Pharmacy Briefing: November 2020

Pharmacy Briefing is a monthly summary of select U.S. Food and Drug Administration (FDA) approvals and launches, treatment guidelines and research updates, and other newsworthy events that have the potential to impact commercial drug utilization or costs.

  • Kaiser Family Foundation releases 2020 Employer Health Benefits Survey
  • Price and cost-sharing rules are finalized requiring insurers to disclose negotiated prices and cost-sharing
  • Most-favored nation and point-of-sale rebate regulations finalized
  • Federal government partners with retail pharmacies to promote access to future COVID-19 vaccines
  • Veklury (remdesivir) is FDA approved to treat COVID-19 in patients requiring hospitalization
  • WHO study finds no reduction in mortality rates associated with COVID-19 patients treated with remdesivir
FDA Approvals and Launches
  • Veklury (remdesivir) is approved to treat COVID-19 in patients requiring hospitalization.
  • Ultomiris (ravulizumab-cwvz) 100 mg/mL is approved to treat certain blood disorders.
    • The formulation improves upon the 10mg/mL formulation by allowing for reduced infusion times.
  • Eysuvis (loteprednol etabonate) ophthalmic suspension is approved to treat dry eye disease.
  • Inmazeb (atoltivimab/maftivimab/odesivimab-ebgn) is approved to treat the Ebola virus.
  • Bronchitol (mannitol) inhalation powder is approved to treat symptoms of cystic fibrosis.
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Evolving landscape of preventive services

The introduction of the Patient Protection and Affordable Care Act (ACA) brought about many legislative changes intended to improve the health of people in the United States. One such change was the introduction of mandatory coverage with no cost sharing for services determined to be “preventive.” Some examples of the services included on the U.S. Preventive Services Task Force (USPSTF)’s A and B Recommendation list are blood pressure screening for adults, depression screening for adolescents and adults, intimate partner violence screening for women of reproductive age, and skin cancer behavioral counseling.

The USPSTF regularly updates its recommendations and the ACA preventive services list has been modified many times since the introduction of the ACA in 2014. In this paper, Milliman’s Barbara Collier and Michelle Klein examine the evolution of preventive services. They also discuss how these services have been impacted by the COVID-19 pandemic.

Five financial statements considerations for health actuaries to think about

Health actuaries have seen unprecedented challenges this year because of the ongoing COVID-19 pandemic. It has disrupted all facets of the U.S. healthcare system. How the pandemic affects an insurer’s financial statement will vary based on the distribution between lines of business, areas of service, and support channels.

As chief financial officers and actuaries attempt to determine the pandemic’s effect on year-end financial statements, the following five issues will require additional attention:

  1. Premium deficiency reserves
  2. Provider financial solvency
  3. Incurred but not reported (IBNR) claim estimates
  4. ACA risk adjustment
  5. Appropriate documentation

Milliman’s Catherine Murphy-Barron, Doug Norris, and Daniel Perlman take a closer look at these five issues in their article “Year-end health actuarial work: Five things to consider in light of COVID-19.”

How will the pandemic impact Medicare Advantage revenue and risk scores in 2021?

While there is a great deal of focus on resource availability and handling a potential influx of severe inpatient cases resulting from COVID-19 infections, the majority of the United States saw a dramatic reduction in healthcare services around March and April 2020 and measurable reductions continue with great variation across the nation. 

As with many prospective risk adjustment models, Medicare Advantage (MA) and Part D (PD) risk scores are based on medical claims, more specifically diagnoses from face-to-face visits from the year prior to the year in which the risk score drives revenue. For 2021 MA payments, 2020 diagnoses are the basis of the final risk scores. To the extent that beneficiaries delay or avoid care, there may be fewer face-to-face encounters with providers where diagnoses can be recorded and applied toward 2021 risk scores.  

While the Centers for Medicare and Medicaid Services has announced additional flexibilities in including telehealth-based diagnoses in risk score calculations, a significant reduction in overall services is likely to result in a material reduction in both MA and PD risk scores. In this article, Milliman’s Rob PipichKarin Cross, and Deana Bell discuss the results of an analysis they performed to support 2021 MA and PD bids. They present nine scenarios intended to illustrate a range of potential outcomes on 2021 MA and PD risk scores. 

Survey reveals pandemic’s effect on individual disability income insurance

Milliman conducted a survey of individual disability income (IDI) insurance companies pertaining to the potential impact of COVID-19 on IDI business. The purpose was to capture how COVID-19 has affected IDI carriers’ new sales and claims to date and what these companies expect will happen in the future.  

Although the ultimate impact of the pandemic on IDI insurance in the United States will not be known for a few years, it’s clear that it will be material, and in ways that go far beyond disability claims specific to COVID-19. 

To read the survey by Milliman’s Robert Beal and Dan Skwire, click here

How will COVID-19 affect medical loss ratios?

The medical loss ratio (MLR) measures a health plan’s spending on medical claims and allowable quality investments as a portion of total premium revenue net of taxes and allowable deductions. As a result of the COVID-19 pandemic, many healthcare services have been deferred and/or eliminated in 2020, leading to a reduction in 2020 claims relative to prior years. The claims reduction for the second quarter of 2020 was more pronounced due to lockdowns in most states.

Health plans have critical decisions to make in the upcoming months with limited data available and wide uncertainty on how the pandemic will transition toward the end of 2020 and into 2021.

In this paper, Milliman’s Andrew Bochner, Jennifer Carioto, and Luis Maldonado explore how COVID-19 can affect a health plan’s MLR requirements. They also provide specific considerations for the commercial, Medicare Advantage, and Medicaid markets in 2020 and beyond.