Michael D. Dalzell

Humana and United HealthCare will never make it to the altar. The two companies terminated their merger agreement after a stock swoon dropped the value of the union from $5.3 billion to $3.1 billion.Wall Street got nervous when United announced a $565 million second-quarter loss stemming from a one-time $900 million charge associated with "strategic realignment activities." Those moves include withdrawing from several commercial markets, as well as rural Medicare markets with high medical loss ratios. United will make other cost-cutting moves, including layoffs.

Though Humana posted a $52 million second-quarter profit, the news about United nonetheless triggered a huge selloff of both HMOs' stocks. United shares lost 30 percent of their value the day of its announcement, while Humana's stock plunged 29 percent.

Meanwhile, Oxford Health Plans posted second-quarter red ink, to the tune of $508 million. The HMO chalked up more than half of the loss to one-time internal restructuring expenses. Word came days after Oxford's ominous announcement that it would soon cut physician and hospital fees and raise premiums.

The day it released second-quarter financials, Oxford stock closed at $7.25 a share, less than a third of its $25.88 close on Oct. 27 — the day Oxford stock lost 62 percent of its value.

Texas Health Resources, the parent company of Harris Methodist Health Plan, has agreed to unload its money-losing HMO to Blue Cross and Blue Shield of Texas. The Blues will buy a majority stake in Harris Methodist, though the purchase price has yet to be determined.

Disposing of Harris Methodist, the largest HMO in northern Texas with about 325,000 members, is a big step in Texas Health's own makeover. The company, which owns 13 hospitals and the HMO, plans to enter into a "joint operating agreement" with Baylor Health Care system. The affiliation — not quite a merger — was contingent upon Texas Health's ability to sell Harris Methodist.

The amount of money spent on direct-to-consumer advertising in April (the latest month for which statistics are available) was up 38 percent from the same period last year.

Perhaps more significant, the ads are persuading people who otherwise might not do so to see their doctors. According to an audit by Scott-Levin, the consulting company, six of the top ten medical conditions that accounted for increased office visits last year were mentioned in direct-to-consumer advertisements.

Physicians may or may not like the increased foot traffic that direct-to-consumer ads generate, but the public apparently appreciates the information. Consumers told Scott-Levin that their doctors often do not take the time to educate them about medications and prescription options.

Financial analysts warn against judging FPA Medical Management's slide into bankruptcy as the general direction of the physician practice management industry. Said one, wide variations in business strategy make generalizations unrealistic. The consensus about FPA is that it grew too fast. FPA has fallen hard; its stock price, which was around $40 a share last fall, hovered below 20 cents in August.... Jay Gellert has succeeded the retiring Malik Hasan, M.D., as CEO of Foundation Health Systems. Hasan will remain chairman of the board until early next year.

Michael D. Dalzell

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.