This is Jacob Emerson with the Becker's payer issues podcast. Here's your biweekly industry news briefing for August 7th. CVS Health CEO Karen Lynch is taking over leadership of Aetna after a difficult year for the health insurer. The company reported its Q2 earnings, August 7th. Revenue in CVS's health care benefits segment dropped 40% from the Q2 of last year. Brian Kane, now the former president of Aetna, is no longer with the company.
Miss Lynch said that they are disappointed by the current performance at Aetna and outlook for the health care benefit segment, and she has decided to make leadership changes effective immediately. Mister Cain was appointed EVP and CEO of Aetna last year after serving as CFO of Humana. CVS has faced challenges in its health benefits business recently, especially in the Medicare Advantage segment. The company expects to lose up to 10% of its MA members next year as it
cuts benefits to recover margins. The company lowered its earnings got its earnings guidance for 2024 based on the performance of its health care benefits segment. Miss Lynch said that she and CVS's CFO, Tom Caughey, will assume day to day leadership of Aetna until a new president is named. CVS is also planning to cut $2,000,000,000 in expenses in the coming years, a plan that includes further streamlining the company's portfolio and using AI tools and automation.
While Centene will exit a handful of Medicare Advantage Markets next year, will continue to offer prescription drug plans in those states. But we'll continue to offer prescription drug plans in those states. Novant Health is looking to acquire a 200 provider urgent care group from Blue Cross Blue Shield of South Carolina.
Novant entered into a definitive agreement with BCBS on July 19th to purchase UCI Medical Affiliates, which includes its affiliates, Doctors Care and Progressive Physical Therapy. Doctors Care is an urgent care network established in Columbia, South Carolina in 1981. It employs 1100 people with nearly 200 providers focused on urgent care, family care, occupational medicine, and employee wellness. That transaction is expected to close in the Q4. Terms were not disclosed.
Well, Blue Cross Blue Shield of Louisiana is rebranding as Louisiana Blue. The BCBS affiliate will keep Blue Cross Blue Shield as its formal name, but will use Louisiana Blue in marketing, promotions, and public facing materials. The change is one of a few pits the insurer has made after its proposed sale to Elevance Health fell through. In May, the company appointed Brian Camrelink as its next CEO.
In February, BCBS scrapped the proposed sale to Elavance after the deal faced a lot of scrutiny from physicians and state officials. UnitedHealth Care will launch its national gold carding program on October 1st. That program will reward contracted provider groups that consistently adhere to evidence based care guidelines. That's according to an August 1st policy update from United.
The program will apply to all of United's commercial, individual, Medicare Advantage, and community, which is Medicaid, plans. The payer said the details on how to determine whether a provider group is qualified for the program will be published September 1st. UnitedHealth Group is suing the state of Minnesota over a new law that bans for profit Medicaid managed care providers from participating in the state's Medicaid program.
United alleged that Minnesota lawmakers violated the state's constitution by passing a quote jumbo omnibus at the end of its legislative session. The ban on health maintenance organizations that turn a profit was included in a bill that included provisions on vaccines, traffic cameras, college admission requirements, and several other changes outside of the health care industry.
United wrote or its attorneys wrote that none of the legislators had time to read it, much less any members of the public or press, nor were legislators given time for debate. The jumbo jumbo omnibus was on the floor of each chamber for barely 10 minutes, and it was passed on a party line vote minutes before midnight. Minnesota had banned for profit companies from participating in its Medicaid program until 2017 when it then reversed course.
United was awarded a contract to manage care for Minnesota enrollees in 2022. And then in June, the Minnesota Department of Human Services informed United that its contract would be terminated at the end of 2024 due to the new law. Well, encircleRx, a program from Cigna helping employers control the cost of GLP-one drugs for weight loss, has reached 2,000,000 enrollees in its 1st 6 months since launch.
Cigna launched that program back in March when it called the when it called it the first ever GLP one management program with a financial guarantee for health plans. GLP one medications approved for weight loss include Wegovy, Saxenda, and Zepbound. Those drugs, of course, can cost 1,000 of dollars a month. On an August first call with investors, Cigna CEO David Cordani said that GLP ones are expected to be the number one driver of pharmacy benefit trends for plans
of all sizes this year. Eric Palmer, president and CEO of Evernorth, told investors that the program is growing nicely, reaching 2,000,000 enrollees so far. Around 50% of plan sponsors are choosing to cover the cost of GLP 1 drugs for weight loss for their beneficiaries, he said. Some estimates predict that as many as 1 in 10 people in the US will be prescribed a GLP one drug over the next decade.
Cigna also isn't sweating the gross the growth of the individual coverage health reimbursement arrangement markets or ICRA. On an on that August 1st call, Brian Ivankoe, CEO of Cigna's insurance segment, said that the market is niche, though the company is monitoring closely any new developments. ICRA's allow employers to offer employees contributions to purchase an individual health plan on the ACA exchange rather than offering a group policy.
Mister Ivanka told investors that the product is likely to be attractive to employers with under 50 employees, a market that is financially immaterial for Cigna. He said, all that said, our Some insurers including Oscar Health and Centene have said that they are betting on the ICRA market. And finally, the 2 midnight rule is driving
up inpatient costs for Humana. On a July 31 call with investors, Humana CEO Jim Rechten said inpatient admissions in Medicare Advantage were higher than expected in the back half of the second quarter of 2024. Humana's medical loss ratio was 89% in the second quarter. That's up from 86.3% in the same period last year. Susan Diamond, Humana's CFO, said the 2 midnight rule was likely the largest factor driving higher inpatient costs.
At the beginning of 2024, new CMS regulations took effect requiring MA plans to provide coverage for an inpatient admission rather than observation when the admitting physician expects the patient to require hospital care for at least 2 midnights, though insurers do have discretion over this final decision. The increased inpatient admissions Humana has observed tend
to be lower acuity and lower cost. The increased inpatient stays correlated to a decrease in observation stays, meaning the 2 midnight rule is likely to blame for rising utilization rates. Miss Diamond said that we would say this is also consistent with what we've seen reported from the hospital systems with their results in terms of volume and revenue per patient. So we do believe it's all consistent.
In April, HCA Healthcare CFO, Bill Rutherford, said the 2 midnight rule was providing a moderate benefit to the system's revenues. Mr. Recton at Humana said the company is enhancing claim audits and negotiating with providers to mitigate the impact of the rule. He said despite the increase in inpatient admissions, the company's overall medical benefits ratio was lower than expected for the quarter. The company also raised its MA member growth expectations for the year offsetting
the higher inpatient costs. Humana expects to add 225 1,000 members in 2024, though the company said it also expects to lose a few 100,000 members through market and plan exits starting next year. If you'd like the latest health insurance industry news delivered straight to your inbox every morning, subscribe to the Becker's Payer Issues e newsletter on our website at beckerspayor.com.