BUSINESS 

CVS to Close 900 Stores, Beef Up HealthHubs

CVS announced it would close around 900 stores over the next three years to adapt to its growing number of customers purchasing goods online. The company will focus more on its digital services and HealthHubs — I just hope they digitize their pages-long receipts. 

The DeetsThe pandemic shook up the consumer market: consumers now prefer online shopping vs in-person shopping. “Online shopping” includes prescriptions, personal care items and telehealth. CVS recognizes its consumers’ changing needs and behaviors and will back down on its retail-end and beef up its digital solutions and HealthHubs. One analyst wrote: 

CVS plans to operate three core stores: MinuteClinics, HealthHubs and traditional retail. The company already operates over 1,000 MinuteClinics and plans to have over 1,000 HealthHub locations by the end of the year. These HealthHubs, which offer primary care, ancillary staff and a suite of services, are key to CVS becoming the strongest healthcare company in the U.S. 

My Two CentsCVS’s new focus will allow the company to refine its position in nearly every aspect of the healthcare value chain, from insurance to pharmacy and primary care to consumer goods. Soon you won’t be able to think “healthcare” without thinking “CVS.” 

INSURANCE 

Medicare Part B Premiums See Record-breaking Spike

Monthly premiums for Medicare Part B will increase by $21.60 in 2022, the largest dollar increase in the health insurance program’s history. This will be a 15% increase, bringing premiums from $148.50 to $170.10. 

Why the Hike in Price?The Centers for Medicare and Medicaid Services (CMS) provides some explanations for the jump in Medicare Part B premiums: 

• $$$$: Healthcare costs for Medicare enrollees have increased due to higher prices and utilization of services during the pandemic.

• Give us the money back: Congress provided enough funding to Medicare Part B in 2021 to limit the increase in monthly premiums to around $3 per month (a nice thing to do during a global pandemic). However, Congress wants CMS to start paying that money back in 2022, so the organization needs the money to do so. 

• The Drama Drug: CMS is proactively setting aside money to pay for Biogen’s new and highly (I do mean highly) controversial Alzheimer’s drug, Aduhelm, set at $56,000 per year. 

Next StepsWe’ll find out in January if CMS chooses to cover Aduhelm. Until then, expect the 15% increase in Medicare Part B premiums. 

PUBLIC HEALTH 

Q3 Was a Little Rough for Insuretech

Leading insuretech companies Bright, Clover and Oscar reported Q3 medical loss ratios (MLR) of around 100%, despite reporting strong year-over-year revenue growth. The MLR is the proportion of revenue insurance companies spend on clinical services instead of admin costs and profits. So, a high MLR may be a sign that companies aren’t managing their revenues well. 

Let’s Talk Numbers

• Oscar’s MLR was 99.7%, up from 90.5% at this time last year. Their YOY revenue growth was 336%. 

• Bright’s MLR topped 103%, up from 90% at this time last year. Their YOY revenue growth was 206%. 

• Clover’s MLR reached 102.5%, up from 86.7% at this time last year. However, the company’s MLR has been down-trending during 2021. Their YOY revenue growth was 153%. 

Why Such High MLRs?The spike in delta variant cases and their associated high costs are partly to blame for the high MLR. Additionally, these insurers have had difficulty accurately assessing the risk of new members who joined during the extended special enrollment period, which lasted from February through August. New members who joined were more likely to use more health services, thus driving up payers’ expenses on care. 

MLRs will likely come down as Covid-19 cases settle and insurers more accurately adjust risk for new members going into 2022.  

OUTSIDE THE HUDDLE

• Political partisanship predicts Covid-19 vaccination status better than just about anything else, including race, education level and insurance coverage.

• The FDA approved the first drug for achondroplasia, a genetic cause of dwarfism. With only about 3,000 potential patients in the U.S., the price tag for Voxzogo will be north of $300,000.

• AppliedVR is changing the game with its virtual reality tool to treat lower back pain. The company recently received FDA authorization and $36 million in funding. 

• The Mayo Clinic embraced “remote” and had significant success with its remote patient monitoring program. Expect this trend to last. 

• Here’s one you probably haven’t heard before: there has been a confirmed case of monkeypox in the US. It’s the second time this year, here’s what you should know.

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