Health Plan Weekly

This week, a growing chorus of criticism from state officials effectively stopped two proposed health insurer combinations in their tracks.  

One industry observer says SCAN Group and CareOregon’s now-scuttled deal, as well as Elevance Health, Inc.’s beleaguered bid to purchase Blue Cross Blue Shield of Louisiana, offer valuable lessons for companies hoping to combine in the future. 

“In both cases, the organizations proposing the merger spent over a year trying to convince stakeholders that the deal was a good thing, and after multiple efforts to generate support for the decision, gave up when that support did not materialize,” Michael Abrams, managing partner of the consulting firm Numerof & Associates, tells AIS Health, a division of MMIT. 

In the latest round of health insurer executive compensation data collected by AIS Health, there were once again intriguing stories to tell — such as why an insurtech CEO appeared to outearn the heads of the industry’s largest insurers, or what led a Blue Cross Blue Shield affiliate to nearly double its CEO’s compensation year over year. 

However, finance experts who spoke to AIS Health, a division of MMIT, say that the biggest story might just be a recent court decision involving none other than Tesla, Inc. CEO Elon Musk, as the ruling could influence how all types of companies — including health insurers — determine their chief executives’ compensation going forward. 

In a recent memo, the Biden administration clarified restrictions on the use of artificial intelligence in Medicare Advantage coverage decisions. Congress may also eventually weigh in on AI use in federal health insurance programs: The Senate Finance Committee on Feb. 8 held a hearing in which senators indicated they may tighten the rules on payer and provider use of AI, particularly in Medicare and Medicaid. 

In its Feb. 6 memo, CMS sought to address questions it received after finalizing a rule last April that made technical changes to the MA program. The frequently asked questions (FAQ) document confirmed that “an algorithm or software tool can be used to assist MA plans in making coverage determinations,” but it also emphasized that plans must base coverage decisions “on the individual patient’s circumstances.” According to one D.C. insider, the rule may force plans to move faster to curb misuse of AI and algorithms in decision making. 

A recent report from Morgan Health, JP Morgan Chase & Co.’s health care venture fund and consultancy, documents troubling disparities for health care access and outcomes among Black, Asian American and Hispanic employer-sponsored insurance plan members; lesbian, gay and bisexual (LGB) plan members; and ESI members with low incomes. Experts tell AIS Health, a division of MMIT, that plan sponsors and insurers must consider plan design and provider incentives, among other strategies, to close health disparity gaps. 

Plan sponsors and insurers can take proactive steps to reduce health disparities among their plan members, experts say — and they add that there are clear business incentives for doing so.