|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
Cigna-Express Scripts—putting all the pieces together
Like UnitedHealthcare (with its OptumRx division) and Aetna (as part of CVS/Caremark), Cigna has decided that owning a pharmacy benefits manager (PBM) will solve a key problem with the PBM model—the opacity of negotiated prices with drug companies. The move is emblematic of a new era in which health plans increasingly believe they must own a full complement of healthcare assets, not just the insurance function, in order to remain relevant in a changing marketplace. We’d expect payers to continue to expand their ownership of outpatient centers, retail clinics and physician practices, and to seek to control as many other pieces of the care continuum as possible, in order to position themselves to capture any downstream savings from better management of care.
Azar gets aggressive on payment reform, but may not have the arms and legs to execute
In a speech to the Federation of American Hospitals HHS Secretary Alex Azar delivered a shot across the bow to providers, expressing frustration with the pace of payment reform. He indicated that the Trump administration is seeking a faster path to cost reduction and value in healthcare and may not be willing to wait for pilots and demonstrations to slowly unfold. Despite this intent, Azar may find an critical obstacle inside CMS: a drain of talent away from the agency. Many key positions in the agency, including the directorship of the Innovation Center, are still unfilled. Providers will likely be expected to move faster to show real progress against savings targets, but Azar will need to move quickly to put in place the team needed to hold providers accountable.
United Healthcare cracks down on ED visits—with a twist
United announced a policy of increased scrutiny of high-acuity (level 4 or 5) ED visits, warning hospitals that they could see claims denied or adjusted if the visits are deemed inappropriate. This follows Anthem’s earlier attempt to ratchet down on unnecessary emergency visits. But Anthem’s approach was different: they proposed denying coverage for patients should their condition be deemed non-emergent after review. While Anthem’s policy spurred lawsuits and Congressional scrutiny for placing an excessive burden on patients, it’s likely UHC’s approach—which targets hospitals not patients—will come under far less criticism.