Health Plan Weekly

Merging urban and rural Affordable Care Act marketplace rating areas in Texas significantly increased carrier and plan choices and lowered overall plan premiums in rural Texas, according to a recent Health Affairs study.

When calculating premiums for customers, the ACA permits insurers to consider those customers’ area of residence — or rating area — among other factors including age, smoking status and family size. Yet the use of rating areas can lead to higher premiums for rural areas, where residents tend to have greater health care needs and where there’s a smaller risk pool due to lower population density.

The Cigna Group’s Express Scripts PBM announced on Nov. 14 that it’s launching a new “cost-plus” prescription drug pricing model for its clients. With the Express Scripts ClearNetwork, “clients pay a straight-forward estimated acquisition cost for individual medications, in addition to a small markup for pharmacy dispensing and service costs.” Express Scripts plans on launching the model in early 2024 and applying it toward generic, branded and specialty drugs. The move comes amid rising scrutiny from regulators over PBMs’ standard business practices like spread pricing, which allows PBMs to pocket the difference when pharmacies charge less for filling prescriptions than payers reimburse.  

Five health care organizations, including AHIP and the American Medical Association, have launched the Common Health Coalition: Together for Public Health, according to a Nov. 9 press release. The coalition is “focused on translating the hard-won lessons and successes of the COVID-19 pandemic response into actionable strategies that will strengthen the partnership between our health care and public health systems.” The other founding members are the Alliance of Community Health Plans, American Hospital Association and Kaiser Permanente. Dave A. Chokshi, M.D., a physician at Bellevue Hospital and former New York City Commissioner, is chair of the Common Health Coalition.  

The Cigna Group could be fielding offers for its Medicare Advantage book, according to a Nov. 6 Reuters report. Experts say that a spinoff is plausible given the small size of Cigna’s MA book and Cigna’s heavy focus on commercial insurance — and Wall Street analysts say the move could be a first step towards a megamerger with a government-focused insurer.

Wells Fargo and RBC analysts say that the move could be an effort to preempt the intense antitrust scrutiny Cigna might face if it sought to merge with a government insurance-focused firm such as Humana Inc. or Centene Corp., because Cigna would have only commercial and Affordable Care Act marketplace books after an MA spinoff.

The beleaguered startup insurers known as “insurtechs” continued to post losses during the third quarter, but executives from Oscar Health, Inc., Clover Health Investments Corp. and Alignment Healthcare, Inc. all said they expected to at least break even in 2024.

However, Bright Health Group and Friday Health Plans, two insurtechs that have ended their insurance operations, together owe billions in unpaid risk adjustment payments to other insurers that participate in the Affordable Care Act marketplaces. CMS on Oct. 27 released details of payment plans for both firms.

CMS on Nov. 6 released a proposed rule that aims to address multiple parts of the Medicare Advantage program that recently have been the target of criticism — including broker compensation, access to behavioral health care, and the use of supplemental benefits and prior authorization. However, a major trade group for health insurance brokers and agents says the part of regulation targeting their industry is both misguided and potentially disastrous.

Should the rule be implemented as proposed, “I think that the MA distribution [system], which is the agents and brokers, will collapse,” says John Greene, senior vice president of government affairs at the National Association of Benefits and Insurance Professionals (NABIP).