It’s Not Me, It’s You

The collars of healthcare trade association executives must be getting a little tight right now as costs continue to rise and outcomes continue to slip. Someone has to take blame whether deserved or not.

On Sept. 9, the American Medical Association (AMA) blamed pharmacy benefit managers (PBMs) and commercial health insurance companies in a 20-page report titled, “Competition in PBM Markets and Vertical Integration of Insurers With PBMs.”

The report said four PBMs control 70% of the national PBM market when it comes to three core PBM functions: rebate negotiation, retail network management and claims adjudication. The four PBMs in ranked order are CVS Health, OptumRx, Express Scripts and Prime Therapeutics.

The report also said health insurers that are vertically integrated with a PBM, meaning they’re under the same corporate umbrella, cover 72% of people with either commercial or Medicare Part D drug benefits. CVS Health owns Aetna. UnitedHealth Group owns OptumRx. Cigna owns Express Scripts. And 19 Blue Cross and Blue Shield plans own Prime Therapeutics.

“Low competition may have the potential to lead to higher PBM prices, higher insurance premiums, and PBMs not fully passing on rebates to consumers than if markets were competitive,” the AMA said.

Meanwhile, the American Hospital Association (AHA) blamed commercial health insurance companies in a two-page report titled, “Skyrocketing Hospital Administrative Costs, Burdensome Commercial Insurer Policies Are Impacting Patient Care,” released a day later on Sept. 10.

The AHA cited data that showed that administrative costs make up more than 40% of hospitals’ total costs of caring for patients. Specifically, the AHA cited insurer policies such as prior authorization (PA), step therapy requirements, fail-first benefits and claim denials as the sources of hospitals’ growing administrative burden and expense.

“Hospitals and health systems already face many pressures that make their ability to care for communities more challenging,” the AHA said. “We shouldn’t allow insurers or others to add to that with costly administrative practices that burden already overwhelmed healthcare professions and decrease patient access to care.”

The two-page report links to a 10-page AHA report released in May that also blames higher labor costs, higher supply costs and higher drug costs for the precarious financial position many hospitals and health systems currently find themselves in.

I’m going with the AMA and the AHA on these two new reports. Vertical integration in healthcare has never lowered costs or improved outcomes for anyone other than the integrators, particularly vertical integration between insurers and any other industry segment. PA is a huge waste of time and money as most PA requests are approved in the end.

Heads up for reports by PBMs and health insurers blaming doctors and hospitals for higher healthcare costs and worse healthcare outcomes. It’s just how it is.

To learn more about this topic, please read:

• “Health Insurance and Drug Company Execs Must Be Chuckling Over Antitrust Enforcement of Providers”
• “No, It’s Your Turn to Throw Me Under the Healthcare Bus”
• “Playing the Information Blocking Blame Game”