Latest / Becker’s Payer Issues Podcast / The prior auth reform push continues + more

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The prior auth reform push continues + more · Becker’s Payer Issues Podcast

• 0:00
  This is Jacob Everson with the Becker's Payer
• 0:02
  Issues podcast.
• 0:03
  Here's your biweekly industry news update for February
• 0:06
  6.
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  Moody's has revised its outlook for the health
• 0:10
  insurance sector to negative, citing continually high medical
• 0:14
  costs that are expected to constrain earnings growth
• 0:16
  in 2025.
• 0:18
  In a January
• 0:19
  reports, analysts
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  discussed the significant challenges insurers are facing across
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  their Medicare Advantage, Medicaid, and commercial businesses.
• 0:28
  Rising medical costs driven by inflation,
• 0:30
  prescription drug spending,
• 0:32
  and increased utilization of behavioral health services are
• 0:35
  outpacing reimbursement rates and premium increases.
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  Proposed legislation targeting PBMs and the potential expiration
• 0:42
  of ACA premium subsidies in 2026
• 0:45
  could also further increase pressures.
• 0:47
  Amid these change challenges, Moody's has assigned a
• 0:50
  positive outlook to only one major insurer, Hellevance
• 0:52
  Health, reflecting its strong market position and operational
• 0:56
  performance.
• 0:57
  In contrast, Humana and Healthcare Service Corporation have
• 1:00
  been given negative outlooks. Humana's negative outlook is
• 1:03
  driven by its heavy reliance on Medicare Advantage
• 1:06
  and HCSC, which is the parent company of
• 1:08
  five Blue Cross plans. They were given a
• 1:09
  negative outlook because of their exposure to Medicaid
• 1:13
  redeterminations
• 1:13
  and competitive pressures within the core commercial business.
• 1:17
  Medical costs are rising at their fastest rate
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  in thirteen years, with commercial group spending projected
• 1:23
  to grow by 8% in 2025.
• 1:26
  Individual market spend is expected to increase by
• 1:28
  seven and a half percent, and MA spending
• 1:30
  is forecast to rise by
• 1:33
  between somewhere of 57%.
• 1:35
  Competitive and regulatory constraints are also limiting the
• 1:38
  insurer's ability to offset
• 1:40
  rising costs through premium increases.
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  Medicare Advantage specifically accounted for about 20% of
• 1:46
  industry earnings in 2023,
• 1:48
  Lower reimbursement rates from CMS and regulatory limits
• 1:51
  on benefit reductions
• 1:53
  have led to higher medical loss ratios and
• 1:56
  lower earnings.
• 1:57
  The Inflation Reduction Act has also exacerbated costs
• 2:00
  by eliminating the 5% coinsurance requirements for individuals
• 2:04
  in the catastrophic phase of prescription drug plans,
• 2:06
  which has led to increased utilization
• 2:08
  of high cost medications.
• 2:10
  And finally, with Medicaid, enrollment did decline in
• 2:13
  2024 due to redeterminations,
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  but the ACA market saw record growth during
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  the last enrollment period. So Moody's expects overall
• 2:21
  enrollment across markets to improve in 2025
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  with Medicaid stabilizing and MA growth remaining steady.
• 2:28
  The potential expiration, though, of ACA subsidies could
• 2:31
  lead, though, to significant enrollment declines.
• 2:34
  And then there's PBMs facing bipartisan scrutiny.
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  A proposed federal legislation could require insurers to
• 2:41
  divest their pharmacy businesses, which would also potentially
• 2:44
  weaken earnings.
• 2:46
  On the federal level, members of Elon Musk's
• 2:49
  Department of Government Efficiency have been granted access
• 2:52
  to the payment and contracting systems at CMS.
• 2:56
  Department representatives have been on-site at CMS's offices
• 3:00
  this week, which is the week of February
• 3:02
  5, examining,
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  spending
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  data for potential fraud or waste, and reviewing
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  the agency's
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  organization and staffing.
• 3:10
  Doge representatives
• 3:11
  had not yet been granted access to databases
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  that include
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  personal health information of Medicaid and Medicare beneficiaries.
• 3:19
  The Doge representatives
• 3:20
  have only
• 3:21
  read have read only access, meaning they cannot
• 3:24
  change any material viewed. President Donald Trump created
• 3:27
  the department referred to as DOGE by officials
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  in November to cut wasteful spending and reduce
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  operational inefficiencies.
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  He appointed Elon Musk, who, of course, is
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  the CEO of Tesla, SpaceX, and Twitter to
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  lead the initiative.
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  Doge aims to cut federal spending by $1,000,000,000,000
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  with Medicaid emerging as a likely target.
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  On the topic of Medicaid, the Centene is
• 3:53
  declaring the redeterminations
• 3:55
  era over. On February 4, CEO Sarah London
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  told investors
• 4:00
  the company is anticipating a more stable period
• 4:02
  for Medicaid enrollment this year. She said as
• 4:05
  we move through 2025,
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  we're looking forward to turning the page on
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  the redetermination
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  era, returning to overall Medicaid stability and working
• 4:13
  closely with state partners on innovations to deliver
• 4:15
  health care and better health to communities.
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  In 2023 and 2024,
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  of course, states determine the eligibility of Medicaid
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  beneficiaries for the first time since 2020,
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  which was barred,
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  in terms of removing beneficiaries during the COVID
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  public health emergency.
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  Prior authorization reform is remaining a major advocacy
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  priority for provider trade groups this year, and
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  several state lawmakers have also introduced legislation
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  to bring changes to the process.
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  The
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  said the commercial insurers should be held accountable
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  for ensuring appropriate access
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  to care, including by reducing the excessive use
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  of prior auth. The group is also seeking
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  to reduce administrative burdens that take clinicians away
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  from the bedside
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  and contribute to burnout.
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  The Medical Group Management Association is seeking to
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  eliminate or significantly reduce the volume of prior
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  authorization and other prerequisites for coverage.
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  The AMA and the Federation of American Hospitals
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  are also both urging Congress to pass the
• 5:14
  improving seniors timely access to care act, which
• 5:17
  aims to reform the Medicare Advantage
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  specific
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  prior authorization
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  process. That would establish an electronic prior authorization
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  process for MA plans that includes a standardization
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  for transactions and clinical attachments
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  and and some more transparency around how those
• 5:33
  prior auth requirements are put to use.
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  At the state level, lawmakers in Indiana and
• 5:39
  Rhode Island have introduced prior authorization reform legislation
• 5:43
  just this year alone.
• 5:47
  UnitedHealth Group is raising concerns with the SEC
• 5:50
  after hedge fund manager Bill Ackman suggested that
• 5:52
  the company's profitability could be, quote, massively overstated.
• 5:56
  He wrote on x, formerly known as Twitter,
• 5:59
  saying, if I still shorted stocks, I would
• 6:02
  short UnitedHealthcare.
• 6:03
  He suggested that the SEC conduct a thorough
• 6:06
  investigation of the company and said, quote, I
• 6:08
  would not be surprised that the company's profitability
• 6:10
  is massively overstated
• 6:12
  due to its denial of medically necessary procedures
• 6:15
  and patient care.
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  He later deleted that post. Mister Ackman is
• 6:19
  a billionaire and the founder of hedge fund,
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  Pershing Square. He has a million and a
• 6:23
  half followers on x. A spokesperson for UnitedHealth
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  told Bloomberg that the company reached out to
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  the SEC about those comments.
• 6:31
  Shares of the company fell 4.3%
• 6:33
  on February 5. United said, quote, health insurance
• 6:36
  has long been subject to significant regulatory oversight
• 6:39
  and earnings caps. And he claims that health
• 6:41
  insurers, which typically have low to mid single
• 6:44
  digit margins, can somehow over earn or grossly
• 6:47
  uninformed about the structure and strong regulatory oversight
• 6:50
  of the sector.
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  And finally, a federal court in Tennessee has
• 6:55
  upheld a jury's decision in favor of a
• 6:57
  former BCBS of Tennessee employee who filed a
• 7:00
  religious discrimination lawsuit after she was terminated for
• 7:03
  refusing to comply with the company's COVID nineteen
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  vaccination mandate.
• 7:07
  The judge issued a final ruling on January
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  31 confirming that Blue Cross must pay the
• 7:13
  plaintiff a total of more than $500,000
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  in damages following a jury's original verdict last
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  June.
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  A jury had initially awarded the plaintiff
• 7:22
  over $680,000,
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  but it wasn't in accordance with federal rules
• 7:26
  for employers with more than 500 employees,
• 7:29
  and so the punitive damages were reduced to
• 7:32
  300,000.
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  The jury had originally found the Blue Cross
• 7:36
  had not met its legal obligation to offer
• 7:38
  reasonable accommodations
• 7:40
  under the Civil Rights Act. It's also part
• 7:42
  of a broader litigation against BCBS
• 7:45
  of Tennessee with a class action lawsuit filed
• 7:48
  by a group of former employees who were
• 7:49
  also terminated for refusing the vaccine on religious
• 7:52
  grounds. The company terminated 41 employees who had
• 7:55
  requested
• 7:56
  religious exemptions,
• 7:58
  for a mandate that affected 900
• 8:00
  customer facing roles.
• 8:02
  It's also part of a larger trend because
• 8:04
  back in November, a federal jury ordered Blue
• 8:06
  Cross Blue Shield of Michigan to pay nearly
• 8:08
  $13,000,000
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  in damages to a former employee who said
• 8:12
  she was wrongfully terminated
• 8:13
  for refusing to receive the COVID vaccine back
• 8:16
  during the pandemic.
• 8:18
  If you'd like the latest health insurance industry
• 8:20
  news delivered straight to your inbox every morning,
• 8:22
  subscribe to the Becker's Payer Issues e newsletter
• 8:24
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