Health Plan Weekly

Two new analyses from prominent health care research groups argue that huge savings could be realized if private insurers paid providers at roughly the same rate as Medicare does. However, industry experts point out that the political will to do so may not be strong enough — even with a public option supporter in the White House — and such a move could also have very problematic consequences.

First, a research report from RAND Corp. examined three policy options that could reduce hospital prices: regulating prices, improving price transparency and increasing hospital competition. Of those three, researchers found that “price regulation could have the largest impact on hospital prices and spending but would likely face political challenges.” Specifically, hospital spending could be reduced by $61.9 billion to $236.6 billion if reimbursement rates for private plans were capped at 100% to 150% of Medicare rates, creating a 1.7% to 6.5% reduction in national health spending.

Patients are likely to follow referrals made by their physicians even if they have sufficient information to make a choice between providers based on price, according to a new study by published in the Journal of Health Economics by authors including Michael Chernew, Ph.D., a Harvard Medical School economist and chair of the Medicare Payment Advisory Commission. The study adds another wrinkle to the ongoing debate about whether health care services can be shopped for like a commercial service.

According to an abstract of the study published by the National Institute for Health Care Management (NIHCM) Foundation, “this study examines the factors that influence where patients receive elective lower-limb MRIs and the potential for patients to shop for this care. Results highlight the very important role that referring physicians play in patients’ choice of MRI provider and the lack of patient price shopping. Lower-limb MRIs should be highly shoppable because they are scheduled in advance, clinical quality does not vary meaningfully across providers and prices are widely variable. The fact that patients struggle to shop in this favorable setting makes it unlikely that greater cost sharing and price transparency will lead them to shop for more complex services.”

Oscar Health Inc., the perennially buzzy startup health insurer, saw its shares slide almost 11% during its first day as a publicly traded company on March 3. But Oscar’s underwhelming debut doesn’t come as a surprise to some industry consultants, who observe that the firm’s technology- and customer-experience-driven business model may be a poor fit for an individual health insurance market where customers tend to flock to the lowest-premium plans.

And that scrutiny comes as another startup insurer — Medicare Advantage-focused Clover Health — released its first quarterly earnings results since it went public, all while trying to shake off the cloud of controversy stirred up by a critical short-seller report that caused its stock prices to plummet (HPW 2/12/21/ p. 1).

Health insurers have begun to consolidate their position in the telehealth market, as indicated by a recent move by Cigna Corp. to acquire MDLive Inc. Meanwhile, lawmakers are beginning to consider the future of telehealth regulation and payment, which could include a new Medicare reimbursement scheme and a new national licensing regime for practitioners.

Cigna’s Evernorth health services arm announced on Feb. 26 that it had reached an agreement with MDLive to acquire the virtual care provider, which offers video visits for medical care, dermatology, psychology and psychiatry, according to MDLive’s website. While the financial terms of the deal were not disclosed, private equity news outlet and business intelligence firm PitchBook said on March 1 that MDLive “was valued at $1 billion.” Cigna and MDLive have an existing relationship: MDLive has been available in-network as a primary care option to all members of Cigna’s commercial members since January 2020.

✦ Cigna Corp.’s Evernorth division has reached a deal to acquire the telehealth platform MDLIVE, the companies said on Feb. 26. Cigna is already an MDLIVE customer and investor, and noted in a press release that the telehealth firm “has a sizable and forward-thinking client base, a class-leading provider network, brand recognition among customers and consumers, and experience in medical and behavioral health.” In a note to investors about the deal, Evercore ISI analysts wrote that “although we don’t view MDLIVE as particularly differentiated vs. other telehealth providers, it gives [Cigna] a platform to better integrate telehealth medical and behavioral visits into its healthcare offering to help control costs and improve patient experience, and expands the service offerings Evernorth can cross-sell into other health plans.” The analysts also noted that previously MDLIVE was considering going public, and its latest funding round valued it above $1 billion. No financial terms were disclosed for the deal, which is subject to customary closing conditions and regulatory approvals, and is expected to be completed in the second quarter of 2021. Read more at https://prn.to/3qZ9eOr.

✦ Hawaii elected to renew its contract with Centene Corp.’s ‘Ohana Health Plan to provide behavioral health care services to Medicaid-eligible adults with severe and persistent mental illness under the state’s Community Care Services (CCS) program. The plan, which serves about 5,000 members ages 21 and older who have severe and/or persistent mental illness, has been the sole contractor for CCS since 2013. The contract extension will begin July 1 and continue for three years, and the state holds two one-year options to extend it. Read more at http://prn.to/3sxWpuR.