The Weekly Gist: The Mochachino Pitch Clock Edition

What happened in healthcare this week—and what we think about it.

1. Texas federal judge rules against no-cost ACA preventative care services. US District Judge Reed O’Connor ruled on Thursday that the Affordable Care Act’s (ACA’s) requirement for most insurers to cover certain preventative care services without cost-sharing is unlawful. Judge O’Connor—who invalidated the entire ACA in 2018, before the Supreme Court reversed that ruling—had already sided with the plaintiffs in Braidwood vs. Becerra last September, on the grounds that mandatory coverage of HIV prevention treatment, also known as PrEP therapy, violated their religious beliefs. His latest ruling applies to the ACA-mandated preventive services that are compelled by the US Preventative Services Task Force (USPSTF), on the grounds of the task force’s makeup and the fact that some of its recommendations predate the ACA. Services covered for no cost today include screening tests for a variety of cancers, sexually transmitted infections, and diabetes. The ruling does not impact other ACA preventative care services, like contraceptive services and children’s immunizations, as they are based on the recommendations of other government advisory groups. The immediate impact of this week’s ruling is unclear, as the Biden administration has already filed an appeal and may seek to stay the ruling, while most insurance contracts are set on an annual basis.

The Gist: Given the reasoning laid out in Judge O’Connor’s Braidwood v. Becerra ruling last fall, this decision was expected. As with previous attempts to repeal the ACA that have come through his district, the ultimate fate of the ACA’s cost-free preventative care services will likely be decided by the US Supreme Court. It’s possible that the Court may find the narrow targeting of this case more reasonable, making no-cost preventive care coverage optional for employers. If that happens, millions of Americans could again have to pay for some of the most common and highest-value healthcare services. That additional financial burden, along with tightening of health plan benefit designs, could create barriers to access and exacerbate health disparities.

2. Payers revise prior authorization policies ahead of new regulations. On Wednesday, UnitedHealth Group (UHG) announced that it will reduce its prior authorization claims volume by 20 percent for its commercial, Medicare Advantage, and Medicaid businesses later this year. Next year, it will launch a “gold card” program for qualifying providers that will further streamline care approvals. Cigna also shared that it has removed nearly 500 services from prior authorization review since 2020, relying on an electronic process for faster response times. These changes come in the wake of a Centers for Medicare and Medicaid Services (CMS) proposed rule, set to be finalized in April, that aims to streamline prior authorization by requiring certain payers to establish a method for electronic transmission, shorten response time for physician requests, and provide a reason for denials.

The Gist: These changes address two of providers’ primary complaints around prior authorizations: there are too many of them, and payers take too long to process them. However, technology options aiming to solve this problem through automation are by no means a foolproof solution. As ProPublica recently reported, algorithm-based electronic claims processing solutions that improve response times can create other challenges, including improper automatic denials, and can expand prior authorization to lower-cost services, for which it was previously determined to be inefficient to rely on human review. Quicker responses must still be accurate and fair, necessitating that insurance companies closely monitor, audit, and hone technology solutions.  

3. Oscar Health appoints insurance veteran Mark Bertolini as CEO. On Tuesday, New York City-based “insurtech” Oscar Health announced that Mark Bertolini, the former Chairman and CEO of Aetna, will be taking over as CEO. While Oscar’s latest financial results slightly outperformed expectations, the company has been plagued by significant net losses, absorbing high medical loss and administrative expense ratios to cover just over 1M members. Bertolini said that his primary mission will be achieving full-company profitability by 2024.

The Gist: Bertolini’s appointment comes at a difficult time for many “insurtechs.” Rising interest rates have created a tough environment for digital health and insurance startups: with their cheap funding sources cut off, investors are expecting profitable returns sooner rather than later. Oscar is betting that bringing in a “traditional” insurance executive to run its “nontraditional” insurance platform will allow it to finally turn a profit.

Plus—what we’ve been reading.

4. Mississippi hospitals are dying without Medicaid expansion. Published this week in the New York Times, this article describes the decaying state of Greenwood Leflore Hospital, a 117 year-old facility in the Mississippi Delta that may be within months of closure. While rural hospitals across the country are struggling, Mississippi’s firm opposition to Medicaid expansion has exacerbated the problem in that state, by depriving providers of an additional $1.4B per year in federal funds. Instead, only a few of the state’s 100-plus hospitals actually turn an annual profit, and uncompensated care costs are almost 10 percent of the average hospital’s operating costs. Despite a dozen or more hospitals at imminent risk of closure, Mississippi officials would rather use the state’s $3.9B budget surplus to lower or eliminate the state income tax.

The Gist: Expanding Medicaid doesn’t just reduce rates of uncompensated care provided by hospitals, it changes the volume and type of care they provide. Further, Medicaid expansion has been found to result in significant reductions in all-cause mortality. Ensuring that low-income residents in Mississippi and other non-expansion states have access to Medicaid would allow providers to administer more preventive care and manage chronic diseases more effectively, before costly exacerbations require hospitalization.