This is Jacob Emerson with the Becker's Payer Issues podcast. Here's your biweekly industry news briefing for September 23rd. Maryland is dropping Kaiser Permanente as a Medicaid managed care organization in 2025.
The state's deputy director of health care finance told local media on September 20th that after lengthy contract discussions, the state has elected not to enter into a contract with Kaiser, and the state is working to ensure a seamless transition of those enrollees to other health plans. Maryland did recently temporarily suspend new enrollments into Kaiser's Medicaid plan, citing a failure to meet contractual obligations related to financial operation reporting requirements.
It is not clear if the Medicaid contract negotiations were related to the recent enrollment sanctions. Maryland is also implementing new health equity standards for managed care organizations in 2025. Kaiser has held a Medicaid contract in Maryland for more than 10 years, and it maintains the highest rated Medicaid plan in the state per the NCQA.
Kaiser told Becker's in a statement that if the company is not able to participate in Maryland Medicaid, it would interrupt the highest rated care and coverage for more than 113,000 Medicaid members in Maryland in 2025, and that Kaiser will continue to work with the state so that they can continue to serve that community
for decades to come. The state will renew its existing managed care contracts with Aetna, CareFirst Blue Cross Blue Shield, UnitedHealthcare, Elevance Health's WellPoint, Jai Medical Systems, Maryland Physicians Care, MedStar Family Choice, and Priority Partners. JI Medical and MedStar Family Choice are independent private companies. Maryland Physicians Care is co owned by Ascension, Holy Cross Health, Emeritus Health, and UPMC.
And Priority Partners is owned by Johns Hopkins Health Plans and the state of Maryland. Well, after weeks of internal disagreements at the Federal Trade Commission about pharmacy benefit managers, the agency said September 20th that it is suing CVS Caremark, OptumRx, and Express Scripts over allegedly inflating insulin prices. In an administrative complaint, the FTC accused the 3 PBMs of abusing their economic power by rigging pharmaceutical supply chain competition in their favor.
The lawsuit alleges those PBMs excluded low cost insulins to achieve higher rebates, thus artificially inflating insulin list prices and hurting patients. The FTC also said the legal action will include the company's group purchasing organizations. In recent years, the FTC has stepped away from its decades long support of PBMs, which handle drug pricing negotiations between manufacturers, payers, and pharmacies.
The legal action comes amid the FTC's years long investigation into the top 6 PBMs over allegations of opaque business practices. In July, the FTC published an interim report on the probe, which said PBMs engage in favoritism for their own pharmacies and have a vast control over drug prices. It's important to note that 2 FTC commissioners did openly criticize the report. The FTC commission's vote to file an administrative complaint was 3 to 2 with 2 commissioners recusing themselves.
Cigna, which owns Express Scripts, has filed its own lawsuit against the FTC on September 17th over the interim support interim report. The company called that report unfair, biased, erroneous, and defamatory. CVS told Becker's that its PBM has negotiated lower insulin prices and increased competition after 3 leading brand insulin manufacturers raised their list prices by as much as 500% before 2012.
Then the Pharmaceutical Care Management Association, which is the trade group represent representing PBMs, spoke out against that lawsuit. The National Community Pharmacists Association, which represents pharmacies, applauded the FTC's actions. Well, OptumCare, which is located in Basking Ridge, New Jersey, is planning to lay off a 160 employees in the state according to regulatory documents filed with the states. Those layoffs are expected to occur between December 11th January 22nd next year.
Optimus faced several rounds of layoffs and clinic closures this year across various states. In July, the company laid off 524 employees in California, which included remote positions in other states. Earlier this year, there were reports servicing on social media about layoffs affecting employees at Optum Virtual Care and NaviHealth. And, additionally, in May, Optum closed a changed health care facility in Toledo, Ohio, which resulted in 129 job losses.
Cigna Health Care is exiting Medicare Advantage Markets. We're making service area reductions in 8 states for 2025. In total, 36 plans and about 54100 members are impacted, the vast majority in Florida. The majority of the markets have low membership and alternative MA plans available with the exception of just a few full county exits.
There's a list of Medicare Advantage market exits industry wide on the Becker's website, and there's more details about these Cigna exits on our website as well, including state by state and the types of plans that are affected. Southwestern Health Resources will not offer Medicare Advantage Plans in 2025. The company said it has decided to sunset its MA plan because of increasing competition and utilization along with regulatory requirements from the federal level.
There are will be no changes for members in 2024, but there will be no plans to enroll in during the upcoming open enrollment annual enrollment period. Southwestern Health Resources is based in Farmers Branch, Texas. It operates CarenCare, an MA company. They had about 26,000 Medicare Advantage members according to CMS. Southwestern Health Resources is a joint venture between UT Southwestern Medical Center and Texas Health Resources.
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