Insurers have maintained strong earnings in recent years — much to the delight of stockholders — because of relatively stable expenses, improved case management, and new technology. However, a report by A.M. Best Company, a global credit rating organization, suggests that insurers will need to navigate a challenging financial landscape in 2008.

According to “Health Insurers’ Financial Results Will Be Tested as Markets Evolve,” health plans involved in Medicare and Medicaid may experience higher medical loss ratios overall because more, and more expensive, claims are being filed.

In addition, not-for-profit Blue Cross & Blue Shield companies may see a dip in revenue because these companies generate earnings through income, rather than underwriting gains.

The industry may also draw attention from Congress, particularly companies that are involved with Medicare Advantage programs, which have contributed to enrollment growth.

The report suggests that payment rates, particularly for private fee-for-service plans, may draw closer scrutiny from the federal government.

A.M. Best expects underwriting margins for provider-owned and -affiliated health plans to remain stable at 2.3 percent for the first nine months of 2007. This was the same rate as 2006’s full-year result. Historically, underwriting margins had been declining from as high as 2.8 percent in 2003 to 2.6 percent in 2004, before falling to 2.1 percent in 2005. Provider-owned and -affiliated health plans may also face pressure on medical loss ratios because of competition and higher costs as plans increase expenses related to sales, marketing, and commissions to defend their existing accounts and to expand their business.

And as in other election years, proposals by presidential candidates to reform health care, including Medicare expansion, granting states flexibility to develop coverage mandates, and tax credits to pay for expenses, will make 2008 an interesting year for the industry.

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.