Health Plan Weekly

✦ CMS on Oct. 29 finalized its insurer price transparency rule, drawing quick rebukes from the industry. The rule will require plans, starting on Jan. 1, 2023, to offer online shopping tools “that will allow consumers to see the negotiated rate between their provider and their plan, as well as a personalized estimate of their out-of-pocket cost for 500 of the most shoppable items and services.” Effective one year later, those shopping tools will have to show the costs for all remaining items and services. Insurers must also meet a Jan. 1, 2022 deadline to “make publicly available standardized and regularly updated data files, which would open new opportunities for research and innovation to drive improvements within the healthcare market.” America’s Health Insurance Plans said in a statement that by forcing insurers to reveal negotiated rates, “the final rule will work to reduce competition and push health care prices higher — not lower — for American families, patients, and taxpayers.” The rule was first proposed in November 2019 (HPW 11/25/19, p. 1). Visit https://go.cms.gov/37SEc3Z.

✦ The health systems Intermountain Healthcare and Sanford Health, which both operate insurance plans, said on Oct. 26 that they are planning to merge. Citing a desire to “further implement value-based strategies and realize economies of scale” as their motivation for combining, the two not-for-profit organizations said they expect their deal to close in 2021, pending federal and state approvals. Intermountain Healthcare-owned SelectHealth covers a total of 903,370 medical lives, and Sanford Health Plan covers 200,515, according to AIS’s Directory of Health Plans. During a call with reporters, Sanford Health CEO Kelby Krabbenhoft indicated that growing the organization’s health plan was a primary motivator for the deal, according to FierceHealthcare. Read more at https://bit.ly/3mqxOoE and https://bit.ly/3jyMQqB.

Anthem, Inc.’s third-quarter 2020 earnings were not as robust as investors had hoped at the start of the year due to the insurer’s obligation to pay out its $594 million share of a recently settled lawsuit against Blue Cross Blue Shield plans. Despite that, Wall Street analysts were positive about the firm’s outlook for the rest of the year.

The insurer reported that its quarterly adjusted net income was $4.20 per share, which Citi analyst Ralph Giacobbe said beat a Wall Street consensus projection of $4.12. Anthem CEO Gail Boudreaux said during an Oct. 28 earnings call that the earnings per share (EPS) figure was down 14% year over year. Anthem posted a medical loss ratio (MLR) of 86.8%, which Giacobbe noted was lower than a consensus 87.2%. Anthem’s revenues increased by 15.9% year over year to $30.6 billion, which Chief Financial Officer John Gallina attributed largely to growth in the firm’s Medicare and Medicaid businesses. The firm projects end-of-year earnings to exceed $22.30 per share.

During their third-quarter 2020 earnings conference call, Centene Corp. executives made the case that despite all the challenges related to the pandemic and politics, there are plenty of reasons to believe the company is well-equipped to weather the storm.

“While there is continued uncertainty, including the intensity and duration of the pandemic and the outcome of next week’s election, we believe we have the scale and size to deliver results as the environment continues to evolve,” Chairman, President and CEO Michael Neidorff said in his opening remarks during the Oct. 27 call, per a transcript from The Motley Fool.

With open enrollment for the Affordable Care Act (ACA) exchanges set to begin on Nov. 1 in most states, the COVID-19 pandemic — as is the case with nearly everything in 2020 — is expected to play a role. Health insurers had to decide when setting 2021 premiums whether to factor in a “COVID load,” while rising unemployment driven by the pandemic has the potential to boost sign-ups after two years of flat enrollment totals. Meanwhile, new federal data suggests that the individual insurance market has not only stabilized but is becoming more attractive to consumers.

A report released by the Trump administration on Oct. 19, which analyzed rates in the 36 states that use HealthCare.gov, found that the average premium paid by a 27-year-old for the second-lowest-cost silver plan will decline 2% for 2021, and 22 more plan issuers will offer coverage (see infographic, p. 6). That will mark three straight years of both declining average benchmark plan premiums and increasing issuer participation, CMS noted.

Since the beginning of the COVID-19 pandemic, which saw health care utilization crater — and insurer margins grow as a result — payers have refunded billions of dollars to members and plan sponsors. Experts say that the premium rebate trend is primarily driven by the desire of payers to manage cash flow and future medical loss ratio (MLR) obligations, but is also likely an attempt by insurers to improve their public image as the prospect of major health care legislation looms after the election.

The Affordable Care Act (ACA) MLR rules require commercial insurers to spend at least 80% of their premium revenue from individual and small group plans and 85% of their large-group revenue on claims and quality improvement. The ACA requires any profits above those rates to be rebated to plan members. MLR rebate amounts are calculated on a rolling three-year average, meaning financial figures from 2017 to 2019 are the basis of 2020’s MLR calculations. Rebates accrued in a given plan year must be paid out by Sept. 30 of the following year.