Fierce Healthcare hosted its second annual in-person Payer Summit conference in Austin, Texas, on Nov. 13-14. Payer industry executives gathered with Fierce Healthcare journalists to discuss the most pressing issues for U.S. payers like prior authorization, value-based care and pharmacy benefits.
The first day panels included discussions of individual exchange plans and broker fraud, the changing landscape of Medicare Advantage (MA) given this year's high-profile exits and the staggering changes to Medicare Part D in 2025. Payer experts also discussed the shared burden of prior authorization and how to make healthcare insurance more equitable.
Prior authorization
On a panel about prior authorization, providers-turned-entrepreneurs discussed the necessary oversight and payer overreach on prior authorization, including the use of AI, with Fierce Healthcare Senior Writer Anastassia Gliadkovskaya.
Jeremy Friese, M.D., founder and CEO of Humata Health, argued that AI should only be used in prior authorization to say "yes" to patients and that denying care should be left to humans.
“We as a healthcare system need to balance the need between managing costs and making sure patients get the right care … I would actually argue that the part that is overreaching is when you're requiring all this human intervention, rather than the fact that [prior authorization] exists,” he said.
Michael Anne Kyle, Ph.D., assistant professor at the Perelman School of Medicine at the University of Pennsylvania, explained the burden that patients are under when prior authorization is required.
“I found that about 1 in 4 people are delaying or foregoing care because of the administrative burden of prior auth,” Kyle said. “This is higher for people with … higher health needs, like cancer, and so particularly people who are already on the sicker side, who already don't feel well.”
Kyle highlighted the patient burden of prior authorization, but the burden also extends to doctors and payers.
“The docs are spending their next week dealing with this,” Kyle said. “People are probably working around the clock in payer offices, too, and meanwhile the patient is also sitting at home doing it. So there's multiple parties here who are really exhausted.”
The panel discussed the potential for prior authorization to be less burdensome with technology, particularly large language models, that can extract the necessary information from a provider’s notes or patient record to reduce the administrative burden.
“There's still all this human intervention on both sides that, frankly. I personally believe that 90% of all of it should be done by a computer to submit it and a computer to make a decision, period," Friese said. "And that's already possible today, but there's always going to be this gray zone. And that gray zone, you need a computer to help take that 30-minute review down to two minutes."
The evolution of value-based care
Meera Atkins, M.D., vice president of medical management at Blue Cross and Blue Shield of Minnesota, stressed the importance of fully transitioning to value-based care.
"We are certainly far more data-driven now than we have been in the past. I think that there is ... more and more buy in," she said. “We can't dabble in this. I think we need to rip the Band-Aid off."
Former Department of Health and Human Services (HHS) Secretary Alex Azar called for the stability of the government's stance on value-based care. “The government has got to be a reliable business partner," Azar said. "It has got to be a public-private partnership. And the government has got to be stable, predictable, transparent with its data, because, again, we are running P&L businesses. We just can't operate with quicksand.”
Azar said during a keynote interview that he is “bullish” on MA while also voicing concerns about where the outgoing Biden administration has left the program.
Azar pointed to the successes of value-based care models that were implemented under his tenure in conjunction with the Centers for Medicare and Medicaid Innovation like the ACO Reach model and the kidney care model. He contends that under his tenure, HHS improved value-based care.
“We changed the paradigm of how you think about value-based care, because I think this notion of paying for an outcome and rewarding an outcome, the transaction costs around that are so high it was just more micromanagement from Security Boulevard, and instead we said total cost of care,” Azar said. “Let's instead think about delegated payments and unleashing providers and their patients to do what's right within a budget, and that became the current and future direction of value right now."
Azar said the new Trump administration will likely be more favorable to value-based care, though it’s not a surefire initiative. He said the future of value-based care will depend on the personnel that president-elect Donald Trump hires in the Office of Management and Budget, the West Wing and to lead HHS and the Centers for Medicare & Medicaid Services.
“Anyone on the Republican side has worked for me over the last 20, 25 years. So we all did work together,” Azar said. “So we’ve all been trained, indoctrinated, are believers in that particular transformation. I think MA will find a more positive ear, [but] not unquestioning.”
Azar railed against the January 2024 Medicare Payment Advisory Commission (MedPAC) report (PDF) on the status of MA that said MA costs more than Medicare fee for service (FFS). He said the Medicare payment advisory commission wrongly concluded that MA costs more than Medicare FFS, because it assumed that MA patients are healthier than Medicare FFS patients.
The report contributed to the “perfect storm” for MA that has led to hospitals and providers moving away from MA, Azar said. He argued that detrimental cuts to the program under the Biden administration and the post-pandemic healthcare utilization spike have made MA unprofitable for provider organizations.
“I talked to a hospital system CEO the other day. They're getting rid of all delegation next year on MA, because they're saying, ‘Hey, we know fee-for-service. We know how to turn the crank’ … I think you're going to see a lot of these major physician groups that were taking on [risk] ... convert out of taking delegation.”
Conversely, Azar talked about the Inflation Reduction Act (IRA) and the cuts it made to prescription drug programs for Medicare. Because FFS needs a standalone prescription drug plan, which the reform has made “unsustainable,” Azar predicted that more payers will shift to MA. "That will accelerate the growth of MA membership," Azar said.
The outlook for pharmacy benefits
Nick Stefanizzi, CEO of Northwell Direct, led a session on the unprecedented costs employers are facing to provide insurance coverage for their employees.
Quoting keynote speaker Glen Tullman, CEO of Transcarent, Stefanizzi said: “Employees care a lot about the experience that you provide them, benefits are a core component of that employee experience, and if you're providing a plan that creates an unnecessary and undue amount of friction, they just may start to question your commitment to them, the experience that you provide and look for something to apply something better."
He explained why his company has invested in GLP-1s for its workforce.
“Our view is you can deny the impact of [GLP-1s], the efficacy and the impact that they're having. And we think it's a worthy investment in our own work. We have to have a workforce that is generally long tenure … But our view is, if the organization is going to make the investment, the individual also has to invest and make the commitment on behavioral lifestyle modification to make these things sustainable,” he said.
Fierce Healthcare Senior Writer Paige Minemyer hosted a panel Thursday with pharmacy benefit management experts from CVS Caremark, the nation's largest PBM lobbying group, and a venture capital investor with a background in the PBM market. The panel discussed the complexity of the pharmaceutical supply chain, disrupters in the industry like Mark Cuban Cost Plus Drugs and the impact of biosimilars and GLP-1s.
They also discussed the demands for PBM reform and drug pricing transparency from legislators and consumers.
JC Scott, president and CEO of the PBM lobbying group the Pharmaceutical Care Management Association, urged attendees to watch how the newly elected Republican Congress will approach the IRA regulatory control for the Federal Trade Commission and how it addresses PBMs.
There is also no shortage of legislation at both the state and federal levels that seeks to reform PBMs.
Also top of mind for PBMs, and healthcare payers more broadly, is how to handle costly GLP-1s, which have increased from about 5% of spending to between 20% and 30%. Ed DeVaney, president of employer and health plans at CVS Caremark, said the industry should watch the biosimilars market. “Biosimilars today are a $10 billion market. In a short amount of time, it will be $100 billion,” he said.
DeVaney talked about the changes CVS Caremark is making to lower prices for customers. It is doing so by aligning its pharmacy benefit management business with the acquisition price of the drug.
“Over the next six months, we're going to convert 100% of our pharmacy benefit management business to align to acquisition … all the PBMs will contract under that, which is going to really kind of smooth out the pricing that members see,” DeVaney said.
He also stressed the cross subsidization of the drug supply chain.
“We are the single largest purchaser of drugs in the United States, possibly even global. When you look at our acquisition price and what we're selling it to customers, after you get rid of this cross subsidization, which is again losing money on every brand, making up more than your fair share on generics, Mark Cuban Cost Plus Drugs is 40% more expensive," he said.