What is not clear is how Aetna might engage independent clinical laboratories as in-network providers for this health insurance plan
For years, Dark Daily and its sister publication The Dark Report have regularly predicted that the traditional fee-for-service reimbursement model of indemnity health insurance that requires beneficiaries to pay a co-pay is on the way out. What is not known is how the nation’s biggest health insurers plan to reinvent themselves, as value-based reimbursement for providers becomes more common.
That may be clearer now, at least for one insurance giant. Aetna recently announced it was incorporating CVS Health services provided at CVS-owned pharmacies and retail clinics into a healthcare plan for individuals in the greater Kansas City, Mo., area.
The Aetna Connected Plan “combines CVS Health services—including free one to two-day prescription delivery and 20% discounts on thousands of health-related items—with Aetna’s cost-saving I-35 Performance Network to deliver a more convenient and connected member experience, along with up to 20% premium savings compared to comparable PPO products in the market,” states a CVS Health press release.
Members can schedule appointments at CVS Health MinuteClinics, request consultations at CVS HealthHUBs for no copay, and access other services, including telehealth visits, through CVS pharmacies. Essentially, Aetna made network providers for this range of CVS-owned health services.
CVS Health services, according to the press release, include:
$0 copay at local HealthHUB and MinuteClinic locations,
Free one to two-day prescription delivery,
20% discounts on thousands of health-related items in-store and online,
The Aetna health plan will be made available next year to employers with 101 or more workers in three counties in Missouri (Clay, Jackson, and Platte) and two counties in Kansas (Johnson and Wyandotte). Aetna claims the premiums for their new plan are 20% less expensive than other similar plans for the region, MedCity News reported.
“It’s all about meeting our members where they are to increase engagement, improve outcomes, and reduce healthcare costs,” said Jim Boyman (above), VP, Market President-Heartland at Aetna, in the press release. “This plan is just one example of how Aetna and CVS Health are combining forces to help people live healthier lives,” he added. “We’re providing a better member experience by reducing costs and simplifying their healthcare journey.” (Photo copyright: LinkedIn.)
AMA Expressed Concerns over CVS Purchase of Aetna
CVS acquired Aetna for $70 billion in late 2018 and the two companies have been working to integrate their businesses ever since.
There are currently more than 1,000 CVS MinuteClinics located throughout 33 states and the District of Columbia. CVS began opening HealthHUB clinics in the Houston area last year and plans to open more than 1,500 HealthHUBs by the end of 2021, the Houston Chronicle reported.
Critics of the 2018 purchase of Aetna by CVS were concerned that CVS would somehow use Aetna’s 40 million members to drive revenue for its stores. Many groups, including the American Medical Association (AMA), Consumers Union, and pharmacy organizations were opposed to the merger due to anticompetitive concerns.
The AMA felt the merger would reduce competition in some pharmaceutical markets, which could lead to higher premiums and lower the quality of some insurance products. The organization also believed that the merger “faced enormous implementation challenges and was unlikely to realize efficiencies that benefit patients,” the AMA noted in a statement.
“We are very concerned about the consolidation in healthcare because we know that as healthcare systems consolidate, prices tend to go up,” AMA President Barbara McAneny, MD said in the statement. “And we are very concerned that with the CVS purchase of Aetna that drug prices will continue to rise and that is a major pain point of patients all across the country.”
The AMA also stressed concerns regarding how the lack of competition could have negative impacts on the pharmaceutical industry.
“It’s also causing harm to a lot of the parts of the industry,” McAneny added. “Independent pharmacies are going out of business and this consolidation makes them (CVS) just such a stronger player in that market that competition is really difficult.”
Despite the opposition, the CVS and Aetna merger received final approved from regulators last year. Before the merger was approved, the two companies had to convince state attorneys general, antitrust regulators, and Congress that the consolidation would not result in anticompetitive practices and impair independent drugstores and other national chains.
Will Aetna Engage Independent Clinical Laboratories?
Aetna’s new health plan is another example of how the nation’s biggest health insurers are adapting away from fee-for-service and to value-based reimbursement for healthcare providers. Clinical laboratory managers will want to watch how CVS and Aetna do or do not work with independent laboratory companies to collect lab specimens at the pharmacies and provide testing.
In another example of giving consumers more direct access to medical laboratory tests, Walmart believes that convenience and lower prices can help it capture market share
Retail giants continue to add healthcare services—including medical laboratory testing—to their wares. It’s a trend that pressures hospital systems, clinical laboratories, pathology groups, and primary care providers to compete for customers. And, while in most instances competition is good, many local and rural healthcare providers cannot reduce their costs enough to be competitive and stay in business.
This is true at Walmart (NYSE:WMT), which recently opened its second “Health Center” in Georgia and announced prices for general healthcare services 30% to 50% below what medical providers typically charge, reported Modern Healthcare.
The services offered at the new Walmart Health Center in Calhoun, a suburb of Atlanta, include:
Primary care
Dental
Counseling
Clinical laboratory testing
X-rays
Health screening
Optometry
Hearing
Fitness and nutrition
Health insurance education and enrollment
A Walmart news release states, “This state-of-the-art facility provides quality, affordable and accessible healthcare for members of the Calhoun community so they can get the right care at the right time … in one facility at affordable, transparent pricing regardless of a patient’s insurance status.”
The fact that Walmart posts “Labs” on the Health Center’s outdoor sign may indicate the retail giant considers easy access to clinical laboratory testing a selling point that will draw customers.
“By offering clinical laboratory testing in support of primary care and urgent care, Walmart may be able to lower prices for lab tests in any market that it enters,” said Robert Michel, Editor-in-Chief of Dark Daily and its sister publication The Dark Report, and President of The Dark Intelligence Group.
The sign above on the exterior of Walmart Health Centers lists the services offered. By advertising “Labs” Walmart is confirming that growing numbers of consumers want to order their own lab tests and that the availability of lab tests gives its medical clinic a competitive advantage. (Photo copyright: Modern Healthcare.)
Healthcare Transparency and Lower Prices
The 1,500 square-foot free-standing Walmart Health Centers offer more services than the in-store Care Clinics installed in other Walmarts throughout Georgia, South Carolina, and Texas. For its healthcare services, Walmart established partnerships with “on-the-ground” health providers to offer affordable services.
“We have taken advantage of every lever that we can to bring the price of doing all of this down more than any hospital or group practice could humanly do. Our goal, just like in the stores, is to get the prices as low as we can,” Sean Slovenski, Senior Vice President and President of Walmart Health and Wellness, told Bloomberg Businessweek.
Some of the clinical laboratory prices prominently posted in the building and noted on the Health Center online price list include:
Meanwhile, the average cost to visit a primary care doctor is $106, according to Health Care Cost Institute data cited by Business Insider, which noted that Walmart’s rates “could be a steep mountain for traditional providers to climb.”
However, Rob Schreiner, Executive Vice President of WellStar Health System in Northern Georgia told Modern Healthcare that “Walmart will offer a cheaper alternative for working-class families who may not have health insurance and may not have an established relationship with a primary care provider.”
Convenient Access to Quality Healthcare Services a Major Draw
At a freestanding Walmart Health Center, people can park near the entrance and walk a few steps to the entrance, rather than traversing aisles to a Care Clinic inside a Walmart Supercenter. And for many customers, finding a Walmart Health Center may not be as complicated or stressful as visiting doctors’ offices.
That seems to be Walmart’s goal—not simply using the Health Centers to increase traffic in its stores, Slovenski said. “We are trying to solve problems for our customers. We already have the volume,” he told Forbes. “We have the locations and the right people. We are creating a supercenter for basic healthcare services.”
Walmart’s arrangement with local healthcare providers differs from traditional primary care clinics staffed by doctors who are practice owners, or who are employed by nearby hospitals and health systems.
“The whole design of the clinic is curious to most of the doctors here [in Dallas, Ga.],” Jeffrey Tharp, MD, Chief Medicine Division Officer, WellStar Medical Group, told Modern Healthcare. “We are advocating integration into our network, for instance with patients who need a cardiologist coming from Walmart to WellStar.”
Clinical laboratory leaders may want to explore partnerships with Walmart and other retailers that are developing healthcare centers to deliver primary care services in places where masses of people shop for everyday items. Especially given that these big-box retailers remain open during healthcare crises like the COVID-19 pandemic.
While clinical laboratories may not be directly affected by copay accumulators, anything that affects patients’ ability to pay for healthcare will likely impact lab revenues as well
Here’s a new term and strategy that some big employers are
deploying in an attempt to control the choice of health benefits provided to
their employees. The term is “copay accumulator” and it is intended to offset
efforts by pharmaceutical companies to minimize what consumers must pay
out-of-pocket for expensive prescription drugs.
Clinical laboratory managers and pathologists will have a front row seat to watch this next round in the struggle between industry giants for control over how patients pay for drugs and treatment regimes.
Pharmaceutical companies on one side and health insurers and employers on the other side have played brinksmanship over medication copays for years. Now at the center of this struggle are copay accumulators, a relatively new feature of plans from insurers and pharmacy benefit managers (PBMs) on behalf of the large employers they serve.
More than 41-million Americans use copay accumulators, and about nine million use similar though limited copay maximizer programs, Zitter Health Insights, a New Jersey-based pharma and managed care consultancy firm, told Reuters.
Now, big employers are getting in on the game. Walmart
(NYSE:WMT) and Home Depot (NYSE:HD) are among a growing number of companies using
copay accumulators and copay maximizers to keep their healthcare costs down and
encourage employees to seek lower-cost alternatives to expensive brand
prescriptions (generic drugs).
About 25% of employers currently use such programs, and 50% of employers are anticipated to be doing so in just two more years, the National Business Group on Health told Reuters.
What Are Copay
Accumulators and How Do They Work?
In response to popular drug company discount cards,
insurance companies developed the “copay accumulator.” Here’s how it works.
Typically, patients’ insurance plan deductibles can be thousands
of dollars. Thus, even after plan discounts, patients often pay hundreds, even
thousands of dollars each month for prescribed medications. Insurance companies
see a beneficial side to this, stating the cost encourages patients to be aware
of their medications and motivates them to try lower-cost non-branded
alternatives (generic drugs), all of which saves insurance plans money.
However, many patients with high-deductibles balk at paying
the high cost. They opt to not fill prescriptions, which costs pharmaceutical
companies money.
To encourage patients to fill prescriptions, drug companies
provide discount cards to help defray the cost of the drugs. The difference
between the discounted payment and the full price of the drug is paid by the
pharmaceutical company. But these discount cards interfere with insurance
companies’ ability to effectively track their enrollees’ drug usage, which
impacts the payers’ bottom lines.
When a patient uses a drug discount card at the point-of-sale, the sale is noted by the patient’s health insurer and the insurer’s copay accumulator program kicks in. It caps the total accumulated discount an enrollee can take for that medication and prevents any patient payments to apply toward the plan’s deductible. Once the drug company’s discount card threshold is reached, the patient bears the full cost of the drug, a ZS Associates Active Ingredient blog post explained.
Critics of copay accumulators point out that patients could
end up paying full price for extremely expensive prescriptions they previously
accessed with discount cards, while simultaneously making no progress toward
fulfilling their insurance deductibles. Or, they will simply stop taking their
medications altogether.
“A medication which previously cost $7 may suddenly cost hundreds or even thousands of dollars because the maximum amount of copay assistance from the [drug] manufacturer was reached,” noted Ken Majkowski, Pharm.D, Chief Pharmacy Officer at FamilyWize (a company that offers its own prescription savings programs), in a blog post. “Since the health plan will no longer allow the copay amounts to contribute to the patient’s deductible, the cost of the medication remains very high.”
Major Employers Implement
Their Own Copay Accumulator Programs
Enter the next goliath into the fray—the large employer. Executives
at Walmart and Home Depot say discount drug coupons drive up healthcare costs
and give their employees and their family members no incentive to explore lower
cost alternatives, Reuters reported.
Walmart’s pharmacy benefits are managed by Express Scripts, a prescription benefit plan provider that fills millions of prescriptions annually, according to the company’s website. Meanwhile, Home Depot’s pharmacy benefits are operated by CVSHealth, which focuses on therapies for cystic fibrosis, hepatitis C, cancer, HIV, psoriasis, pulmonary arterial hypertension, and hyperlipidemia, Reuters noted.
Insurance Associations
Weigh-In
Health insurance company representatives say the need for copay accumulators begins with the high price of pharmaceuticals. Insurers are not the only ones concerned about these costs. The American Hospital Association (AHA), the Federation of American Hospitals (FAH), and the American Society of Health-System Pharmacists (ASHP) recently released a report showing total drug spending per hospital admission increased by 18% between 2015 and 2017, and some drug categories rose more than 80%.
“The bigger question is why do we need copay coupons at all? It’s very important to recognize the problem starts with the [drug] price. This is the real underlying problem,” Cathryn Donaldson, Director of Communications, America’s Health Insurance Plans (AHIP), told the Los Angeles Times.
In their blog post, ZS Associates advised drug companies to
“push-back” on the copay accumulators. The Evanston, Ill.-based consultancy
firm recommends pharma executives change the way they run the discount cards—such
as paying rebates directly to patients instead of working through pharmacies.
Medical laboratory leaders need to be aware of programs,
such as copay accumulators, and the associated issues that affect patients’
ability to pay for their healthcare. Because large numbers of patients struggle
to pay these high deductibles, it means clinical laboratories will be competing
more frequently with hospitals, physicians, imaging providers, and others to
get patients to pay their lab test bills.
While consolidation is a common trend across many sectors—including anatomic pathology groups and hospital systems—UnitedHealth Group is the latest example of the payer-provider consolidation trend impacting medical laboratories nationwide
Pending the successful completion of a $4.9-billion acquisition of DaVita Medical Group, UnitedHealth Group (UNH) will be poised to become the largest single employer of doctors in the U.S., according to numbers reported by leading sources.
Clinical laboratories, anatomic pathology groups, and other service providers that service those doctors should already be taking a serious look at their revenue flows and efficiencies to maintain margins and weather the shift into a model of value-based reimbursement.
Controlling Costs with Direct Care
According to a press release, UnitedHealth Group’s (NYSE:UNH) direct-to-patient healthcare subsidiary, OptumCare, currently employs or is affiliated with 30,000 physicians. And, DaVita Medical Group, a subsidiary of DaVita Inc. (NYSA:DVA), lists 13,000 affiliated physicians on their website. Should acquisition of DaVita Medical Group go forward, OptumCare would have approximately 43,000 affiliated or employed physicians—roughly 5,000 more physicians than HCA Healthcare and nearly double Kaiser Permanente’s 22,080 physicians—thus, making OptumCare’s parent company UNH the largest individual employer of physicians in the U.S. The acquisition is reportedly to reinforce UNH’s ability to control costs and manage the care experience by acquiring office-based physicians to provide services.
OptumCare has seen significant growth over the past decade. OptumHealth, one of three segments of UNH’s overall Optum healthcare subsidiary, includes OptumCare medical groups and IPAs, MedExpress urgent care, Surgical Care Affiliates ambulatory surgery centers, HouseCalls home visits, behavioral health, care management, and Rally Health wellness and digital consumer engagement.
“We have been slowly, steadily, methodically aligning and partnering with phenomenal medical groups who choose to join us,” Andrew Hayek, CEO of OptumHealth (above), told Bloomberg. “The shift towards value-based care and enabling medical groups to make that transition to value-based care is an important trend.” (Photo copyright: Becker’s ASC Review.)
Acquisitions of Doctors on the Rise; Clinical Lab Revenues Threatened
Independent physicians and practices have been a hot commodity in recent years. A March 2018 study from Avalere Health in collaboration with the Physicians Advocacy Institute (PAI) showed that the number of physicians employed by hospitals rose from 26% in July 2012 to 42% in 2016—a rise of 16% over four years.
By acquiring physicians of their own, insurance companies like UnitedHealth Group believe they can offset the cost and shifts in service of these prior trends. “We’re in an arms race with hospital systems,” John Gorman of Gorman Health Group told Bloomberg. “The goal is to better control the means of production in their key markets.”
According to Modern Healthcare, the acquisition of DaVita Medical Group is UnitedHealth’s third such acquisition in 2017. Other acquisitions include:
Advisory Board, a healthcare consulting firm, for $2.3-billion in November.
Along with Surgical Care Affiliates came a chain of surgery centers that, according to The New York Times (NYT), OptumCare plans to use to perform approximately one million surgeries and other outpatient procedures this year alone, while reducing expenses for outpatient surgeries by more than 50%.
NYT also noted that acquisition of DaVita Medical Group doesn’t bring just physicians under the OptumCare umbrella, but also nearly 250 MedExpress urgent care locations across the country.
By having physicians, clinical laboratories, outpatient surgery centers, and urgent care centers within their own networks, insurance providers then can steer patients toward the lowest-cost options within their networks and away from more expensive hospitals. This could mean less demand on independent clinical laboratories and hospitals and, with that, reduced cash flows.
According to NYT, Optum currently works with more than 80 health plans. However, mergers such these—including those between CVS Health (NYSE:CVS) and Aetna (NYSE:AET), and the proposed agreement between Humana (NYSE:HUM) and Walmart (NYSE:WMT) to deliver healthcare in the retailers’ stores—indicate that insurers are seeking ways to offer care in locations consumers find most accessible, while also working to exert influence on who patients seek out, to generate cost advantages for the insurers.
This consolidation should concern hospitals as payers increasingly draw physicians from them, potentially also taking away their patients. The impact, however, may also reach independent medical laboratories, medical imaging centers, anatomic pathology groups, and other healthcare service providers that provide diagnoses and treatments in today’s complex healthcare system.
Deep Payer Pockets Mean Fewer Patients for Clinical Labs and Medical Groups
As this trend continues, it could gain momentum and potentially funnel more patients toward similar setups. Major corporations have deeper pockets to advertise their physicians, medical laboratories, and other service providers—or to raise public awareness and improve reputations. Such support might be harder to justify for independent healthcare providers and medical facilities with shrinking budgets and margins in the face of healthcare reform.
Shawn Purifoy, MD, a family medicine practitioner in Malvern, Ark., expressed his concern succinctly in The New York Times. “I can’t advertise on NBC [but] CVS can,” he noted.
While further consolidation within independent clinical laboratories and hospitals might help to fend off this latest trend, it remains essential that medical laboratories and other service providers continue to optimize efficiency and educate both physicians and payers on the value of their services—particularly those services offered at higher margins or common to menus across a range of service providers.
It’s all about convenience and offering consumers multiple services at a single location. That’s why certain clinical laboratory tests will soon be offered at CVS Health Minute Clinics
As predicted, operators of rapid clinics located in retail pharmacies and other retail stories are adding additional clinical services. In the case of CVS Health, it recently announced plans to add certain clinical laboratory testing services to its Minute Clinic locations.
Consumer demand is driving these decisions. After all, who doesn’t want to save time and money these days? Combining errands into as few trips as possible means getting more at each location. This imperative drove big-box stores Walmart (NYSE:WMT) and Target (NYSE:TGT) to combine their household lines with grocery products all under one roof, and customers loved it!
Thus, it was no surprise when pharmacy chains got in on the act by adding rapid care clinics to retail stores that already included health and beauty products, pharmaceuticals, and limited grocery items. This important trend has been written about by Dark Daily in previous e-briefings.
Now, during a second quarter earnings call, CVS Health revealed that they plan to expand their offerings at Minute Clinic locations to include services intended to help consumers manage chronic health conditions. The move could be considered part of the same trend—providing customers with more options at each visit. However, there’s more to it. The new services aim at empowering chronic disease suffers through population health management tools. For patients and caregivers of chronic disease patients, this could be quite beneficial.
But how will this impact medical laboratories and pathology groups, when patients realize they can employ tools that monitor their chronic conditions at convenient locations where they can likely fulfill other needs as well? Might this impinge on revenues from tests and specimen gathering procedures traditionally performed at clinical laboratories?
Demand for Low-Cost Quality Care Driving Growth in Retail Clinics
There are currently more than 1,100 Minute Clinics located inside CVS stores in 33 states and the District of Columbia. Headquartered in Woonsocket, R.I., CVS expects an escalation in the need for their Minute Clinic services due to:
· A shortage of primary care physicians;
· An increase in chronic diseases; and
· The aging US population.
CVS Health’s initial service offerings will help diabetes patients:
· Monitor glucose levels;
· Adhere to medication schedules, and,
· Modify their lifestyles through education.
During the next two years, CVS plans to add similar services at their Minute Clinic locations for other chronic conditions, including:
The Minute Clinics operate seven days a week, with half of their patients seen in the evenings and weekends—times when most traditional medical offices are closed. CVS Health plans to open an additional 150 Minute Clinic locations within the next year.
Patients waiting to be seen by nurse practitioner Marti Wolfson (right) at a Minute Clinic in La Mesa, CA. CVS announced that it will introduce certain clinical laboratory testing services to its chain of rapid care clinics located in CVS retail pharmacies. (Photo copyright: San Diego Union Tribune/John Gastaldo.)
According to a report from the Robert Wood Johnson Foundation and Manatt Health Solutions, there are more than 1,800 retail clinics in the United States and CVS Minute Clinics hold more than 50% of the market. Access to walk-in appointments, convenience, extended hours of service, lower costs, and having no primary source of care are the most common reasons given by people who utilize services at the clinics.
Retail clinics account for 10.5 million healthcare visits annually, which represent about 2% of primary care encounters in the country. The number of retail clinics in the US increased by 900% between 2006 and 2014 and is expected to continue to climb.
According to AMN Healthcare research, the most common reasons for visits to the clinics include:
· Diagnosis and treatment of new illnesses and symptoms;
VA Now Referring Vets to Retail Clinics in Phoenix Area
In April, CVS Health, the Department of Veterans Affairs (VA), and TriWest Healthcare Alliance joined forces to improve access to health services for veterans in the Phoenix area. This initiative allows healthcare professionals at the Phoenix VA to refer veterans to Minute Clinic for minor health conditions.
“This new public-private collaboration between CVS, TriWest, and the VA is an important step forward in enhancing choice and flexibility in veterans’ healthcare,” Senator John McCain noted in a CVS Health press release. “I’ve long believed that veterans in need of routine healthcare services should not have to wait in line for weeks to get an appointment when they can visit community health centers like Minute Clinic to receive timely and convenient care.”
Because of this collaboration, 120,000 veterans living in the Phoenix area may now receive care, when appropriate, at the 24 Minute Clinic locations in the metropolitan area.
“Our number one priority is getting veterans access to care when and where they need it. The launch of this partnership will enable VA to provide more care for veterans in their neighborhoods,” stated Baligh Yehia, MD, MPP, MSc, in the CVS Health press release. Yehia is Senior Medical Director at Johns Hopkins Medicine, and Deputy Undersecretary for Health at the US Department of Veterans Affairs.
As retail clinics become more popular a growing number of medical laboratory test samples that traditionally came from office-based physicians may originate from these clinics. Clinical laboratory outreach, physician support, and patient education programs have never been more critical.
