ACA Holds Strong

Early and incomplete reports of the number of people who signed up for health insurance on the federal insurance exchange indicate that already almost as many people as last year enrolled, but in about half the sign-up time, according to Kaiser Health News. The analysis was based on Centers for Medicare & Medicaid Service Weekly Enrollment Snapshot: Week 7. Complete numbers, which will then include the millions of people who have signed up in California, New York and Washington, D.C., should be available soon.

Feds Cut Payments to 80+ California Hospitals
The federal government has cut payments to 751 hospitals nationwide with high rates of patient injuries this year. The hospitals will lose 1 percent of Medicare payments over the federal fiscal year, which runs from October through September. More than 80 hospitals from California are included in the hospitals that have had payments cut.

MyTelemedicine Listed Among Entrepreneur Magazine’s “Best Entrepreneurial Companies in America” for Second Year
For the second year in a row, MyTelemedicine has earned a place on Entrepreneur Magazine’s Entrepreneur 360 List as one of the “Best Entrepreneurial Companies in America.”

Based on a comprehensive analysis of U.S.-based private ventures, the Entrepreneur 360 List features organizations that demonstrate mastery of four metrics: innovation, growth, leadership, and impact. MyTelemedicine, a national telemedicine software and service provider, was recognized for leveraging its proprietary technology platform to meet a critical need in the marketplace and become a leader in the telehealth industry. For more information please visit

Commonwealth’s Top 10 For Informed Producers
The Commonwealth Fund also posted its top 10 most read reports for 2017. The list is full of reports pertinent to agents and brokers, including fair, fact-based info about the ACA, Medicaid, health care spending and more. Stay informed and read the reports!

Indiana Lawsuit Filed Against Short-Term Insurer HCC
Lawyers Rachel Geman and Elizabeth Cabraser from Lieff Cabraser Heimann & Bernstein have filed a multi-state class action lawsuit in Indiana federal court alleging that HCC Medical Insurance Services, HCC Life Insurance Company and Health Insurance Innovations, Inc. have cheated consumers of short-term insurance plans. The insurers are accused of routinely and systematically refusing to pay promised insurance benefits through a practice known as “post- claims underwriting.”  Short-term insurance, which is exempt from many ACA consumer protections, provides limited coverage that’s targeted to customers experiencing a health insurance coverage gap. The lawsuit alleges that HCC procedures are “purposely engineered and uniformly applied” to accomplish the delay and denial of valid claims, rendering their short-term insurance products effectively worthless and violating federal and state law in the process. Many states, including California, have laws to specifically deter this post-claims underwriting.


Must Read: EBN’s 2017 Top Blogs (especially Robert Lawton)
It looks like someone at Employee Benefit News has excellent taste. EBN recently posted its list of the Top 10 industry blogs for last year. A blog written by Robert Lawton, who contributes frequently to Cal Broker, came in at #7. Congrats Bob! And we agree: everyone should absolutely read your words.


More X 5 on CVS-Aetna
We can never get too much speculation when it comes to what a potential CVS-Aetna merger might mean. These five financial industry pros, all represented by New York-based Meir Kahtan Public Relations, recently emailed us their two cents about the deal…

1. Todd Huseby, Lead partner in the Pharmacy sector practice of A.T. Kearney, a global strategy and management consulting firm:

  • This merger is consistent with the major consolidation trend-lines.
  • For CVS Stores, their strategy is to get from more traffic in their stores.  I expect they’ll sell Aetna plans that make it easy and affordable to use CVS Pharmacy, and more expensive and difficult to use for anyone else.
  • For Caremark (PBM), they will gain better insights into the patient/member, beyond just the current drug utilization.  This also positions the company to participate more effectively in the fast-growing specialty drug sector — those drugs are often paid for by medical benefit instead of pharmacy benefit.
  • For Aetna, this is a grand experiment to make a step-change improvement in members’ outcomes at same or lower cost.  If one’s mental model is Kaiser Permanente, Geisinger Health or Indian Health Service, then you can more quickly see that the for-profit world of healthcare is lining up their assets and sharing information end-to-end in order to mimic such models.
  • In terms of what’s next, expect continued deals.
    • CVS has been active and should continue to be.  It would not be surprising to see them partner with (or acquire) a large metro-area health systems.  Access to primary care is the main driver of managing healthcare costs.  Their primary care capabilities could be expanded through health system partnerships along with more permissive pharmacist and nurse practitioner scopes of practice.
    • The other chain pharmacies could continue to expand vertical integration.  I would expect:
    • One or more of them will partner with Amazon
    • One of them will acquire ExpressScripts
    • More deals will occur to acquire Specialty Pharmacies
    • More capabilities will be added and/or deals will occur to make pharmacy more eCommerce and home-delivery oriented
    • Consolidation in the generic drug manufacturing market will occur.

2. John Sarich, insurance industry veteran, VP of Strategy at VUE Software, a firm that specializes in innovating and automating insurance business processes.
It is an interesting deal that could have far reaching implications for the delivery of healthcare. What CVS bought is primarily a pharmaceutical benefits company that has thousands of locations with a lot of square footage that could potentially be built out to deliver patient care. This is the “Doc in a Box” concept tied to pharma benefits. In essence, it is taking out the middleman and going direct from the manufacturer right to the patient.

Walgreens is also looking at what CVS has done with Pharmacy Benefits and on-site delivery of healthcare, even as it beefs up its cosmetics department in each store. Sure the cosmetics aisle is highly profitable, but they need to understand the disruption that CVS has created, as well as what United Health did with their starting Optum Health.

3. Duane Harrington, senior managing partner in the healthcare practice at AArete, a global consultancy specializing in data-informed performance improvement.  

  • We are likely to see more payers looking for deals like this because there is a general market reaction that will cause some insurers to look for opportunities to counter any perceived market changes.  Just as the market reacted to the news of possible mega-mergers a year ago, some will react as a defensive move. Operationally, one of the potential benefits for insurers and consumers is that there will be more touch points and opportunities for patient care.  This can result in greater information for the insurer, better access for the patients, and can also lead to better brand recognition/loyalty for those consumers when they have a choice.
  • CVS and Aetna may be able to use this deal to lower some healthcare costs. Pharmacy costs can range from 15 percent to as much as 20 percent of an insurer’s cost structure.  By vertically integrating, there is an inherent expectation that efficiencies will be gained to better control these costs, either through greater leverage, patient adherence, or other means.  In addition, given the fact that CVS has MinuteClinics, there may be an opportunity to increase patient access to care
  • Efforts to coordinate care are increasing across various parties in the care continuum.  Whether incenting physicians or broader hospital systems, there are a greater number of agreements that emphasize improved overall outcomes and quality for patients when determining reimbursement amounts from insurers to providers.  Beyond contracting relationships, formal partnerships and/or separate entities have been formed via Accountable Care Organizations (ACO’s).  The CVS/Aetna deal is another example of these organizations working to find ways to better integrate care.  When optimized, the expectation is that it will lead to better health outcomes, healthier individuals, and therefore lower overall healthcare costs.

4. Deborah Weinswig, Managing Director of Fung Global Retail & Technology, a retail think tank. 

  • On December 3, CVS Health announced its long-anticipated plan to acquire Aetna for $69 billion in cash and stock. The transaction, expected to close in the second half of 2018, requires shareholder and regulatory approvals and must meet customary closing conditions.
  • The companies expect the new entity to benefit consumers through a uniquely integrated, community-based healthcare experience; the use of more integrated data and analytics; and better opportunities to fight chronic disease.
  • Shareholders are expected to benefit through enhanced competitive positioning of the business, higher earnings per share and a platform from which the combined entity can accelerate growth. Over the longer term, the combined company could deliver significant incremental value from the development of new products and growth opportunities.
  • The merger likely represents the first wave of pharmacies and insurance companies combining in order to better withstand the entry of Amazon into the pharmacy business, which is expected in the near term. The merger of CVS and Aetna is likely anticipatory positioning in the face of a looming competitive threat from Amazon, which is expected to enter the prescription drug market after reportedly acquiring pharmacy licenses in at least 12 states. In our view, this merger announcement is likely the first of many to come between pharmacy companies and insurance companies.

5. Maulik Bhagat, Managing Director in the healthcare practice of AArete, a global consultancy specializing in data-informed performance improvement.  

  • This deal is less about payers looking for deals, and more about all players in the healthcare value chain that are looking at opportunities for horizontal or vertical integration.  Depending on who the entity is, the reasons could be different, but largely range from a typical defensive strategy, to decrease the odds of being acquired themselves, to increasing competitive entry barriers for potentially disruptive players such as Amazon, to establishing more control over delivery of care and outcomes for captive membership, etc.  Some of this is also being driven by technology and regulatory direction, especially on the provider side.
  • Logic dictates that the CVS Aetna deal will facilitate lower healthcare costs at least for Aetna members.  As one entity, the margins that Aetna is currently paying CVS as its PBM will reduce or get eliminated for the most part, which should technically lower pharmacy costs for their members.  Also, the ability to have a complete member health view – on the medical and pharmacy side, can be used to drive better quality of care and health outcomes, reducing total cost of care in the process.  CVS’s retail footprint gives Aetna members those many convenient points of access to care.  There are certainly risks however, and a merger of this size not done right operationally could have a negative impact. For example, a key to deriving synergies from such a merger is effective data integration and possibilities from resultant advanced data analytics — but this is easier said than done.
  • I believe there are competitive imperatives and potential disruptive threats driving this merger. However, it is certainly aligned to the overall move towards a more holistic view of healthcare.  The ability to view a member’s wellness and care needs across medical and pharmacy areas, and also provide distributed and convenient access to the member to essential elements of care, particularly preventative, diagnostic and E&M, can be extremely empowering and effective if done right.  At the core of making this possible however is the constantly expanding realm of possibilities from advanced data analytics, without which the benefits from such a merger would only be a pipe dream.

We’d love to hear what you think, too. Email us at


BenefitMall Names Kirksey CEO 

BenefitMall, a provider of employee benefits, payroll, and HR services to small- and medium-sized businesses across the U.S., today announced that Scott Kirksey, formerly president of the company, has assumed the role of chief executive officer, effective January 1, 2018. Outgoing CEO Bernard DiFiore will continue as Chairman of BenefitMall’s Board of Directors and will serve as a key advisor.


Golden Gate Chapter of Society of Financial Service Professionals Meeting
January 4 – 9:00am-5:00pm, Round Hill Country Club, Alamo, CA
The DOL, SEC, FINRA, DOI, NAIC – they’re all ramping up regulations that can amount to significant headwinds, if not tsunamis, for financial advisors in 2018 and beyond. You can get off to a fast start and make 2018 a compliant—and productive—year. Get insight, guidance, and an action plan to thrive in the new regulatory environment from nationally recognized experts supporting all areas of financial services. Lunch is included and a no-host cocktail networking reception immediately following program. Register now.

NAFA Webcast
Jan. 11, 8:30 am
Registration now open for the webcast “NAFA in Action: Year in Review and A Look Ahead to 2018.”

LAAHU Health Insurance Awareness Day – Game Show Style,
January 25- 8am-noon,  Sportsmen’s Lodge ,12825 Ventura Blvd, Studio City, CA,
8 – 8:45 a.m. : Registration and Breakfast with Vendors
8:45 – 9 a.m.: Chapter Business
9 a.m. – Noon: Game Show-Style Program
LAAHU presents a half day, game show-themed, networking and knowledge-gathering session. Featuring these speakers:
Technology Awareness:  Ubiquity – the original flat-fee 401k provider in the nation.
Legislative Awareness: CAHU Lobbyist Faith Lane – The latest news from Sacramento on bills that matter to you.
Market Awareness: Employer/Broker Mini Panel – What do employers really want from health insurance brokers?

Member cost is $25.00, Non-Member $75.00. Register, exhibit or sponsor!

LAAHU Annual Conference
April 11& 12, LA Convention Center
Registration, exhibit and sponsorship info now available!

IICF Casino Night
May 17, The Rotunda, San Francisco
Join the Insurance Industry Charitable Foundation for a fun night of gambling and insurance industry networking while also raising money for community grants. Registration and sponsorship info available at IICF’s website.