This week I attended the annual National BlueCross Consortium Health Care Broker and Consultant Forum. This is an opportunity to get the views of healthcare from, as a group, the largest healthcare network in the United States. The meeting opened with CEO Jim McNary stating that our nation’s healthcare system has reached, and even passed, the tipping point of the impetus for change – and he said the pace of change is fastest once the tipping point is reached. His expectation is that it is time to strap in. As evidence, he pointed to over 1,000 point solutions fueled by more than $15 billion in venture capital to fix aspects of change.
Pharmacy costs which include pharmacy benefit manager (PBM) charges, and costs flowing through the medical portion of insurance plans, now exceed 30% of total medical expenses. These costs are trending well above inflation rates and he expects legislative action which will break and not just bend cost trends.
BlueCross continues to push toward value-based contracting and in 2021 the system will be introducing a national High Performance Network. This introduction is mandated by a change to their charter, the first change to the charter (which governs how the BlueCross and BlueShield plans interact with each other) since development of BlueCard and is expected to shave 8% to 10% as compared with their PPO network. Two plan CEOs responded to my question about whether the alignment of their major competitors with the three largest PBMs put them at a disadvantage; they implied that their PBM, Prime Therapeutics, together with the new Anthem PBM, IngenioRx, would together be up to the challenge. I wonder what that means? A merger perhaps?
Washington supports the pace of change comment with the president’s budget proposal. The proposal replaces ACA with the Graham-Cassidy 2017 bill, which advocates block grants to the states. They also propose allowing HSAs for plans at or below a 70% actuarial value. And the U.S. Department of Health & Human Services (HHS) has proposed rules which would extend the new federal drug rebate rules, which remove the exemption of rebates from anti-kickback laws, to private plans. Cigna’s Express Scripts has recently joined Caremark and Optum in moving rebates to point-of-sale for some customers, which would be allowed under the new federal guidelines. Interestingly, a recent Pew Study shows that between 2012 and 2016 rebates as a percentage of payments to PBMs increased from 9.3% to 14.8%. The share of rebates paid to health plans increased from 78.3% to 91.2% during the same period. And Centers for Medicare & Medicaid Services (CMS) continues to meddle with ACA rules, seeking comment for an initiative to actualize the sale of health insurance products across state lines.
The single-payer debate continues and will definitely be a part of the upcoming presidential debates. While that solution sounds great to many, single-payer systems have their own set of problems. Michael Roizen, Chief Wellness Officer of the Cleveland Clinic, said that in the UK, payment under their National Health Service for kidney dialysis is limited by the age of the patient. It was increased from 57 to 75, but to combat rising costs was recently reduced to 67. Kidney health should be top of mind for single-payer advocates.
Stay tuned, this is all riveting.