Published December 2011 n Copyright © 2011 HealthLeaders-InterStudy, A Decision Resources Group Company n Copyright Strictly Enforced
ANALYSIS
ANA
LYSIS
20
11
Texas
Contents:
Tables:
Other Health Plan Data & Analysis Products
Health Plan Profiles
Health Plan Earnings Summaries
Health Plan Data
Subscribers to Health Plan Data & Analysis products have access to health plan profiles organized by state. Within each profile, users find standard sections such as Market and Products, Provider Contracting, Pharmacy Benefits and others. In addition to a text-based overview of a health plan, the profiles also include the latest financial and enrollment metrics for a plan, as well as contacts and vendors.
Each quarter, market analysts summarize developments reported by the nation’s publicly held health plans through a managed care lens. The earnings summaries are posted soon after the various companies report their quarterly results to Wall Street. Users are also able to view archived copies of the earnings summaries from previous quarters.
The Health Plan Data & Analysis product suite includes financial metrics for HMOs that report their results to the National Association of Insurance Commissioners. The tables offer views of profit, losses and revenues, as well as hospital utilization, prescription drug expenses, medical loss ratios and other metrics. In addition to HMO filings, the tables also include some filings for Blue Cross Blue Shield plans required to report additional lines of business to regulators. In almost every state, the financial data is updated quarterly.
3 Table MP-1: Texas/U.S. Economic Statistics 3 Table MP-2: Texas/ U.S. Economic Snapshot 4 Table MP-3: Texas HMO Net Income PMPM 4 Table MP-4: Texas HMO Medical Loss Ratio
4 Table MP-5: Distribution Of Total Pharmacy Lives In Texas – January 2011 4 Table MP-6: Medicare Advantage Enrollment Trends In Texas
5 Table ES-1: Texas Developments - Fall 2011 8 Table 1-1: Texas Commercial Enrollment Trend
9 Table 1-2: Fully Versus Self-Insured Enrollment Breakdown For Texas (Largest Plans) 12 Table 2-1: Texas Medicaid Profile
12 Table 2-2: Texas Medicaid Enrollment 14 Table 3-1: Texas Medicare Snapshot
15 Table 3-2: Texas Medicare Advantage Enrollment Trends (Largest Plans)
17 Table 3-3: Texas Medicare Stand Alone Part D Plan Enrollment Trends (Largest Plans) 19 Table 4-1: Texas Prescription Drug Landscape
20 Table 4-2: Texas Rx Lives By Sector 22 Table 5-1: Texas Chronic Disease Snapshot 25 Table 6-1: Summary Of Recent Regulations
3 MARKET PROFILE
5 EXECUTIVE SUMMARY
6 HEALTHCARE REFORM WATCH
8 COMMERCIAL CARRIERS
12 MANAGED MEDICAID MARKET
14 MANAGED MEDICARE MARKET
19 PHARMACY BENEFITS
22 PATIENT CARE MANAGEMENT
25 REGULATION/LEGISLATION
Market Profile
Table MP-1: Texas/U.S. Economic Statistics
Texas United States Median family income (two-year average, 2008-2009) $46,895 $49,495 Percentage of residents in poverty (2009) 17.3% 14.3% Covered lives (younger than 65) in employer-sponsored health
insurance (2009) 11,893,000 169,689,000 Covered lives in direct-purchase health insurance (2009) 1,531,000 27,219,000
Executive Summary
Table ES-1: Texas Developments - Fall 2011
Key Development Implications Section
» New plan designs focused on narrow networks or wellness are becoming more common in the Texas commercial market.
Increasing costs have led employers to look at new ways of containing costs, including improving the health of their employees.
Commercial Carriers
» Cigna HealthCare’s planned purchase of HealthSpring will have a major impact on the Texas Medicare Advantage market.
With Cigna, HealthSpring could expand into new markets, designating additional LivingWell Health Centers.
Managed Medicare Market
» Public-sector employer plans increasingly embrace innovative designs and value-based pharmacy benefits.
Pharmacy spending will increase as medical utilization drops. Smaller groups will gravitate toward such plan designs.
Pharmacy Benefits
Source: HealthLeaders-InterStudy, 2011
Commercial
Carriers are introducing non-traditional plan designs with narrow and tiered provider networks. Blue Cross and Blue Shield of Texas has launched an exclusive provider organization that offers few non-network benefits. Humana has been promoting its HumanaVitality wellness program for fully insured groups and is looking for synergies with Concentra, its urgent-care subsidiary.
Medicaid
Managed Medicaid has been extended to new counties in addition to the state’s existing managed care regions. The Texas Health and Human Services Commission has begun implementing the massive Medicaid expansion announced in August 2011. Amerigroup will move into the Bexar Service Area, while in the Travis Service Area, Blue Cross and Blue Shield of Texas and Sendero Health Plans will enter the managed Medicaid market. A cut in the pharmacy dispensing fee, meanwhile, has raised concerns from the state’s pharmacists.
Medicare
Cigna HealthCare’s planned purchase of HealthSpring will send major ripples through the Texas Medicare market, as will UnitedHealthcare’s recently announced deal to acquire XL Health. Competition will be strong in the state’s stand-alone prescription drug plan market, where new low-cost options will challenge Humana’s partnership with Wal-Mart. Only a few Texas Medicare Advantage plans continue to offer extensive coverage in the Part D doughnut hole. Per-member, per-month reimbursement rates under the new star-rating system will affect only a handful of high-ranked plans.
Pharmacy Benefits
Texas employers have instituted a number of utilization changes to blunt the pharmacy cost trend. Public-sector employers have resorted to narrow pharmacy networks, reduced the cost of prescription drugs for diabetics, and instituted mail-order incentives. Texas plans have not made major formulary changes with Lipitor as it loses patent protection, and Crestor has increased in utilization.
Patient Care Management
Bundled-payment initiatives have been limited in Texas. Cigna has begun a pilot with a provider system in northeast Texas. Baptist Health System in San Antonio has been part of the Centers for Medicare & Medicaid Services’ acute-care episode pilot for heart and orthopedic procedures.
Healthcare Reform Watch
ACO Rules Have Been Finalized
» The final Medicare rules scaled back measurements and regulations for ACOs considerably. In the final regulations released on Oct. 20, 2011, the Centers for Medicare & Medicaid Services cut the number of quality markers from 65 to 33, dropped the electronic medical record requirement, made the ACO structure more flexible, and added multiple starting dates throughout 2012.
» CMS also cut the penalty for not meeting quality markers for Track 1, in which the ACO shares savings in the first two years, but could lose money for exceeding the Medicare norm in the third year. The federal agency will continue to offer Track 2 as a risk/reward model for all three years.
» CMS retained electronic medical record use as a quality indicator, but will not require that 50 percent of an ACO’s providers achieve meaningful use status. Along with moving the start dates to April 1 and July 1, 2012, CMS extended the first reporting “year” out to 18 or 21 months, giving ACOs more time to measure progress. ACOs will receive lists of likely beneficiaries up front, giving them more preparation time for the prospective population.
» It is unlikely the new rules will change the ACO landscape for Texas, where interest has been muted outside a handful of providers in major metro areas. Baylor Health Care System will convert all its hos-pitals to ACO models by 2015. In the Dallas–Fort Worth area, Texas Health Resources and Methodist Health System—two of the region’s largest health systems—are exploring a partnership that could lead to an ACO.
» In Texas, the strength of the physician sector could make independent practice associations a larger focus of ACO development. North Texas Specialty Physicians, an IPA composed of 600 family and specialty physicians serving patients in Johnson, Parker, and Tarrant counties, has applied to become an ACO. NTSP already operates a Medicare Advantage PPO, Care N’ Care Health Plan, and Sandlot LLC, a health information exchange. By joining the shared-savings program, it could improve management of its fee-for-service Medicare population.
» OptumHealth, a subsidiary of UnitedHealth Group, has bought several Texas medical practices. OptumHealth’s Collaborative Care unit bought an 80 percent share of WellMed, a multistate medical practice with 32 Texas clinics and four in-take transition centers in San Antonio, El Paso, Corpus Chris-ti, and the Rio Grande Valley. This gives UnitedHealth capabilities similar to what Humana has with Concentra, the national chain of clinics and urgent-care centers. Medical groups and health systems that OptumHealth purchased in other states have plans to form ACOs, such as Monarch HealthCare in California, and the Texas groups could follow that template.
Texas Awaits A Decision On Its MLR Waiver Request
» The Texas Department of Insurance applied for a waiver that would allow it to phase in requirements for medical loss ratios in the individual market. Outgoing Insurance Commissioner Michael Geeslin requested thresholds of 71 percent in 2011, 74 percent in 2012, and 77 percent in 2013. Under the plan, Texas would meet the 80 percent federal requirement in 2014, when the individual mandate goes into effect.
» The state’s application was deemed complete on Nov. 28, 2011, giving HHS 30 days to issue a decision, although it has the option to extend the review period for up to an additional 30 days.
High-Risk Pool Grows, State-Run Pool Renews With Medco
» With 2,650 members as of Aug. 31, 2011, Texas has the third-highest enrollment in the Pre-Existing Condition Insurance Plan. The state already operates the Texas Health Insurance Risk Pool and declined to run the temporary PCIP pool, which runs through Jan. 1, 2014, when pre-existing conditions will be prohibited.
» The Texas-run pool covered 25,418 people as of September 2011. Although membership in the Texas Health Insurance Risk Pool is lower than in prior years, it is not likely that enrollees migrated to PCIP
because the federal plan requires members to go six months without coverage before signing up.
» Migration from the Texas pool to PCIP could also be slow because of a premium subsidy program implemented in 2011. The state funded the subsidy through about $5 million in fees from health insurers for clean claims paid late. On a sliding scale, members earning up to 200 percent of the federal poverty level can receive premium discounts.
» THIRP issued a tentative contract for Medco to continue as its pharmacy benefit manager; it also offered a contract to CVS Caremark in case it cannot reach terms with Medco. Although the state-run pool should dissolve in 2014, Texas extended the contracting period through 2015 because the federal government has not outlined how risk-pool members will migrate into the health exchanges. Based on pharmacy claims data, Medco offered ways it could reduce drug expenses by $20 million over the next two years.
Commercial Carriers
Table 1-1: Texas Commercial Enrollment Trend
Company January 2011 July 2010 Change % Change
Blue Cross Blue Shield of Texas 3,866,946 3,695,705 171,241 4.6% Aetna, Inc. 2,400,256 2,422,552 (22,296) (0.9%) UnitedHealthcare 2,253,942 2,081,162 172,780 8.3% CIGNA HealthCare 959,368 954,979 4,389 0.5% Humana, Inc. 395,100 404,000 (8,900) (2.2%) Scott and White Health Plan 143,646 146,298 (2,652) (1.8%) FirstCare Health Plan 96,264 93,507 2,757 2.9% Assurant Health 64,581 69,568 (4,987) (7.2%)
Source: HealthLeaders-InterStudy
Fourth-Quarter Outlook For Texas Commercial Plans
Texas
Carriers are instituting major changes to plan design as costs mount and employer groups demand solutions. Blue Cross and Blue Shield of Texas has launched an exclusive provider organization, and Aetna offers a design with a tiered hospital network. Scott & White Health Plan is going beyond its HMO base by adding PPO products for individuals and families.
» Plan design:
Narrow-network plans received a boost from the Texas Legislature early in 2011 with legislation opening the commercial market to exclusive provider organizations (HB 1772). The Texas Blue plan was a leading sup-porter, and has initiatied an EPO for the Texas market. The product employs a narrow network like an HMO, but retains some characteristics of a PPO. Unlike an HMO, EPOs do not require a referral in the BlueChoice network. Outside of the network, there are no benefits except for emergency services or services not available in network. Prior to passage of HB 1772, self-funded plans could design such benefits, but a change in law was required for insurers to offer them to the fully insured market. “Employers are interested in offering it. It gives them another choice,” says Jared Wolfe, executive director of the Texas Association of Health Plans. The emergence of EPOs signals a renewed interest in narrow-network products. Blue plans insure higher volumes of small groups, the portion of the market most likely to select a narrow network in exchange for lower premiums. Texas’ premium costs have caused employer groups to cut benefits, increase employee cost sharing, or cut benefits altogether, and moving to narrow or high-performance networks could offer them premium relief.
With the exception of provider-owned plans, such as Scott & White Health Plan, San Antonio’s Community First Health Plans, and Lubbock’s Firstcare Health Plans, HMOs, which typically are less expensive than PPOs, never gained a major foothold in Texas. Dallas–Fort Worth does not have a locally based commercial HMO, although some national insurers offer HMO products in that region.
Plans built on high-performing or narrow networks could shake up the Texas commercial market, and because of the high volume of health systems in Texas, more carriers are likely to move into this arena. “With our main carriers, we are seeing use of an enhanced or premier network,” says Joanna Antongiovanni, presi-dent of the Texas Association of Health Underwriters and a San Antonio-area broker.
Table 1-2: Fully Versus Self-Insured Enrollment Breakdown For Texas (Largest Plans)
Company Fully Insured Self Insured Ratio% FI Ratio% SI Blue Cross Blue Shield of Texas 1,735,155 2,131,791 44.9% 55.1% Aetna, Inc. 463,285 1,936,971 19.3% 80.7% UnitedHealthcare 562,701 1,691,241 25.0% 75.0% CIGNA HealthCare 164,183 795,185 17.1% 82.9% Humana, Inc. 284,400 110,700 72.0% 28.0% Scott and White Health Plan 114,175 29,471 79.5% 20.5% FirstCare Health Plan 74,037 22,227 76.9% 23.1% Assurant Health 64,581 0 100.0% 0.0%
Source: HealthLeaders-InterStudy, as of Jan. 1, 2011
In the Houston region, Cigna HealthCare already operates a narrow-network product built around the Kelsey-Seybold Clinic, which has more than 350 physicians, two ambulatory-surgery centers, cancer centers, and 13 Kelsey Pharmacy locations. The medical practice has sway with plan sponsors, as evidenced by the city of Houston’s migration from Blue Cross and Blue Shield of Texas to Cigna for its health benefits. With 339,102 members in Houston, Cigna is the fourth-largest carrier in the market, while Blue Cross and Blue Shield of Texas leads Houston enrollment with more than double those lives (792,531) as of January 2011 (HealthLeaders-InterStudy).
Narrow-network products could also influence plan designs offered in the health exchanges in 2014. “I think it’s coming. The only way carriers will be able to price products for the exchanges that is affordable will be with narrow networks,” says Jim Watt, president and CEO of Employee Benefit Solutions, a Houston-based benefits consulting firm.
Aetna, the third-largest carrier in the state, established the Choose and Save program for 2012, a tiered net-work with an emphasis on low-cost, high-quality hospitals and facilities. Aetna instituted three tiers: Choose and Save providers on the first tier, followed by all in-network hospitals on the second, and out-of-network facilities on the third. Members must make sure their physicians send them to Choose and Save hospitals to receive the best rates, or they will pay more.
By giving employers an additional incentive to pick these hospitals, more groups are likely to migrate to designs promoting high-quality networks. Since hospital costs are typically the greatest expenses that mem-bers will incur, the savings could be substantial. In Texas, Choose and Save is available in Austin, Houston, and San Antonio. Aetna also offers its Aexcel network, which includes specialists who meet quality and efficiency standards, in those three markets; most of its contracted providers are included (75 percent in Austin, 74 percent in Houston, and 72 percent in San Antonio).
The Choose and Save hospital network is much narrower than Aetna’s traditional hospital network, and facilities are noted in each market. In Austin, the designation is held by several Seton Healthcare hospi-tals, Austin Surgical Hospital, and Cornerstone Hospital of Austin. In Houston, the designation applies to Memoriall Hermann facilities, the Harris County Hospital District, and St. Luke’s Episcopal Hospital, among others. Baptist Health and CHRISTUS Health are among the biggest Choose and Save health systems in San Antonio.
While offering employers a lower price, the narrow network has benefits for insurers as well. Members’ restricted use of physicians and providers in the network can improve the plan’s ability to build member registries and address populations for chronic disease and other illnesses. Out-of-network privileges
built into PPOs have been known to turn problematic for payers and plan members. “A lot of the fights with providers have been related to out-of-network issues. There is a trend among the plans to go back to the employers and say, ‘You can pick the level of out-of-network coverage,” says Wolfe with the Texas Association of Health Plans.
Another benefit design that carriers are offering with greater frequency are plans that cover initial office visits with copays, then switch to coinsurance for subsequent visits; the number of visits covered with copays varies. Plans that offer limited provider visits prior to the deductible are also gaining traction.
Many younger and/or healthy plan members will be attracted to designs that emphasize enhanced preventive care. “Those plans are being rolled out right now. I do have people interested in them, but [most] members are using their plan for [physician visits], not major medical expenses. If you have four office visits, that would be sufficient for most people,” Antongiovanni says.
Scott & White Health Plan, which has about 170,000 members in central Texas, began offering a plan in November 2011 that covers the first three office visits for a $30 pre-deductible copay, with deductibles starting at $7,500. Named MyPlan 100, the product targets healthier individuals and is offered as part of a new suite of four PPO plans. It recently introduced this in the Austin-Round Rock-Georgetown metro area, Bryan-College Station, Temple-Killeen, Waco, and west to San Angelo after decades of only operating an HMO (although it introduced administrative-services-only products several years ago). The PPO suite also includes MyPlan 80, which has copays of $25 for primary-care visits and $50 for specialist visits, with deductibles as low as $1,500. Members must meet the deductible before copays and coinsurance apply. Other plans have taken more aggressive comprehensive approaches to wellness. Humana, among the top five commercial payers in Texas, has embedded HumanaVitality in all its fully insured products and self-insured groups can add the benefit on a per-member basis. HumanaVitality stems from a partnership with Discovery Health, a South African firm with a data-driven, comprehensive wellness plan. Rather than self-reporting their health statistics, members accumulate rewards based on data about their health, including weight loss and screening results. “We’re quickly coming to the conclusion that regardless of how we build our networks and how we manage costs, the bottom line is, unless we manage our own behavior, it is tough to come to grips with healthcare costs,” says Ken Malcolmson, Humana’s chief executive officer for its West Central Region. HumanaVitality does not include any penalties for nonparticipation, only rewards. There are literally thou-sands of different options members can choose. All members start at the same level; a marathon runner does not gain any advantage over any other participant, Malcolmson says. Texas is a critical state for Humana, where it had 395,100 commercial members in January 2011 (HealthLeaders-InterStudy).
Consumer-driven health plans also remain common in Texas. Members might receive some account seed money from an employer, but full funding to the deductible level for health savings accounts is rare. “If they do [deposit something in the account], they won’t fully fund it,” Antongiovanni says. As more employers include wellness-program incentives in their benefits, there has been a move to ensure that at least part of the employee accounts receive funding because members are being required to engage in certain preventive services. “It’s a way to soften the blow,” says Watt.
» Pharmacy benefits:
Scott & WhiteHealth Plan encourages generic utilization by offering $3 generics outside the deductible for its new PPO products MyPlan 70, MyPlan 80, and MyPlan 100. For branded drugs from a network pharmacy, members must meet a $250 pharmacy deductible, then pay 50 percent coinsurance (out-of-network pre-scription drugs are subject to the medical deductible, then are covered at 50 percent coinsurance). For Scott & White’s lone consumer-driven design, MyPlan 100 HSA, members must meet the medical deductible on all prescription drugs, after which they are fully covered.
» Provider contracting:
Commercial carriers are changing the provider landscape in Texas. In early 2011, UnitedHealth Group’s subsidiary, OptumHealth, bought a majority stake in WellMed, a provider with facilities in San Antonio. Humana owns Concentra, which has several dozen facilities in Texas and should appeal to members using services of the HumanaVitality plans. “When biometric screenings are required for Vitality, the natural loca-tion is a Concentra localoca-tion,” Humana’s Malcolmson says.
The November 2010 purchase of Concentra, the partnership that led to HumanaVitality and the company’s value-based focus with drug benefits have dovetailed into a new focus, Malcolmson says. “It fits nicely and strategically with our consumer-focused strategy. It also integrates nicely with our new mantra and strategy of lifelong well-being. It isn’t just physical health, but has to include emotional and spiritual health,” he says. Scott & White Health Plan members in central Texas will see a reduction in their provider network. Because Scott & White Healthcare is constructing a new hospital in College Station, St. Joseph Health System in Bryan has opted to depart the health plan’s provider network. Plan members can continue to see provid-ers from St. Joseph Physician Associates through Feb. 7, 2012, and can continue to visit St. Joseph Hospital through April 30. St. Joseph still contracts with Blue Cross and Blue Shield of Texas, Cigna, UnitedHealth-care, Aetna, and FirstCare, among others.
Employer groups that want to keep St. Joseph in-network could be a potential pickup for those other insur-ers. The five-story, 143-bed acute care hospital will not open until summer 2013, and the lag between the end of the St. Joseph agreement and the opening of the new hospital should give some College Station groups reason to shop around for a new carrier. However, the availability of multiple Scott & White facilities and rapid population growth in the area could blunt any enrollment losses for the Scott & White Health Plan.
» Economy:
The Texas unemployment rate increased modestly in the one-year period ended August 2011, from 8.3 per-cent to 8.5 perper-cent (Bureau of Labor Statistics). However, this was down from July 2011’s rate of 8.7 perper-cent. The state’s biggest markets, Houston and Dallas–Fort Worth, stayed the same year over year, at 8.6 percent and 8.4 percent, respectively. The only large market to see a major shift in unemployment was El Paso, which jumped from 9.8 percent to 10.6 percent between August 2010 and August 2011. Unemployment rates tend to be higher in border cities such as El Paso, McAllen, and Brownsville. Austin had a minor year-to-year increase (7.2 percent to 7.3 percent) and San Antonio’s grew slightly more (7.5 percent to 7.8 percent). Uncertainty over the economy has halted most developments and expansions. Employers are seeing 2008-level productivity, but with 2011-2008-level staffing. That is unlikely to change in the short term because employer confidence is low, says Watt with Employee Benefit Solutions. “The market and the administration policies have left a lot of employers cautious to do anything with their health plans. The kinds of actions employers are taking are very measured, not only on health plans but on employment. The only thing that is supporting this market is energy prices have remained relatively robust,” Watt says.
» Financial news:
Texas commercial HMOs were a mixed bag financially for the six months ended June 30, 2011, with a num-ber of plans seeing strong returns and earnings of a few regional HMOs lagging. Aetna posted net income of $19.8 million on $367.4 million in total premiums, of which 71 percent came from commercial HMO products. Humana produced similar results, earning $17.1 million on $492.3 million in premiums, which were split almost evenly between commercial and Medicare business. Community First Health Plans, part of the San Antonio-based University Health System, earned $4.9 million on premiums of $135.1 million, but commercial business accounted for only 22 percent of overall premiums.
Among plans posting in the red were Scott & White Health Plan, which lost $2.3 million on $276.8 million in premiums, followed by FirstCare Health Plans (reporting as SHA LLC), which lost $43,000 on $124.4 million (HealthLeaders-InterStudy data). Both plans will take major Medicaid roles when they become contractors for the new rural service areas in March 2012. (More detail about these regions is available in the Medicaid section of this report).
Managed Medicaid Market
Table 2-1: Texas Medicaid Profile
Enrollment 4.0 million (2.2 million, or 55 percent, of Medicaid beneficiaries are in managed care)
Administration Texas uses a mix of managed care in metro areas, while primary-care case management in rural areas is being phased out. In 2012, the state will create several new regions and place most PCCM members into managed Medicaid.
Pharmacy Management Texas will end its long-running pharmacy carve-out on March 1, 2012. MCOs will administer the ben-efit, and the state will continue to design the formulary and maintain the preferred drug list.
Source: HealthLeaders-InterStudy; enrollment as of January 2011
Fourth-Quarter Outlook For Texas Managed Medicaid
Texas Adds BC/BS And Sendero Health Plans To Travis Service Area
» The Texas Health and Human Services Commission has already shuffled the slate of MCOs participat-ing in the expansion of managed care in the State of Texas Access Reform (Medicaid) and the Children’s Health Insurance Program. The changes affect two service areas (Travis and Bexar), and along with the carve-in of pharmacy benefits, contracts begin March 1, 2012.
» In the Travis Service Area, the state awarded tentative contracts to Blue Cross and Blue Shield of Texas and Sendero Health Plans, a new HMO owned by Central Health, Travis County’s hospital district. Central Health founded the HMO in early 2011 with the intent of winning a STAR contract.
» The contract awarded to BC/BS marks the return of the Texas Blue plan to Medicaid. It left the program in 2003 for financial reasons, and had members in the Houston, San Antonio, Fort Worth, and Lubbock areas. By acquiring a Medicaid contract, the Texas Blue plan is positioning itself for greater business when federal healthcare reform’s Medicaid expansion goes into effect in 2014. Blue plans typically are among the strongest competitors in their states’ individual and small-group markets, and the Texas Blue plan is no exception.
» Amerigroup was already awarded a contract for the Travis Service Area, and the carrier will continue to participate in STAR+PLUS, the managed care program for aged, blind, and disabled Medicaid mem-bers.Amerigroup will move to the Bexar Service Area to cover STAR and CHIP members. Amerigroup,
along with Centene’s Superior HealthPlan and Molina Healthcare, staked out major blocks of new enrollment in the initial contracting period.
Primary-Care Case Management Converts To Managed Medicaid In 28 Texas Counties
» In September 2011, HHSC ended primary-care case management in 28 counties adjacent to its existing STAR and STAR+PLUS regions, and Medicaid MCOs in each region will split up the new members, who had until Aug. 12, 2011, to pick a plan or have the state assign one.
» The Harris (Houston region) and Harris Expansion regions were combined into a single region with three counties new to managed Medicaid.
» The Jefferson Service Area (Beaumont–Port Arthur region) will cover 11 counties contiguous to the Harris region.
» The Bexar (San Antonio), El Paso, and Travis (Austin) service areas each added a single county to STAR+PLUS (STAR only for El Paso).
» Six counties joined the Lubbock Service Area for STAR (STAR+PLUS will not be added until March 2012), and the Nueces Service Area (Corpus Christi) added five counties to both STAR and STAR+PLUS.
» The state expects to save $34.7 million by converting these counties to managed care.
Texas Rural Areas Will Join The STAR Medicaid Program In Early 2012
» The rural service areas for STAR will represent a change for providers. In the rural service areas, PCCM ends in March 2012 and all members will join MCOs. New regions include Northeast (counties east and north of the Dallas and Tarrant service areas), Central (counties between Austin and the Dallas-Tarrant region), and West (Midland, Odessa, the Panhandle outside of Lubbock and Amarillo).
» Under PCCM, providers and physicians contracted directly with the state. Physicians who want to continue to see Medicaid members must negotiate rates with their regions’ MCOs.
» Provider networks in the rural regions could become an issue because a handful of Texas counties have no physicians. The state has enacted a law allowing physicians to be directly employed by hospitals in counties with 50,000 or fewer residents, so it will have direct impact on counties where STAR will expand in 2012. The law should ensure that more physicians practice in rural counties, although its effect might not be immediate.
» All STAR members must choose a primary-care physician or the state will assign one. The PCP serves as the patient’s medical home and must make all specialist referrals.
Texas Makes Select Benefit And Fee Reductions In Cost-Costing Move
» Texas cut its prescription dispensing fee by 85 cents on Sept. 1, 2011. This followed the enactment of two 1 percent cuts and dropped the rate from $7.35 to $6.50. There are concerns this reduction could hurt community pharmacies—a matter that will be especially critical when the new managed Medicaid plans come to rural Texas in March 2012.
» Plans will have a much greater role in pharmacy benefit management, although the state will administer its own formulary. MCOs argued in favor of controlling their formularies and preferred drug lists.
» For dual eligibles who receive both Medicare and Medicaid coverage, Texas will stop paying coinsurance and deductible payments for Medicare Part B services in January 2012; the move is expected to save $196 million in the next two years.
» The state already prohibits payments on Part A, but the new rules will hold payment on any Medicare Part B services to the Medicaid rate for the same services. Previously the state paid Medicare rates on those procedures.
» The Texas Medical Association opposed the change because Medicaid reimbursement rates in Texas fall below the Medicare rate. On all services, Texas Medicaid averaged 74 percent of the Medicare reim-bursement rate in 2008, although it ranged higher on obstetric care and lower on primary care (Urban Institute 2008 Medicaid Physician Survey published in Health Affairs).
Managed Medicare Market
Fourth-Quarter Outlook For Texas Managed Medicare
Texas
The Texas Medicare market will undergo a major change with Cigna HealthCare’s planned acquisition of HealthSpring, the third-largest Medicare Advantage carrier in Texas. Plan designs for 2012 will continue to offer a fair amount of additional gap coverage. The biggest competition will be in the stand-alone prescription drug plan market, where Humana has been hugely successful with its low-cost plan in partnership with Wal-Mart.
» Plan designs:
A carrier that previously left the Texas Medicare Advantage market fired the year’s biggest salvo. On Oct. 24, 2011, Cigna HealthCare announced the acquisition of HealthSpring, the state’s third-largest MA carrier behind UnitedHealthcare and Humana. HealthSpring’s greatest strength lies in its HMOs in the Houston region, where it operates its hallmark LivingWell Health Centers, which tailor care to the payer’s Medicare Advantage members. HealthSpring designates the practices, which see higher volumes of HealthSpring members, and deploys care teams of nurses for patients.
The Nashville, Tenn.-based insurer also has a strong HMO membership in the Rio Grande Valley, as well as a growing Medicare PPO business in Dallas–Fort Worth. For several years, Cigna operated private fee-for-service plans in Texas, but it terminated those plans prior to PFFS network requirements becoming effective in 2011. Cigna’s proposed purchase of HealthSpring will drastically shift the Medicare Advantage landscape in several Texas markets. Based on its strength in the Houston and Rio Grand Valley, HealthSpring has its largest Medicare Advantage and stand-alone PDP penetration in Texas of any state in the country. In June 2011, it enrolled 54,022 Medicare Advantage members statewide; of those lives, 47,670 came from HMO products. It had a smaller share of the prescription drug plan market, with 54,406 members (HealthLeaders-InterStudy data).
Cigna expects to retain HealthSpring’s executive team. For the short term, HealthSpring will remain active in existing markets, but there will likely be some expansion for 2013 and beyond. After the sale is completed, additional LivingWell Practices could be designated.
Regardless of the merger, HealthSpring could enhance its footprint in 2012 through provider agreements reached by its own Bravo Health subsidiary, acquired in November 2010. Bravo added WellMed Medical Management to its provider network in San Antonio and El Paso. Independent physicians and 24 WellMed Medical Group clinics in those markets began seeing Bravo members in fall 2011. Earlier in 2011, the state’s largest Medicare Advantage carrier, UnitedHealth Group, purchased WellMed, ending the medical group’s practice of exclusive payer agreements and allowing for the Bravo contract.
Table 3-2: Texas Medicare Advantage Enrollment Trends (Largest Plans)
Company Type June 2011 April 2011 Change
UnitedHealthcare of the West HMO/HMOPOS 150,020 149,591 429 SelectCare, Inc. HMO/HMOPOS 51,884 52,531 (647) Humana, Inc. PPO-Regional 48,255 48,086 169 HealthSpring, Inc HMO/HMOPOS 47,670 47,137 533 Humana, Inc. HMO/HMOPOS 40,403 40,265 138 Physicians Health Choice HMO/HMOPOS 28,903 28,774 129 Bravo Health, Inc. HMO/HMOPOS 26,616 26,014 602 Care Improvement Plus PPO-Regional 26,199 25,422 777 Scott and White Health Plan Cost 24,148 24,181 (33) Humana, Inc. PFFS 20,259 19,902 357
Source: HealthLeaders-InterStudy
In the Medicare Advantage market, plans will undertake few expansions into new counties. Texas beneficia-ries have slowly migrated to Medicare Advantage, but overall penetration is still at only 20 percent. As more benefits have become available for beneficiaries who reach the Part D coverage gap under federal healthcare reform, some plans have maintained more robust coverage. Universal American’s TexanPlus HMO (Classic and Select), offered through the company’s SelectCare of Texas subsidiary, covers many generics and some brands without a monthly premium; it is available in 16 counties, including Dallas, Har-ris, and Tarrant. SelectCare is the state’s fourth-largest MA carrier, with 51,884 members as of June 2011 (HealthLeaders-InterStudy data).
Humana also offers members some generics and few brands in the doughnut hole with its Humana Gold Plus HMO, available for no premium in 15 counties (the Gold Plus HMO offers few generics and few brands in three additional Texas counties). For a $54 premium, its regional PPO offers few generics and few brands in the gap to seniors in all 254 Texas counties. Its local HMO and PPO plans, including the Humana Reader’s Digest Healthy Living Plan, have gap coverage that includes few or some generics and few branded drugs; premiums range from $0 for HMOs in the Dallas, Fort Worth, and Austin areas to $119 a month for private fee-for-service plans available primarily in rural counties.
UnitedHealthcare offers gap coverage with its AARP Medicare Complete HMO, available in 14 counties, and its AARP-branded local PPO in El Paso County; both plans include some generics in the gap and have no premiums. Physicians Health Choice, which UnitedHealth bought in early 2011, operates HMO plans in 11 counties mostly on the Mexico border. In each, it has a design covering some generics in the gap.
Among Medicare Advantage Part D designs, most beneficiaries have access to plans that cover many generics in the doughnut hole, including plans with zero premiums from Aetna (in Dallas–Fort Worth), HealthSpring (Houston and the Rio Grande Valley), FirstCare Health Plans (Lubbock), KelseyCare Advantage (an HMO offered by the Kelsey-Seybold Clinic in Houston), and Care N’ Care Health Plan (a subsidiary of North Texas Specialty Physicians in Fort Worth). Scott &White’s Cost plan has the broadest geographical distribution of any plan, with many generics in 53 counties. Monthly premiums for this plan range from $133.10 to $260.10.
» Medicare Advantage rates:
Even though Texas has some of the country’s highest reimbursement rates for Medicare Advantage plans, those earning higher star ratings should reap enough financial reward to separate themselves from the pack. In 42 counties, plan reimbursements in 2012 will exceed $1,000 per member, per month. Texas
reimburse-ments top out in Chambers County, a relatively rural county in the Houston market where even a 2.5-star plan will earn $1,200 PMPM.
The state had no 5-star plans in the 2011 ratings, upon which the 2012 rates are based. Houston’s KelseyCare Advantage, offered by the Kelsey-Seybold Clinic, achieved 4.5 stars overall. Scott & White Health Plan’s Cost plan achieved a 4.5-star summary rating (based solely on Part C), but it did not have enough data on its drug benefit to obtain an overall rating. Texas plans clustered between ratings of 3 and 3.5 stars, so they will receive the subsidy, albeit slightly less than if they had achieved 4 or more stars.
Two of the state’s five largest counties have reimbursements exceeding $1,000 PMPM. In Harris County, a 4-star plan will earn $1,086.50, compared with $1,044.42 for a 2.5-star plan. Rates in Dallas County reached $1,019.85 for a plan with 4 or 4.5 stars, but fell to $980.35 for a 2.5-star plan. In other major counties, rates were more varied. El Paso had a large gap in reimbursement between 4-star plans and 2.5-star plans ($848.25 versus $786.33, or $61.92). Bexar County plans with 4 or 4.5 stars will receive $946.43 versus $909.78 for those with 2.5 stars, a gap of $36.65. In Austin, high- and low-scoring providers were similarly close, with a 4- or 4.5-star plan earning $826.70 PMPM versus $794.54 for a 2.5-star plan, a $32.16 difference.
Any Texas plan that can achieve 5 stars—a goal that KelseyCare Advantage is working toward—should have a major advantage over its competitors. As more Baby Boomers retire, their familiarity with managed care will lead them to shop for quality in an MA plan. Higher-rated plans should benefit.
Texas rates will stay high, but the bigger change will come from the star ratings. More plans will pursue higher rankings like those earned by KelseyCare Advantage and Scott & White. The difference might only amount to between $20 and $40 PMPM, but spread out over tens of thousands of beneficiaries, the dollars can grow substantially.
» Prescription drug plans:
In the prescription drup plan market, 33 carriers will offer stand-alone plans in 2012. At $15.10, Humana’s Wal-Mart PDP has the lowest premium. In Texas, 44 percent of Medicare beneficiaries qualify for the low-income subsidy, which will pay premium subsidies of $29.99 in Texas in 2012, and 14 plans are offering premiums below the benchmark. With such a large population of eligible beneficiaries, plans that missed the LIS benchmark could experience a significant drop in PDP enrollment.
Few local carriers offer Part D plans in Texas. Blue Cross and Blue Shield of Texas offers its PDP in two designs: Blue Medicare Rx Value has a $44.10 monthly premium and a $125 annual deductible; Blue Medi-care Rx Plus members pay $90.80 a month, which includes a $32.80 supplemental premium, but also covers all generics in the Part D doughnut hole. It is the only Texas PDP to cover all generics. The supplement premium allows the plan to provide the additional gap coverage, and should not be confused with Medicare Supplement plans, which augment the coverage for fee-for-service beneficiaries.
Gap coverage from plans has diminished as the federal government has begun closing the gap. For 2012, all members will receive 50 percent discounts on all brands in the coverage gap and 14 percent on all generics. Humana Medicare Rx Complete offers many generics and some brands for a plan costing $104.30 a month with a $27 supplemental premium. For $104.20, FirstHealth Part D Premier covers some generics and some brands in the coverage gap.
Humana will have more competition, thanks to a low-cost plan from Aetna partnered with CVS/pharmacy. Sanctions prevented Aetna from marketing in 2011, contributing to Medicare enrollment losses. The new PDP should help it reclaim some of its PDP market share for 2012. The plan has a $26 monthly premium and a $320 annual deductible, but Aetna exempts preferred and nonpreferred generics from the deductible. Aetna began a long-term partnership with CVS Caremark in 2010, and the PDP is an outgrowth of that agreement. It should see some strong activity among healthier beneficiaries in search of low-cost options. With its enhanced Premier plan, Aetna also exempts preferred brands from the deductible and covers generic benzodiazepines and barbiturates.
Table 3-3: Texas Medicare Stand Alone Part D Plan Enrollment Trends (Largest Plans)
Company June 2011 April 2011 Change
UnitedHealthcare 267,172 267,392 (220) Humana, Inc. 197,597 195,658 1,939 Pennsylvania Life Insurance Company 161,454 161,344 110 Aetna, Inc. 86,102 87,780 (1,678) First Health Life and Health Insurance Co. 76,067 75,311 756 WellCare, Inc. 73,127 71,798 1,329 Blue Cross Blue Shield of Illinois 64,012 65,507 (1,495) HealthSpring, Inc 54,406 54,297 109 Bravo Health, Inc. 43,410 43,451 (41) Connecticut General Life Insurance Co. 41,877 40,779 1,098
Source: HealthLeaders-InterStudy
The battle for enrollees among low-cost plans should begin in earnest, and will likely result in another year of churn among stand-alone PDPs. Humana will continue to run strong, but Aetna should regain some of the ground it lost under sanctions.
» Special needs plans:
Texas has a stable market for Medicare special needs plans, with a mix of regional plans and those spread across multiple metropolitan areas. XL Health’s Care Improvement Plus, which specializes in SNPs, con-tinues to offer its Silver Rx PPO for members with congestive heart failure and diabetes; this plan has a $30 premium and a $210 drug deductible. The company also offers the Dual Advantage plan for dual eligibles. Products offered by Care Improvement Plus include nurse coaching, a 24-7 nurse hotline, free annual in-home visits with a licensed practitioner, personalized counseling sessions with plan pharmacists, and assis-tance with accessing social services. Both the Silver Rx PPO and Dual Advantage products are available in 43 Texas counties, giving Care Improvement Plus the largest reach of any SNP carrier in the state.
XL Health is the latest Medicare Advantage carrier to gain acquisition attention. On Nov. 22, 2011, Unit-edHealthcare announced it had agreed to acquire the company, whose suitors were also said to include WellPoint and Aetna. This deal, which is expected to close during the first half of 2012, could impact Texas SNPs as much as Cigna’s proposed HealthSpring acquisition could alter the standard Medicare Advantage and stand-alone prescription drug plan landscapes.
Including its Bravo Health subsidiary, HealthSpring offers four SNP options: its TotalCareHMO covers dual eligibles for $29.90 a month and a $320 drug deductible. Bravo Health offers three designs: Select HMO cov-ers duals, Achieve HMO covcov-ers membcov-ers with diabetes (offering related supplies for free), and the Traditions PPO covers members in nursing homes.
The premiums might be the same, but dual eligible SNPs cover different geographies in Texas. Amerigroup Community Care’s Amerivantage Specialty SNP and Humana’s Gold Plus SNP each cover dual eligibles in seven populous counties for the same premium and deductible as offered by HealthSpring’s dual eligible SNP. Humana’s service area includes counties in the Dallas–Fort Worth region, while Amerigroup covers dual eligibles in the Houston, San Antonio, and Fort Worth regions. FirstCare Advantage Select (offered by FirstCare Health Plans) is available to dual eligibles in 11 Panhandle counties.
Institutional SNPs, which provide coverage to Medicare beneficiaries in nursing homes, usually have the highest premiums. Fidelis SecureCare of Texas offers HMO designs that cost $98 and $159 a month, with no
annual drug deductible. Other Fidelis Institutional SNP designs have premiums in line with the Texas SNP market and are coupled with an annual deductible.
» Medicare enrollment:
Some Medicare Advantage plans gained modest enrollment, while a few plans underwent slight member-ship losses in the two-month period ended June 2011. Care Improvement Plus added 777 members to its regional PPO available in all Texas counties, and all HealthSpring plans continued to perform well: its HMO added 533 members, for a total of 47,670, and subsidiary Bravo Health’s HMO added 602 members to reach 26,616. SelectCare of Texas lost 647 HMO members, leaving it with 51,884 lives. UnitedHealthcare’s HMO added 429 members, for a total of 150,020 Texas members.
Humana continued to see strong PDP growth, adding 1,939 members from April to June 2011. Its mem-bership increase was followed by that of WellCare (1,329 members) and Cigna (Connecticut General Life Insurance Co.), which added 1,098 PDP members. The new enrollment pushed Humana to 197,597 PDP members, trailing only UnitedHealthcare’s 267,172, down 220 in the two-month period (HealthLeaders-InterStudy data).
Pharmacy Benefits
Table 4-1: Texas Prescription Drug Landscape
Landscape State Average National Average
Average retail prescription price $62.26 $59.02 Number of prescriptions per capita 9.89 11.77
Source: Vector One™, National from Verispan, L.L.C., special data request, 2009, via Kaiser Family Foundation, statehealthfacts.org
Fourth-Quarter Outlook For Texas Pharmacy Benefits
Texas
Public-sector employers are using a variety of utilization methods to tackle pharmacy costs. The proposed merger of Medco and Express Scripts will impact several large groups, although CVS Caremark has a leg up in the market. These employer groups typically signal where the private market will head as costs continue to increase. Some Texas insurers are making formulary changes as Lipitor loses patent protection.
» Pharmacy benefit management:
Government employees in Texas continue to see cost shifting in in their pharmacy benefits. More municipal, education, and state employees are seeing value-based benefits for diabetes and penalties for maintenance drugs not ordered by mail.
Employees of the city of Dallas might notice the biggest change: For two years in a row, the city, which offers a self-funded plan through UnitedHealthcare, will switch its pharmacy benefit manager. In October 2010, it switched from Medco to UnitedHealth’s Prescription Solutions, the insurer’s wholly owned PBM; in January 2012, the PBM will shift to CVS Caremark. The city will also target proton pump inhibitors by requiring members to pay the difference on any PPIs that cost more than $15. This change should allow Dallas to reduce utilization on more expensive PPIs. Many PPIs are already available over the counter, and some plans don’t offer any coverage for this therapeutic class.
For Dallas employees, UnitedHealth’s 75/25 HRA plan has a $2,500 deductible for combined medical and pharmacy benefits, after which members pay 10 percent for generics, 25 percent for preferred brands, and 40 percent for nonpreferred brands. The PPO 70/30 plan features separate deductibles for medical and pharmacy benefits and the same coinsurance rates as the 75/25 plan, but the three tiers include minimum copays of $10, $25, and $40. Out-of-pocket maximums are $6,000 for the 75/25 HRA plan and $2,500 for the 70/30 PPO.
UnitedHealth also holds the contract for San Antonio’s civilian employee group, where it offers three PPO designs that have the same pharmacy benefit. Medco serves as a pharmacy benefit manager, which will change when UnitedHealth and Medco sever ties in 2013. The city lowered the copay on generics from $10 to $5, which should improve generic utilization and decrease prescription abandonment rates. The benefit incentivizes members to use generics by increasing cost sharing on all brands that have generic equivalents. For brands with generic equivalents, members pay 20 percent coinsurance (capped at $40) for preferred brands and 35 percent coinsurance with a $65 cap for nonpreferred brands. For branded drugs without generic equivalents, members pay $20 for preferred and $40 for nonpreferred brands.
The Employees Retirement System of Texas also instituted some incentives to divert maintenance drug users to mail order. Its Group Benefits Plan covers more than 500,000 employees and dependents through its Open Access plan (Blue Cross and Blue Shield of Texas’ HealthSelect) and HMOs in San Antonio (Community First Health Plans) and central Texas (Scott & White Health Plan). CVS Caremark serves as its PBM.
Members who use maintenance drugs must fill them by mail order or at a network of pharmacies avail-able through HealthSelect that have agreed to fill 31- to 90-day drug supplies for the same cost share as members have for mail-order prescriptions. If a member fills a prescription for extended drug supplies at a non-network pharmacy, he would be subject to a maintenance fee for each 30-day supply (fees are $5 for generics, $10 for preferred brands, and $15 for nonpreferred brands). While the program is not considered mandatory mail order, the fee should offer enough incentive for members with chronic conditions to move their prescriptions to mail delivery. For non-maintenance drugs, the state does not incentivize mail order or the use of pharmacies offering extended supplies at reduced copays.
Because the state has an older population, it targeted drug costs for cost shifting. ERS has not added a high-deductible health plan because this would require legislative approval, and no such bill has passed. The state employs an annual $50 drug deductible, although it has a medical deductible for of-network and out-of-area care for BC/BS HealthSelect members (neither Community First or Scott & White has a deductible). ERS’ contracts with the Texas Blue plan, HMOs Community First and Scott & White, and CVS Caremark all expire in 2012. As one of the state’s largest employer groups, bidding should be competitive.
San Antonio offers a more robust pharmacy benefit, with 90-day supplies available for two copays from Medco mail and select retail pharmacies. Its benefits include a value-based design for diabetic drugs, under which members receive generics for no copay, preferred brands for $10, and nonpreferred brands for $20. San Antonio has pushed to improve employee health by highlighting its on-site clinic, which offers primary-care services for half the normal copay and has a pharmacy in the same building.
Houston switched its coverage from Blue Cross and Blue Shield of Texas to Cigna HealthCare earlier in 2011, moving pharmacy benefits for its 66,000 members from the Blue plans’ Prime Therapeutics PBM to Cigna’s pharmacy management. Members have a $100 individual/$300 family deductible on its Cigna KelseyCare plan. Aside from the KelseyCare plan, Houston employees can choose a Cigna Open Access plan that maintains the $10 generic copay for retail pharmacy, but switches to coinsurance for preferred brands (20 percent, with minimum and maximum cost shares of $45 and $100, respectively), nonpreferred brands (40 percent, minimum $55, maximum $150), and specialty drugs (40 percent, minimum $100, maximum $300). Its consumer-driven health plan covers all drugs at 20 percent coinsurance after the deductible is met. In the commercial market, plans increasingly exempt generics from coinsurance or deductible requirements to increase generic utilization.
The Texas Teachers Retirement System covers 1,108 school districts and more than 445,969 teachers and dependents under the ActiveCare program; Medco serves as its PBM. Its plans had major drug changes for the plan year that began Sept. 1, 2011. TRS-ActiveCare 2 doubled its drug deductible from $50 to $100. Previously, members paid standard copays for specialty drugs, but they now face a $200 copay per fill. Retail copays increased from $15/$35/$60 to $20/$45/$75, and mail order increased substantially for 90-day supplies, from $20/$62.50/$112.50 to $45/$105/$180. TRS-ActiveCare 3 enrollees have the same copay increases, but the drug deductible only increased from $50 to $75.
Benefits vary for TRS-ActiveCare HMOs operated by FirstCare and Scott & White Health Plan. Scott &White now exempts generics from members’ $50 annual drug deductible and lowered the generic copay from $5 to $3. The change should drive up generic utilization, although it has always been higher at Scott & White, which offers $5 generics for other commercial plans and operates its own pharmacies. Another TRS-ActiveCare HMO, Valley Baptist Health Plan, added a $50 drug deductible and closed its formulary for the new year, but made no changes to copays.
FirstCare increased its drug deductibles from $50 for both individuals and families to $150 for individuals and $450 for families. Copays increased from $5/$25/$55 to $10/$30/$65. Fourth-tier coinsurance rose from 15 percent to 20 percent, and a fifth tier, which previously required 35 percent coinsurance, was eliminated from the formulary. FirstCare now excludes from its formulary non-sedating antihistamines and proton pump inhibitors—two drug classes with many over-the-counter options.
» Plan design:
The end of Lipitor’s patent protection has spurred some changes in insurers’ formularies. For fully insured customers, UnitedHealth is keeping Lipitor on Tier 2, while keeping generic equivalents for the drug on the third tier, which is typically reserved for nonpreferred brands. Many industry observers expect employers to shift patients taking Lipitor to generic versions once they become available. Many groups in Texas have been shifting to Crestor, another popular statin brand which has shown strength in the Texas marketplace. “Most employers we work with have seen a significant increase in utilization of Crestor,” says Robin Rankin, phar-macy practice leader for Employee Benefit Solutions, a Houston-based health benefits consulting firm. Cre-stor’s growing popularity could represent a challenge for Lipitor when all generic restrictions are dropped. Crestor, whose patent is protected through 2016, has preferred-brand tiering from Aetna, BC/BS of Texas, Scott & White Health Plan, UnitedHealthcare, Humana, and FirstCare Health Plans (Decision Resources’ Fingertip Formularies). Among major carriers, only Cigna HealthCare places it on a nonpreferred tier; Cigna has had a deal with Pfizer for several years that makes Lipitor a preferred brand. Several large PBMs also have deals with Pfizer, and there could be some delays in generic equivalents reaching the market. There will be only limited generic equivalents available until May 2012, when all restrictions are dropped.
Patient Care Management
Table 5-1: Texas Chronic Disease Snapshot
% of Adult Population Rank in the U.S.*
Disease 2009 2010 2009 2010 Prenatal care 61.6% 59.7% 50 49 Immunization coverage 90.4% 88.8% 29 35 Prevalence of smoking 18.5% 17.9% 26 24 Prevalence of obesity 28.9% 29.5% 37 35 Cholesterol checks 70.7% 71.9% 45 46
*Ranking of 1 = lowest incidence for smoking and obesity; highest incidence for prenatal care, immunizations and cholesterol checks Source: United Health Foundation, 2010 America’s Health Rankings
Fourth-Quarter Outlook For Texas Patient Care Management
Texas
Bundled payments have not yet taken hold in Texas, although a pilot between Good Shepherd Medical Center and Cigna HealthCare in northeast Texas could offer some promise for this reimbursement model. Baptist Health System’s participation in the Medicare acute-care episode demonstration in San Antonio signals the future of payment models that take into account quality and efficiency in treating Medicare beneficiaries.
» Bundling:
Bundled payments have made shallow inroads among Texas health systems, in part because most Texas health plans have not engaged in the reimbursement model yet. There was an attempt to open up the market in the 2011 legislative session, but nothing that would have allowed for wider implementation of bundling initiatives passed. Yet there is recognition that the market will soon see more movement to bundled pay-ments. “People know it’s coming and are definitely looking at it in the future. Most agree that there will be at least some move away from fee for service,” says John Hawkins, senior vice president of government relations and public policy for the Texas Hospital Association.
The incubator for bundled payments in Texas lies with accountable care pilots approved for Medicaid in Senate Bill 7. The state will establish pilots in Medicaid and allow the creation of healthcare collaboratives, which could lead to the proliferation of bundled payments. Texas has strict laws governing physician prac-tices, and capitation is not common in many regions, although the Kelsey-Seybold Clinic and Scott & White Healthcare have both taken innovative steps in patient care. Given the complexity of physician employment and the use of capitation, these issues will likely be worked out over several legislative sessions, Hawkins says. “The biggest issue is the governance. Anytime you talk about allocating money and dealing with clinical integration, there always has to be balance between the corporate entity and the physicians,” he says. Cigna HealthCare has embarked on a global payment program with Good Shepherd Medical Center, which has hospitals in northeast Texas cities Linden, Longview, and Marshall. For 100 common cardiac and joint procedures, Cigna pays providers a single payment that covers the cost of any readmission within 30 days. The initiative, launched July 2011, is expected to encourage adherence to clinical guidelines and improve care coordination among physicians and the hospital.
If successful, the Good Shepherd payment program should be opened to midsize and large Texas markets where Cigna has a critical mass of members and providers who are willing to change their reimbursement structure. With Cigna’s planned purchase of HealthSpring, the company’s next logical step would be to
expand bundled payments to Medicare Advantage populations because readmission rates are higher among Medicare beneficiaries than with commercial patients.
The San Antonio market will hold many lessons for future bundling initiatives in the state. The Centers for Medicare & Medicaid Services selected Baptist Health System in San Antonio for the federal acute-care epi-sode demonstration in 2009; Baptist was the only Texas health system selected of five sites across Colorado, New Mexico, Oklahoma, and Texas. The three-year pilot runs through June 2012 for cardiac valve dures, cardiac defibrillator implant procedures, coronary bypass procedures, and cardiac pacemaker proce-dures. Percutaneous cardiovascular procedures, hip replacement surgery, and knee replacement surgery are also included. Baptist’s Vascular Institute of San Antonio helps members with peripheral vascular disease, which refers to the obstruction of arteries in the arms, legs, and feet. Baptist assigns each ACE participant a patient navigator—typically a registered nurse—to help patients throughout their episode of care.
The global payment in the ACE program covers all Part A and Part B Medicare services, including physi-cian services, which pertain to the inpatient stay for Medicare fee-for-service beneficiaries seen by Baptist-affiliated physicians. Medicare Advantage members and Medicare recipients dually eligible for Medicaid cannot join the ACE demonstration. Members who receive those procedures can receive up to 50 percent of Medicare’s savings, or a maximum of $1,157, 90 days after discharge from the hospital.
Providing beneficiaries with a financial incentive could have huge implications for patient health. Incen-tives have been necessary to encourage members of commercial plans to participate in wellness and disease management programs, and in most cases, commercial members have increased their participation. For Medicare beneficiaries on fixed incomes, the incentive could go a long way.
Baptist already operates a network of rehabilitation clinics around San Antonio that provide services for cardiac and othropedic conditions, so it should leverage those facilities to reduce preventable admissions for pilot conditions. While drug costs would not necessarily be included in the bundled payment, providers must take aggressive approaches to patient drug adherence to reduce the need for readmissions.
CMS is also proceeding on a separate bundled payment initiative for 2012. Physicians had until Oct. 6, 2011, to send nonbinding letters of intent, and until Nov. 18 to apply for the model that will be focused on inpatient hospital services. For three other models that will be offered, the deadline for the letter of intent was Nov. 4, and the application deadline is March 2012.
» Diabetes programs:
The Dallas–Fort Worth Business Group on Health is expanding local physician participation in the NCQA Diabetes Recognition Program, a quality initiative for diabetes care. The business group and Blue Cross and Blue Shield of Texas are broadening the Blue plan’s physician incentive system, which combines elements of the NCQA and Bridges to Excellence programs. Business-group members will be encouraged to use physi-cians designated for offering high-quality diabetes care.
The program builds on the business group’s existing work. The group, whose members include 126 large Dal-las–Fort Worth-area employers and healthcare stakeholders, launched the Partnership for Peak Healthcare Performance to improve the health of the region’s chronically ill. Diabetes was the first disease for which it used quality markers. Since July 2007, the partnership has measured area physicians’ administration of four key diabetic tests: A1C screening, LDL cholesterol screening, nephropathy testing or treatment, and retinal eye exams. If available, the program also reports a physician’s average patient lab values for A1C and LDL cholesterol.
» Accountable care:
Cigna has seen strong early results from its accountable care progam with the Medical Clinic of North Texas, which encourages the practice to follow evidence-based guidelines. During its first year, the medical clinic saw a 3 percent improvement in A1C blood sugar in diabetic patients, and its medical cost trend came in two points lower than the market average for providers. Originally billed as a medical home, Cigna has placed the pilot under its accountable care initiative.
Cigna’s clinical programs serve as an extension of services provided by MCNT. Care coordinators use patient-specific data to direct members to applicable disease and lifestyle management programs. Cigna plans to broaden its accountable care initiative in 2012, and additional Texas markets could receive consider-ation. MCNT already served a critical mass of Cigna members and has an electronic health record; practices with similar characteristics could be ideal candidates.
Regulation/Legislation
Table 6-1: Summary Of Recent Regulations
Bill Name and Number Description Status and Date 2012-2013 Texas Budget
(HB 1/SB2) Approves state budget for two-year cycle that began Sept. 1, 2011; implements efficiency and cost-containment measures for Medicaid, including 8 percent reduction in reimbursement for providers
Signed by governor July 2011
Coverage for Oral Oncology
Drugs (HB 438) As of Sept. 1, 2011, requires coverage for oral oncology drugs to be no less favorable than for intravenously administered or injected oncology drugs
Signed by governor May 2011
Texas Health Insurance
Connector (HB 636) Would have established an insurance exchange, the Texas Health Insurance Connector, to be governed by a seven-member board of directors
Pending in Insurance Committee
March 2011 Telemedicine Services for
Medicaid Beneficiaries (HB 842)
Would have directed the state to implement a system to reimburse providers under the state Medicaid program for telemedicine or telehealth services
Pending in Public Health Committee after public hearing
March 2011 Advanced Practice Nurses
Scope of Practice (HB 915) Would have granted prescribing authority to advance practice registered nurses Pending in Public Health Committee after public hearing
April 2011 Exclusive Provider Health
Plans (HB 1772) Authorizes regulation of exclusive provider organizations in the same manner as the state regulates PPO plans, effective Sept. 1, 2011 (EPOs exclude member coverage for some or all services, other than emergency services, from providers who are not preferred providers)
Signed by governor June 2011
Discretionary Clause Ban
(HB 3017) Amends Insurance Code to prohibit an evidence of coverage of benefits provided by a HMO from containing a discretionary clause provision Signed by governor June 2011 Medicaid Payment Reform
(SB 7) Makes numerous changes to healthcare law, including measures designed to expand Medicaid managed care, facilitate the operation of healthcare collaboratives, and evaluate physician incentive programs that attempt to reduce hospital emergency-room use for non-urgent conditions by Medicaid recipients; effective Sept. 28, 2011
Signed by governor July 2011