The Blues are (mostly) in the black

Adobe

A $203 million tax refund for Blue Cross Blue Shield of North Carolina. Nearly $1.5 billion in profit for Health Care Service Corp., the parent of five Blues plans. A quadrupling of profit at BCBS of Alabama.

Publicly traded health insurers were not the only ones in the industry that continued to amass large windfalls in 2022. Many nonprofit and private Blue Cross Blue Shield companies ended last year with sizable gains that added to their mountainous cash reserves, according to an analysis of financial filings for 10 Blues companies.

The results underscore how much financial and political power the Blues still hold in their respective states, and how they broadly remain entrenched household names, particularly within the market for employer-based health insurance.

Read the story to learn more about the companies that fared the best, which two Blues lost money and why, and which BCBS affiliate has quietly dipped its toes into the waters of owning primary care providers.

technology

Excuse me, the AI scribes are making how much?

Hospitals are trying to buy their physicians’ happiness, but the price tag is high, secret, and ambiguous, according to an exclusive report from my colleague Brittany Trang.

Microsoft-owned Nuance Communications has developed an artificial intelligence platform called DAX that is supposed to relieve disgruntled physicians from having to finish up visit notes during lunch or “pajama time” by writing the notes for them with AI. Theoretically, the time-savings should allow physicians to see enough additional patients to give a return on the subscription.

But health system CIOs who talked to STAT said they hadn’t noticed a financial return, to the extent that one health system makes their physicians pay for it out of pocket if they want it, and they do — even if it means over $1,500 disappears from their paychecks each month.

Read Brittany’s story, and send any DAX prices, hospital system product horror stories, or doctor/nurse industry gossip to brittany.trang@statnews.com.

hospitals

Sure, why not another big hospital merger

Hospital merger consultants are making hay right now. The latest deal: BJC HealthCare in St. Louis and Saint Luke’s Health System in Kansas City have signed a nonbinding agreement to merge.

The combined system would operate almost 30 hospitals, generate more than $9 billion of annual revenue, and hold immense negotiating power over insurers and employers across Missouri. If it passes antitrust review, the deal could close by later this year.

This is an obligatory reminder that all of the academic literature has consistently found that hospital consolidation raises prices for everyone and doesn’t improve care quality.

And yet, hospital mergers have been rolling out at a feverish pace over the past year (although there has been some pushback from regulators). Large regional transactions have included Froedtert Health and ThedaCare in Wisconsin, University of Michigan Health and Sparrow Health in Michigan, and so many others. Recent cross-market deals creating behemoth hospital systems include Kaiser Permanente and Geisinger, UnityPoint Health and Presbyterian Healthcare Services, and Sanford Health and Fairview Health Services.

medicare advantage

Emblem-atic of a larger problem

CMS recently levied a $116,000 fine on EmblemHealth, the health insurer based in New York and led by former AHIP chief Karen Ignagni. The reason? EmblemHealth’s Medicare Advantage plans violated what are known as “plan-directed care” requirements.

That means if in-network doctors refer patients to out-of-network doctors for a service that is covered by the plan, patients shouldn’t have to pay more than their standard in-network copay or deductible. However, EmblemHealth didn’t follow these rules, and patients likely paid more than they should have, according to CMS.

And in an indictment of the health insurance industry’s IT infrastructure, this appeared to be completely preventable: “This failure occurred because EmblemHealth’s claims processing system was configured to automatically deny certain non-contract facility and radiology claims regardless of the referring provider,” CMS said in its penalty letter.

EmblemHealth did not respond to questions.

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Industry odds and ends

ICYMI: CVS Health’s CFO, Shawn Guertin, said the company’s PBM would pivot to other types of fees if Congress went after drug rebates and spread pricing. He also gave an estimate of how much of CVS’ pre-tax PBM profits came from rebates and spread.
Phoenix Children’s and UnitedHealthcare reached a new contract at the last second this past week. Spokespeople for both sides did not answer questions about specific details of the new deal, so we don’t know whether denials and contract language were altered, or what kind of price increases were baked in. Naturally, both sides are singing kumbaya just weeks after throwing barbs at each other.
Advocate Health, the hospital mega-system that merged Advocate Aurora and Atrium, filed its first combined quarterly report. It basically broke even on operations in the first three months of 2023, but made a mint on Wall Street.
Big Humira biosimilar news: Coherus BioSciences is working with Mark Cuban’s pharmacy to sell its Humira copycat for $579 for a two-pack, my colleague Ed Silverman reports. The big question is whether employers and insurers will gravitate toward that version (by far the lowest-cost version of Humira), or hold on for dear life to those Humira rebates.
Ezekiel Emanuel, the breast oncologist and health policy provocateur, appeared on STAT’s First Opinion Podcast with Torie Bosch to talk about why cancer patients shouldn’t have to pay a dime out of pocket for their treatments and drugs.
The Massachusetts Health Policy Commission is meeting on Wednesday. On the agenda: preliminary data of health spending in the state this year, and how the No Surprises Act is playing out.
The New York Times is back with its investigative series on nonprofit hospitals, this time profiling Allina Health System in Minnesota for denying care to patients who have unpaid bills.

The Meme Ward

Health Care Inc. Meme - Issue 46

Thanks for reading! More next week.

@bobjherman

bob.herman@statnews.com

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