licensure requirements for telehealth providers.

As the impact of the COVID-19 pandemic continues to reverberate throughout the U.S. economy, it’s become clear that there will be a major enrollment shift away from employer-sponsored plans and into Medicaid and the individual market. And while far more people are covered by Medicaid than individual plans, experts tell AIS Health that the effects on the latter market — and health insurers’ business strategies — are definitely worth watching.

In fact, one recent analysis suggests that there could be “unprecedented growth” in the individual health insurance market, where enrollment has remained static in recent years after Affordable Care Act-triggered expansion. “The impact of COVID-19-related job losses will likely more than double the current enrollment in Individual & Marketplace plans, with the potential for the Individual market to triple in size to over 35 million in a sustained and severe economic contraction,” states the analysis, which A2 Strategy Group released on April 16.

✦ Molina Healthcare, Inc. said on April 30 that it plans to buy Magellan Health, Inc.’s managed care organization, Magellan Complete Care (MCC), for about $820 million. MCC served approximately 155,000 members across six states as of Dec. 31, 2019, and it reported full-year 2019 revenues greater than $2.7 billion. “Acquiring MCC expands our geographic footprint in our core businesses of managed Medicaid, dual eligibles, and long-term services and supports,” said Joe Zubretsky, president and CEO of Molina. “We believe it will allow us to scale our enterprise-wide platforms and benefit from both operating and fixed cost leverage.” By adding MCC to its portfolio, Molina expects to serve more than 3.6 million members in government-sponsored health care programs in 18 states and will have 2020 pro-forma projected revenues of over $20 billion. The deal, which has not yet been approved by regulators, is expected to close in the first quarter of 2021. Read more at https://bwnews.pr/2xsW71q.

✦ UnitedHealth Group’s Optum division is in advanced talks to acquire the tele-behavioral health provider AbleTo, CNBC reported, citing people familiar with the potential deal. Optum’s venture arm previously made a “significant” strategic investment in AbleTo — a 12-year-old company based in New York — and the company has also raised money from investors including Bain Capital Ventures and Aetna (now owned by CVS Health Corp.). In addition, AbleTo CEO Trip Hofer was a senior executive at Optum from 2006 to 2012. Read the CNBC article at https://cnb.cx/2z0oWCU.