Latest / Becker’s Healthcare Podcast / GLP-1 Coverage Cuts, Medicaid Changes, and the Future of Health Plans with Jakob Emerson

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GLP-1 Coverage Cuts, Medicaid Changes, and the Future of Health Plans with Jakob Emerson · Becker’s Healthcare Podcast

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  - This is Scott Becker with the Becker's Healthcare
• 1:02
  - podcast.
• 1:03
  - We're thrilled to stay to visit with Jacob
• 1:04
  - Emerson.
• 1:06
  - Jacob talks to us regularly to discuss the
• 1:08
  - issues he's watching in the payer arena and
• 1:10
  - what's going on. Jacob, let me tee it
• 1:12
  - up and then turn it over to you
• 1:14
  - and tell us what are you watching currently
• 1:16
  - in the in the world of payers and
• 1:18
  - and and mega payers and and so forth.
• 1:20
  - Yeah. Absolutely. It's it's great to talk with
• 1:22
  - you, Scott. So that's one story we could,
• 1:26
  - start off with that I think is indicative
• 1:28
  - of just the wider price pressures that insurers
• 1:31
  - across the entire industry are facing. It's the
• 1:34
  - GLP one coverage and employers as, as as
• 1:36
  - self insured employers too.
• 1:38
  - And yesterday, just really big news with Cigna
• 1:41
  - deciding that they're gonna be dropping GLP one
• 1:44
  - coverage for weight loss to their own employee
• 1:46
  - health plan, starting next month. And, you know,
• 1:49
  - this is one of the biggest companies in
• 1:50
  - the country, almost 70,000
• 1:52
  - employees.
• 1:53
  - And I think what's interesting is that, you
• 1:55
  - know, they're one of the they're one of
• 1:57
  - those payers that has really transformed themselves in
• 2:00
  - recent years, really diversified
• 2:01
  - their business, and they offer a whole suite
• 2:04
  - of products as a as a PBM to
• 2:06
  - employers to try to, get the costs of
• 2:09
  - GLP ones down, try to put different financial
• 2:12
  - incentives
• 2:12
  - to cap the costs on those drugs. And
• 2:14
  - now Cigna, the pharmacy benefit manager, is saying
• 2:18
  - we can no longer afford
• 2:20
  - these these medications for our employees.
• 2:22
  - It definitely sends a signal, I think, across
• 2:24
  - the industry of just how much GLP ones
• 2:27
  - are wreaking havoc on
• 2:29
  - employers' health plan finances.
• 2:33
  - Yes. Jacob, and I know this might not
• 2:34
  - be a popular perspective,
• 2:37
  - but but my sense is,
• 2:39
  - as these things come out of coverage
• 2:41
  - by payers,
• 2:43
  - the
• 2:44
  - free market starts to work better on this
• 2:46
  - stuff. I know this is a general popular
• 2:48
  - thought track today
• 2:49
  - because it leads to competitive pricing on these
• 2:51
  - things. And you see, for example, people getting
• 2:54
  - GLP ones,
• 2:56
  - maybe not the preferred ones, but the the
• 2:59
  - compounded ones
• 3:01
  - at much cheaper prices than a couple years
• 3:03
  - ago, even though, like, the Zepbounds and the
• 3:06
  - the the
• 3:08
  - the prime brand names are able to hold
• 3:10
  - the line on pricing. Still no no more
• 3:12
  - nowhere near 1,000 a month, more like 400
• 3:13
  - a month. But
• 3:15
  - the compounders have brought down prices to a
• 3:17
  - 100 to $200 a month. Yes. And that
• 3:19
  - just is so different than a couple years
• 3:21
  - ago.
• 3:22
  - And the more that it all flows to
• 3:24
  - insurance companies, it strikes me as
• 3:27
  - you're you're not seeing that free market fighting
• 3:29
  - overpricing.
• 3:30
  - So it seems like there's
• 3:32
  - it's a signal. Yes.
• 3:34
  - But it also seems to be like one
• 3:35
  - of these places where the free market is
• 3:37
  - working better
• 3:39
  - than it was a couple years ago, partly
• 3:42
  - because of the
• 3:43
  - the competition with compounders.
• 3:45
  - Yeah. Absolutely. And I think, you know, there's
• 3:46
  - also, of course, all the cash pay offerings
• 3:49
  - now available,
• 3:50
  - from the manufacturers in ways that what what
• 3:53
  - really wasn't available
• 3:54
  - before. And,
• 3:56
  - and so as I understand it, you know,
• 3:58
  - we were citing an an external report on
• 4:00
  - this, Scott. But as I understand it, the
• 4:03
  - employees there at Cigna can still pay for
• 4:05
  - these drugs with cash directly
• 4:07
  - through manufacturer websites or through Trump RX. And
• 4:10
  - that's what an internal document from Cigna told
• 4:13
  - employees they could do,
• 4:15
  - instead of now instead of using their health
• 4:17
  - plan,
• 4:18
  - even though that's money won't count toward their
• 4:20
  - deductible
• 4:20
  - or anything like that.
• 4:23
  - So it's interesting that that's that's the direction
• 4:25
  - that Cigna is is,
• 4:27
  - sending its own employees is pay pay cash
• 4:30
  - for these drugs from the manufacturers directly
• 4:33
  - versus
• 4:34
  - deal with it through our pile health plan,
• 4:37
  - when the pharmacy benefit manager is involved.
• 4:40
  - Right. Because when they do it through the
• 4:42
  - pharmacy benefit manager, it gets marked up through
• 4:44
  - all those kinds of things. And when they
• 4:45
  - do it direct to the manufacturer,
• 4:48
  - it it might end up being 2 to
• 4:49
  - 300 a month versus the 5 to 700
• 4:51
  - a month. Yeah. Exactly. So just kind of
• 4:54
  - interesting, I think, just as a company to
• 4:56
  - amplify, I think, what we're seeing a lot
• 4:58
  - go on a lot across the industry right
• 4:59
  - now.
• 5:01
  - Just go cash with with, some of these
• 5:03
  - services.
• 5:04
  - GLP ones, for a lot of people, might
• 5:06
  - be cheaper
• 5:07
  - than, you know, trying to do it through
• 5:08
  - your health plan for for weight loss, not
• 5:10
  - for diabetes.
• 5:12
  - Right. Exactly. That's that's absolutely fascinating to see,
• 5:14
  - and it's it's it's directionally fascinating too.
• 5:17
  - And it is a fascinating evolution of what's
• 5:20
  - going on with these GLP ones as you
• 5:22
  - watch this, which certainly when they're getting priced
• 5:24
  - a thousand bucks a month or 700 a
• 5:26
  - month, 800 a month through PBMs,
• 5:29
  - that would just break the back of the
• 5:30
  - insurance companies or breaks the back of us
• 5:33
  - because it drives up the insurance cost by
• 5:34
  - that much more too. Because it's not there's
• 5:36
  - no there's
• 5:37
  - if you're using another 12,000 a year in
• 5:39
  - benefits, then your insurance cost are gonna go
• 5:41
  - up 12,000 a year, quite frankly. Yeah. Absolutely.
• 5:44
  - As these get out of the insurance universe,
• 5:47
  - it does seem like the price has come
• 5:49
  - down a great deal,
• 5:51
  - and and we'll see how that evolves. But
• 5:53
  - then you do have the challenge, of course,
• 5:54
  - many people just even though it's gone down
• 5:56
  - a a a great deal,
• 5:57
  - that whatever the numbers are, the cost of
• 6:00
  - an expensive gym membership, that's still a lot
• 6:02
  - of money for a lot of people. You
• 6:04
  - know, even if it gets down to 300
• 6:06
  - a month, it's still a real lot of
• 6:07
  - money for a lot of people. So I
• 6:08
  - guess there's no easy win on it. But
• 6:11
  - I I don't I I could see where
• 6:12
  - this gets out of the insurance world because
• 6:15
  - you end up with getting better pricing,
• 6:17
  - and it's fascinating to watch how Cigna approaches
• 6:19
  - this.
• 6:20
  - Definitely. And I I was talking with the
• 6:22
  - CFO at Blue Cross of Massachusetts
• 6:24
  - just last week, and she had told me
• 6:26
  - they had to drop coverage for weight loss
• 6:29
  - last year,
• 6:30
  - in their plans because they were for this
• 6:32
  - year, we're approaching 1,000,000,000
• 6:34
  - in pharmacy spend on just GLP ones in
• 6:37
  - one year, one health plan. So those are
• 6:40
  - the kind of numbers that a lot of
• 6:42
  - these more regional plans especially are facing.
• 6:46
  - And it's, you know, for an employee health
• 6:47
  - plan, 67,000
• 6:49
  - people, give or take. I'm not I don't
• 6:50
  - know the exact numbers there, but that's, you
• 6:52
  - know, that's it's a tough it's a tough
• 6:54
  - product category to cover, it sounds like.
• 6:56
  - A 100%. And you got 67,000 people. That
• 6:58
  - means 15,000 of them are on GLP one,
• 7:01
  - so it's a lot of money to the
• 7:02
  - insurance plan. I mean, that's an estimate, of
• 7:03
  - course, that but you got maybe 20% of
• 7:06
  - people are on them of that group or
• 7:08
  - it can be, and that becomes a large,
• 7:10
  - large cost.
• 7:11
  - Absolutely. And I I thought the other story,
• 7:14
  - that we've been following, Scott, that it's just
• 7:17
  - been a very noticeable trend,
• 7:19
  - over these last couple weeks, but part of
• 7:21
  - a wider trend that's been going on for
• 7:23
  - years now. And it's the
• 7:25
  - the,
• 7:26
  - the hospital system retreat from operating your own
• 7:30
  - health insurance plan. Typically, you know, in the
• 7:32
  - Medicare Advantage market,
• 7:34
  - in a pretty strong way, is what these
• 7:36
  - types of health plans,
• 7:38
  - operate in. But,
• 7:39
  - you know, I just I think it was,
• 7:40
  - like, two weeks ago. It was all over
• 7:42
  - the country. There was there was bad news
• 7:44
  - coming out from
• 7:45
  - some of these more nonprofit,
• 7:47
  - provider owned,
• 7:49
  - small regional plans like Providence Health Plan.
• 7:52
  - And I think it was a big it's
• 7:53
  - been the biggest in a while,
• 7:55
  - saying that they're gonna be closing down most
• 7:58
  - of their their health plan business by next
• 8:01
  - year.
• 8:02
  - The ending forty years as a company affecting
• 8:04
  - about half a million people over on the
• 8:06
  - West Coast
• 8:07
  - and pulling out of ACA, Medicaid, Medicare commercial
• 8:10
  - markets,
• 8:11
  - and or they're hoping
• 8:13
  - to ink a a Medicare Advantage deal with
• 8:15
  - another large payer. But,
• 8:17
  - overall, you know, this matches up with what
• 8:19
  - we've seen in terms of research
• 8:22
  - within the last year as well that it's
• 8:24
  - something like
• 8:25
  - a the the major the majority of regional
• 8:28
  - plans around the country
• 8:30
  - are, are running at a loss. And so
• 8:32
  - and there was many it was predicted that
• 8:34
  - if they have under half a million members
• 8:35
  - at this point,
• 8:37
  - they're probably running on borrowed time, and they
• 8:38
  - need to figure out a way to to
• 8:40
  - even stay alive if if they can.
• 8:42
  - And I think this is an example of
• 8:44
  - that.
• 8:45
  - It's just become too difficult of an industry
• 8:47
  - to
• 8:48
  - operate a health plan and that does all
• 8:50
  - these markets, but that has so little members,
• 8:53
  - comparatively to the big guys and just has
• 8:55
  - not the same amount of access to to
• 8:58
  - infrastructure,
• 8:59
  - technology,
• 9:00
  - all the things that they need internally, but
• 9:02
  - also that,
• 9:03
  - that members want now too. And so,
• 9:06
  - yeah, I think just these hospitals are finding,
• 9:08
  - running running small bolted on health plans is
• 9:11
  - is becoming a very untenable business for a
• 9:14
  - lot of them.
• 9:15
  - No. It sure seems like it. And that's
• 9:17
  - been the case for the last thirty, forty
• 9:18
  - years with some different, you know, periodic people
• 9:21
  - going back into it, people coming out of
• 9:23
  - it. Yeah. But over the history of it,
• 9:25
  - it seems like it's been a challenging, challenging
• 9:27
  - challenging business.
• 9:28
  - The only place that have done really well
• 9:30
  - with it are places that are really in
• 9:31
  - sort of localized areas where they really have
• 9:33
  - regional dominance is the only place that have
• 9:35
  - really seen it,
• 9:37
  - work well, and even those places are getting
• 9:39
  - harder and harder. It it Yeah. Fascinating. And,
• 9:41
  - obviously,
• 9:42
  - there there's the biggest place like Kaiser, but
• 9:44
  - Kaiser's really not a local house system. There's
• 9:46
  - much insurance plan, everything else, and they're personally
• 9:49
  - built out of Kaiser, you know, metals and
• 9:51
  - stuff like that or Kaiser Steel. Fascinating. So
• 9:54
  - it so we've talked about GLP ones. But,
• 9:56
  - Jake, if anything else that's top of mind
• 9:58
  - that you're watching closely right now you know,
• 10:00
  - I I keep on hearing about Medicare coverage
• 10:02
  - Medicaid coverage and eligibility issues, people talking about
• 10:06
  - that on a previous podcast today. Are there
• 10:08
  - other things that you're watching closely that are
• 10:10
  - top of mind for you right now? Yeah.
• 10:12
  - I mean, the Medicaid, we we just got
• 10:14
  - the final rule from from CMS
• 10:16
  - just finalizing,
• 10:19
  - the Medicaid work requirement rules for,
• 10:22
  - for every state around the country going into
• 10:25
  - next year.
• 10:26
  - And, you know, no two may no major
• 10:28
  - surprises there, Scott. I mean and we we
• 10:30
  - knew it was coming at some point that
• 10:32
  - the federal government was gonna give some guidance
• 10:34
  - to states around this process. But what we're
• 10:36
  - hearing just from around the country in terms
• 10:38
  - of the lift for a lot of states
• 10:40
  - to get these rules up and off the
• 10:42
  - ground is,
• 10:44
  - it sounds a lot of states don't believe
• 10:46
  - they have enough money to do so.
• 10:48
  - And then there's been some states like Nebraska
• 10:50
  - that have just gone full steam ahead
• 10:53
  - and basically enacted work requirements six months early,
• 10:56
  - but in a way where it it sounds
• 10:58
  - like from local reporting, no no real infrastructure,
• 11:01
  - no extra funding, no extra staff is available,
• 11:05
  - to take up that extra lift. And so
• 11:07
  - we've seen lots of, like, local news reports
• 11:09
  - out of just Nebraska alone saying people will
• 11:12
  - call the state and they're the the state
• 11:14
  - can no longer tell them if,
• 11:16
  - they have Medicaid coverage or not, because of
• 11:19
  - how complicated and confusing that the system has
• 11:22
  - become,
• 11:23
  - of whether someone's eligible based off of,
• 11:26
  - 80, you know, work volunteer,
• 11:29
  - certain other requirements every every week,
• 11:32
  - or every two weeks. So,
• 11:34
  - so, yeah, it's it's clearly it's gonna be
• 11:36
  - a massive lift for states who many of
• 11:38
  - which are on the record saying they're nervous
• 11:40
  - about even having the funding or the staff
• 11:42
  - or the infrastructure
• 11:43
  - to do this.
• 11:44
  - And and CMS is is rolling out this
• 11:47
  - framework as we speak, Scott, to to each
• 11:49
  - state, to give them a clue on how
• 11:50
  - to get a better handle on it going
• 11:52
  - into next year.
• 11:54
  - Yeah.
• 11:55
  - Literally fascinating. And that that's become a big
• 11:57
  - discussion
• 11:58
  - is whether people
• 12:00
  - still would be eligible, but have to get
• 12:02
  - through all the processes of eligibility to get
• 12:04
  - the coverage they would be entitled to.
• 12:07
  - And, yeah, as you say, like, these things
• 12:09
  - come out of congress, they come out of
• 12:11
  - governments
• 12:12
  - that put on different requirements
• 12:15
  - with with understating
• 12:17
  - the administrative burden to actually fulfill these requirements
• 12:20
  - and actually deal with them. Yeah. And that
• 12:23
  - itself is a a real shame, actually, because
• 12:25
  - you you sort of legislate stuff where there's
• 12:27
  - no money to cover it,
• 12:29
  - and then it's sort of a you know,
• 12:30
  - it's it's a it's almost illusory that you've
• 12:32
  - got a rule because
• 12:34
  - nobody's got the funds to implement that rule.
• 12:36
  - It's just sort of
• 12:38
  - you know, it's it's political platitude is at
• 12:40
  - its worst on every side.
• 12:42
  - Well, we'll we'll see what happens. I think
• 12:44
  - it I I think anybody could say the
• 12:46
  - core of what they want is
• 12:48
  - to save money to root out individuals that
• 12:50
  - shouldn't be receiving,
• 12:52
  - health care benefits that they shouldn't.
• 12:55
  - We'll see whether the lift to
• 12:58
  - basically,
• 12:59
  - you know, start an entirely new program in
• 13:01
  - every,
• 13:02
  - every state around the country,
• 13:04
  - to measure that and to prove that is
• 13:06
  - is worth the trade off financially. I you
• 13:08
  - know, it hasn't really been undone on this
• 13:10
  - scale, so we're gonna see.
• 13:12
  - No. That's exactly right. That's exactly the point.
• 13:14
  - It's like the rule sounds like an idea
• 13:16
  - where you could get behind or be against
• 13:18
  - whatever your politics are. Like, you could have
• 13:20
  - people that say, yeah. People should have to
• 13:21
  - work to get welfare, whatever it is. Other
• 13:23
  - people can say, oh, go. They really need
• 13:24
  - this. They just have to prove up, whatever.
• 13:26
  - Whatever your perspective's on
• 13:28
  - it, either way, you're in a situation where
• 13:30
  - actually implementing these rules is gonna be as
• 13:33
  - as complicated as as the idea itself and
• 13:35
  - or even more so. The intuition of it's
• 13:37
  - much harder than actually, like, platituding on it.
• 13:39
  - So fascinating.
• 13:41
  - Jacob, as always,
• 13:42
  - thank you for joining us on the Becker's
• 13:44
  - Healthcare podcast. What a fascinating set of times
• 13:47
  - going on,
• 13:48
  - between the GLP one coverage, the Medicaid eligibility
• 13:51
  - and coverage rules, and just the, the the
• 13:54
  - storm that is American health care. Some stuff
• 13:56
  - going right, some stuff really challenging, and fasting
• 14:00
  - to watch.
• 14:01
  - Exciting times ahead for for the industry. And
• 14:04
  - just the last talk, what we talked alone,
• 14:06
  - Scott, it's, it's gonna be a lot to
• 14:07
  - follow for sure.
• 14:09
  - It it it sure is. Jacob Emerson, brilliant.
• 14:11
  - Thank you as always for joining us. I
• 14:13
  - always learn something. I brought it to us
• 14:14
  - too. Thank you very much for joining us.
• 14:16
  - Thank you, Scott.