It's hard to get a handle on whether the HMO industry is headed for brighter days — or still in the doldrums. Weiss Ratings reports that 47 percent of HMOs lost money in the third quarter of last year.

Aggregate HMO profits were $69 million, down from $274 million during the first quarter; losses started to hit all but the largest HMOs (those with more than a half-million members). Previously, most serious losses had been restricted to plans with fewer than 100,000 members.

An early glance at some first-quarter 2000 results is a bit more promising. Foundation Health says operating profits rose 22 percent from the same period last year, Cigna reported 16-percent profit growth, and Kaiser Permanente posted first-quarter net income of $142 million — up 233 percent from the same quarter of 1999.

For some, the news remains bad. Humana reported a 36-percent decline in operating profits, a bigger-than-expected drop. One of the few remaining staff-model HMOs in the country, Wisconsin-based Family Health Plan Cooperative, disappeared when it was sold to United Wisconsin Services. Family lost $21 million over the last two years.

The plans seeing higher profits say their improved bottom lines are largely the result of premium hikes; most seem to be basing their pricing now on profitability, rather than market share. The poorer results for many smaller HMOs, coupled with a number of recent HMO failures, prompted Weiss Chairman Martin Weiss to comment that a broader shakeout may be in the making.

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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.