The nation’s financial crisis is leaving no industry unscathed, and managed care is no exception. Although most companies are believed to have relatively little exposure to the Wall Street companies that were at the center of the turmoil, there are still several ramifications. John Gorman, who heads the Gorman Health Group, a consulting company, offers a view of the situation.

Managed Care: To what extent, if any, are managed care companies hurt by the crisis?

Gorman: It’s really pretty straightforward. The good news is they’re not a particularly capital-intensive business. And with a few exceptions, they don’t have much exposure to the firms that took a beating on Wall Street. The flip side, though, is that, like everybody else, they have a restricted ability to access capital, especially the publicly traded companies. And of course, their stocks are in the tank. Several got downgraded, Universal American, for instance.

MC: What about smaller plans?

Gorman: Yes, the tough spots will be small privately held plans, which will find themselves in a bind because of a lack of liquidity in the market and difficulty accessing investment capital. And companies heavily invested in the Medicare business need to be making some substantial investments in things like IT and other infrastructure, given a big increase in regulation of that program. So capital will be harder to access and more expensive.

MC: So where do they go for capital?

Gorman: There’s an opportunity for reinsurance carriers to rethink what they do for these health plans and be able to provide some of these services as alternatives to investment capital. They can help cover some or all the plans’ statutory reserves by basically swapping in reinsurer money for health plan statutory reserves. In effect, they’d be buying up their risk, which frees up capital the plan had in reserve and can use as operating capital.

MC: How will all this affect health care reform?

Gorman: It will have a negative impact on the prospects for health reform if the market stays in turmoil for an extended period. Health reform is really something the insurance industry is hoping will happen as a way of opening new markets on the 47 million uninsured, and if it looks like the government is bled dry because of a bailout or lingering economic crisis, the prospects for getting that done become questionable. — Ed Silverman

Managed Care’s Top Ten Articles of 2016

There’s a lot more going on in health care than mergers (Aetna-Humana, Anthem-Cigna) creating huge players. Hundreds of insurers operate in 50 different states. Self-insured employers, ACA public exchanges, Medicare Advantage, and Medicaid managed care plans crowd an increasingly complex market.

Major health care players are determined to make health information exchanges (HIEs) work. The push toward value-based payment alone almost guarantees that HIEs will be tweaked, poked, prodded, and overhauled until they deliver on their promise. The goal: straight talk from and among tech systems.

They bring a different mindset. They’re willing to work in teams and focus on the sort of evidence-based medicine that can guide health care’s transformation into a system based on value. One question: How well will this new generation of data-driven MDs deal with patients?

The surge of new MS treatments have been for the relapsing-remitting form of the disease. There’s hope for sufferers of a different form of MS. By homing in on CD20-positive B cells, ocrelizumab is able to knock them out and other aberrant B cells circulating in the bloodstream.

A flood of tests have insurers ramping up prior authorization and utilization review. Information overload is a problem. As doctors struggle to keep up, health plans need to get ahead of the development of the technology in order to successfully manage genetic testing appropriately.

Having the data is one thing. Knowing how to use it is another. Applying its computational power to the data, a company called RowdMap puts providers into high-, medium-, and low-value buckets compared with peers in their markets, using specific benchmarks to show why outliers differ from the norm.
Competition among manufacturers, industry consolidation, and capitalization on me-too drugs are cranking up generic and branded drug prices. This increase has compelled PBMs, health plan sponsors, and retail pharmacies to find novel ways to turn a profit, often at the expense of the consumer.
The development of recombinant DNA and other technologies has added a new dimension to care. These medications have revolutionized the treatment of rheumatoid arthritis and many of the other 80 or so autoimmune diseases. But they can be budget busters and have a tricky side effect profile.

Shelley Slade
Vogel, Slade & Goldstein

Hub programs have emerged as a profitable new line of business in the sales and distribution side of the pharmaceutical industry that has got more than its fair share of wheeling and dealing. But they spell trouble if they spark collusion, threaten patients, or waste federal dollars.

More companies are self-insuring—and it’s not just large employers that are striking out on their own. The percentage of employers who fully self-insure increased by 44% in 1999 to 63% in 2015. Self-insurance may give employers more control over benefit packages, and stop-loss protects them against uncapped liability.