Volume 37

Cigna To Sell Medicare Advantage Business

Cigna is reportedly exploring the potential sale of its Medicare Advantage (MA) business with the assistance of an investment bank. An official spokesperson did not confirm or deny the rumors, however. The value of Cigna’s MA division is estimated to be several billion dollars. Despite recent legal challenges, Cigna’s third-quarter financial performance exceeded expectations, with $1.4 billion in profit and $49 billion in revenue.

So What’s The Big Deal? While it’s not entirely odd for a company to divest from certain service lines during business cycles, what is odd is to cleave off their MA business. In the past, these plans have been lucrative. But apparently, Cigna has some concerns about their Center for Medicare and Medicare Services (CMS) Star Ratings that could affect their reimbursements.

Your BIG Thoughts: Blip or does this news (which, again, is still unconfirmed) indicate larger problems with Medicare Advantage?

CMS Proposes Medicare Advantage Marketing Rules

Speaking of CMS ratings, and regulations, MA insurers are poised to encounter stricter guidelines encompassing marketing practices, prior authorization procedures, and supplemental benefits, according to a newly proposed rule from CMS. In a broader context, this regulation reflects the Biden administration’s ongoing efforts to enhance oversight and accountability within the MA sector.

So What’s The Big Deal? Many policymakers have touted the overwhelming benefits of MA (“advantage” is in the name). Still, unscrupulous practices have caught the current White House’s eye, particularly regarding predatory marketing and anti-competitive practices. The Biden administration plans to change that by banning misleading advertisements. An even bigger deal? The Biden administration plans to expand MA networks by adding behavioral health to network adequacy requirements. In short, if a payer offers an MA plan, wraparound mental health services must be offered. That’s a good thing.

Your BIG Thoughts: How much of an effect will the Biden administration’s changes have on the efficacy of MA? Will they better protect American seniors?

Medicare’s Death By A Thousand Cuts

The Biden administration recently announced significant policy changes to Medicare reimbursements in 2024. Notably, these changes entail a 1.25% reduction in physician payments compared to 2023. This reduction stems from a 3.34% decrease in the fee schedule’s conversion factor, which is the basis for calculating Medicare payouts to doctors. The conversion factor is $32.74, a decrease of $1.15 from the previous year.

So What’s The Big Deal? But to maintain budget neutrality, CMS plans to increase payments for some services, particularly primary and longitudinal care, while offsetting these increases with cuts elsewhere. While CMS is barred from expanding the budget to increase reimbursements, Congress can (and needs to). CMS reimbursement rates for physicians have fallen way behind inflation. There’s more: As reimbursements decline and inflation builds, provider groups will find even greater budgetary constraints.

Your BIG Thoughts: Tell anyone they are getting a 3.4% pay cut next year, and outrage would ensue. How will these cuts affect care in the community?

Envision Completes Bankruptcy

Envision Healthcare recently achieved a remarkable debt reduction of more than 70% through a significant operational overhaul during its Chapter 11 bankruptcy proceedings. The company's financial troubles, stemming from payer lawsuits, rising labor costs, and the impact of the No Surprises Act, prompted its bankruptcy filing in May. A federal bankruptcy court approved Envision’s restructuring plan on October 11, marking a pivotal moment in its financial recovery. Following the restructuring, Envision and its former ambulatory surgery unit, Amsurg, now operate as separate entities. Envision also announced a new board chair and interim CEO this past week.

So What’s The Big Deal? There is a lot to unpack here. While Envision successfully exited bankruptcy, the fundamentals of the healthcare services market are still strained. For one, profits will continue to remain thin with declining reimbursements from private payers and the government (see above). Envision-like companies will continue to depend on increasing operational efficiencies (doing more with less), salary cuts, enhanced productivity, and higher hospital subsidization requests to stay afloat. Finally, regarding the former CEO and new board chair, Envision’s former CEO, Jim Rechtin, is heading to Humana to be president and CEO. Envision’s new board chair was previously at Chen Med and was CEO of United Healthcare. After years of fighting insurers in the press and the courtroom, Envision seems to be switching gears. We guess if you can’t beat ‘em … join ‘em?!

Your BIG Thoughts: We’re skeptical, but tell us: Do you think companies like Envision can stay afloat amid declining reimbursements?

Future Of AI in Healthcare. Will It Live In The Shadows?

If you were at the Milken Institute's 2023 Future of Health Summit, you heard much about artificial intelligence’s (AI) potential to address issues like doctor burnout, enhance clinical trial diversity, and improve patient outreach. Experts are worried about the regulation of AI, however. Dr. Brian Anderson, a panel member and chief digital health physician at MITRE, raised questions about the U.S. Food and Drug Administration's (FDA) regulatory capacity and authority over advanced AI, which doesn’t currently meet the criteria for medical devices.

So What’s The Big Deal? President Joe Biden's recent executive order aims to establish safety and trustworthiness in AI and could offer federal agencies greater insights into AI models through reporting requirements. Nevertheless, some have expressed apprehension that these regulations might be susceptible to circumvention.

Your BIG Thoughts: What is your opinion on the White House’s AI executive order? Give us the good, the bad, and the ugly.

AI And Prior Authorizations: More Oversight, Please

Citing concerns about increased claim denials driven by AI software such as naviHealth, myNexus, and CareCentrix, U.S. House Democrats have asked CMS to enhance oversight of AI use in MA plans. The lawmakers want transparency about how CMS monitors AI tool utilization in order to ensure compliance with Medicare rules and to avoid unwarranted care barriers. While MA plans argue AI guides care decisions, CMS emphasizes the importance of medical necessity, raising broader questions about AI’s role in healthcare and the potential influence of profit motives.

So What’s The Big Deal? Two things: First, AI is not new, despite the constant buzz about it in the news. Insurers have used AI to help identify medical necessity for insurance authorizations. Second, AI must be regulated. In theory, the purpose of prior authorizations is to limit over-utilization, but in practice, it has become a deterrent. It could delay needed care. Without oversight, insurers could wittingly or unwittingly leverage AI to erect hurdles to care delivery, which would have the unintended consequences of widening healthcare disparities and causing harm to patients.

Your BIG Thoughts: We believe improved AI oversight is crucial to safeguard the interests of seniors and individuals with disabilities in Medicare. What can CMS do?

Infant Mortality Increases In The U.S.

The U.S. witnessed a troubling 3% increase in infant mortality in 2022, the largest surge in two decades, as reported by the U.S. Centers for Disease Control and Prevention (CDC). This unexpected rise, primarily affecting infants born prematurely and from specific ethnic backgrounds, reverses the historical decline in infant mortality rates. The exact causes of the decline are unknown, but some have speculated factors like RSV and flu infections may contribute.

So What’s The Big Deal? This concerning trend necessitates a focus on addressing socio-economic factors, inadequate prenatal care, and poverty. Research and public health efforts must intensify to reverse this concerning shift and ensure the well-being of newborns.

Your BIG Thoughts: Tell us: do you think the decline is profound enough for Congress to pay attention to this problem?

Healthcare Systems, Take Care Of Burnout

The CDC's anti-burnout campaign takes a comprehensive approach to support healthcare workers and shift the responsibility for addressing burnout away from individuals to health systems. It emphasizes the role of leadership in improving the work environment and offering practical tools and online workshops that address various aspects of well-being. Notably, the campaign seeks to remove questions about mental health history from healthcare credentialing applications (this is a really big deal!), acknowledging the need for systemic changes alongside individual-focused efforts to combat burnout in the healthcare sector.

So What’s The Big Deal? The campaign stands out in its holistic approach, which acknowledges the significance of individual and systemic factors contributing to worker burnout. By offering practical resources and addressing issues like sleep quality, it recognizes that healthcare professionals face challenges beyond their control, including administrative barriers, institutional inefficiencies, demanding schedules with limited resources, and on-call duties.

Your BIG Thoughts: The CDC is paying attention. Will hospitals and health systems respond to the federal government’s call? What’s in it for them?

More Surprises From The No Surprises Act

After numerous criticisms and legal challenges, the Biden administration is working to reform the independent dispute resolution (IDR) process for surprise medical bills. In a proposed rule that is a joint effort by several government departments, the White House aims to streamline the process, enhance early communication, and address issues related to dispute eligibility, batched payment determinations, and administrative fees.

So What’s The Big Deal? The IDR, instituted under the No Surprises Act, has been criticized by both providers and insurers. Making changes is necessary to protect patients and improve the healthcare billing process. This rule could rebalance reimbursements so that more revenues go back to provider groups. Watch this space.

Your BIG Thoughts: Is the Biden administration’s proposal enough to rebalance the system? If not, what more must be done?

OneMedical For Prime Members

Amazon’s healthcare expansion took another leap ahead with One Medical for Prime. Priced at $9/month or $99/year, the program offers 24/7 virtual care that is seamlessly integrated with Amazon Pharmacy's RxPass and Prime Rx. Amazon's 2022 One Medical acquisition bolstered its presence in primary care and the employer market, enhancing accessibility and affordability.

So What’s The Big Deal? The partnership between Amazon and One Medical could expand healthcare accessibility, potentially reshaping how consumers access healthcare services. The caveat here is whether Amazon and OneMedical can adequately manage the expected surge in patients. Additionally, the prospect of bundled healthcare services is increasingly appealing to payers seeking to transition patients from high-cost care settings to more cost-effective virtual platforms. Blue Cross Blue Shield (BCBS) is already collaborating with Amazon Pharmacy.

Your BIG Thoughts: While there is potential here, we still have some concerns. Tell us, are you worried about the capacity for clinicians to handle a substantial influx of patients? Second, will this development result in fragmented care for patients who are not part of the One Medical network and, finally, is the demand really there for this level of virtual care?

Kaiser Rebounds

Kaiser Permanente reported robust third quarter financials. Operating revenue surpassed expenses, resulting in a 2.6% year-over-year revenue increase. Expenses rose by just 1.6%. Investment income rebounded during this period too, and Kaiser increased its capital spending. The organization expanded its reach with a new San Marcos medical center and added 29,000 health plan members, overcoming ongoing Medicaid redeterminations.

So What’s The Big Deal? Kaiser's financial boost is likely from their expanded membership’s capital infusion, but storms may be coming. The cost associated with the new employee contract (remember the historic labor strike) will be reflected in fourth-quarter earnings.

Your BIG Thoughts: How much will Kaiser’s new labor contract affect the company’s profitability?

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Adam Brown

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