The strategic move could pay off for CVS Health's Medicare Advantage members.
In its latest business move, CVS Health has tacitly acquired Hella Health, a tech-enabled Medicare Advantage (MA) broker based in New York City. Hella Health operates as a wholly owned insurance agency with a national platform in all states.
While CVS has not put out a press release about the deal, Hella Health CEO and founder Rafal Walkiewicz announced the news in a LinkedIn post. The financial terms of the deal were not disclosed, but Walkiewicz did express his belief that it will further enhance CVS Health’s digital capabilities, particularly for their senior members.
“Through this combination, CVS Health will expand its multi-payor technology platform to include a wide range of insurance offerings, supported by trusted advisors and agents, to provide a simple, direct-to-consumer Medicare shopping and enrollment experience,” Walkiewicz said.
This is a savvy move by CVS. Payers have been recently struggling with their digital platforms, specifically regarding MA, as these platforms typically have seen a much lower rate of engagement. Members are increasingly unsatisfied with the digital health insurance experience, and this can have a somewhat substantial effect on member loyalty.
Care management has always been a pain point for payers in terms of expense and navigation. As a result, many payers have not seen a return on investment from their care management efforts. Some payers appear to let care management fall by the wayside in favor of more big picture opportunities, but care management can affect a great deal of a payer’s business and will continue to do so.
Care management is becoming an increasingly important aspect of whole health for plan members, especially as the sector focuses on the concept of value-based care models.
Other payers will likely follow suit and explore options for better tools to boost their ROI in this space. These tools must be functional and enable engagement with providers in their networks, as well as craft a user-friendly digital experience for members. When payers are able to do this and increase all-around participation in their care-management programs, member engagement improves, as can star ratings, and better, informed health outcomes.
"The fact that you're so big and so dominant, presents a special vulnerability."
On Wednesday, UnitedHealth Group (UHG) CEO Andrew Witty sat before Congress to give his testimony during a hearing regarding the Change Healthcare ransomware attack. Witty was met with intense questioning about everything from UnitedHealth’s billing practices to its “leviathan” presence in healthcare.
Here are the key takeaways from the hearing:
Security Updates
UHG was in the process of updating its outdated security systems to meet “UnitedHealth standards.” The security systems UHG had in place at the time of the attack did not call for multi factor authentication, which seems to be how the hackers were able to get into the system, UHG believes the hackers broke into the system nine days prior to deploying ransomware.
Payments
Witty confirmed that UHG has paid more than $6 billion to providers since the attack, in the form of interest-free loans that they do not have to repay until 45 days after confirmation that they are fully operational.
In his written testimony, Witty confirmed that UHG paid the $22 million ransom and that it was his decision to do so.
Too Big To Fail
The size of UHG was scrutinized due to its substantial presence in healthcare, with one senator comparing the company to a leviathan. Oregon Senator Ron Wyden opened the hearing by “putting things in perspective” he said: “Last year UnitedHealth Group generated $324 billion in revenue, making it the fifth largest company in the country. Overall the company touches 152 million individuals across all lines of business, insurance, physician practice, home health, and pharmacy.”
UHG has been called the largest physician employer in the country, but Witty argued against this statement saying that UHG employs less than 10,000 physicians and it contracts and affiliates with another 80,000 who voluntarily chose to work with its Optum colleagues.
United may not directly employ the other 80,000 physicians, but it owns Optum, which, albeit indirectly, expands its physician groups and market power.
Witty was also questioned by Senator Elizabeth Warren about the federal investigation into UHG’s billing practices, calling UHG “a monopoly on steroids.” Witty did not provide a comment on this.
Accountability
Witty confirmed that the data breach resulting from the ransomware attack affected about 111 million people. Congress noted that is a massive amount of people and data to be handled by a single enterprise.
“The bigger the company, the bigger its responsibility to protect its system from hackers,” said Louisiana Senator Bill Cassidy, MD during the hearing. “The fact that you’re so big and so dominant, presents a special vulnerability.”
Cassidy may be right. Millions of consumers having their data exposed and the American healthcare system being brought to an almost absolute standstill begs the question: how big is too big when it comes to payers?
Studies show that these mega-payers are not serving the best interests of patients, but instead creating less options with steeper prices.
As CEO, Witty has a lot of responsibility on his shoulders, arguably too much for one person. Ultimately policymakers will have to decide if the weight is too much to bear.
If we pause to think about it, there’s a large possibility this type of attack could happen again…and it could be worse. When asked if he was certain if UHG was prepared to deal with another cyberattack, he said that UHG is doing everything in its power to do so. But would everything in its power be enough? We better hope so when just about the entire country’s private health data is on the line.
How can payers utilize tools to help with care-management ROI?
Payers have been fighting the woes of care management for a long time. Taking the extra step to educate and equip plan members with health tools that they will actually use can be a big challenge.
According to a study by Mckinsey and Company, most payers dedicate about 10% of their administrative spend on care management but are not seeing a ROI.
There’s a lot of talk around the shift to value-based care, but implementation is a different story.
In order to come out on the profitable side of care-management, payers will need to shift their perspective to whole-person health. This shift will likely be more taxing compared to dwelling in traditional health concepts, (at least in the commencement phase) and it will take innovation, dedication, and consistency for payers to create a sustainably profitable care model that keeps their members engaged.
Why Help Is Needed
Payers haven’t been faring too well when it’s come to member engagement, particularly on their digital platforms. With Medicare Advantage plans usually seeing lower rates of engagement, combined with new, stricter rules for calculating MA star ratings, payers need to start looking to new platforms to improve their MA plans.
Regardless of how payers implement new tools, improved care management and member engagement are two critical factors for health plans to retain satisfied members. Since the COVID-19 pandemic and all the consumer-tailored health solutions, ーsuch as telehealth optionsー that came with it, members are increasingly seeking an easy, well-rounded experience when they interact with their health plans. With better tech, and a little thoughtful innovation, payers can offer this while simultaneously improving the ROI of their care-management solutions.
Payers need functional tools that allow them to engage with the providers in their networks. When payers are able to do this and increase all-around participation in their care-management programs, member engagement improves, as can star ratings, and better, informed health outcomes.
But What’s Out there?
There are endless technology options available for payers with new options frequently popping up.
For example, on April 25 WebMD Ignite announced HealthHub Interactive for health plans.
The new HealthHub Interactive will allow health plan clinical teams to engage with members in a more personalized, effective way. The new platform combines Webmd’s HealthHub and HealthAdvisor platforms and each platform in the bundle speaks to a specific healthcare function.
The newest bundled platform will also allow payers to pinpoint the populations that are less engaged with their health and make targeted outreach to them.
Kyruus Connect for Payers is another option that offers the streamlining of data and optimal transparency, something members rate highly in a health plan. Kyruus Connect allows members to make informed care decisions, search providers, and know their costs, all while staying engaged on a platform that offers a consistent experience from every angle.
HealthInteractive and Kyruus Connect are just a couple tools that payers can utilize to offer a comprehensive solution to care management. As more innovative health tech solutions emerge, payers can choose from a variety of options to get a handle on care management and conquer member engagement.
The healthcare industry is a prime target for ransomware attacks.
Healthcare is no stranger to cyber-attacks, and ransomware attacks accounted for 249 of them last year, costing the industry millions. The recent Change Healthcare attack shook the country and sent health systems into chaos. It’s also likely the biggest ransomware attack on healthcare, affecting 1 in 3 Americans.
Cyber-attacks can lead not only to massive data breaches, financial loss, and hardship, but also lawsuits and public distrust in health systems in how they manage and protect consumer health data.
With healthcare being a prime target for cyber-attacks, usually through phishing emails, health systems must prepare actionable response plans for cyberattacks and educate their systems on the facts surrounding cyber-attacks, particularly ransomware attacks.
Check out this infographic for 5 quick facts about ransomware attacks on the healthcare industry.
Four trends are shaping the payer landscape in 2024.
Governmental payers outweigh commercial payers: With the immense growth of government-funded programs like Medicare and Medicaid, hospitals and health systems have become too reliant on these systems. Medicaid fee-for-service physician payments are about 30% lower than Medicare payments, and commercial payments are even lower than that. Medicaid expansion has been booming lately and the program now has even more enrollees than Medicare programs.
Size & Negotiation Power: Often, a payer business is about ten times the size of its health system. Providers are fed up with the lack of negotiation power when they’re contracting with these insurance giants. When payers hold the majority of negotiation power in contracts providers' reimbursement rates also tend to suffer. For example, a 2023 analysis showed that the top insurer in the least competitive insurance markets pays about 15% less to health systems than the top insurer in the most competitive markets. Payers may be profiting, but it’s through unsustainable strategies. The trajectory of payer/provider relations will have to change for hospitals and health systems to stabilize and provide better health outcomes.
Medicare Advantage Is Ballooning: MA now covers more than half of the Medicare population. Payers have seen a lot of profit from MA but also a lot of regulatory headaches and rate cuts. Despite any speed bumps, payers are still basking in the cash flow of the MA market; the CMS overpaid an estimated $75 billion to MA organizations in 2023.
To Cover or Not To Cover? GLP-1 Drugs for Weight-Loss: Diabetes/obesity drugs have become the popular kid and have seen more coverage last year and leading into this year, which is set to keep increasing. One KFF study showed that about 80% of adults think insurance companies should cover these drugs for obesity, and 53% think they should be covered for general weight loss.
The platform is giving physicians faith in quick prior authorization turnaround.
Payer giant Humana has expanded its partnership with Cohere Health’s prior authorization platform for diagnostic imaging and sleep services.
Cohere Health is a startup clinical intelligence company that aims to reduce administrative expenses while improving patient outcomes through intelligent prior authorization. The company’s platform uses AI to accelerate the prior authorization process by using predictive technology coupled with clinical intelligence. The platform is able to give providers suggestions before submitting prior authorization requests, aiming to lower payer denial rates.
The two companies began a partnership in January 2021 with a pilot program in 12 states to improve the prior authorization process for musculoskeletal (MSK) services. After the program proved successful in reducing prior authorization approval turnaround times, as well as increasing provider satisfaction, it was expanded to all 50 states in 2022. By January 2023 Cohere’s platform was established nationwide with the addition of cardiovascular and surgical services.
The expanded partnership, announced this week, added diagnostic imaging and sleep solutions to Humana’s member services.
"We're pleased Humana will be utilizing our diagnostic imaging and sleep solutions, further strengthening our strategic and ongoing partnership," said Siva Namasivayam, Chief Executive Officer of Cohere Health. "Our solutions are rooted in the latest evidenced-based guidelines from leading medical societies and use advanced technology to align patient services within care pathways through upstream moments of influence, ultimately enabling faster diagnoses."
Payers & Prior Authorization
Payers should take note on the outcomes of this partnership. Prior authorization is one of the biggest problems providers face, and in the past has often led to contemptuous relations with payers, even lawsuits.
A survey released by the American Medical Association earlier this year found that 94% of physicians say prior authorization leads to delays in patient care. It also found that one in three physicians, about 33%, say prior authorization has led to serious adverse events with their patients.
The CMS have proposed changes in prior authorization practices, which the healthcare industry has seen as a step in the right direction. CMS has urged some payers to transition to electronic authorizations by 2026, as well as aim for shorter turnaround times.
Using AI for prior authorization right now can be a slippery slope. We saw Humana abuse the veil of AI to dish out denials, which resulted in a class-action lawsuit. This time around it seems their use of AI in prior authorization has achieved much better results, and importantly, satisfied, less-stressed providers who are able to provide better clinical outcomes for their patients.
"Diagnostic imaging is often the start of a patient's journey, and we are confident our collaboration will further elevate our members' overall healthcare journey and streamline administrative tasks for our providers," Humana Senior Vice President of Clinical Operations Lisa Stephens said in the release.
From diagnosis to administration, AI is already helping.
AI has already come far from its infancy as we see more implementation and how it is helping health systems in a variety of ways.
Four areas where AI is making the most impact on health systems right now are:
Diagnosing patients. AI has given providers another means of analyzing medical imaging data, from X-rays to MRIs to CT scans, AI has proven to be helpful here by making swift and accurate diagnoses. Although many consumers have expressed uneasiness about having AI make their diagnosis, about six in ten patients, providers have assured that a human analysis will still always have the final say.
Transcribing clinical notes. The day has finally come when physicians and nurses no longer have to be typists in addition to their health roles. AI has made big advances in transcribing medical notes via automatic speech recognition (ASR) which employs advanced algorithms and machine meaning models to convert spoken words into written text. This is helping health systems produce fast, accurate documentation and give more of their time back to their patients.
Pittsburgh-based UPMC is exploring how AI can help in patient care by transcribing accurate clinical notes and integrating them with the patient’s EHR.
Drug Discovery. AI can analyze vast datasets faster than a human ever could. By doing this AI can accelerate the drug discovery process to identify potential drug candidates and predict their efficacy. This AI area is far more technical than simply transcribing notes and may take longer for health systems to implement.
Atomwise is a biotech company that aims to reduce the costs of drug development with the help of supercomputers to make predictions from a database to show which drugs will work and which won’t. In 2015 the company launched a virtual search for safe, existing medicines that could be used or redesigned to treat the Ebola virus.
Administrative burden. One of the most straightforward ways health systems are using AI is by lowering administrative burden. AI is multifaceted in this area, from enchanting patient experience to streamlining workflows, AI is slowly taking the administrative weight off of health systems shoulders.
One health system making strides here is Omaha, Neb.-based CHI Health which is employing artificial intelligence to predict missed appointments.
About twenty-seven percent of health systems are already using AI in some way, and about seventy-two percent and considering implementing AI.
The possibilities for healthcare transformation seem endless with AI. Also, see our coverage on how AI is being used to identify healthcare-based outbreaks. There’s no doubt that AI is helping health systems and has the potential to do even more.
Medicare cuts aren’t only going to affect payers in the MA space.
Medicare Advantage plans saw a final rate cut earlier this month, and it caused quite a stir amongst payers. A base rate cut of 0.16% will be seen in MA plans for 2025.
But ultimately payers will see an increase in MA payments in 2025 compared to 2024.
Overall the rate cut won’t bite off much from major payer businesses, but for others, it could.
Five other groups that will likely be more affected by the rate cuts are:
Smaller MA sponsors and their lobbying groups: these groups tried their best to defeat this rule and members will pay dues for the results.
Hospitals and physicians: these groups will see reimbursement cuts to care providers, especially smaller and rural health systems with large MA enrollment.
MA brokers, agents and marketing companies: these groups will see their profits affected by MA marketing tactic constraints as well as member transparency protections.
MA enrollees: this group will see fewer plan options and higher premiums.
Supplemental service providers: this group will see lower CMS payments and possibly be forced to reduce/eliminate supplemental benefits.
Will health insurers be prepared for a climate health crisis? They should be.
The climate crisis is longer confined to our TV set on National Geographic, it’s on our doorstep. From wildfires that choked the nation last year, to extreme heat that took lives, the notion that climate change is affecting our health is no longer an argument, it’s a reality.
For evidence of climate effects, look no further than last year, a.k.a the hottest year on record. Last year alone there were 28 climate disasters that cost the U.S. a whopping $92.9 billion.
Of course, not every storm, fire, and drought is caused by climate change. However, climate scientists state that a warming planet will increase the chances of more storms, more extreme heat waves, more droughts, and more wildfires. If that isn’t something that affects our health, what is?
What does that mean for the population? More health crises. What does that mean for health insurance? Skyrocketing utilization.
Climate Change and Health Insurance
Climate change is already affecting things like home insurance, making it more expensive and harder to obtain; health insurance is next in line.
A report by the Boston Consulting Group looked at how climate change will affect health insurance: “Beyond its impact on individuals, global warming puts a strain on health care providers, causes loss of work hours, and leads to higher economic costs. It is also leading to mounting claims and costs for health insurers.”
Beyond experiencing these disastrous climate events, climate-induced anxiety and depression also comes into play. From trauma and loss from these events to existential concerns about an unsteady future, the climate crisis is affecting our mental health too. This factor has the potential to raise utilization and expenses in mental and behavioral healthcare as well.
The CommonWealth Fund puts it as “further taxing a behavioral health care system already in crisis.”
What Does It Mean For Payers?
So how do health plans even begin to tackle such a problem?
One state that has experienced drastic climate effects, perhaps more than anywhere else in the country, is California; from fires, floods, and droughts to record heat—the state is no stranger to extreme weather.
HealthLeaders sat down with Baylis Beard, director of sustainability at Blue Shield of California, to hear their thoughts on climate change’s relationship with health insurance, its effect on healthcare, and what the organization is doing to prepare.
“We have seen our health systems get overwhelmed again and again – from Hurricane Katrina to Hurricane Maria and Sandy to the wildfires and flooding we see here in California,” Beard said.
Health plans are often less exposed to the frontline issues that clinicians face, but they are nonetheless responsible for providing sustainable care and providing resources to make the health system more resilient, Beard explained.
Beard also pointed out that healthcare isn’t entirely a victim in this problem. The US healthcare system contributes to 8.5 percent of U.S. emissions. In turn, climate change costs the healthcare system billions.
“And financially, pollution and climate change cost $820 billion in annual health care costs. Inaction will cost $8 trillion over 10 years according to the National Resources Defense Council,” Beard said.
Not Every Disaster Is Created Equal
While we can’t say we know for sure the effects climate change has on our health, we do know it affects some communities more than others. We can’t talk about climate change and solutions to it without at least acknowledging the disproportionate effect it has on minority groups. The health impacts of climate change are not felt equally.
The National Institute of Health explains that there is evidence of racial disparities in climate change regarding mortality, respiratory and cardiovascular disease, mental health, and heat-related illness. It also notes that children are particularly vulnerable, and infants of color have experienced poorer perinatal outcomes, heat stress, and higher emergency department visits in association with extreme weather.
According to The National Institute of Health: “The evidence strongly suggests climate change is an environmental injustice that is likely to exacerbate existing racial disparities across a broad range of health outcomes.”
“[...] We know that certain communities – particularly communities of color, the communities that contribute least to planetary harm – are the ones that already face disproportionate burdens of environmental pollution, and climate impacts on health,” Beard stated.
Looking Ahead
Health insurers are already well-positioned to tackle this problem; being able to predict, control for, and prevent risk is a philosophy health insurers know well.
In other parts of the insurance industry, like property and home insurance where climate change is already having an effect, these companies are reacting by pulling out of high-risk areas or limiting coverage, including in California, Beard explained. But this is not a sustainable solution.
“As the climate crisis continues to develop and exacerbate our big problems – cost, affordability, quality, access, equity and satisfaction – we must look at this as a catalyst for system transformation – for reimagining our healthcare system as a whole,” Beard said. “We can no longer accept the status quo.”
Now that you know why payers should care about climate change, check back for part two where we’ll dive into what payers can do about it.
Facing legal heat once again, Aetna just can’t seem to stay out of the spotlight. On April 16, a group of three Pennsylvania health systems sued Aetna for breaching the terms of their contract with Bridges Health Partners.
Aetna had been allegedly subtracting the cost from supplemental benefits such as meals and gym memberships from Centers for Medicare & Medicaid Services funds intended for patient care. In the contract, Aetna was supposed to reward Bridges with a share of the cost savings that were below a specific medical cost target, then they were to provide additional payments for meeting agreed upon quality metrics, according to a press release.
However, Aetna did not pay what was due and instead stacked up the supplemental benefit costs that included gift cards and over-the-counter medications, which were only available through Aetna’s parent company CVS, therefore directing millions of dollars towards CVS and charging the cost back to Bridge providers.
Bridges alleges that Aetna was funneling money back to parent company CVS and called the supplemental programs "marketing expenses" designed to attract more members.
Bridges also stated in the press release that the health system is losing millions of dollars that it earned in shared savings, which is impacting the financial wellbeing of Bridges’ providers.
Dr. Robert Zimmerman, Bridges Health Partners president and chief medical officer said in the press release: “While the incentives are good programs, they are not critical care health programs. They are supplemental programs that potentially erode a patient’s care at our providers. If we have to pay for the incentives, we cannot provide cost-saving, patient-centered care. It’s egregious manipulation but also a breach of our contract with Aetna.”
Bridges Health Partners requested that a judge issue an injunction that would require Aetna to abide by the terms of its contract as well as reimbursement of funds and legal fees.
“Health plan organizations, like Aetna, are setting record profits while community-based hospitals and health systems are struggling. This is a national crisis,” John Grese, Bridges Health Partners vice president of administration, said in the press release. “If the insurance agency corporate giants are not stopped, community health care will be obsolete, putting thousands of doctors, nurses, and staff out of jobs and the very people needing treatment will be the ones who suffer. “
Last year, Aetna’s peak revenue was $60.6 billion, roughly about $1.3 million to each employee out of 47, 950 employees.
This isn’t the first time Aetna has geared up for a lawsuit. Last year, the insurance giant saw 21 lawsuits in just one week. A New Jersey federal court accused Aetna of failing to fund reconstructive surgery for breast cancer patients who’ve had mastectomies.
Aetna was also hit with a different lawsuit last month for allegedly discriminating against non-heterosexual patients through its coverage of fertility treatments. The case moved forward after a federal judge dismissed one of the lawsuit’s three claims.
An audit by the U.S. Department of Health and Human Services' Office of the Inspector General from last year also found that Aetna received an estimated $25.5 million in Medicare Advantage overpayments for 2015 and 2016.
This case with Bridges Health Partners could have the potential to reshape Medicare Advantage supplemental benefits. The case could prompt insurers to possibly do away with coverage of benefits such as gym memberships and over-the-counter medications.
Another possible outcome could be Aetna facing a bumpy road to securing future provider contracts. As the cases (and new coverages) pile up, health systems are surely aware of Aetna’s alleged dishonest practices. The consistent court cases could potentially shine a softer light on other insurers when it comes to contract renewals. As Aetna gets battered in court, other payers should take note of the legal repercussions when they breach the terms of their contracts; providers and health systems have no interest in working with manipulative partners.
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