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DECEMBER 2018

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2019
YEAR IN PREVIEW
What lurks beneath the surface

Three of our 10 looks ahead

Why Medicare Advantage

Will Keep On Growing .....................16
Why Employers Are Offering
More Health Plan Choices ............... 21
Why PBMs, Insurers
Are Combining ....................................32
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Real value in RA comes together with Olumiant
For adult patients with moderately to severely active RA

Provided Meaningful Demonstrated

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and symptoms ms patients who
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therapy a tablet, with a
on WAC prices, as of recommended
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do not imply comparable
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Olumiant tablet.

Visit olumiant.com/hcp to learn more about adding Olumiant to formulary.

INDICATION
Olumiant is a Janus kinase (JAK) inhibitor indicated for the treatment of adult patients with moderately to severely active
rheumatoid arthritis (RA) who have had an inadequate response to one or more tumor necrosis factor (TNF) antagonist therapies.
Limitation of Use: Use of Olumiant in combination with other JAK inhibitors, biologic disease-modifying antirheumatic
drugs (DMARDs), or with potent immunosuppressants, such as azathioprine and cyclosporine, is not recommended.

IMPORTANT SAFETY INFORMATION FOR OLUMIANT (baricitinib) tablets

WARNING: SERIOUS INFECTIONS, MALIGNANCY, AND THROMBOSIS
SERIOUS INFECTIONS: Patients treated with Olumiant are at risk for developing serious infections that may lead to
hospitalization or death. Most patients who developed these infections were taking concomitant immunosuppressants
such as methotrexate or corticosteroids. If a serious infection develops, interrupt Olumiant until the infection is controlled.
Reported infections include:
• Active tuberculosis (TB), which may present with pulmonary or extrapulmonary disease. Test patients for latent TB before
initiating Olumiant and during therapy. Treatment for latent infection should be considered prior to Olumiant use.
• Invasive fungal infections, including candidiasis and pneumocystosis. Patients with invasive fungal infections may present
with disseminated, rather than localized, disease.
 Olumiant demonstrated greater ACR20, ACR50, and ACR70 response rates than placebo at
weeks 12 and 241,3,4
100 ACR Response Rates *p≤0.05; **p≤0.01; ***p≤0.001.
90 ACR20 is defined as achieved a 20% improvement in
tender and swollen joint counts and 20% improvement
80
in at least 3 of the 5 remaining ACR components.5
PERCENTAGE OF PATIENTS (NRI)

70
From week 16, non-responding patients could be rescued
60 to receive baricitinib 4 mg† once daily. Patients who were
rescued or discontinued treatments were considered
50 ***
49 *** non-responders in the analysis.
45
40 Study IV (BEACON) Clinical Trial Design
30
Olumiant was evaluated in a 24-week, randomized,
27 27 * double-blind, phase 3, placebo-controlled trial in
**
20
20
23 527 patients with moderately to severely active RA
*** *** who had an inadequate response to one or more TNF
10 13 13 13
8 2 3 inhibitors. Patients could have had prior treatment
0 with other biologic DMARDs. Patients received Olumiant
ACR20 ACR50 ACR70 ACR20 ACR50 ACR70 2 mg (n=174) or baricitinib 4 mg (n=177) once daily
WEEK 12 WEEK 24 or placebo (n=176), added to background cDMARD
Placebo + cDMARDs (n=176) Olumiant 2 mg/day + cDMARDs (n=174)
treatment. The primary endpoint was the proportion of
patients who achieved ACR20 response at week 12.
†
Baricitinib 4 mg is not an approved dose.

Olumiant demonstrated significant improvement in physical function vs placebo1,3

0 Change in Physical Function (HAQ-DI) ***p≤0.001.
HAQ-DI is a patient-reported questionnaire that measures
LS MEAN CHANGE FROM BASELINE

–0.1 the degree of difficulty experienced in completing

activities of daily living, such as dressing and grooming,
arising, eating, walking, hygiene, reach, grip, and activities.6
–0.2
From week 16, non-responding patients could be rescued
to receive baricitinib 4 mg once daily.
–0.3
Missing data were reported as modified last observation carried
*** *** forward (mLOCF) except for week 12, which was reported
–0.4 as modified baseline observation carried forward (mBOCF).
Primary endpoint was the proportion of patients achieving
ACR20 response at week 12.
–0.5
0 2 4 6 8 10 12 14 16 18 20 22 24 RA=rheumatoid arthritis; TNFi=tumor necrosis factor inhibitor;
WAC=wholesale acquisition cost; ACR20/50/70=American
WEEK
College of Rheumatology 20%/50%/70% improvement criteria;
Placebo + cDMARDs (n=176) Olumiant 2 mg/day + cDMARDs (n=174) NRI=non-responder imputation; cDMARD=conventional
disease-modifying antirheumatic drug; LS=least squares;
HAQ-DI=Health Assessment Questionnaire-Disability Index.

IMPORTANT SAFETY INFORMATION FOR OLUMIANT (baricitinib) tablets (cont’d)

• Bacterial, viral, and other infections due to opportunistic pathogens.
Carefully consider the risks and benefits of Olumiant prior to initiating therapy in patients with chronic or
recurrent infection.
Closely monitor patients for the development of signs and symptoms of infection during and after treatment with
Olumiant including the possible development of TB in patients who tested negative for latent TB infection prior to
initiating therapy.
MALIGNANCIES: Lymphoma and other malignancies have been observed in patients treated with Olumiant.
THROMBOSIS: Thrombosis, including deep venous thrombosis (DVT) and pulmonary embolism (PE), has been
observed at an increased incidence in patients treated with Olumiant compared to placebo.
In addition, there were cases of arterial thrombosis. Many of these adverse events were serious and some
resulted in death. Patients with symptoms of thrombosis should be promptly evaluated.
Please see the following pages for additional Important Safety Information and Brief Summary
of Prescribing Information, including Boxed Warning about Serious Infections, Malignancies, and Thrombosis.
IMPORTANT SAFETY INFORMATION FOR OLUMIANT (baricitinib) tablets (cont’d)
WARNINGS AND PRECAUTIONS
SERIOUS INFECTIONS: The most common serious infections
reported with Olumiant included pneumonia, herpes zoster,
and urinary tract infection. Among opportunistic infections,
tuberculosis, multidermatomal herpes zoster, esophageal
candidiasis, pneumocystosis, acute histoplasmosis,
cryptococcosis, cytomegalovirus, and BK virus were
reported with Olumiant. Some patients have presented with
disseminated rather than local disease, and were often taking
concomitant immunosuppressants such as methotrexate
or corticosteroids. Avoid Olumiant in patients with an active,
serious infection, including localized infections. Consider the
risks and benefits of treatment prior to initiating Olumiant
in patients:
• with chronic or recurrent infection
• who have been exposed to TB
• with a history of a serious or an opportunistic infection
• who have resided or traveled in areas of endemic
tuberculosis or endemic mycoses; or
• with underlying conditions that may predispose them
to infection.
Closely monitor patients for infections during and after
Olumiant treatment. Interrupt Olumiant if a patient develops a
serious infection, an opportunistic infection, or sepsis. Do not
resume Olumiant until the infection is controlled.
Tuberculosis – Before initiating Olumiant evaluate and test
patients for latent or active infection and treat patients with
latent TB with standard antimycobacterial therapy. Olumiant
should not be given to patients with active TB. Consider anti-TB
therapy prior to initiating Olumiant in patients with a history of
latent or active TB in whom an adequate course of treatment
cannot be confirmed, and for patients with a negative test for
latent TB but who have risk factors for TB infection. Monitor
patients for TB during Olumiant treatment.
Viral Reactivation – Viral reactivation, including cases of
herpes virus reactivation (e.g., herpes zoster), were reported
in clinical studies with Olumiant. If a patient develops herpes
zoster, interrupt Olumiant treatment until the episode resolves.
The impact of Olumiant on chronic viral hepatitis reactivation is
unknown. Screen for viral hepatitis in accordance with clinical
guidelines before initiating Olumiant.
MALIGNANCY AND LYMPHOPROLIFERATIVE DISORDERS:
Malignancies were observed in Olumiant clinical studies.
Consider the risks and benefits of Olumiant prior to initiating
therapy in patients with a known malignancy other than a
successfully treated non-melanoma skin cancer (NMSC) or
when considering continuing Olumiant in patients who develop
a malignancy. NMSCs were reported in patients treated with
Olumiant. Periodic skin examination is recommended for
patients who are at increased risk for skin cancer.
THROMBOSIS: Thrombosis, including DVT and PE, has been
observed at an increased incidence in Olumiant-treated
patients compared to placebo. In addition, arterial thrombosis
events in the extremities have been reported in clinical studies
with Olumiant. Many of these adverse events were serious and
some resulted in death. There was no clear relationship between
platelet count elevations and thrombotic events. Use Olumiant
with caution in patients who may be at increased risk of
thrombosis. If clinical features of DVT/PE or arterial thrombosis
occur, evaluate patients promptly and treat appropriately.
GASTROINTESTINAL PERFORATIONS: Gastrointestinal
perforations have been reported in Olumiant clinical studies,
although the role of JAK inhibition in these events is not known.
Use Olumiant with caution in patients who may be at increased
risk for gastrointestinal perforation (e.g., patients with a history
of diverticulitis). Promptly evaluate patients who present with
new onset abdominal symptoms for early identification of
gastrointestinal perforation.
LABORATORY ABNORMALITIES:
Neutropenia – Olumiant treatment was associated with an
increased incidence of neutropenia (absolute neutrophil count
[ANC] <1000 cells/mm3) compared to placebo. Avoid initiation
or interrupt Olumiant treatment in patients with
an ANC <1000 cells/mm3. Evaluate at baseline and
thereafter according to routine patient management.
Lymphopenia – Absolute lymphocyte count (ALC)
<500 cells/mm3 were reported in Olumiant clinical
trials. Lymphocyte counts less than the lower limit
of normal were associated with infection in patients
treated with Olumiant, but not placebo. Avoid
initiation or interrupt Olumiant treatment in patients
with an ALC <500 cells/mm3. Evaluate at baseline and
thereafter according to routine patient management.
Anemia – Decreases in hemoglobin levels to
<8 g/dL were reported in Olumiant clinical trials. Avoid
initiation or interrupt Olumiant treatment in patients
with hemoglobin <8 g/dL. Evaluate at baseline and
thereafter according to routine patient management.
Liver Enzyme Elevations – Olumiant treatment was
associated with increased incidence of liver enzyme
elevation compared to placebo. Increases to ≥5x and
≥10x upper limit of normal were observed for both
ALT and AST in patients in Olumiant clinical trials.
Evaluate at baseline and thereafter according to
routine patient management. Promptly investigate
the cause of liver enzyme elevation to identify
potential cases of drug-induced liver injury. If
increases in ALT or AST are observed and drug-
induced liver injury is suspected, interrupt Olumiant
until this diagnosis is excluded.
Lipid Elevations – Treatment with Olumiant was
associated with increases in lipid parameters,
including total cholesterol, low-density lipoprotein
cholesterol, and high-density lipoprotein cholesterol.
Assess lipid parameters approximately 12 weeks
following Olumiant initiation. Manage patients
according to clinical guidelines for the management of
hyperlipidemia.
VACCINATIONS: Avoid use of live vaccines with
Olumiant. Update immunizations in agreement with
current immunization guidelines prior to initiating
Olumiant therapy.
ADVERSE REACTIONS
Adverse reactions (≥1%) include: upper respiratory
tract infections (16.3%, 14.7%, 11.7%), nausea
(2.7%, 2.8%, 1.6%), herpes simplex (0.8%, 1.8%,
0.7%), and herpes zoster (1.0%, 1.4%, 0.4%)
for Olumiant 2 mg, baricitinib 4 mg, and placebo,
respectively.
USE IN SPECIFIC POPULATIONS
PREGNANCY AND LACTATION: No information is
available to support the use of Olumiant in pregnancy
or lactation. Advise women not to breastfeed during
treatment with Olumiant.
HEPATIC AND RENAL IMPAIRMENT: Olumiant is
not recommended in patients with severe hepatic
impairment or in patients with moderate or severe
renal impairment.
Please see the following pages for Brief Summary
of Prescribing Information, including Boxed
Warning about Serious Infections, Malignancies,
and Thrombosis.
BA HCP ISI 01JUN2018

References: 1. Olumiant [package insert]. Indianapolis, IN: Eli Lilly and Company; 2018. 2. FDB MedKnowledge™, Analysource®.
Analysource.com. Updated 2018. Accessed September 1, 2018. 3. Genovese MC, Kremer J, Zamani O, et al. Baricitinib in patients with
refractory rheumatoid arthritis. N Engl J Med. 2016;374:1243-1252. 4. Genovese MC, Kremer J, Zamani O, et al. Baricitinib in patients
with refractory rheumatoid arthritis. N Engl J Med. 2016;374(suppl):1-30. 5. Felson DT, Anderson JJ, Boers M, et al. American College of
Rheumatology. Preliminary definition of improvement in rheumatoid arthritis. Arthritis Rheum. 1995;38:727-735. 6. Farheen K, Agarwal SK.
Assessment of disease activity and treatment in rheumatoid arthritis. J Manag Care Pharm. 2011;17(9 suppl B):S09-S13.
Olumiant® is a registered trademark owned or licensed by Eli Lilly and Company, its subsidiaries or affiliates.
PP-BA-US-0465 10/2018 ©Lilly USA, LLC 2018. All rights reserved.
 T:7”
OLUMIANT® (baricitinib) TABLETS BRIEF SUMMARY OF PRESCRIBING INFORMATION
Consult the package insert for complete prescribing information.
WARNING: SERIOUS INFECTIONS, MALIGNANCY, AND THROMBOSIS
SERIOUS INFECTIONS:
Patients treated with Olumiant are at risk for developing serious infections
that may lead to hospitalization or death. Most patients who developed these
infections were taking concomitant immunosuppressants such as methotrexate
or corticosteroids.
If a serious infection develops, interrupt Olumiant until the infection is controlled.
Reported infections include:
• Active tuberculosis, which may present with pulmonary or extrapulmonary
disease. Patients should be tested for latent tuberculosis before initiating
Olumiant and during therapy. Treatment for latent infection should be
considered prior to Olumiant use.
• Invasive fungal infections, including candidiasis and pneumocystosis. Patients
with invasive fungal infections may present with disseminated, rather than
localized, disease.
• Bacterial, viral, and other infections due to opportunistic pathogens.
The risks and benefits of treatment with Olumiant should be carefully considered
prior to initiating therapy in patients with chronic or recurrent infection.
Patients should be closely monitored for the development of signs and symptoms
of infection during and after treatment with Olumiant including the possible
development of tuberculosis in patients who tested negative for latent tuberculosis
infection prior to initiating therapy.
MALIGNANCIES:
Lymphoma and other malignancies have been observed in patients treated
with Olumiant.
THROMBOSIS:
Thrombosis, including deep venous thrombosis and pulmonary embolism, has been
observed at an increased incidence in patients treated with Olumiant compared
to placebo. In addition, there were cases of arterial thrombosis. Many of these
adverse events were serious and some resulted in death. Patients with symptoms
of thrombosis should be promptly evaluated.
INDICATIONS AND USAGE
Olumiant® (baricitinib) is indicated for the treatment of adult patients with moderately to
severely active rheumatoid arthritis who have had an inadequate response to one or more
tumor necrosis factor (TNF) antagonist therapies.
Limitation of use: Use of Olumiant in combination with other JAK inhibitors, biologic
disease-modifying antirheumatic drugs (DMARDs), or with potent immunosuppressants such
as azathioprine and cyclosporine is not recommended.
WARNINGS AND PRECAUTIONS
Serious Infections—Serious and sometimes fatal infections due to bacterial,
mycobacterial, invasive fungal, viral, or other opportunistic pathogens have been reported
in rheumatoid arthritis patients receiving Olumiant. The most common serious infections
reported with Olumiant included pneumonia, herpes zoster, and urinary tract infection.
Among opportunistic infections, tuberculosis, multidermatomal herpes zoster, esophageal
candidiasis, pneumocystosis, acute histoplasmosis, cryptococcosis, and cytomegalovirus,
and BK virus were reported with Olumiant. Some patients have presented with disseminated
rather than local disease, and were often taking concomitant immunosuppressants such as
methotrexate or corticosteroids.
Avoid use of Olumiant in patients with an active, serious infection, including
localized infections. Consider the risks and benefits of treatment prior to initiating Olumiant
in patients:
• with chronic or recurrent infection
• who have been exposed to tuberculosis
• with a history of a serious or an opportunistic infection
• who have resided or traveled in areas of endemic tuberculosis or endemic mycoses; or
• with underlying conditions that may predispose them to infection.
Closely monitor patients for the development of signs and symptoms of infection
during and after treatment with Olumiant. Interrupt Olumiant if a patient develops a
serious infection, an opportunistic infection, or sepsis. A patient who develops a new
infection during treatment with Olumiant should undergo prompt and complete diagnostic
testing appropriate for an immunocompromised patient; appropriate antimicrobial therapy
should be initiated, the patient should be closely monitored, and Olumiant should be
interrupted if the patient is not responding to therapy. Do not resume Olumiant until the
infection is controlled.
Tuberculosis—Evaluate and test patients for latent or active infection prior to administration
of Olumiant. Patients with latent tuberculosis (TB) should be treated with standard
antimycobacterial therapy before initiating Olumiant.
Olumiant should not be given to patients with active TB. Consider anti-TB therapy
prior to initiation of Olumiant in patients with a history of latent or active TB in whom an
adequate course of treatment cannot be confirmed, and for patients with a negative test
for latent TB but who have risk factors for TB infection. Consultation with a physician with
expertise in the treatment of TB is recommended to aid in the decision about whether
initiating anti-TB therapy is appropriate for an individual patient.
OLUMIANT® (baricitinib) BA HCP BS 01JUN2018
Monitor patients for the development of signs and symptoms of TB, including patients
who tested negative for latent TB infection prior to initiating therapy.
Viral Reactivation—Viral reactivation, including cases of herpes virus reactivation
(e.g., herpes zoster), were reported in clinical studies with Olumiant. If a patient develops
herpes zoster, interrupt Olumiant treatment until the episode resolves.
The impact of Olumiant on chronic viral hepatitis reactivation is unknown. Patients
with evidence of active hepatitis B or C infection were excluded from clinical trials. Patients
who were positive for hepatitis C antibody but negative for hepatitis C virus RNA were
permitted to enroll. Patients with positive hepatitis B surface antibody and hepatitis B core
antibody, without hepatitis B surface antigen, were permitted to enroll; such patients should
be monitored for expression of hepatitis B virus (HBV) DNA. Should HBV DNA be detected,
consult with a hepatologist. Perform screening for viral hepatitis in accordance with clinical
guidelines before starting therapy with Olumiant.
Malignancy and Lymphoproliferative Disorders—Consider the risks and benefits of
Olumiant treatment prior to initiating therapy in patients with a known malignancy other
than a successfully treated non-melanoma skin cancer (NMSC) or when considering
continuing Olumiant in patients who develop a malignancy. Malignancies were observed in
clinical studies of Olumiant.
Non-melanoma skin cancers—Non-melanoma skin cancers (NMSCs) have been reported in
patients treated with Olumiant. Periodic skin examination is recommended for patients who
are at increased risk for skin cancer.
Thrombosis—Thrombosis, including deep venous thrombosis (DVT) and pulmonary
embolism (PE), has been observed at an increased incidence in patients treated with
Olumiant compared to placebo. In addition, arterial thrombosis events in the extremities
have been reported in clinical studies with Olumiant. Many of these adverse events were
serious and some resulted in death. There was no clear relationship between platelet count
elevations and thrombotic events. Olumiant should be used with caution in patients who
may be at increased risk of thrombosis. If clinical features of DVT/PE or arterial thrombosis
occur, patients should be evaluated promptly and treated appropriately.
Gastrointestinal Perforations—Events of gastrointestinal perforation have been
reported in clinical studies with Olumiant, although the role of JAK inhibition in these events
is not known.
Olumiant should be used with caution in patients who may be at increased risk for
gastrointestinal perforation (e.g., patients with a history of diverticulitis). Patients presenting
with new onset abdominal symptoms should be evaluated promptly for early identification of
gastrointestinal perforation.
Laboratory Abnormalities
Neutropenia—Treatment with Olumiant was associated with an increased incidence of
neutropenia (absolute neutrophil count [ANC] less than 1000 cells/mm3) compared to placebo.
Avoid initiation or interrupt Olumiant treatment in patients with an ANC less than 1000 cells/mm3.
T:10”
Evaluate at baseline and thereafter according to routine patient management.
Lymphopenia—Absolute lymphocyte count (ALC) less than 500 cells/mm3 were reported
in Olumiant clinical trials. Lymphocyte counts less than the lower limit of normal were
associated with infection in patients treated with Olumiant, but not placebo.
Avoid initiation or interrupt Olumiant treatment in patients with an ALC
less than 500 cells/mm3. Evaluate at baseline and thereafter according to routine
patient management.
Anemia—Decreases in hemoglobin levels to less than 8 g/dL were reported in
Olumiant clinical trials. Avoid initiation or interrupt Olumiant treatment in patients with
hemoglobin less than 8 g/dL. Evaluate at baseline and thereafter according to routine
patient management.
Liver Enzyme Elevations—Treatment with Olumiant was associated with increased
incidence of liver enzyme elevation compared to placebo. Increases to greater than or equal
to 5x and greater than or equal to 10x upper limit of normal (ULN) were observed for both
ALT and AST in patients in Olumiant clinical trials.
Evaluate at baseline and thereafter according to routine patient management. Prompt
investigation of the cause of liver enzyme elevation is recommended to identify potential
cases of drug-induced liver injury. If increases in ALT or AST are observed and drug-induced
liver injury is suspected, interrupt Olumiant until this diagnosis is excluded.
Lipid Elevations—Treatment with Olumiant was associated with increases in lipid
parameters, including total cholesterol, low-density lipoprotein (LDL) cholesterol, and high-
density lipoprotein (HDL) cholesterol. Assessment of lipid parameters should be performed
approximately 12 weeks following Olumiant initiation.
Manage patients according to clinical guidelines for the management of hyperlipidemia.
Vaccinations—Avoid use of live vaccines with Olumiant. Update immunizations in
agreement with current immunization guidelines prior to initiating Olumiant therapy.
ADVERSE REACTIONS
Clinical Trials Experience—Because clinical studies are conducted under widely varying
conditions, adverse reaction rates observed in the clinical studies of a drug cannot be
directly compared to rates in the clinical studies of another drug and may not predict the
rates observed in a broader patient population in clinical practice.
The following data include six randomized, double-blind, placebo-controlled studies
(three Phase 2, three Phase 3) and a long-term extension study. All patients had moderately
to severely active RA. Patients were randomized to placebo (1070 patients), Olumiant 2 mg
(479 patients), or baricitinib 4 mg (997 patients).
Patients could be switched to baricitinib 4 mg from placebo or Olumiant 2 mg from as
early as Week 12 depending on the study design. All patients initially randomized to placebo
were switched to baricitinib 4 mg by Week 24.
OLUMIANT® (baricitinib) BA HCP BS 01JUN2018
 T:7”
During the 16-week treatment period, adverse events leading to discontinuation
of treatment were reported by 35 patients (11.4 events per 100 patient-years) treated
with placebo, 17 patients (12.1 events per 100 patient-years) with Olumiant 2 mg, and
40 patients (13.4 events per 100 patient-years) treated with baricitinib 4 mg.
During 0 to 52 week exposure, adverse events leading to discontinuation of treatment
were reported by 31 patients (9.2 events per 100 patient-years) with Olumiant 2 mg, and
92 patients (10.2 events per 100 patient-years) treated with baricitinib 4 mg.
Overall Infections—During the 16-week treatment period, infections were reported by
253 patients (82.1 events per 100 patient-years) treated with placebo, 139 patients
(99.1 events per 100 patient-years) treated with Olumiant 2 mg, and 298 patients
(100.1 events per 100 patient-years) treated with baricitinib 4 mg.
During 0 to 52 week exposure, infections were reported by 200 patients (59.6 events
per 100 patients-years) treated with Olumiant 2 mg, and 500 patients (55.3 events per
100 patient-years) treated with baricitinib 4 mg.
In the 0 to 52 week exposure population, the most commonly reported infections
with Olumiant were viral upper respiratory tract infection, upper respiratory tract infection,
urinary tract infection, and bronchitis.
Serious Infections—During the 16-week treatment period, serious infections were reported
in 13 patients (4.2 events per 100 patient-years) treated with placebo, 5 patients (3.6 events
per 100 patient-years) treated with Olumiant 2 mg, and 11 patients (3.7 events per
100 patient-years) treated with baricitinib 4 mg.
During 0 to 52 week exposure, serious infections were reported in 14 patients
(4.2 events per 100 patient-years) treated with Olumiant 2 mg and 32 patients (3.5 events
per 100 patient-years) treated with baricitinib 4 mg.
In the 0 to 52 week exposure population, the most commonly reported serious
infections with Olumiant were pneumonia, herpes zoster, and urinary tract infection.
Tuberculosis—During the 16-week treatment period, no events of tuberculosis
were reported.
During 0 to 52 week exposure, events of tuberculosis were reported in 0 patients treated
with Olumiant 2 mg and 1 patient (0.1 per 100 patient-years) treated with baricitinib 4 mg.
Cases of disseminated tuberculosis were also reported.
Opportunistic Infections (excluding tuberculosis)—During the 16-week treatment period,
opportunistic infections were reported in 2 patients (0.6 per 100 patient-years) treated with
placebo, 0 patients treated with Olumiant 2 mg and 2 patients (0.7 per 100 patient-years)
treated with baricitinib 4 mg.
During 0 to 52 week exposure, opportunistic infections were reported in 1 patient
(0.3 per 100 patient-years) treated with Olumiant 2 mg and 5 patients (0.6 per 100 patient-
years) treated with baricitinib 4 mg.
Malignancy—During the 16-week treatment period, malignancies excluding non-melanoma
skin cancers (NMSC) were reported in 0 patients treated with placebo, 1 patient (0.7 per
100 patient-years) treated with Olumiant 2 mg, and 1 patient (0.3 per 100 patient-years)
treated with baricitinib 4 mg.
During the 0 to 52 week treatment period, malignancies excluding NMSC were
reported in 2 patients (0.6 per 100 patient-years) treated with Olumiant 2 mg and 6 patients
(0.7 per 100 patient-years) treated with baricitinib 4 mg.
Venous Thrombosis—During the 16-week treatment period, venous thromboses (deep
vein thrombosis or pulmonary embolism) were reported in 0 patients treated with placebo,
0 patients treated with Olumiant 2 mg, and 5 patients (1.7 per 100 patient-years) treated
with baricitinib 4 mg.
During the 0 to 52 week treatment period, venous thromboses were reported in
2 patients (0.6 per 100 patient-years) treated with Olumiant 2 mg and 7 patients (0.8 per
100 patient-years) treated with baricitinib 4 mg.
Arterial Thrombosis—During the 16-week treatment period, arterial thromboses were
reported in 1 patient treated with placebo (0.3 per 100 patient-years), 2 patients (1.4 per
100 patient-years) treated with Olumiant 2 mg, and 2 patients (0.7 per 100 patient-years)
treated with baricitinib 4 mg.
During the 0 to 52 week treatment period, arterial thromboses were reported in
3 patients (0.9 per 100 patient-years) treated with Olumiant 2 mg and 3 patients (0.3 per
100 patient-years) treated with baricitinib 4 mg.
Laboratory Abnormalities
Neutropenia—During the 16-week treatment period, neutrophil counts below 1000 cells/mm3
occurred in 0% of patients treated with placebo, 0.6% of patients treated with Olumiant 2 mg,
and 0.3% of patients treated with baricitinib 4 mg. There were no neutrophil counts below
500 cells/mm3 observed in any treatment group.
Platelet Elevations—During the 16-week treatment period, increases in platelet counts
above 600,000 cells/mm3 occurred in 1.1% of patients treated with placebo, 1.1% of
patients treated with Olumiant 2 mg, and 2.0% of patients treated with baricitinib 4 mg.
Mean platelet count increased by 3000 cells/mm3 at 16 weeks in patients treated with
placebo, by 15,000 cells/mm3 at 16 weeks in patients treated with Olumiant 2 mg and by
23,000 cells/mm3 in patients treated with baricitinib 4 mg.
Liver Enzyme Elevations—Events of increases in liver enzymes greater than or equal to
3x ULN were observed in patients treated with Olumiant.
• During the 16-week treatment period, ALT elevations greater than or equal to 3x ULN
occurred in 1.0% of patients treated with placebo, 1.7% of patients treated with
Olumiant 2 mg, and 1.4% of patients treated with baricitinib 4 mg.
• During the 16-week treatment period, AST elevations greater than or equal to 3x ULN
occurred in 0.8% of patients treated with placebo, 1.3% of patients treated with
Olumiant 2 mg, and 0.8% of patients treated with baricitinib 4 mg.
• In a phase 3 study of DMARD naive patients, during the 24-week treatment period,
ALT and AST elevations ≥3x ULN occurred in 1.9% and 0% of patients treated with
OLUMIANT® (baricitinib) BA HCP BS 01JUN2018
methotrexate monotherapy, 1.9% and 1.3% of patients treated with baricitinib
4 mg monotherapy, and 4.7% and 1.9% of patients treated with baricitinib 4 mg
plus methotrexate.
Lipid Elevations—In controlled clinical trials, Olumiant treatment was associated with
dose-related increases in lipid parameters including total cholesterol, triglycerides,
LDL cholesterol, and HDL cholesterol. Elevations were observed at 12 weeks and remained
stable thereafter. During the 12-week treatment period, changes in lipid parameters are
summarized below:
• Mean LDL cholesterol increased by 8 mg/dL in patients treated with Olumiant 2 mg and
by 14 mg/dL in patients treated with baricitinib 4 mg.
• Mean HDL cholesterol increased by 7 mg/dL in patients treated with Olumiant 2 mg and
by 9 mg/dL in patients treated with baricitinib 4 mg.
• The mean LDL/HDL ratio remained stable.
• Mean triglycerides increased by 7 mg/dL in patients treated with Olumiant 2 mg and
by 15 mg/dL in patients treated with baricitinib 4mg.
Creatine Phosphokinase (CPK)—Olumiant treatment was associated with increases in
CPK within one week of starting Olumiant and plateauing after 8 to 12 weeks. At 16 weeks,
the mean change in CPK for Olumiant 2 mg and baricitinib 4 mg was 37 IU/L and
52 IU/L, respectively.
Creatinine—In controlled clinical trials, dose-related increases in serum creatinine were
observed with Olumiant treatment. At 52 weeks, the mean increase in serum creatinine was
less than 0.1 mg/dL with baricitinib 4 mg. The clinical significance of the observed serum
creatinine increases is unknown.
Other Adverse Reactions—Other adverse reactions are summarized in the following table.
Adverse Reactions occurring in greater than or equal to 1% of Olumiant 2 mg
and baricitinib 4 mg Treated Patients in Placebo-Controlled Trials
Weeks 0-16
Olumiant Baricitinib
Placebo 2 mg 4 mg
n=1070 n=479 n=997
Events (%) (%) (%)
Upper respiratory tract infectionsa 11.7 16.3 14.7
Nausea 1.6 2.7 2.8
Herpes simplexb 0.7 0.8 1.8
Herpes zoster 0.4 1.0 1.4
a
Includes acute sinusitis, acute tonsillitis, chronic tonsillitis, epiglottitis, laryngitis,
nasopharyngitis, oropharyngeal pain, pharyngitis, pharyngotonsillitis, rhinitis, sinobronchitis,
sinusitis, tonsillitis, tracheitis, and upper respiratory tract infection.
T:10”
b
Includes eczema herpeticum, genital herpes, herpes simplex, ophthalmic herpes simplex,
and oral herpes.
Additional adverse drug reactions occurring in fewer than 1% of patients: acne.
DRUG INTERACTIONS
Strong OAT3 Inhibitors—Baricitinib exposure is increased when Olumiant is
co-administered with strong Organic Anion Transporter 3 (OAT3) inhibitors (such as
probenecid). Olumiant is not recommended for use in patients taking strong OAT3 inhibitors,
such as probenecid.
Other JAK Inhibitors or Biologic DMARDs—Olumiant has not been studied in combination
with other JAK inhibitors or with biologic DMARDs.
USE IN SPECIFIC POPULATIONS
Pregnancy
Risk Summary—The limited human data on use of Olumiant in pregnant women are
not sufficient to inform a drug-associated risk for major birth defects or miscarriage. In
animal embryo-fetal development studies, oral baricitinib administration to pregnant rats
and rabbits at exposures equal to and greater than approximately 20 and 84 times the
maximum recommended human dose (MRHD), respectively, resulted in reduced fetal body
weights, increased embryolethality (rabbits only), and dose-related increases in skeletal
malformations. No developmental toxicity was observed in pregnant rats and rabbits treated
with oral baricitinib during organogenesis at approximately 5 and 13 times the exposure at
the MRHD, respectively. In a pre- and post-natal development study in pregnant female rats,
oral baricitinib administration at exposures approximately 43 times the MRHD resulted in
reduction in pup viability (increased incidence of stillborn pups and early neonatal deaths),
decreased fetal birth weight, reduced fetal body weight gain, decreased cytotoxic T cells on
post-natal day (PND) 35 with evidence of recovery by PND 65, and developmental delays
that might be attributable to decreased body weight gain. No developmental toxicity was
observed at an exposure approximately 9 times the exposure at the MRHD.
The estimated background risk of major birth defects and miscarriage for the
indicated population(s) are unknown. All pregnancies have a background risk of birth defect,
loss, or other adverse outcomes. In the U.S. general population, the estimated background
risk of major birth defects and miscarriage in clinically recognized pregnancies is 2-4% and
15-20%, respectively.
Data
Animal Data: In an embryofetal development study in pregnant rats, dosed orally during the
period of organogenesis from gestation days 6 to 17, baricitinib was teratogenic (skeletal
malformations that consisted of bent limb bones and rib anomalies) at exposures equal to or
greater than approximately 20 times the MRHD (on an AUC basis at maternal oral doses of
OLUMIANT® (baricitinib) BA HCP BS 01JUN2018
 T:7”

10 mg/kg/day and higher). No developmental toxicity was observed in rats at an exposure

approximately 5 times the MRHD (on an AUC basis at a maternal oral dose of 2 mg/kg/day).
In an embryofetal development study in pregnant rabbits, dosed orally during the
period of organogenesis from gestation days 7 to 20, embryolethality, decreased fetal
body weights, and skeletal malformations (rib anomalies) were observed in the presence
of maternal toxicity at an exposure approximately 84 times the MRHD (on an AUC basis
at a maternal oral dose of 30 mg/kg/day). Embryolethality consisted of increased post-
implantation loss that was due to elevated incidences of both early and late resorptions.
No developmental toxicity was observed in rabbits at an exposure approximately 12 times
the MRHD (on an AUC basis at a maternal oral dose of 10 mg/kg/day).
In a pre- and post-natal development study in pregnant female rats dosed
orally from gestation day 6 through lactation day 20, adverse findings observed in pups
included decreased survival from birth to post-natal day 4 (due to increased stillbirths
and early neonatal deaths), decreased birth weight, decreased body weight gain
during the pre-weaning phase, increased incidence of malrotated forelimbs during the
pre-weaning phase, and decreased cytotoxic T cells on PND 35 with recovery by PND 65 at
exposures approximately 43 times the MRHD (on an AUC basis at a maternal oral dose of
25 mg/kg/day). Developmental delays (that may be secondary to decreased body weight
gain) were observed in males and females at exposures approximately 43 times the
MRHD (on an AUC basis at a maternal oral dose of 25 mg/kg/day). These findings included
decreased forelimb and hindlimb grip strengths, and delayed mean age of sexual maturity.
No developmental toxicity was observed in rats at an exposure approximately 9 times the
MRHD (on an AUC basis at a maternal oral dose of 5 mg/kg/day).
Lactation
Risk Summary—No information is available on the presence of Olumiant in human milk,
the effects of the drug on the breastfed infant, or the effects of the drug on milk production.
Baricitinib is present in the milk of lactating rats. Due to species-specific differences in
lactation physiology, the clinical relevance of these data are not clear. Because of the
potential for serious adverse reactions in nursing infants, advise an Olumiant-treated woman
not to breastfeed.
Data—A single oral dose of 25 mg/kg radiolabeled baricitinib was administered to lactating
female Sprague-Dawley rats on post-partum day 13. Drug exposure was approximately
45-fold greater in milk than in plasma based on AUC0-t values.
Pediatric Use—The safety and effectiveness of Olumiant in pediatric patients have not
been established.
Geriatric Use—Of the 3100 patients treated in the four phase 3 studies, a total of
537 rheumatoid arthritis patients were 65 years of age and older, including 71 patients
75 years and older. No overall differences in safety or effectiveness were observed between
these subjects and younger subjects, and other reported clinical experience has not
identified differences in responses between the elderly and younger patients, but greater
sensitivity of some older individuals cannot be ruled out.

T:10”
Olumiant is known to be substantially excreted by the kidney, and the risk of adverse
reactions to this drug may be greater in patients with impaired renal function. Because
elderly patients are more likely to have decreased renal function, care should be taken in
dose selection, and it may be useful to monitor renal function.
Hepatic Impairment—No dose adjustment is necessary in patients with mild or moderate
hepatic impairment. The use of Olumiant has not been studied in patients with severe
hepatic impairment and is therefore not recommended.
Renal Impairment—Renal function was found to significantly affect baricitinib exposure.
Olumiant is not recommended for use in patients with estimated GFR of less than
60 mL/min/1.73 m2.
OVERDOSAGE
Single doses up to 40 mg and multiple doses of up to 20 mg daily for 10 days have been
administered in clinical trials without dose-limiting toxicity. Pharmacokinetic data of a single
dose of 40 mg in healthy volunteers indicate that more than 90% of the administered dose
is expected to be eliminated within 24 hours.
In case of an overdose, it is recommended that the patient should be monitored for
signs and symptoms of adverse reactions. Patients who develop adverse reactions should
receive appropriate treatment.

Additional information can be found at www.Olumiant.com

Marketed by: Lilly USA, LLC, Indianapolis, IN 46285, USA

Copyright © 2018, Eli Lilly and Company. All rights reserved.
BA HCP BS 01JUN2018

OLUMIANT® (baricitinib) BA HCP BS 01JUN2018

 14 Vol. 27, No. 12
December 2018
Anirban Basu

CVS’s $100,000 QALY Threshold Challenged 14

Patient groups (with the backing of pharma) say the PBM’s use of the
quality-adjusted life year measure could be discriminatory. By Ed Silverman

2019: T H E Y E A R IN PRE VIE W ( WHYS AND WHEREFORES)

Why Medicare Advantage Will Keep On Growing .................................. 16
Why Bundled Payments Will Take Off ............................................................. 18
23 Why Pre-existing Conditions Will Still Be Covered ................................ 19
Scott Gottlieb, MD
Why the ACA Will Continue To Survive ........................................................... 20
Why Employers Are Offering More Health Plans .................................... 21
Why Blockchain for Health Care May Turn the Corner ........................ 22
Why Drug Prices Will Continue To Roil the Waters ................................. 23
Why New Opioid Bill Will Not Affect Insurers That Much................... 29
Why Marijuana Will Head for the Mainstream .......................................... 31

29 Why PBMs, Insurers Are Combining ................................................................ 32

Kate Berry A Wide-Angle Lens on Hospital Adverse Events 34

Conventional adverse event data may create an incomplete picture.
Blue Health Intelligence says its data captures reality. By Peter Wehrwein

ORIGINAL RESEARCH
Why 3 Start-up Health Plans Went Into the Red 42
Answer: Health Republic, CareConnect, and Oscar were faced with higher-
cost provider contracts than their competitors.

31 DEPARTMENTS
Editor’s Memo ..........................................9 Viewpoints, cont’d.
The perils of prediction. Managed care’s new wheels: PHSOs.....38
By Richard Stefanacci, Do, & Terri Schieder
News & Commentary......................... 10
Digital Edition Accelerating the move toward value ....40
Proposal expands telehealth in MA.
www.managedcaremag.com/ By Emad Rizk, MD
digital Viewpoints
Web Way to better behavioral health care ....37 Enter payer collaboration leaders .........41
www.managedcaremag.com By Petra Esseling By Jesse Ford

COVER: GETTY IMAGES

 EDITORIAL ADVISORY BOARD

M
anaged Care publishes origi- MICHAEL T. HALPERN, MD, PhD BURTON I. ORLAND, BS, RPh
nal papers and feature articles Associate Professor of Public Health President
dealing with diverse elements of College of Public Health BioCare Consultants
the health care system. Among these are University of Arizona Westport, Conn.
impartial peer-reviewed research and Tucson, Ariz.
review articles examining clinical and JAN HIRSCH, PhD STEVEN R. PESKIN, MD, MBA, FACP
financial aspects of managed care. Associate Professor of Clinical Associate Clinical Professor of Medicine
Pharmacy, Scaggs School of Pharmacy University of Medicine and
ALAN G. ADLER, MD
and Pharmaceutical Sciences Dentistry of New Jersey–
Health Care Consultant
University of California–San Diego Robert Wood Johnson Medical School
Bryn Mawr, Pa.
San Diego, Calif. New Brunswick, N.J.
PARTHA S. ANBIL
Principal GEORGE J. ISHAM, MD EMAD RIZK, MD
The ConfluenceElite Group LLC Senior Adviser President & CEO
West Chester, Pa. HealthPartners Cotiviti
JAN BERGER, MD, MJ Minneapolis, Minn. Atlanta, Ga.
President LUCY JOHNS, MPH
Health Intelligence Partners Independent Consultant JOHN ROGLIERI, MD, MBA
Chicago, Ill. Health Care Planning and Policy Medical Director
San Francisco, Calif. New York Life Insurance Co.
THOMAS BODENHEIMER, MD
New York, N.Y.
Family and Community Medicine ROBERT C. JOHNSON, MS
University of California–San Francisco President, R.C. Johnson & Associates
San Francisco, Calif. TIM SAWYERS, BPharm, MBA, PAHM
Former President, American
Pharmacy Consultant
PETER BOLAND, PhD Pharmaceutical Association
MedImpact Healthcare Systems
President, Boland Healthcare Scottsdale, Ariz.
Nashville, Tenn.
Berkeley, Calif. THOMAS KAYE, RPh, MBA
LARRY S. BORESS, MPA Pharmacy Consultant JAMES M. SCHIBANOFF, MD
President & CEO Louisville, Ky. Editor-in-Chief, Milliman Care Guidelines
Midwest Business Group on Health RANDALL KRAKAUER, MD, FACP, Milliman USA
Chicago, Ill. FACR San Diego, Calif.
H. ERIC CANNON, PharmD Vice President, National Medical Director,
Chief of Pharmacy Medical Strategy STEPHEN W. SCHONDELMEYER,
SelectHealth/Intermountain Healthcare Aetna PharmD, PhD
Salt Lake City, Utah Princeton, N.J. Professor & Director, PRIME Institute
University of Minnesota College
GEORGANNE CHAPIN, MPhil, JD PETER KONGSTVEDT, MD, FACP of Pharmacy
President & CEO President Minneapolis, Minn.
Hudson Health Plan P.R. Kongstvedt Co.
Tarrytown, N.Y. McLean, Va. JAAN SIDOROV, MD, MHSA
VIVIAN H. COATES, MBA THOMAS H. LEE, MD, SM Chief Medical Officer
Vice President Chief Medical Officer medSolis
Information Services and Health Press Ganey Associates Frisco, Texas
Technology Assessment Wakefield, Mass.
ECRI Institute ATEEV MEHROTRA, MD, MPH THOMAS D. SNOOK, FSA, MAAA
Plymouth Meeting, Pa. Associate Professor of Medicine and Principal & Consulting Actuary
HELEN DARLING Health Care Policy Milliman Inc.
Strategic Adviser Department of Health Care Policy Phoenix, Ariz.
Former President and CEO Harvard Medical School
National Business Group on Health Boston, Mass. RICHARD G. STEFANACCI, DO,
Washington, D.C. MGH, MBA, AGSF, CMD
MICHAEL L. MILLENSON Chief Medical Officer, The Access Group
GARY SCOTT DAVIS, JD President Jefferson College of Population Health
Partner, Health Law Department Health Quality Advisors LLC Thomas Jefferson University
McDermott, Will & Emery LLP Highland Park, Ill. Philadelphia, Pa.
Miami, Fla.
THOMAS MORROW, MD
D.S. (PETE) FULLERTON, PhD, RPh Chief Medical Officer F. RANDY VOGENBERG, PhD, RPh
Strategic Pharmacy Innovations Next IT Principal
Seattle, Wash. Spokane, Wash. Institute for Integrated Healthcare
ARCHELLE GEORGIOU, MD Board Chair,
SAM NUSSBAUM, MD Employer-Provider
Founder Executive Vice President
Georgiou Consulting Interface Council of HQF
and Chief Medical Officer Greenville, S.C.
Minneapolis, Minn. Anthem
JEFF GOLDSMITH, PhD Indianapolis, Ind. JONATHAN P. WEINER, DrPH
President, Health Futures Inc. MATT NYE, PharmD Professor and Director of the
Charlottesville, Va. Vice President Center for Population Health
ALICE G. GOSFIELD, Esq. Pharmacy Care Support Services Johns Hopkins University
Principal, Gosfield & Associates Kaiser Permanente Bloomberg School of Public Health
Philadelphia, Pa. Downey, Calif. Baltimore, Md.

8 MANAGED CARE / DECEMBER 2018

 EDITOR’S MEMO

YIP, YIP, Histor-yeah!

By Peter Wehrwein

S
tarting in 2015, we’ve used our December issues to feature a collection of
Editor “Year in Preview” stories—or YIPs as we’ve come to call them. Turns out
Peter Wehrwein we’re also susceptible to the contagion of acronyms that infects American
peter.wehrwein@iconplc.com
health care.
Managing Editor
The goal with the YIPs is to take a step back, look at the year that has gone
Frank Diamond
frank.diamond@iconplc.com by in health and managed care and hazard some educated guesses about what
Senior Contributing Editors
awaits us.
Michael D. Dalzell It’s still December with shopping days on the calendar. But Janus—next
Timothy Kelley month’s eponymous god with one head looking back and the other, forward—
Contributing Editors captures the idea.
Joseph Burns Last year we got caught up in Amazon fever and all the hyperventilating about
Jan Greene the online retailer disrupting health care. Amazon’s health care thingamajig
Richard Mark Kirkner
generated a sizable amount of clickbaity news in 2018. Atul Gawande and Jack
Thomas Reinke
Stoddard were interesting hires. But has it been disruptive? Nah.
Design Director
Philip Denlinger High drug prices and efforts to tame (or justify) them were a big story this
year. That was an easy one to get right, and drug prices made the 2019 YIP roster
Designer
Kevin Riley we have in this issue. The opioid epidemic is also making a repeat appearance.
The question for next year is whether the massive, bipartisan federal legislation
President that passed this year will have its intended effect. The ACA may be frayed at
Lee Termini the edges, but our YIPs, last year and this, discuss its stick-to-itiveness. The
(267) 685-3682
politics and policies of guaranteed issue, which Contributing Editor Richard
lee.termini@iconplc.com
Mark Kirkner reports on page 19, are certainly a factor.
VP, Group Publisher
Maureen Dwyer Liberti We are trying something different this year by attempting to get beneath
(267) 685-3603 the surface and delve into reasons for next year’s developments. Less of “what
maureen.liberti@iconplc.com will happen” and more about the eddying whys of what may or could happen.
Director of Production We’re less likely to be wrong this way. Arnold Toynbee may not have actually
Services said it, but it’s still irresistible. “History,” goes the quote attributed to the British
Dawn Flook historian, “is just one damn thing after another.” And so too hard to predict.
(267) 685-3422
dawn.flook@iconplc.com
Circulation Manager CONTACT E-MAIL ADDRESSES:
Jacquelyn Ott Editorial: frank.diamond@iconplc.com
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Kim Kleinberg
(443) 512-8899 ext. 117 Clinical judgment must guide each clinician in weighing the benefits of treatment against the risk of toxicity. Dosages, indications, and meth-
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experience of the authors, and might not be the same as what is on the approved package insert. Please consult the complete prescribing
Greg Pessagno information for any products mentioned in this publication. MMMM Group LLC assumes no liability for the information published herein.
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DECEMBER 2018 / MANAGED CARE 9

 N E W S & C O M M E N TA R Y
Telehealth Expansion Proposal
Aimed at Medicare Advantage
T elehealth services will be available to more Medicare Advantage
beneficiaries under a CMS proposal now open to public comment
until December 31. The public comment period began November 1.
CMS wants to encourage broader
use of telehealth by updating methods
of payment and the amount paid to
MA plans and their providers, CMS
said in a prepared statement. Under
the proposed rule, Medicare would
pay doctors $14 for a five-minute call
to patients. If enacted, the changes
would take effect starting in 2020.
The 362-page proposal springs
from the Bipartisan Budget Act of
2018, which President Trump signed
earlier this year and includes a relax-
ation of restrictions on use of tele-
health. For instance, patients would
be able to get telehealth services in
their homes, rather than having to go
to a health care facility. The MA plans
can also cast a wider telehealth net,
eliminating geographical restrictions
on telehealth services. Those services
would become available to all MA
beneficiaries whether they live in rural
or urban areas.
“Plans would also have greater flex-
ibility to offer clinically appropriate
telehealth benefits that are not other-
wise available to Medicare beneficia-
ries,” CMS said in a news release.
The telehealth expansion, as well
as a crackdown in waste and fraud
in MA, will save the agency about
$4.5 billion over 10 years, according
to CMS officials. (In 2017, Medicare
benefit payments totaled $702 billion.)
Not surprisingly, the American
Telemedicine Association applauded
the proposal; it has long advocated
expansion of telehealth services. The
association said the proposal repre-
sents “improvements that indicate
major progress for telehealth and the
digital health industry.”
Some physicians are not happy with
the change, as Kaiser Health News re-
10 MANAGED CARE / DECEMBER 2018
ported. It “could have a chilling effect
on patients because they would be
required to pay a 20% cost-sharing
charge.”
Amy Messier, MD, a family medi-
cine doctor in Wilmington, N.C.,
wrote CMS, saying: “I worry about
implementation of this from the
patient perspective now that we are
charging patients for this previously
free service and they have to pay their
portion of the charge.”
Loneliness Linked
To Dementia
When Elvis crooned “Are You Lone-
some Tonight?” little did he know that
about six decades later researchers
would be asking people a variation of
that question and carefully measuring
the responses.
That’s what researchers at Florida
State University did, finding that
loneliness increases a person’s risk of
developing dementia by 40%. Their
study, a data analysis of 12,030 par-
ticipants over 10 years, was published
October 26 in the Journals of Gerontol-
ogy. Participants were patients aged 50
and older and their spouses who were
part of the University of Michigan’s
Health and Retirement Study. Over the
decade, 1,104 participants developed
dementia.
The researchers looked at the usual
suspects: a variety of clinical, behav-
ioral, and genetic risk factors; the
presence of certain relatively com-
mon diseases (diabetes, hyperten-
sion, depression); and some behaviors
(smoking, alcohol consumption). But
University of Michigan researchers
also collected data about loneliness.
Angelina Sutin, the study’s principle
investigator and an associate professor
at Florida State University, noted in a
news release that this is not the first
study to show a connection between
loneliness and dementia, but it is by far
the largest with the longest follow up.
There are a number of ways loneliness
can put someone at risk for dementia.
For instance, it may cause higher in-
flammation, causing the body to not
respond to infection in a timely way.
Then there are the behavioral prob-
lems, such as heavy drinking, being
sedentary, or lacking social interaction
that can keep the mind engaged.
Don’t blame the victim, said Sutin.
“People might say, ‘You’re lonely. Go
make a friend.’ But it’s not that easy.”
Also, there’s hope in that feelings of
loneliness can ebb; it is a modifiable
risk factor. “Most people might describe
periods where they felt lonely and then
periods where they didn’t feel lonely.”
ACE Inhibitors Linked
To Lung Cancer
ACE inhibitors are associated with a
14% increased risk of lung cancer com-
pared to ARBs, according to a recent
study in BMJ. Both classes of drugs
are prescribed for high blood pressure,
heart failure, chronic kidney disease,
and a variety of other conditions.
The observational study of almost
a million patients in the United King-
dom said that the elevated risk did
not become apparent until a patient
had been on the ACE inhibitor for
five years.
There was a 31% increased risk of
lung cancer for patients taking ACE
inhibitors over 10 years, according to
lead author Blánaid M. Hicks and her
colleagues.
ACE inhibitors may increase the
risk of lung cancer through the accu-
mulation of bradykinin and substance

P in the lung. This was a long-term ob-
servational study, with data taken from
the U.K. Clinical Practice Datalink
from January 1995 to December 2015.
“The magnitudes of the observed
estimates are modest, but these small
relative effects could translate into large
absolute numbers of patients at risk, so
these findings should be replicated in
other settings,” the study stated.
The BMJ study authors anticipated
that other experts would be quick to
point out that this was not a random-
ized double-blind placebo-controlled
study. Meta-analyses of randomized
control trials have not found any link
between ACE inhibitors and an in-
creased risk of lung cancer, but those
studies were not designed to assess
those outcomes, Hicks and her col-
leagues argued.
“This high quality study shows that
ACE inhibitors are a risk factor for
lung cancer,” Klause Lessnau, MD, a
pulmonary and critical care specialist
at Lenox Hill Hospital in New York
City, told Forbes. “The most important
factor remains smoking, but implies
that ACE inhibitors should be contra-
indicated in smokers and ex-smokers,
armed with a study that reveals sig-
nificant statistical association with
biologic plausibility.”
CMS Aims for
Site-neutral Pay
Location, location, location—it’s a big
deal in real estate, but it has also mat-
tered a lot when it comes to health
care payment. CMS may be changing
that. Over the next two years, it will
be phasing in “site-neutral” changes
that it hopes will level the playing field
between physician offices and hospital
outpatient departments.
“This policy would result in lower
copayments for beneficiaries and sav-
ings for the Medicare program in an
estimated amount of $380 million for
2019,” CMS said in a press release on
November 2.
Hospitals are not thrilled, and here’s
the lead to the American Hospital As-
sociation’s rapid-response news re-
lease: “Today’s misguided final rule
will have negative consequences for
N E W S & C O M M E N TA R Y
the patients we serve. This rule, which
phases in over two years payment cuts
to hospital outpatient clinic visits, is
based on unsupportable analyses and
erroneous policy rationales. These ill-
advised cuts will hit patients in rural
and vulnerable communities espe-
cially hard.”
The changes will be incorporated in
the Hospital Outpatient Prospective
Payment System (OPPS) and the Am-
bulatory Surgical Center (ASC) Pay-
ment System. CMS notes that clinic
visits are the most common service
billed under OPPS. Currently, ben-
eficiary payment for a clinic visit to
an off-campus provider-based depart-
ment is $23. Under the new rule, that
would be reduced to $16 in 2019.
“The final policies remove unnec-
essary and inefficient payment dif-
ferences so patients can have more
affordable choices and options,” CMS
Administrator Seema Verma said in
the news release.
Jugna Shah, the president of Nimitt
Consulting, told Revenue Cycle Advi-
sor, a publication that follows Medi-
care regulatory issues, that the agency
disregarded technical reasons why “it
would be completely inappropriate
to move forward with the proposed
payment reduction.” She predicts that
the AHA and other hospital groups
“You’re in luck! The doctor switched you to recreational drugs.”
DECEMBER 2018 / MANAGED CARE
will likely mount legal challenges to
the new rule.
Briefly Noted
Some astronomical hospital bills
that blindsided patients and recently
sparked outrage are caused by health
plans not having wide enough physi-
cian networks—networks that include
oncologists and radiologists and other
specialists, argue R. Bruce Williams,
MD, and Geraldine B. McGinty, MD,
in a recent opinion piece for Stat. Wil-
liams is president of the College of
American Pathologists and McGinty is
chairwoman of the American College
of Radiology’s Board of Chancellors.
“Patients should not be financially
responsible when an insurance plan
cannot provide in-network physician
services at in-network hospitals or
other facilities,” wrote Williams and
McGinty. “Instead, the insurance plan
should foot that bill”…. A change in
how mental health services for Med-
icaid patients are billed and how pro-
viders are paid for those services is af-
fecting about 700,000 Ohio residents,
reports Cleveland.com, a news website
associated with the Cleveland Plain
Dealer. The changes are part of Gov.
John Kasich’s efforts to modernize be-
havioral health care, but providers say
the transition is full of processing and
11
 N E W S & C O M M E N TA R Y
reimbursement delays and is putting a
financial strain on a field already over-
whelmed by the opioid epidemic. Part
of the problem seems to stem from
the state’s efforts to move more ben-
eficiaries into Medicaid managed care,
which involved adding 100 new codes
to the system…. Minnesotans eligible
for Medicare should take a close look
at the Medicare Advantage plans that
they have to choose from, reports the
Star Tribune of Minneapolis. Some
Medicare Advantage plans come
with a smaller network of providers
than what beneficiaries would find
under traditional Medicare. Those
“limits seem to be one reason some
shoppers are considering a return
to original Medicare plus a Medigap
supplementary policy, which brings
more choice but generally with higher
premiums,” the newspaper reports….
Yet another study saying that the
benefits of weight-reduction surgery
may go further than just losing weight.
Researchers with Kaiser Permanente
Washington Health Research Institute
tracked about 20,000 severely obese
patients who had type 2 diabetes.
Those who had the weight-reduction
surgery had a 40% lower chance of
getting a stroke or heart attack five
years after the surgery compared with
patients who got the usual diabetes
care. The results were published in
the October 16 issue of JAMA. David
Fisher and his colleagues say the find-
ings mean that health care profession-
als “should engage patients with severe
obesity and type 2 diabetes in a shared
decision-making conversation about
the potential role of bariatric surgery
in the prevention of macrovascular
events”…. Employers have changed
their approach to controlling health
care costs, from shifting cost burden to
employees to managing benefit pack-
ages, said Sarah Thomas, managing
director of the Deloitte Center for
Health Solutions in an opinion piece
on the Deloitte website. She sees em-
ployers focusing on two main goals:
reducing the costs for their sickest
employees and keeping their healthy
employees healthy. For the former,
some employers have relied on value-
based insurance designs, partnering
12 MANAGED CARE / DECEMBER 2018
with innovative providers, and steer-
ing certain employees toward ACOs. DOWNLOADS
For the latter, some employers have
considered building onsite health AVAILABLE
centers and employing health advo-
cates…. Millennials, the 83 million
Americans born between 1981 and
1996, don’t seem to see much of a need The Postpartum
for having a primary care physician, Depression (PPD)
unlike earlier generations, according Patient Journey
to a national poll by the Washington
First in a Series of Articles on the
Patient Journey and Management
Challenges of PPD
SUPPLEMENT
Post. The poll found that 45% of 18-
to 29-year-olds have no primary care
provider. That’s compared with 28%
for those aged 30 to 49, 18% for those
who are 50 to 64, and 12% for those
who are 65 and older. Many millen-
nials are getting care on the run, so Supplement to
to speak, from retail clinics located at Volume 27, No. 6
Supplement 1
Brought to you by
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national drugstore chains or in urgent-
June 2018
care centers…. The MiMedx Group
SGE12784_PPD-PatSupmnt_MC_FINAL.indd 1 5/9/18 1:49 PM
is facing serious allegations that it
bilked hospitals run by the VA and
the Department of Defense by limit- The Postpartum
ing the sort of products that it sells Depression (PPD)
Patient Journey:
to those hospitals. MiMedx makes The Provider
treatments that help heal wounds, us- Perspective
ing skin grafts and injectable products Second in a Series of Articles on the
SUPPLEMENT
Patient Journey and Management
Challenges of PPD
from donated placental tissues. It’s a
complicated case, but here’s just one
thing that the company is accused of,
as reported by the Wall Street Jour-
nal: “To treat the smallest wounds,
MiMedx offered government hospitals
nothing smaller than a 16-millime-
Supplement to
Brought to you by
ter disk-shaped EpiFix graft costing
Sage Therapeutics
Volume 27, No. 8
Supplement 2
August 2018
$895. Private hospitals, however, SGE13211_Provider_Supplement_MC_FNL.indd 1 7/13/18 3:02 PM
were offered a 14-millimeter disk
for $313”….A fluid and widespread
The Postpartum Depression
workforce might make employers (PPD) Patient Journey:
take a good look at how to integrate Payer Considerations
telehealth into their health care benefit Third in a Series of Articles on the Patient Journey
and Management Challenges of PPD
packages. Kathleen O’Driscoll, vice
president for the global business group
SUPPLEMENT
at the National Business Group on
Health told Human Resource Executive
that telehealth might be able to close
coverage gaps. “Local plans rarely have
coverage in other countries to meet
the needs of the trailing dependent
[the ones who do not relocate] and Supplement to
staying on their local home plan is Volume 27, No. 11
Supplement 3
Brought to you by
Sage Therapeutics, Inc.
not an option either,” said O’Driscoll.
November 2018
“Companies have been discussing how
SGE14516_Payer_Supplement_FINAL.indd 1 10/11/18 4:50 PM
to address this gap and the potential
managedcaremag.com/dl/ppd
role telehealth could play.”
—Frank Diamond
 When it comes to postpartum depression (PPD)...

Patients, Providers, and Payers Working Together

to Increase Communication and Education About PPD
May Help Improve Outcomes as Members Navigate
Their Postpartum Journeys1,2

PPD is the most common complication of pregnancy

and childbirth.3-7

Estimates vary by state from 8% to 20% with an

overall average of 11.5% in the United States,5 and
approximately 50% of cases may go undiagnosed.8-11

Early detection and intervention may be important

in improving health outcomes in patients with PPD.2

For more information on the patient journey and

management challenges of PPD from the patient,
provider, and payer perspectives, please visit
www.postpartumdepression.today

References: 1. Byatt N, Biebel K, Friedman L, Debordes-Jackson G, Ziedonis D, Pbert L. Patient’s views on depression care in obstetric settings: how do they compare to the views of perinatal health
care professionals? Gen Hosp Psychiatry. 2013;35(6):598-604. 2. O’Connor E, Rossom RC, Henninger M, Groom HC, Burda BU. Primary care screening for and treatment of depression in pregnant
and postpartum women: evidence report and systematic review for the US Preventive Services Task Force. JAMA. 2016;315(4):388-406. 3. DeSisto CL, Kim SY, Sharma AJ. Prevalence estimates of
gestational diabetes mellitus in the United States, Pregnancy Risk Assessment Monitoring System (PRAMS), 2007-2010. Prev Chronic Dis. 2014;11:E104. 4. Knight M, Callaghan WM, Berg C, et al. Trends
in postpartum hemorrhage in high resource countries: a review and recommendations from the International Postpartum Hemorrhage Collaborative Group. BMC Pregnancy Childbirth. 2009;9(55):1-10.
5. Ko JY, Rockhill KM, Tong VT, Morrow B, Farr SL. Trends in postpartum depressive symptoms—27 states, 2004, 2008, and 2012. MMWR. 2017;66(6):153-158. https://www.cdc.gov/mmwr/volumes/66/
wr/mm6606a1.htm. Accessed September 5, 2018. 6. Reddy UM, Rice MM, Grobman WA, et al. Serious maternal complications after early preterm delivery (24-33 weeks’ gestation). Am J Obstet
Gynecol. 2015;213(4):538.e1-e9. 7. Centers for Disease Control and Prevention (CDC). Data on selected pregnancy complications in the United States 2017. https://www.cdc.gov/reproductivehealth/
maternalinfanthealth/pregnancy-complications-data.htm. Accessed September 5, 2018. 8. Evins GG, Theofrastous JP, Galvin SL. Postpartum depression: a comparison of screening and routine clinical
evaluation. Am J Obstet Gynecol. 2000;182(5):1080-1082. 9. Georgiopoulos AM, Bryan TL, Wollan P, Yawn BP. Routine screening for postpartum depression. J Fam Pract. 2001;50(2):117-122. 10. Cox EQ,
Sowa NA, Meltzer-Brody SE, Gaynes BN. The perinatal depression treatment cascade: baby steps toward improving outcomes. J Clin Psychiatry. 2016;77(9):1189-1200. 11. Goodman JH, Tyer-Viola L.
Detection, treatment, and referral of perinatal depression and anxiety by obstetrical providers. J Womens Health (Larchmt). 2010;19(3):477-490.

© 2018 Sage Therapeutics, Inc. All rights reserved. 09/18 PP-US-PPD-0009

 CVS and the $100,000 QALY
CVS Caremark set $100,000-per-QALY as a threshold for its formulary. Patient
groups (with pharma backing) say the approach is discriminatory.

By Ed Silverman a flashpoint in the debate over cost effectiveness and

the wider discussion about the types of metrics that

T
his summer CVS Caremark took a surprising
step and adopted a new plan for assessing the
value of medicines. The PBM unit of the health
giant CVS decided that any new drug exceeding
$100,000 per quality-adjusted life year—QALY for
short—may be excluded from the formularies that
are maintained by its clients.
To make its plan work, CVS will rely on the Insti-
tute for Clinical and Economic Review (ICER), the
increasingly prominent cost-effectiveness and drug
evaluator in Boston. In many developed countries,
government entities do the number crunching that’s
used in coverage decisions. But in this country there’s
a void and ICER is filling it.
CVS Caremark’s QALY gambit came as PBMs are
fighting a three-front war. Many lawmakers see them as
perpetuating and benefiting from an opaque pharma-
ceutical pricing system.
Pharma has tried to shift some of the blame for
high drug prices onto PBMs. And the big mergers
notwithstanding (CVS’s acquisition of Aetna and
Cigna’s acquisition of Express Scripts), some health
plans and employers want to push back against PBMs
as their budgets get swamped by new medicines with
hefty price tags.
should be used to inform and decide coverage.
In an open letter sent this past September to CVS
Caremark, a coalition of dozens of patient advocacy
groups and a few professional medical societies argued
that the PBM will rely on a “one-size-fits-all” ap-
proach to assessing value that “discriminates against
the chronically ill, the elderly, and people with disabili-
ties, using algorithms that calculate their lives as ‘worth
less’ than people who are younger or nondisabled.”
Among the groups that sent the letter were the
American Association of People with Disabilities,
the AIDS Institute, the U.S. Pain Foundation, the
American Academy of Nursing, the Autism Society of
America, the Black Women’s Health Imperative, and
the Epilepsy Foundation. The effort was organized
by the Partnership to Improve Patient Care, which
counts pharmaceutical industry trade groups among
its members.
The pharma funding raises suspicions about this
effort being a thinly veiled attempt by pharma to
thwart cost-effectiveness evaluations that will call
into question high prices and possibly cut into profit
margins.

One size fits all: discriminatory?

Using QALYs to make formulary decisions suggests
that CVS is willing to take on some risks, especially
because the $100,000-per-QALY threshold is rather
stringent.
“This has been batted around in the academic com-
munity forever and is a very commonly used approach
in the U.K. and other countries to make decisions,”
says Robert Dubois, MD, the chief science officer and
executive vice president of the National Pharmaceu-
tical Council, a think tank supported by the pharma-
ceutical industry. “There is a middle ground, but the
problem is in its infancy and we’re only now starting
to see some examples in this country.”
Almost immediately, though, CVS was criticized
by patient groups that argue that QALY-based cov- “The $100,000 [QALY] threshold is just for guidance and
erage is an unfair cost-saving tool. Their complaints was never meant to be a black-and-white decision,” says
underscore how this benchmark is likely to become Anirban Basu of the University of Washington.

14 MANAGED CARE / DECEMBER 2018

 But patient groups have a coherent argument against Join Formkit.com
QALYs. In their view, QALYs are inherently unfair
because they assume certain health states are more and get formulary data
desirable than others, creating an imbalance when when you need it!
calculating the benefits provided by a particular treat-
ment. Someone in perfect health, for instance, would Current kits
be assigned the highest starting value, but a disabled
person gets a lower score, so they would presumably
FASENRA™
(benralizumab) Subcutaneous Injection 30 mg
gain less benefit. In other words, by starting with a
lower baseline, the value of eliminating a disease in a IDHIFA®
disabled person would be lower. (enasidenib)
Please see full Prescribing Information, including Boxed
Don’t pick on the QALY WARNING.
The criticism stung CVS Caremark, which had already INGREZZA™
planned to exclude medicines that are classified as (valbenazine) tablets
breakthrough therapies by the FDA from its new
$100,000-per-QALY threshold. Nonetheless, CVS
KEDRAB™
(Rabies Immune Globulin [Human])
maintained its program will get under way next year
but did agree to meet with the groups and also con- NEW: LOKELMA™
ceded some unspecified changes may be considered. (sodium zirconium cyclosilicate) 10g for oral
One meeting, in October, has been held so far. suspension
“It’s really a debate about how you balance different RADICAVA®
expectations among different patient groups and using (edaravone) IV infusion
one metric for comparing and allocating resources,”
says Anirban Basu, a professor of health economics SUBLOCADE™
and director of the Comparative Health Outcomes, (buprenorphine extended-release)
Policy, and Economics Institute at the University of Injection for Subcutaneous Use (CIII)
Washington. Please see Full Prescribing Information and Boxed
WARNING.
“But that’s the reason QALY is used in the first
place,” continues Basu. “It’s true that QALY has limi-
tations, but it’s unfair to pick on QALY, since there is Formkit.com provides around-the-clock free
no metric out there that doesn’t pose this problem. access to specific formulary kit information for
The $100,000 threshold is just for guidance and was the key decision-makers at hospitals, managed
never meant to be a black-and-white decision. For care organizations, and federal facilities.
patients, the metric just gives you a flag so you can The site includes:
bring perspectives to the discussion, and then you • Product overviews
can make a stronger case of value.” • Disease overviews
As for payers, he argues that a more holistic view • Dosing information
is necessary. Why? A key reason is that QALYs may • Product fact sheets
not capture all the benefits of a medication and the • Product monographs
lowering of costs on a wider scale. They may miss, • Clinical summaries
for instance, the time and anxiety spared seeking • Slide decks
other forms of treatment. At the same time, Basu • Full prescribing information
acknowledges the need for some kind of standardized • Important safety information
assessment for costs and benefits.
“Unless you know who is going to benefit, it’s very Formkit.com is part of PTCommunity.com
difficult to say you should give an expensive treatment and is available only to verified P&T committee
to everybody [on] the premise that somebody will members.
benefit,” he explains. “Unfortunately, this can create
a situation where there is a tradeoff that appears to
pit one group against another.”

Ed Silverman founded the Pharmalot blog and has

covered the pharmaceutical industry for 20 years.

DECEMBER 2018 / MANAGED CARE 15

 2019 YEAR IN PREVIEW
10 trends—and what lurks beneath the surface in the year ahead. Actual events—they
are contingent upon a Jenga game of other events, some distal, some proximate. But the
underlying reasons are made of steadier, more discernible stuff.

Why Medicare Advantage

enrollment will keep on growing,
whatever the politics
By Timothy Kelley, Senior Contributing Editor

T
CMS has broadened he feds have a bullish 2019 forecast for Medicare Advantage (MA), which puts
private health plans in charge of managing the seniors’ health insurance program
the services that
for enrollees who choose it. In September, CMS estimated that the new year will
Medicare Advan- bring a 6% decline in the average monthly premium—to $28 from this year’s $29.81, with
tage plans can pro- 46% of plan members enjoying a zero premium (that is, no charge on top of the standard
vide—services that Medicare charge). The number of MA plans available across the country will increase to
may reduce expen- 2,734, according to the Kaiser Family Foundation. CMS says that enrollment will shoot
sive treatments and up 11.5% from this year’s 20.2 million to 22.6 million. By CMS’s reckoning, that means a
record 36% of Medicare beneficiaries will be covered by an MA plan next year.
injuries. Insurers
Experts agree that MA will keep growing—never mind that privately managed Medicare
continue to see the has been a graveyard for prophecies. Long hailed as a potential cost cutter, it has yet to
market as a busi- conclusively demonstrate overall net savings in delivering care. In this century’s first years,
ness opportunity. MA’s predecessor, Medicare+Choice, was projected to grow, but shrank instead. When MA’s
Critics see a slow- trend lines bounced back, along came the ACA—which by reducing payments to private
motion privatiza- health plans, establishing a minimum medical loss ratio, and setting other conditions—was
predicted to trigger widespread disenrollment. Wrong again! Boom years ensued.
tion of Medicare.
For 2019 there’s something new in the works that may well make MA plans more attractive
than ever. In April 2018, CMS announced rules that broaden the definition of the “primarily
health-related” benefits insurers are allowed to include in MA policies. While many plans
already offer gym memberships, dental cleanings, hearing aids, and eyeglasses, they may
now add things like adult day care, rides to appointments, home aides to help with daily
activities, home-based palliative care, therapeutic massage, and even home safety features
such as ramps for wheelchairs and air conditioners for asthmatics.
“Beneficiaries will have more supplemental benefits, making it easier for them to lead
healthier, more independent lives,” said CMS Administrator Seema Verma.

New benefits a Trojan horse?

As the New York Times explained this summer, the new rules mean that the government,
which has long paid thousands to treat and rehab injuries sustained in bathtub falls, will now
also shell out the few bucks required to install a grab bar to prevent those falls. For believers
in proactive, cost-effective medicine—or even in simple common sense—what’s not to like?
A lot, say critics. They point out that the 2018 rule change also allows MA plans to deviate
from the required standard set of benefits, varying them for certain diseases or geographic
areas, with hard-to-foresee results. And they worry that adding sweeteners to privately run
MA coverage gives it an unfair advantage over traditional Medicare, which doesn’t cover

16 MANAGED CARE / DECEMBER 2018

the new services. It’s no wonder companies are flocking to offer MA options, they say,
because MA is a bonanza for plans, who reap—in the words of Don McCanne, MD, senior
health policy fellow at Physicians for a National Health Program—“greater reimbursement
rates than their costs and what they are statutorily entitled to.” The administration’s real
goal, he believes, is “to move a critical threshold of patients out of traditional Medicare
wherein they can begin to sharply reduce federal payments to the traditional program,
thus privatizing Medicare.”
That grab bar, in other words, may actually be a Trojan horse.
Or maybe not. Laura Skopec, a research associate at the Urban Institute’s Health Policy
Center, notes that MA plans enjoyed buoyant growth during the Obama years and are
chosen by millions of big-city residents who vote
blue. “Medicare Advantage has actually been More Medicare Advantage plans are available
a fairly bipartisan program,” she says. “It’s not in 2019 than in any year since 2009
contentious in quite the way the marketplaces
2,830
are in the individual market.” 2,623
2,734
That said, she and other analysts concede 2,314 2,317
that the playing field between MA and standard 2,098 2,011 1,974 2,074 2,014 1,945 2,001 2,034
Medicare isn’t yet completely level.
Drafters of the ACA targeted MA plans for
payment cuts because research showed that
enrollees in those private plans cost the gov-
ernment 114% of what their counterparts in
traditional Medicare cost. But a December 2017
Commonwealth Fund study by Yash Patel and
Stuart Guterman showed that by 2017 that 114% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
had come down to 100%. Source: Kaiser Family Foundation
Problem solved? Not quite. “Payment neutral-
ity has not yet been achieved,” the authors explained, finding that plans still got a bonus of
2% to 4% in the years 2010 to 2017 because “coding intensity adjustments”—with which
CMS holds back some money to compensate for plans’ getting rewarded for identifying
higher-than-average risk in their patients—did not yet account for the full risk-based extra
pay the plans received. In late October, CMS announced a proposed rule that would step
up risk adjustment data validation (RADV) audits of MA plans. The motivation for RADV
audits is to curb, if not stop, upcoding, and CMS could end up clawing back more payment
from some plans. But despite that—and despite the attractiveness of the new year’s broader
supplemental benefits—MA skeptics and naysayers may have a point.
Skopec is the co-author—with Guterman and Stephen Zuckerman—of another December
2017 Commonwealth Fund report that found that the “benchmark-and-bidding” system
by which payments to MA plans are determined may need to change if the plans are ever
to truly minimize cost. She notes that there are some local markets in which MA penetra-
tion may hit a ceiling, as there will always be Medicare enrollees who decline to accept a
limited provider network even to gain extra benefits. But places where MA does reach or
exceed 50% of the Medicare market—perhaps in the coming year—deserve a careful look,
she believes. MA payment is keyed to traditional Medicare—what happens when the norm
becomes the minority?
Skopec foresees no big legislative changes for Medicare in 2019, but expects a watchful eye
on spending to continue. She says health plans should “keep trying to improve the efficiency
of their Medicare Advantage plans so that they can continue offering those supplemental
benefits even as payment rates go down.
“I’m very curious to see how these new benefits will pan out,” Skopec adds. “Will they be
targeted appropriately to actually improve outcomes for enrollees in Medicare Advantage
plans?”

DECEMBER 2018 / MANAGED CARE 17

 2019
YEAR IN PREVIEW
Why bundled payments are poised
to take off
By Michael D. Dalzell, Senior Contributing Editor

W
“ e can never go back again, that much is certain,” wrote Daphne du Maurier in
her 1938 novel Rebecca. Eighty years later, Du Maurier’s observation is just as
fresh when looking at the uptake of value-based payment.
A newly released analysis from the Health Care Payment Learning & Action Network
(HCP-LAN) found that 34% of health care dollars flowed through alternative payment
models last year—a 17% increase over the previous year and a 50% jump from 2015.
Long live fee for service? No. We’re never going back.
HCP-LAN defines an alternative payment model as shared savings, with or without
BPCI Advanced sig- downside risk, or population-based payment, such as capitation. As more dollars move
nals a willingness out of fee for service and ultimately into APMs, health care policy wonks are divided about
among Medicare whether bundled payments, the most common form of shared savings, or capitation will
providers to rede- be the endgame.
sign care and take A pair of articles in the Harvard Business Review in 2016 made cases for both. Michael
Porter and Robert Kaplan argued that bundled payments would emerge as the predominant
on risk. Commercial
way of paying for health care because they encourage competition and a focus on outcomes
payers are watch- that matter to patients. Brent James, MD, and Gregory Poulsen countered that capitation
ing closely. will reign supreme because it is the only model that encourages providers to attack waste.
The October 2018 launch of CMS’s Bundled Payments for Care Improvement (BPCI)
Advanced program, however, may telegraph who’s right. More than 1,500 hospitals and phy-
sician groups signed up—north of what was expected for a program that includes downside
risk from Day 1. Modeled on one of the arms of what CMS now calls BPCI Classic, BPCI
Advanced promises “results and a game plan you can point to, to be successful in getting
better patient outcomes and patient satisfaction, and hopefully a way for a health system
to make money,” says Carter Paine, president and COO of naviHealth, which facilitates
provider coordination for most of the BPCI Advanced episodes.
Panelists at a forum held by the University of Pennsylvania’s Leonard Davis Institute of
Health Economics in late October concurred that the evidence in favor of bundled payments
has reached a tipping point. Amol Navathe, MD, reviewed studies that showed bundled
payments for surgical procedures have generated savings without adversely affecting patient
outcomes, although he acknowledged that less is known about bundles’ effects on acute
or chronic conditions.
We may soon know about that, too. Some of the most popular episodes in BPCI Ad-
vanced were not surgical, but medical: CHF, stroke, cardiac arrhythmia, sepsis, urinary
Amol Navathe, MD tract infection.
Moreover, in BPCI Advanced, CMS fixed some nagging problems associated with target
prices and predictability. At the LDI forum, Christina Ritter of the Center for Medicare
and Medicaid Innovation (CMMI) acknowledged that there was “no way that folks can
continue to achieve significant savings off of a historical target, time and time and time
again.” In BPCI Advanced, CMMI uses a risk-adjusted, “moderately prospective payment”
methodology that may ultimately pave the way for uptake of bundled payments outside of
fee-for-service Medicare.
Commercial insurers are also beginning to pay through bundles; Horizon Blue Cross
Blue Shield in New Jersey, for instance, offers them for 16 episodes. Commercial uptake is
patchy, though, and 57% of commercial dollars are still tied to fee for service without regard
for quality or value, according to HCP-LAN. That may soon change, however. A Deloitte
report this year was bullish on bundles, given that they engage specialists, are compatible
with a population health management strategy, and attack variations in care—of which there

18 MANAGED CARE / DECEMBER 2018

is much to be found. “We’ve had a nationwide awakening to post-acute care variance,” says
Paine. “If you look at fee for service, in most cases, you’re five times more likely to go to [a
long-stay facility] or to inpatient rehab versus a Medicare Advantage member.”
Not that the outlook for bundles is all puppies and rainbows. Provider lack of invest-
ment in data analytics, the potential for cherry picking, and patient attribution are real
issues to be worked out. And patience, rather than looking for the quick hit, says Paine,
is a challenge all newcomers to bundles must accept: “On the health plan side, it’s a much
more linear buildup in terms of savings, because you have to influence providers versus
turning a light switch on.”
But with fee-for-service Medicare all but conquered, Medicare Advantage may be the
next frontier for bundled payments. Humana offers bundles to MA providers in 13 states,
and Paine, too, sees strong new interest among MA plans in giving bundles a try. That
would be an interesting twist—bundles within a capitated model. Maybe the two forms of
APM can co-exist after all.

Why the politics will continue to

favor protections for Americans
with pre-existing conditions
By Richard Mark Kirkner, Contributing Editor

S
o much love was shown in the last election cycle—love for people with pre-existing In the midterms,
health conditions—even from people whose actions haven’t shown a whole lot of Republicans tried
love. A number of erstwhile suitors walked back their opposition to the idea. Look at
to walk back their
Missouri Attorney General and now Republican senator-elect Josh Hawley, who declared
his love for people with pre-existing conditions even though he’d joined a lawsuit with 19 opposition to
other Republican attorneys general challenging the ACA and its protections for people guaranteed issue,
with pre-existing conditions. while health care
The most graphic flip may have belonged to Arizona GOP Rep. Martha McSally. In worked as an issue
her hotly contested race for Sen. Jeff Flake’s seat against Democratic Rep. Kyrsten Sinema for Democrats.
(which Sinema won by a slim margin of less than two percentage points), McSally said she
was “leading the fight to … force insurance companies to cover pre-existing conditions,”
even though she’d voted multiple times to repeal the ACA, and, according to the Associated
Press, urged her caucus in a closed-door meeting in 2017 about ACA repeal to “get the
f---ing thing done.” But before the election, on Sean Hannity’s radio show, McSally said,
“I’m getting my ass kicked” for those ACA repeal votes.
That may be because most Americans, like a lot of Republicans who ran in November,
had already fallen in love with the idea. Kaiser Family Foundation (KFF) polling has found
that overwhelming majorities say it is “very important” that the ACA’s protections for people
with pre-existing conditions (75%) remain. Even 58% of Republicans agree.
The polling is easy to understand when you consider how many Americans have what
might be considered a pre-existing condition. KFF estimated that 27% of adults, ages 18 to
64, and almost half (47%) of the pre-Medicare age group (60-to-64-year-olds) have what
could be deemed a pre-existing condition that would have led to either a higher premium
or outright denial of coverage in the individual market prior to the ACA. “I think what we
found is that once people with pre-existing conditions, who are a very sympathetic group,
have been guaranteed coverage, it’s really hard politically to take it away,” says Larry Levitt,
a KFF senior vice president and a senior health policy adviser in the Clinton White House.
In less polarized times, that scenario could bring opposing sides together to craft a
compromise. Can all the love shown for pre-existing conditions inspire a similar kumbaya
between a Republican Senate and Democratic House? Don’t bet on it.

DECEMBER 2018 / MANAGED CARE 19

 2019
YEAR IN PREVIEW
“Once people with pre-
existing conditions, who
are a very sympathetic
group, have been guaran-
teed coverage, it’s really
hard politically to take it
away,” says Larry Levitt.
Insurers are figur-
ing out the mar-
ket, say the law’s
defenders.
20 MANAGED CARE / DECEMBER 2018
There are three paths forward in 2019 and the years beyond for preserving protections
for pre-existing conditions:
1) Nothing much happens legislatively to the ACA protections while the lawsuit brought
by Hawley and the other Republican attorneys general makes its way through the courts.
The Trump administration’s Department of Justice has joined the lawsuit, known as Texas
v. Azar, but 17 states have intervened to fight it and defend the ACA.
2) ACA subsidies are increased to lure more people into the individual market to moder-
ate premiums. “But the tradeoff is more government spending, and that money has to come
from somewhere,” Levitt says. Rate this a longshot, partly because it would take legislation.
Besides the ACA individual market seems to have stabilized for now. Lawmakers in both
parties may figure if it ain’t broke, don’t fix it.
3) Republican ideas for preserving protections for pre-existing conditions get enacted.
This probably won’t happen through Congressional action—see number two—but the
Trump administration could pursue a regulatory pathway to dismantle pre-existing cover-
age through the ACA’s Section 1332 innovation waivers. As the Center on Health Insurance
Reforms notes, these waivers could allow states to permit insurance products that don’t
meet the ACA’s minimum coverage for pre-existing conditions.
This path fits with Republican legislative ideas. The Health Policy Consensus Group—a
group of conservative wonks working on an ACA alternative—proposes requiring states
to cover pre-existing conditions while giving them more flexibility to do so. Doug Badger
of the Heritage Foundation, a member of the group, says the ACA’s guaranteed issue pro-
vision comes at a cost of driving up premiums and scaring otherwise healthy people out
of the market.
“Our view is that states are far better equipped to deal with those issues than the federal
government,” he says. “The federal government’s foray into that market has priced out mil-
lions of people.” The proposal would redirect the ACA’s spending on premium tax credits
and Medicaid expansion to help states set up risk mitigation mechanisms—like reinsurance
and high-risk pools—to protect people with high-cost health conditions, he says.
“The common denominator is to focus public resources on people with pre-existing
medical conditions and with chronic illnesses,” Badger says. “Don’t try to spread the cost
of covering them onto other policy holders, because the cost of that course, which is what
the ACA did, is to price the product out of reach of a lot of people.”
Another idea the consensus group offers to lure younger, healthier people into the indi-
vidual market: repeal the ACA’s 3:1 age-rating requirements.
Turns out, there are many different ways to profess one’s love for people with pre-existing
conditions. To paraphrase Pat Benatar, love can be a battlefield.
Why the ACA is ‘not dead yet’
and lives on in 2019
By Robert Calandra
A
t many levels and from multiple perspectives, President Trump and the Republican
Party seem as intent as ever on trying to kill off the ACA. The administration has,
for example, drastically cut funding for ACA navigators and ordered the Justice
Department not to defend the law against a suit brought by Texas and several other states.
Short-term health plans that aren’t ACA compliant are poised to become a bigger factor
in the individual market in 2019 because of Trump administration policies. The loosen-
ing of the rules for association health plans could also whittle away at the ACA market.
But the ACA—and more specifically, the individual ACA exchange market—is doing
quite well these days, thank you very much. The “I’m not dead yet” line from Monty Python
and the Holy Grail comes to mind.
Marketplace premium changes in 2019 vary dramatically by state
VT
23%
Premiums increasing

IN, MS, WY
0% Premiums decreasing

NC AL IL UT AK LA NV MO WI ME AZ NM CT MD MN NH NJ PA

DC ND DE NY WA HI KY NE WV RI IA KS MT OR SD OK SC MA AR CO ID VA OH FL TX CA GA MI

Source: Kaiser Family Foundation U.S. average

-1%

ACA premium prices have stabilized and even gone down for many plans. In October,
CMS announced that the average premium for the second-lowest-cost silver plans for 2019
had decreased by 1.5%. The enrollment period still had several weeks to go as we went TN
to press. But in 2018, almost 12 million Americans bought coverage through the ACA -26%

exchanges, a 3% decline from 2017, but not the kind of mass flight that many were either
predicting (the law’s detractors) or worrying about (some of its supporters).
The ACA is also getting more popular, although Republican-led repeal of the unpopular
individual mandate might have something to do with that. A Fox News poll conducted in
late October found the ACA had a 54% approval rating. The large premium increases last
year for coverage this year were a one-time adjustment, argued Ezekiel Emanuel in the New
York Times. “After a few rocky years, insurers are figuring out how to price the market, and
premiums are leveling out,” wrote Emanuel, a top Obama administration health official.
The Trump administration has a different take on reasons for the taming of premium
increases. The press release announcing the silver plan premiums credited elimination of
“overly burdensome regulations,” market stabilization rules issued by the administration in
2016, and the administration’s granting of waivers that have cleared the way for state-level
reinsurance programs.

Why employers are offering more

choices in health plans next year
By Jan Greene, Contributing Editor

A
merican employers may have to juggle uncertainties, some good, some bad—an
The labor market
unpredictable White House, a limited labor force, a volatile stock market. But one
thing they can count on: Health benefit costs will go up. is tight (an un-
Next year appears to be on track for more of the same. Employer surveys show a modest employment rate
but steady uptick in employer health benefit spending for the coming year—about 5% on of under 4%) and
average. Much of that increase will go toward specialty drugs, the benefit with the biggest the Cadillac tax is
price hikes. still a can kicked
Meanwhile, a tight labor market means employers won’t be able to skimp on offering
down the road.
health benefits, and the surveys show that more big employers are now offering workers a
choice of health plan options. Several years ago it was common for large employers to have
narrowed their offerings down to just one, usually a high-deductible, plan. Now they’re
offering two or three plans, says Tracy Watts, a senior partner at Mercer consulting. “We’re
seeing employers start to offer a wider variety of choice.”
It’s hard to nail down the effect of the long-delayed Cadillac tax on generous health
plans. Some consultants say the fact that this ACA provision has not been enacted has
allowed employers to plow money into benefits. Others say the possibility that the tax could

DECEMBER 2018 / MANAGED CARE 21

 2019
YEAR IN PREVIEW
go into effect with little warning has kept them conservative with their spending, although
currently it is scheduled to start in 2022.
Workers may get more health plan options, but one of those is almost certain to be
a high-deductible plan, usually with an accompanying health
savings account. The growth of HDHPs has plateaued in the past
few years; about a third of employees are enrolled in one. Paul
Fronstin, an economist with the Employee Benefit Research In-
stitute, says the main form of high-deductible benefit, the health
Employer trends savings account-associated plan, continues to be attractive to
HRAs offered cost-conscious employers. “It’s growing but it’s taking off like an
9% airplane, not the space shuttle,” he says.
7%
The health reimbursement account (HRA), which contains
money controlled by the employer that can be used for health Tracy Watts
9%
2017 2018
coverage, could also get a boost in 2019. The Trump administra-
7%
tion is pursuing a rule that would allow employers to use HRAs to help pay for workers’
Source: Kaiser Family Foundation
premiums on the individual health insurance market, something that was not allowed by
33% the Obama administration. HRAs could also be used to pay for dental benefits or short-
On-site primary care term insurance plans. But the proportion of companies offering HRAs is small and getting
24%
clinics smaller. According to the 2018 Kaiser Family Foundation employer survey it slid from 9%
33% in 2017 to 7% in 2018.
Employers are finding other ways to pump the brakes on their health care spending
24% through benefit design. The KFF employer survey found, for example, an increase in use
of tiered provider networks from 13% in 2017 to 17% in the past year. Mercer found 51%
of employers providing employees with a service that provides second opinions (which
may determine an expensive treatment is unnecessary) and 36% offering care manage-
ment benefits.
Another growth area for large employers is on-site primary care clinics; Mercer found
a third of large employers offer worksite clinics, up from 24% in 2012. It’s significant that
2012 2018 big employers are investing in these clinics even though they would count toward health
Source: Mercer
plan spending under a Cadillac tax, if it comes to pass, Watts said.
Unpredictable actions by the administration and Congress or the courts in 2019 are
always a possibility with health care, but Watts doubts that next year will bring any major
reorderings, even if the political winds and power arrangements were to shift. “It’s been
hard to get anything done” in Washington, she says. “The bottom line is that change is hard.”

Why blockchain for health care

may be finally turning the corner
Because it enables
By Richard Mark Kirkner, Contributing Editor
both the security

B
and sharing of lockchain is one of those curiosities like Picasso’s cubism: People admire it but don’t
data, blockchain know what to make of it. There’s been a lot of buzz about how blockchain will alter
seems ideally data record storage and transactions, but so far the hype has outpaced the reality.
Next year, however, could be the year blockchain turns a corner in health care.
suited to health
This fall PricewaterhouseCoopers issued a report on blockchain in health care and
care. Next year, the outlined six areas where it could have a profound impact: supply chain and inventory man-
pieces may come agement; enrollment and provider data management; back office functions and payments;
together for it to data management; managing risk and regulatory issues; and research and development.
finally get some Marco Iansiti and Karim R. Lakhani, writing last year in the Harvard Business Review
real traction in the (January–February 2017), pointed out the parallels between blockchain and TCP/IP
(transmission control protocol/internet protocol), which provided the digital sending
sector.
and processing foundation for the internet. “TCP/IP unlocked new economic value by

22 MANAGED CARE / DECEMBER 2018

dramatically lowering the cost of connections,” wrote the Harvard Business School profes-
sors. “Similarly, blockchain could dramatically reduce the cost of transactions.” Blockchain What is
would be the digital register for transactions—“a peer-to-peer network that sits on top of blockchain?
the internet,” as Iansiti and Lakhani noted. TCP/IP took 30 years to develop fully; with
blockchain, they said, the process will happen much faster. Bitcoin, for example, is built A digital record or ledger—
on blockchain technology. you might think of it as a
Brett Blackman, CEO and founder of the health care technology company HealthSplash, mini-database—that is struc-
tured as a series of blocks
describes blockchain as a continuously growing list of linked records, or blocks, linked
that are strung together in a
together and secured via encryption. Write once and read only. It can record transactions chain, thus the name. Each
between two parties, verify them instantaneously, and then transact payment—think claims block—a digital expression of
and reimbursement—just as fast. Each transaction is assigned a block that cannot be altered a transaction or an event—is
unless the other blocks in the chain are altered. That, Blackman notes, would require collu- validated by multiple com-
sion of a majority of the network. HealthSplash is in a pilot program with KanCare, Kansas’s puters on the internet. A key
Medicaid program, to create a platform to improve efficiency in verifying eligibility for feature of blockchain is that
participants through a singular digital platform. blockchains are distributed
For health care and the life sciences industry, blockchain represents “the perfect paradox” on many computers so there
because the data must be both shared and secured, Mark Treshock wrote in the IBM is no centralized database to
Blockchain Blog. The technology can provide faster access to vast amounts of secured hack.
data, improve the patient experience because people can get information so quickly, and
provide a guard against counterfeit drugs, he said. Yet an IBM survey in 2016 of over 200
health care executives found that health care organizations in North America were behind
their counterparts in other countries in adopting blockchain. Blackman thinks, though,
that 2019 could be the year that blockchain in health care goes from talk to traction. He
points to initiatives that Experian, the consumer credit reporting agency, and Cardona, the
cryptocurrency purveyor, have undertaken that could potentially give health care providers
platforms for expediting payments for services. Both became members of Hyperledger, an
open-source organization focused on blockchain technology. Other Hyperledger members
include the health care technology company Change Healthcare, Aetna, Eli Lilly, and Hashed
Health, which specializes in blockchain platforms for health care.

Why drug prices will continue

to roil the waters–and why
Scott Gottlieb, MD, will be
in the center of the action
By Jan Greene, Contributing Editor

T
hroughout 2018, drug prices kept going up and outrage about it followed close behind.
President Trump was one of the loudest voices complaining about rising prices on
brand name prescription drugs and eye-popping price tags on new specialty drugs
as they reached the market.
And yet the list of potential fixes issued by the administration in May 2018 was long
but did not include any price controls likely to draw significant fire from the influential
pharmaceutical industry. Later in the year the federal government issued occasional salvos,
such as a proposal to require television drug ads to include prices and a requirement that
pharmacists had to tell consumers if there was a cheaper alternative. Scott Gottlieb, MD
Then in October the administration offered its first truly hard-hitting proposal that in-
volved actual price-fixing, a concept sure to upset congressional Republicans and pharma.
The proposal to have Medicare start experimenting with negotiating prices of certain spe-
cialty drugs administered by physicians under Medicare Part B and to benchmark them to
continued on page 28

DECEMBER 2018 / MANAGED CARE 23

 NOW
APPROVED
INDICATION
LIMITED POPULATION: ARIKAYCE® is indicated in adults, who
have limited or no alternative treatment options, for the
treatment of Mycobacterium avium complex (MAC) lung
disease as part of a combination antibacterial drug regimen
in patients who do not achieve negative sputum cultures
after a minimum of 6 consecutive months of a multidrug
background regimen therapy. As only limited clinical safety
and effectiveness data for ARIKAYCE are currently available,
reserve ARIKAYCE for use in adults who have limited or no
alternative treatment options. This drug is indicated for use
in a limited and specific population of patients.
This indication is approved under accelerated approval
based on achieving sputum culture conversion (defined
as 3 consecutive negative monthly sputum cultures) by
Month 6. Clinical benefit has not yet been established.
Continued approval for this indication may be contingent
upon verification and description of clinical benefit in
confirmatory trials.
Limitation of Use: ARIKAYCE has only been studied in
patients with refractory MAC lung disease defined as
patients who did not achieve negative sputum cultures
after a minimum of 6 consecutive months of a multidrug
background regimen therapy. The use of ARIKAYCE is not
recommended for patients with non-refractory MAC
lung disease.
IMPORTANT SAFETY INFORMATION
WARNING: RISK OF INCREASED RESPIRATORY
ADVERSE REACTIONS
ARIKAYCE has been associated with an increased
risk of respiratory adverse reactions, including
hypersensitivity pneumonitis, hemoptysis,
bronchospasm, and exacerbation of underlying
pulmonary disease that have led to hospitalizations
in some cases.
Please see additional Important Safety Information and the Brief Summary on the following pages.
Hypersensitivity Pneumonitis has been reported with
the use of ARIKAYCE in the clinical trials. Hypersensitivity
pneumonitis (reported as allergic alveolitis, pneumonitis,
interstitial lung disease, allergic reaction to ARIKAYCE)
was reported at a higher frequency in patients treated
with ARIKAYCE plus background regimen (3.1%) compared
to patients treated with a background regimen alone
(0%). Most patients with hypersensitivity pneumonitis
discontinued treatment with ARIKAYCE and received
treatment with corticosteroids. If hypersensitivity
pneumonitis occurs, discontinue ARIKAYCE and manage
patients as medically appropriate.
Hemoptysis has been reported with the use of ARIKAYCE
in the clinical trials. Hemoptysis was reported at a
higher frequency in patients treated with ARIKAYCE plus
background regimen (17.9%) compared to patients treated
with a background regimen alone (12.5%). If hemoptysis
occurs, manage patients as medically appropriate.
Bronchospasm has been reported with the use of
ARIKAYCE in the clinical trials. Bronchospasm (reported as
asthma, bronchial hyperreactivity, bronchospasm, dyspnea,
dyspnea exertional, prolonged expiration, throat tightness,
wheezing) was reported at a higher frequency in patients
treated with ARIKAYCE plus background regimen (28.7%)
compared to patients treated with a background regimen
alone (10.7%). If bronchospasm occurs during the use of
ARIKAYCE, treat patients as medically appropriate.
Exacerbations of underlying pulmonary disease has
been reported with the use of ARIKAYCE in the clinical
trials. Exacerbations of underlying pulmonary disease
(reported as chronic obstructive pulmonary disease (COPD),
infective exacerbation of COPD, infective exacerbation of
bronchiectasis) have been reported at a higher frequency
in patients treated with ARIKAYCE plus background regimen
(14.8%) compared to patients treated with background
regimen alone (9.8%). If exacerbations of underlying
pulmonary disease occur during the use of ARIKAYCE, treat
patients as medically appropriate.
Limited Population: the first and only
FDA-approved treatment for refractory
MAC lung disease in adults as part of a
combination antibacterial drug regimen1
Ototoxicity has been reported with the use of ARIKAYCE in
the clinical trials. Ototoxicity (including deafness, dizziness,
presyncope, tinnitus, and vertigo) were reported with a
higher frequency in patients treated with ARIKAYCE plus
background regimen (17%) compared to patients treated
with background regimen alone (9.8%). This was primarily
driven by tinnitus (7.6% in ARIKAYCE plus background
regimen vs 0.9% in the background regimen alone arm) and
dizziness (6.3% in ARIKAYCE plus background regimen vs
2.7% in the background regimen alone arm). Closely monitor
patients with known or suspected auditory or vestibular
dysfunction during treatment with ARIKAYCE. If ototoxicity
occurs, manage patients as medically appropriate,
including potentially discontinuing ARIKAYCE.
Nephrotoxicity was observed during the clinical trials
of ARIKAYCE in patients with MAC lung disease but
not at a higher frequency than background regimen
alone. Nephrotoxicity has been associated with the
aminoglycosides. Close monitoring of patients with known
or suspected renal dysfunction may be needed when
prescribing ARIKAYCE.
Neuromuscular Blockade: Patients with neuromuscular
disorders were not enrolled in ARIKAYCE clinical trials.
Patients with known or suspected neuromuscular
disorders, such as myasthenia gravis, should be closely
monitored since aminoglycosides may aggravate
muscle weakness by blocking the release of
acetylcholine at neuromuscular junctions.
Embryo-Fetal Toxicity: Aminoglycosides can cause
fetal harm when administered to a pregnant woman.
Aminoglycosides, including ARIKAYCE, may be associated
with total, irreversible, bilateral congenital deafness in
pediatric patients exposed in utero. Patients who use
ARIKAYCE during pregnancy, or become pregnant while
taking ARIKAYCE should be apprised of the potential
hazard to the fetus.
Visit ARIKAYCEhcp.com
© 2018 Insmed Incorporated. All Rights Reserved. Insmed and ARIKAYCE
are trademarks of Insmed Incorporated. PP-ARIK-US-00024
Contraindications: ARIKAYCE is contraindicated in patients
with known hypersensitivity to any aminoglycoside.
Most Common Adverse Reactions: The most common
adverse reactions in Trial 1 at an incidence ≥5% for patients
using ARIKAYCE plus background regimen compared to
patients treated with background regimen alone were
dysphonia (47% vs 1%), cough (39% vs 17%), bronchospasm
(29% vs 11%), hemoptysis (18% vs 13%), ototoxicity (17% vs 10%),
upper airway irritation (17% vs 2%), musculoskeletal pain (17%
vs 8%), fatigue and asthenia (16% vs 10%), exacerbation of
underlying pulmonary disease (15% vs 10%), diarrhea (13% vs
5%), nausea (12% vs 4%), pneumonia (10% vs 8%), headache
(10% vs 5%), pyrexia (7% vs 5%), vomiting (7% vs 4%), rash (6%
vs 2%), decreased weight (6% vs 1%), change in sputum (5%
vs 1%), and chest discomfort (5% vs 3%).
Drug Interactions: Avoid concomitant use of ARIKAYCE
with medications associated with neurotoxicity,
nephrotoxicity, and ototoxicity. Some diuretics
can enhance aminoglycoside toxicity by altering
aminoglycoside concentrations in serum and tissue.
Avoid concomitant use of ARIKAYCE with ethacrynic acid,
furosemide, urea, or intravenous mannitol.
Overdosage: Adverse reactions specifically associated
with overdose of ARIKAYCE have not been identified.
Acute toxicity should be treated with immediate
withdrawal of ARIKAYCE, and baseline tests of renal
function should be undertaken. Hemodialysis may be
helpful in removing amikacin from the body. In all cases
of suspected overdosage, physicians should contact the
Regional Poison Control Center for information about
effective treatment.
Please see the Brief Summary on the following pages.
Reference: 1. ARIKAYCE [package insert]. Bridgewater, NJ: Insmed
Incorporated; 2018.
ARIKAYCE® (amikacin liposome inhalation suspension)
BRIEF SUMMARY: For complete safety, please consult the full
Prescribing Information.
WARNING: RISK OF INCREASED RESPIRATORY ADVERSE REACTIONS
ARIKAYCE has been associated with an increased risk of respiratory
adverse reactions including, hypersensitivity pneumonitis, hemoptysis,
bronchospasm, exacerbation of underlying pulmonary disease that have
led to hospitalizations in some cases [see Warnings and Precautions
(5.1, 5.2, 5.3, 5.4)].
1 INDICATIONS AND USAGE
LIMITED POPULATION: ARIKAYCE® is indicated in adults, who have limited or no alternative
treatment options, for the treatment of Mycobacterium avium complex (MAC) lung disease as part of a
combination antibacterial drug regimen in patients who do not achieve negative sputum cultures after a
minimum of 6 consecutive months of a multidrug background regimen therapy. As only limited clinical
safety and effectiveness data for ARIKAYCE are currently available, reserve ARIKAYCE for use in adults
who have limited or no alternative treatment options. This drug is indicated for use in a limited and
specific population of patients.
This indication is approved under accelerated approval based on achieving sputum culture conversion
(defined as 3 consecutive negative monthly sputum cultures) by Month 6. Clinical benefit has not yet been
established [see Clinical Studies (14)]. Continued approval for this indication may be contingent upon
verification and description of clinical benefit in confirmatory trials.
Limitation of Use: ARIKAYCE has only been studied in patients with refractory MAC lung disease
defined as patients who did not achieve negative sputum cultures after a minimum of 6 consecutive
months of a multidrug background regimen therapy. The use of ARIKAYCE is not recommended for
patients with non-refractory MAC lung disease.
2 DOSAGE AND ADMINISTRATION
2.1 Important Administration Instructions: ARIKAYCE is for oral inhalation use only. Administer
by nebulization only with the LamiraTM Nebulizer System. Refer to the Instructions for Use for full
administration information on use of ARIKAYCE with the Lamira Nebulizer System.
Instruct patients using a bronchodilator (‘reliever’) to first use the bronchodilator following the
bronchodilator leaflet for use information before using ARIKAYCE.
Pre-treatment with short-acting selective beta-2 agonists should be considered for patients with known
hyperreactive airway disease, chronic obstructive pulmonary disease, asthma, or bronchospasm [see
Warnings and Precautions (5.3)].
2.2 Recommended Dosage: The recommended dosage of ARIKAYCE in adults is once daily
inhalation of the contents of one 590 mg/8.4 mL ARIKAYCE vial (590 mg of amikacin) using the Lamira
Nebulizer System.
Administer ARIKAYCE with the Lamira Nebulizer System only. ARIKAYCE should be at room
temperature before use. Prior to opening, shake the ARIKAYCE vial well for at least 10 to 15 seconds
until the contents appear uniform and well mixed. The ARIKAYCE vial is opened by flipping up the
plastic top of the vial then pulling downward to loosen the metal ring. The metal ring and the rubber
stopper should be removed carefully. The contents of the ARIKAYCE vial can then be poured into the
medication reservoir of the nebulizer handset.
If a daily dose of ARIKAYCE is missed, administer the next dose the next day. Do NOT double the dose
to make up for the missed dose.
4 CONTRAINDICATIONS
ARIKAYCE is contraindicated in patients with a known hypersensitivity to any aminoglycoside.
5 WARNINGS AND PRECAUTIONS
5.1 Hypersensitivity Pneumonitis: Hypersensitivity pneumonitis has been reported with the
use of ARIKAYCE in the clinical trials. Hypersensitivity pneumonitis (reported as allergic alveolitis,
pneumonitis, interstitial lung disease, allergic reaction to ARIKAYCE) was reported at a higher
frequency in patients treated with ARIKAYCE plus a background regimen (3.1%) compared to patients
treated with a background regimen alone (0%). Most patients with hypersensitivity pneumonitis
discontinued treatment with ARIKAYCE and received treatment with corticosteroids [see Adverse
Reactions (6.1)]. If hypersensitivity pneumonitis occurs, discontinue ARIKAYCE and manage the patient
as medically appropriate.
5.2 Hemoptysis: Hemoptysis has been reported with the use of ARIKAYCE in the clinical trials.
Hemoptysis was reported at a higher frequency in patients treated with ARIKAYCE plus a background
regimen (17.9%) compared to patients treated with a background regimen alone (12.5%) [see Adverse
Reactions (6.1)]. If hemoptysis occurs, manage the patients as medically appropriate.
5.3 Bronchospasm: Bronchospasm has been reported with the use of ARIKAYCE in the clinical
trials. Bronchospasm (reported as asthma, bronchial hyperreactivity, bronchospasm, dyspnea, dyspnea
exertional, prolonged expiration, throat tightness, wheezing) was reported at a higher frequency in
patients treated with ARIKAYCE plus a background regimen (28.7%) compared to patients treated with a
background regimen alone (10.7%) [see Adverse Reactions (6.1)]. If bronchospasm occurs during the
use of ARIKAYCE treat the patients as medically appropriate.
5.4 Exacerbation of Underlying Pulmonary Disease: Exacerbations of underlying pulmonary
disease has been reported with the use of ARIKAYCE in the clinical trials. Exacerbations of underlying
pulmonary disease (reported as chronic obstructive pulmonary disease, infective exacerbation of
chronic obstructive pulmonary disease, infective exacerbation of bronchiectasis) have been reported at
a higher frequency in patients treated with ARIKAYCE plus a background regimen (14.8%) compared
to patients treated with background regimen alone (9.8%) [see Adverse Reactions (6.1)]. If
exacerbations of underlying pulmonary disease occurs during the use of ARIKAYCE, treat the patients
as medically appropriate.
5.5 Ototoxicity: Ototoxicity has been reported with the use of ARIKAYCE in the clinical trials.
Ototoxicity (including deafness, dizziness, presyncope, tinnitus, and vertigo) were reported with a
higher frequency in patients treated with ARIKAYCE plus a background regimen (17%) compared to
patients treated with background regimen alone (9.8%). This was primarily driven by tinnitus (7.6%
in ARIKAYCE plus background regimen vs 0.9% in the background regimen alone arm) and dizziness
(6.3% in ARIKAYCE plus background regimen vs 2.7% in the background regimen alone arm) [see
Adverse Reactions (6.1)].
Closely monitor patients with known or suspected auditory or vestibular dysfunction during treatment
with ARIKAYCE. If ototoxicity occurs, manage the patient as medically appropriate, including potentially
discontinuing ARIKAYCE.
5.6 Nephrotoxicity: Nephrotoxicity was observed during the clinical trials of ARIKAYCE in patients
with MAC lung disease but not at a higher frequency than the background regimen alone [see Adverse
Reactions (6.1)]. Nephrotoxicity has been associated with the aminoglycosides. Close monitoring of
patients with known or suspected renal dysfunction may be needed when prescribing ARIKAYCE.
5.7 Neuromuscular Blockade: Patients with neuromuscular disorders were not enrolled in
ARIKAYCE clinical trials. Patients with known or suspected neuromuscular disorders, such as
myasthenia gravis, should be closely monitored since aminoglycosides may aggravate muscle
weakness by blocking the release of acetylcholine at neuromuscular junctions.
5.8 Embryo-Fetal Toxicity: Aminoglycosides can cause fetal harm when administered to a pregnant
woman. Aminoglycosides, including ARIKAYCE, may be associated with total, irreversible, bilateral
congenital deafness in pediatric patients exposed in utero. Patients who use ARIKAYCE during
pregnancy, or become pregnant while taking ARIKAYCE should be apprised of the potential hazard to
the fetus [see Use in Specific Populations (8.1)].
6 ADVERSE REACTIONS
The following clinically significant adverse reactions are described in greater detail in other sections
of labeling:
• Hypersensitivity Pneumonitis [see Boxed Warning and Warnings and Precautions (5.1)]
• Hemoptysis [see Boxed Warning and Warnings and Precautions (5.2)]
• Bronchospasm [see Boxed Warning and Warnings and Precautions (5.3)]
• Exacerbation of Underlying Pulmonary Disease [see Boxed Warning and Warnings and Precautions (5.4)]
• Ototoxicity [see Warnings and Precautions (5.5)]
• Nephrotoxicity [see Warnings and Precautions (5.6)]
• Neuromuscular Blockade [see Warnings and Precautions (5.7)]
6.1 Clinical Trials Experience: Because clinical trials are conducted under widely varying conditions,
adverse reaction rates observed in the clinical trials of a drug cannot be directly compared to rates in the
clinical trials of another drug and may not reflect the rates observed in practice.
Overview of Clinical Trials for Safety Evaluation
Within the refractory NTM clinical program, 388 patients that participated in three clinical trials were
treated with ARIKAYCE at the dose of 590 mg/day (median duration of exposure to ARIKAYCE was
169 days).
Trial 1 (NCT#02344004) was an open-label, randomized (2:1), multi-center Phase 3 trial in patients with
refractory Mycobacterium avium complex (MAC) lung disease. Patients were randomized to either
8 months of ARIKAYCE plus a background regimen (n=223) or background regimen alone (n=112).
Trial 2 was a single-arm extension of Trial 1 for refractory MAC lung disease patients that failed to
achieve negative sputum cultures after 6 months of treatment or had a relapse or recurrence by Month 6
from either study arm of Trial 1. A total of 133 patients (n=74 from the prior background regimen alone
arm of Trial 1, and n=59 from the prior ARIKAYCE plus background regimen arm in Trial 1) participated
in the trial.
Trial 3 (NCT#01315236) was a double-blind, randomized, placebo-controlled Phase 2 study in patients
with refractory nontuberculous mycobacterial (NTM) lung disease caused by MAC and Mycobacterium
abscessus. Patients were randomized to either ARIKAYCE plus background regimen or an inhaled
diluted empty liposome placebo plus background regimen for 84 days.
Across all clinical trials of patients with and without refractory NTM lung infection, 802 patients were
exposed to multiple doses of ARIKAYCE.
Adverse Reactions Leading to Treatment Discontinuation
In the three NTM studies, there was a higher incidence of premature discontinuation of ARIKAYCE. In
Trial 1, 33.5% discontinued ARIKAYCE prematurely; most were due to adverse reactions (17.4%) and
withdrawal by subject (9.4%). In the comparator arm 8% of subjects discontinued their background
regimen, with 0.9% due to adverse reactions and 5.4% due to withdrawal by subject. In Trial 2 (the
single-arm extension of Trial 1), 20.3% of patients starting on ARIKAYCE discontinued prematurely
with 14.9% discontinuing due to adverse reactions. In Trial 3, all 9 (20.5%) premature discontinuations
occurred in the ARIKAYCE plus background regimen-treated patients and there were no premature
discontinuations in the placebo plus background regimen arm.
Serious Adverse Reactions in Trials 1 and 3
In the two randomized trials (Trial 1 and Trial 3), there were more serious adverse reactions (SARs)
reported in the ARIKAYCE-treated arm as compared to the respective control arm. In Trial 1, 20.2%
of patients treated with ARIKAYCE plus background regimen reported SAR as compared to 16.1% of
patients treated with background regimen alone. In addition, in Trial 1 [2 to 1 randomization, ARIKAYCE
plus background regimen versus background regimen alone], there were 82 hospitalizations in
41 patients (18.4%) treated with ARIKAYCE plus background regimen compared to 23 hospitalizations
in 15 patients (13.4%) treated with background regimen alone. The most common SARs and reasons
for hospitalization in the ARIKAYCE plus background regimen arm were related to exacerbation of
underlying pulmonary disease and lower respiratory tract infections, such as pneumonia.
In Trial 3, 18.2% of patients treated with ARIKAYCE plus background regimen reported SARs compared
to 8.9% of patients treated with background regimen plus inhaled placebo.
Common Adverse Reactions
The incidence of adverse reactions in Trial 1 are displayed in Table 1. Only those adverse reactions with
a rate of at least 5% in the ARIKAYCE plus background regimen group and greater than the background
regimen alone group, are shown.
 Table 1: Adverse Reactions in ≥5% of ARIKAYCE-treated MAC Patients and More Animal reproductive toxicology studies have not been conducted with inhaled amikacin. Subcutaneous
Frequent than Background Regimen Alone in Trial 1 administration of amikacin to pregnant rats (up to 100 mg/kg/day) and mice (up to 400 mg/kg/day)
ARIKAYCE plus Background during organogenesis was not associated with fetal malformations. Ototoxicity was not adequately
Background Regimen Alone evaluated in offspring in animal studies.
Adverse Reaction
Regimen (n=223) (n=112) The estimated background risk of major birth defects and miscarriage for the indicated populations is
n (%) n (%) unknown. All pregnancies have a background risk of birth defect, loss, or other adverse outcomes. In
Dysphonia a
105 (47) 1 (1) the U.S. general population, the estimated background risk of major birth defects and miscarriage in
Coughb 87 (39) 19 (17) clinically recognized pregnancies is 2-4% and 15-20%, respectively.
Bronchospasmc 64 (29) 12 (11) Data
Hemoptysis 40 (18) 14 (13) Animal Data
Ototoxicityd 38 (17) 11 (10)
No animal reproductive toxicology studies have been conducted with ARIKAYCE or non-liposomal
Upper airway irritatione 37 (17) 2 (2)
amikacin administered by inhalation.
Musculoskeletal painf 37 (17) 9 (8)
Fatigue and asthenia 36 (16) 11 (10) Amikacin was subcutaneously administered to pregnant rats (Gestation Days 8-14) and mice (Gestation
Exacerbation of underlying pulmonary disease g 33 (15) 11 (10) Days 7-13) at doses of 25, 100, or 400 mg/kg to assess developmental toxicity. These doses did not
cause fetal visceral or skeletal malformations in mice. The high dose was excessively maternally toxic
Diarrhea 28 (13) 5 (5)
in rats (nephrotoxicity and mortality were observed), precluding the evaluation of offspring at this dose.
Nausea 26 (12) 4 (4)
Fetal malformations were not observed at the low or mid dose in rats. Postnatal development of the rats
Pneumoniah 22 (10) 9 (8) and mice exposed to these doses of amikacin in utero did not differ significantly from control.
Headache 22 (10) 5 (5)
Ototoxicity was not adequately evaluated in offspring in animal developmental toxicology studies.
Pyrexia 16 (7) 5 (5)
Vomiting i
15 (7) 4 (4) 8.2 Lactation
Rashj 14 (6) 2 (2) Risk Summary
Weight decreased 14 (6) 1 (1) There is no information regarding the presence of ARIKAYCE in human milk, the effects on the breastfed
Change in sputumk 12 (5) 1 (1) infant, or the effects on milk production after administration of ARIKAYCE by inhalation. Although
Chest discomfort 12 (5) 3 (3) limited published data on other routes of administration of amikacin indicate that amikacin is present in
a
Includes aphonia and dysphonia. human milk, systemic absorption of ARIKAYCE following inhaled administration is expected to be low
b
Includes cough, productive cough, and upper airway cough syndrome. [see Clinical Pharmacology (12.3)]. The developmental and health benefits of breastfeeding should be
c
Includes asthma, bronchial hyperreactivity, bronchospasm, dyspnea, dyspnea exertional, prolonged expiration, throat considered along with the mother’s clinical need for ARIKAYCE and any potential adverse effects on the
tightness, wheezing. breastfed child from ARIKAYCE or from the underlying maternal condition.
d
Includes deafness, deafness neurosensory, deafness unilateral, dizziness, hypoacusis, presyncope, tinnitus, vertigo.
e
Includes oropharyngeal pain, oropharyngeal discomfort, throat irritation, pharyngeal erythema, upper airway inflammation, 8.4 Pediatric Use: Safety and effectiveness of ARIKAYCE in pediatric patients below 18 years of age
pharyngeal edema, vocal cord inflammation, laryngeal pain, laryngeal erythema, laryngitis. have not been established.
f
Includes back pain, arthralgia, myalgia, pain/body aches, muscle spasm, and musculoskeletal.
g
Includes COPD, infective exacerbation of COPD, infective exacerbation of bronchiectasis. 8.5 Geriatric Use: In the NTM clinical trials, of the total number of patients receiving ARIKAYCE,
h
Includes atypical pneumonia, empyema, infection pleural effusion, lower respiratory tract infection, lung infection, lung 196 (50.5%) were ≥65 years and 55 (14.2%) were ≥75 years. No overall differences in safety and
infection pseudomonas, pneumonia, pneumonia aspiration, pneumonia pseudomonas, pseudomonas infection, and effectiveness were observed between elderly subjects and younger subjects. Because elderly patients
respiratory tract infection. are more likely to have decreased renal function, it may be useful to monitor renal function [see
i
Includes vomiting and post-tussive vomiting.
Warnings and Precautions (5.6)].
j
Includes rash, rash maculo-papular, drug eruption, and urticaria.
k
Includes increased sputum, sputum purulent, and sputum discolored. 8.6 Hepatic Impairment: ARIKAYCE has not been studied in patients with hepatic impairment.
Selected adverse drug reactions that occurred in <5% of patients and at higher frequency in ARIKAYCE- No dose adjustments based on hepatic impairment are required since amikacin is not hepatically
treated patients in Trial 1 are presented in Table 2. metabolized [see Clinical Pharmacology (12.3)].
8.7 Renal Impairment: ARIKAYCE has not been studied in patients with renal impairment. Given the low
Table 2: Selected Adverse Reactions in <5% of ARIKAYCE-treated MAC Patients and systemic exposure to amikacin following administration of ARIKAYCE, clinically relevant accumulation of
More Frequent than Background Regimen Alone in Trial 1 amikacin is unlikely to occur in patients with renal impairment. However, renal function should be monitored
ARIKAYCE plus Background Background Regimen in patients with known or suspected renal impairment, including elderly patients with potential age-related
Regimen (n=223) Alone (n=112) decreases in renal function [see Warnings and Precautions (5.6), Use in Specific Populations (8.5)].
Anxiety 10 (4.5) 0 (0)
Oral fungal infectiona 9 (4) 2 (1.8)
10 OVERDOSAGE
Bronchitis 8 (3.6) 3 (2.7) Adverse reactions specifically associated with overdose of ARIKAYCE have not been identified. Acute
Hypersensitivity pneumonitisb 8 (3.6) 0 (0) toxicity should be treated with immediate withdrawal of ARIKAYCE, and baseline tests of renal function
should be undertaken.
Dysgeusia 7 (3.1) 0 (0)
Respiratory failurec 6 (2.7) 1 (0.9) Hemodialysis may be helpful in removing amikacin from the body.
Epistaxis 6 (2.7) 1 (0.9) In all cases of suspected overdosage, physicians should contact the Regional Poison Control Center for
Neuromuscular disorderd 5 (2.2) 0 (0) information about effective treatment. In the case of any overdosage, the possibility of drug interactions
Dry mouth 5 (2.2) 0 (0) with alterations in drug disposition should be considered.
Pneumothorax e
5 (2.2) 1 (0.9) 13. NONCLINICAL TOXICOLOGY
Exercise tolerance decreased 3 (1.3) 0 (0)
13.1 Carcinogenesis, Mutagenesis, Impairment of Fertility: In a 2-year inhalation
Balance disorder 3 (1.3) 0 (0) carcinogenicity study, rats were exposed to ARIKAYCE for 15-25, 50-70, or 155-170 minutes per day
a
Includes oral candidiasis and oral fungal infection. for 96-104 weeks. These provided approximate inhaled doses of 5, 15, and 45 mg/kg/day. Squamous
b
Includes allergic alveolitis, interstitial lung disease, and pneumonitis. cell carcinoma was observed in the lungs of 2 of 120 rats administered the highest dose tested.
c
Includes acute respiratory failure and respiratory failure.
d
Includes muscle weakness, neuropathy peripheral, and balance disorder.
Maximum serum AUC levels of amikacin in the rats at steady state were approximately 1.3, 2.8, and
e
Includes pneumothorax, pneumothorax spontaneous, and pneumomediastinum. 7.6 mcg*hr/mL at the low, mid, and high doses, respectively, compared with 23.5 mcg*hr/mL (8.0 to
46.5 mcg*hr/mL) measured in humans. The squamous cell carcinomas may be the result of a high lung
Refer to Table 1 and Table 2 for the incidence rate of hypersensitivity pneumonitis, bronchospasm, burden of particulates from ARIKAYCE in the rat lung. The relevance of the lung tumor findings with
cough, dysphonia, exacerbation of underlying disease, hemoptysis, ototoxicity, upper airway irritation, regards to humans receiving ARIKAYCE is unknown.
and neuromuscular disorders [see Warnings and Precautions (5.1, 5.2, 5.3, 5.4, 5.6)].
No evidence of mutagenicity or genotoxicity was observed in a battery of in vitro and in vivo
7 DRUG INTERACTIONS genotoxicity studies with a liposome-encapsulated amikacin formulation similar to ARIKAYCE (in vitro
7.1 Drugs with Neurotoxic, Nephrotoxic, or Ototoxic Potential: Avoid concomitant use of microbial mutagenesis test, in vitro mouse lymphoma mutation assay, in vitro chromosomal aberration
ARIKAYCE with medications associated with neurotoxicity, nephrotoxicity, and ototoxicity. study, and an in vivo micronucleus study in rats).
7.2 Ethacrynic Acid, Furosemide, Urea, or Mannitol: Some diuretics can enhance No fertility studies were conducted with ARIKAYCE. Intraperitoneal administration of amikacin to male
aminoglycoside toxicity by altering aminoglycoside concentrations in serum and tissue. Avoid and female rats at doses up to 200 mg/kg/day prior to mating through Day 7 of gestation were not
concomitant use of ARIKAYCE with ethacrynic acid, furosemide, urea, or intravenous mannitol. associated with impairment of fertility or adverse effects on early embryonic development.
8 USE IN SPECIFIC POPULATIONS 13.2 Animal Toxicology and/or Pharmacology: To provide information about chronic dosing of
8.1 Pregnancy ARIKAYCE to another animal species, a 9-month inhalation toxicology study was conducted in dogs.
Foamy alveolar macrophages associated with clearance of the inhaled product were present at dose-
Risk Summary related incidence and severity, but they were not associated with inflammation, tissue hyperplasia, or the
There are no data on ARIKAYCE use in pregnant women to evaluate for any drug-associated risk of presence of preneoplastic or neoplastic changes. Dogs were exposed to ARIKAYCE for up to 90 minutes
major birth defects, miscarriage or adverse maternal or fetal outcomes. Although systemic absorption of per day, providing inhaled amikacin doses of approximately 5, 10, and 30 mg/kg/day.
amikacin following oral inhalation is expected to be low [see Clinical Pharmacology (12.3)], systemic
exposure to aminoglycoside antibacterial drugs, including ARIKAYCE, may be associated with total,
irreversible, bilateral congenital deafness when administered to pregnant women [see Warning and © 2018 Insmed Incorporated. All Rights Reserved. Insmed and ARIKAYCE
Precautions (5.8)]. Advise pregnant women of the potential risk to a fetus. are trademarks of Insmed Incorporated. All other trademarks are property of
their respective owner. PP-ARIK-US-00348
continued from page 23

2019
YEAR IN PREVIEW
the lower prices in other Western countries was meant in part to reduce drag from “global
freeloaders,” Trump declared.
The proposal will go through the regulatory meat grinder in 2019, so time will tell if
it emerges intact. The plan is sure to stir opposition with powerful constituencies such as
drug companies and physicians; part of the plan would cut the doctors’ share of drugs they
provide to Medicare patients directly. At the same time, it has one key political advantage:
Congress doesn’t have to get involved unless the administration wants to expand the experi-
ment beyond specific geographic areas to all Medicare beneficiaries.
None of these ideas to control the complicated pharmaceuticals
We’ll see what market is new, notes Milena Sullivan, director of policy for Avalere
happens to the Health, a consulting firm. But most have been impossible to get past
administration’s political hurdles or were dropped for lack of interest. “Since we’ve
Part B proposal. seen these proposals or some variation thereof, we can certainly
expect there would be pushback from a range of stakeholders,”
Congress is not
Sullivan predicted.
likely to take Meanwhile, much of the action is likely to remain with the
bold action, FDA. The agency, under Administrator Scott Gottlieb, MD, has Milena Sullivan
partly because been working to increase competition in drug markets by pushing
drugmakers are through generic applications quickly and encouraging the development of biosimilars.
a strong influence Gottlieb has been outspoken about the need to make some sense of “Kabuki” drug pricing
schemes that obscure profit taking across the supply chain; he also called out PBMs and
on both parties.
their complicated rebate arrangements.
That leaves the FDA But drug pricing is its own strange, counterintuitive world. Janet Woodcock, MD, direc-
and Administrator tor of the FDA’s Center for Drug Evaluation and Research, said in late 2018 that raising
Scott Gottlieb, MD, the price of a given generic “a thousandfold” could make that product attractive and draw
as major players other pharmaceutical firms to offer a version of it at a more competitive price. Such is the
in efforts to rein in state of the drug marketplace.
drug prices. After halt, price increases have resumed
Other proposals floating around HHS and Capitol Hill would go after the rebates that
PBMs currently hold onto or give to their employer clients and shift them to point of sale
and directly to consumers. Another line of reform focuses on drug patents and giving
brand name makers fewer tools to extend patents and block generic versions. Congress
could also pursue price transparency, requiring drugmakers to publicize significant price
increases. It could also give Medicare beneficiaries relief by capping their out-of-pocket
costs for prescriptions.
Action on Capitol Hill is somewhat dependent on what Democrats might do with their
control of the House, but in reality drugmakers have significant influence over both parties
and efforts to control prices have flagged under both parties. There has also been activity
on drug prices in state legislatures in 2017 and 2018, but Sullivan said that appears to have
slowed down for 2019.
In the private sector, insurers, wholesalers and retailers are also on the lookout for ways
to rein in drug costs. CVS Caremark, the PBM part of CVS Health, is offering employers
a plan that would restrict formulary access to drugs that meet a threshold of $100,000 per
quality-adjusted life year (see “CVS and the $100,000 QALY,” page 14).
Drugmakers themselves see the writing on the wall and say they are making efforts to
show good faith, such as Amgen’s move to cut the cost of its cholesterol drug Repatha from
$14,000 per year to $5,850.
Others have halted planned price increases, though skeptics say the moves had little
actual impact; the Associated Press reported in September that for every drug price cut,
there were 96 price increases. Pfizer CEO Ian Read said in late October that the company
would resume raising prices next year; other companies may follow suit. Analysts believe
drug prices will just keep going up overall in 2019; the Vizient Drug Price Forecast predicted
drug prices will go up 5%.

28 MANAGED CARE / DECEMBER 2018

Why the new opioid bill
won’t really change the way
insurers approach the epidemic
By Frank Diamond, Managing Editor

T
he big development in fighting the opioid crisis in 2018 was the massive Support for Which is not to say
Patients and Communities Act signed into law by President Trump on October 24. that health plans
Eric Bailly, the business solutions director at Anthem who oversees that insurer’s
will not attempt
substance abuse program, says that the law probably won’t “have a dramatic impact on
our continued strategies.” He adds: “The legislation helps solidify many of our current some innovative
strategies, such as support for expanding the use of telehealth for comprehensive medi- things on their
cation assisted treatment.” own. One such
Keith Humphreys, drug policy expert at Stanford University, notes that the law’s payer innovation: an
policy changes focus mostly on Medicaid and Medicare, although commercial health plans addiction recovery
will be more closely monitored on how well they provide mental health parity.
medical home.
The emphasis in 2019 will be on early intervention and increasing access to nonopioid
treatments, but that’s a continuation of what plans have been doing for the last few years.
There’s a lot to like about the bill, says Kate Berry, AHIP’s senior vice president of clinical
affairs, including provisions that make telehealth more flexible. That could conceivably lead
to telehealth counseling sessions with substance use disorder (SUD) patients that allows
for them to better avoid the stigma of ad-
diction. But, again, just how that will work National overdose deaths
on the ground is still unknown. Number of deaths involving opioids
“This is fairly new, right?” asks Berry. 50,000 49,068
Total
Right. Female 42,249
It’s no mystery why the law garnered bi- 40,000 Male
partisan support. Although the number of
overall drug overdose deaths seems to have 30,000
(arguably) gone down in 2017, the number
of deaths from opioids laced with fentanyl 20,000
actually increased, from about 29,000 in
2017 to a projected 30,000 in 2018. The 10,000
National Institute on Drug Abuse says that
0
there were 49,068 opioid deaths in 2017. 2002 2004 2006 2008 2010 2012 2014 2016 *
It’s a huge problem and will remain one *2017 data are provisional
for some time. Source: National Institute on Drug Abuse
Berry likes the way the legislation cracks
down on so-called sober homes, which are supposed to be safe places for people who are
addicted and who want to get their lives back on track. Instead, HHS investigators have
found that many of them take advantage of vulnerable patients and make their drug-related
and other problems worse.

Credible allegations of fraud

She also likes that the law allows suspension of payment for prescription drugs in Medicare
Advantage and Part D when the dispensers are being investigated for credible allegations
of fraud.
Insurers can also better monitor opioid prescribing for things like lower back pain. “We’re
looking at other kinds of treatment for that,” says Berry.
For the most part, though, health plans in 2019 will continue to do what they did in
2018, which is to investigate innovative approaches to dealing with the problem. One

DECEMBER 2018 / MANAGED CARE 29

 2019
YEAR IN PREVIEW
such approach is an addiction recovery medical home model developed by the Alliance
for Recovery-Centered Addiction Services. Anthem’s a member, and so are some other
heavy hitters such as Leavitt Partners and the National Council on Alcoholism and Drug
Dependence. The model includes bundled payments and performance bonuses, nationally
recognized quality metrics, and the placement of treatment and recovery providers close
to where SUD patients live.
“Going into 2019, it’s our intent to launch at least one, if not several, pilots within our
Anthem markets, to give this a shot, and to take a look and see if we can make this work,”
says Bailly at Anthem.
Meanwhile there’s the opioid legislation. Health insurers are still sorting through its
ramifications.
“We are partnering with others in the Blue Cross Blue Shield Association to really take
a look at what’s been passed and what wasn’t,” says Bailly.
Some of the main provisions include cracking down on mailed shipments of drugs like
fentanyl. It also provides more inpatient treatment beds, allowing payments for Medicaid
beneficiaries for five years. In addition, it frees up money for demonstration medication
assistance programs, a crucial step, many in the medical community believe.
However, the law doesn’t give health plans access to information in state-run prescription
drug monitoring programs (PDMPs). “Allowing health plans access to PDMP data would
“The CDC opioid help existing PDMPs reach full potential for efficacy in addressing opioid misuse,” says Bailly.
prescribing guidelines Berry at AHIP points to privacy concerns and “a lack of understanding by many about
that were released a why patients can benefit from plans having access to this data and what plans do with it,”
few years ago say that
as a couple of the reasons that health plans can’t so far convince policy makers to let plans
opioids should not be
the first thing that you get a hold of PDMP data.
try for pain,” says AHIP’s Even when states have recognized the benefit of plans having access to such data, technical
Kate Berry. barriers on granting optimal access remain, says Berry. “We strongly advocate for policy that
will allow integrating of the PDMP data with claims data to give a more complete picture
of people’s controlled substances prescriptions,” says Berry.

What about utilization management?

What to do about utilization management seems to also have been left unaddressed.
A study in June in JAMA Network Open that looked at opioid prescribing in Medicaid,
Medicare Advantage, and commercial insurance plans garnered some headlines because
it concluded that those plans rely too heavily on utilization management that excludes
non-pharmaceutical treatments for pain.
Berry counters that nearly all insurers cover, for instance, chiropractic and physical
therapy. “But this is a really complex area,” she adds. “The evidence is limited for some
of those other types of care. There are not a lot of studies that say what type of treatment
works best for what type of pain.”
Berry hopes that real-world evidence might step into the void where, so far at least,
clinical studies have not ventured. “A lot of work needs to be done; we don’t really have a
consensus on how to measure pain,” says Berry. “Patients might have high expectations to
be pain free and that may not always be the realistic answer.”
Cultural change has to accompany changes in treatment. It is far easier to pick up a
prescription than it is to go to six or eight physical therapy appointments, Berry observes.
Patients need to be educated about the different options for pain relief.
“The CDC opioid prescribing guidelines that were released a few years ago say that opioids
should not be the first thing that you try for pain,” says Berry. “Sometimes stretching and
other kinds of things can be just as effective.”
Or ibuprofen, says Berry—something found in every drug store in America.
She sees health plan benefit design and utilization management in 2019 evolving as more
is learned about approaches to pain management. Health plans will continue to struggle
to strike the right balance, says Berry. “We don’t want patients to go without treatment for
pain. We don’t want them to be in danger of addiction.”

30 MANAGED CARE / DECEMBER 2018

Why marijuana is headed
for the mainstream
By Thomas Reinke, Contributing Editor

T
he credibility of cannabis as a source of a legitimate pharmaceutical ingredient States are liberal-
in prescription medications took a major step forward in 2018 when the FDA ap-
izing their mari-
proved Epidiolex (cannabidiol) for two types of severe seizures. Epidiolex was a
stellar candidate for approval. It reduced convulsive seizures by about 40% and has a good juana laws. Federal
safety profile. The advisory committee’s recommendation for approval was unanimous. officials may be
Epidiolex may turn out to be the trailblazer for more FDA-approved cannabis-derived ready to take a
drugs. It has triggered an important regulatory change that may lead to additional changes step in that direc-
in 2019 that will spur drug development and also fuel the retail medical pot market. tion by ending the
Historically, drug development with cannabis has been severely curtailed by its classifica-
restrictions on a
tion by the Drug Enforcement Administration as a Schedule 1 highly restricted narcotic.
Cannabis researchers must register and be approved by the DEA, and they must account key ingredient,
for every fraction of an ounce of the drug they use. Likewise, physicians conducting clinical cannabidiol.
trials must be approved by the DEA and register their patients. The federal government
also has ridiculous bureaucratic restrictions. The DEA allows only one individual at the
University of Mississippi to grow cannabis for medical research purposes.
Epidiolex’s approval created a disconnect between the FDA and DEA and forced the
federal government to reconsider its ban on prescribing cannabis-based drugs. The FDA
sent a letter to the DEA outlining several reasons why Epidiolex’s active ingredient, canna-
bidiol, should not fall under the restrictions applied to narcotics. In
September, the DEA reclassified Epidiolex as a Schedule V narcotic,
which allows physicians to prescribe it without registration. But
the DEA kept cannabis itself on Schedule I as a restricted narcotic.
The Trump administration has been sending mixed signals about
its pot policy. On one hand, former Attorney General Jeff Sessions
resisted any liberalization of laws against it. On the other hand,
President Trump has said that he is open to reforms, such as states
individually deciding to legalize marijuana.
“Everything in the marijuana industry is a moving target,” says
Josh Horn, an attorney at Fox Rothschild who represents marijuana
businesses. Nevertheless, Horn believes that there will be a fair
amount of consolidation in the industry as it begins to mature.
Thirty-one states have legalized medical marijuana and nine
states plus Washington, D.C., have legalized it for recreational
use, notwithstanding federal law and rules. Horn says the federal government could take
a half-step toward consistent, nationwide liberalization by removing restrictions on just
cannabidiol, the active ingredient in Epidiolex. It is a different compound, tetrahydrocan-
nabinol (commonly know by its initials, THC) that is responsible for the marijuana high.
Cannabidiol is associated with most medicinal benefits but it does not generate psychoac-
tive effects. A narrower federal OK for cannabidiol “would open up a new industry on a
national basis,” in Horn’s view, and be an incentive for the larger drug developers to get
into cannabidiol products and medications, including pain medications that might be an
alternative to opioids.
Federal liberalization on cannabidiol may not be so farfetched. Horn says the 2018 farm bill
includes a provision that would remove cannabidiol’s designation as a controlled substance.
The FDA’s letter to the DEA about cannabidiol not being a narcotic is another indication
that the tide may be turning. Regardless, 2019 stands to be an interesting, and perhaps
pivotal, year for the mainstreaming of marijuana for recreational and medicinal purposes.

DECEMBER 2018 / MANAGED CARE 31

 2019
YEAR IN PREVIEW
Why vertical will continue to be the
favored direction for PBMs, insurers
By Robert Calandra

T
he Justice Department’s approval of the $52 billion merger of Cigna and Express Scripts
in September followed a month later by its blessing of CVS and Aetna tying the $69
billion knot pretty much signaled the end of the era of the large independent PBM.
PBMs and insurers Sure, there are still a number of smaller, independent PBMs. But consider UnitedHealth
are getting rolled Group and Optum; the Blue Cross Blue Shield plans with their PBM, Prime Therapeutics;
into single entities and Anthem’s announcement that it was going to develop an in-house PBM. It appears that
insurers and PBMs are in the process of getting rolled up into one.
with clout over the “Let’s get vertical,” tweeted Adam Fein after the CVS/Aetna merger was announced. Fein’s
supply chain and Drug Channels blog is popular among pharma insiders.
benefit design. Any And vertical integration is, in fact, the general idea. Getting vertical theoretically will
major changes in allow the new entities to capitalize on efficiencies in care management, total cost of claims,
how they operate and other programs while creating an all-in-one health care product that provides more
may wait as they services at less cost. At least that’s the spin.
But before the newly formed entities can truly “get vertical” and realize their goal, there’s
spend 2019 figur- a lot of work ahead. Integrating businesses can take years. So what can plan sponsors expect
ing out how to from the newly amalgamated industry in the year ahead?
mesh. “It’s going to take a little time for these entities to begin to move beyond pulling together
these organizations and actually start to innovate as one intensive unit,” says Ashraf Shehata,
partner at KPMG’s Global Healthcare Center of Excellence.
There are a lot of moving parts to manage when blending companies, Shehata says. The
first order will be making sure the transition is smooth. Shehata says “the low hanging fruit”
will happen in 2019, the harder parts of integrating the businesses could take two years. Only
then will the efficiencies and innovations from the mergers be realized.
“So if you look at it you will probably see another year of true integra-
tion activity that will take us up to 2020,” he says. “If the innovation work
is stalled or less than heavily invested, then we might see innovation not
come together until 2023. It is hard to innovate when you are integrating.”
If anything, the mergers have made things more complex for employers
and employees, says Wayne Dix, a health care expert at SSA & Company,
a management consulting company.
Dix says 2019 will be “a continuation of the current trajectory” for
PBMs. But he also expects Congress to pass more legislation like the
Patient Right to Know Act and Know the Lowest Price Act that President
Trump signed into law in October.
Those bills allow pharmacists to tell patients about lower-cost alterna-
tives, something that most PBM contracts with pharmacists had forbidden.
Dix also expects that state legislatures and Congress will pass laws that will
alter, curtail, or even end the rebates and the various other deals PBMs
make with pharmaceutical companies that have left people grumbling.
“To be perfectly honest, everybody is kind of fed up with the illusion of transparency
and this notion that rebates are being passed through to the plan sponsor,” says Dix. The
plan sponsors “know they are being lied to and that this is a game. They would love to
find a way around these guys. If the formulary is driven by what’s best for PBM and drug
company profits and not clinical results, that’s a problem.”
While he is hopeful that legislation will end rebates, Dix isn’t betting that even the so-
called “gag law” has enough bite to change the industry. The industry “is ripe for a change,”
he says. “You just don’t know what that one thing will be that tips everything over.”

32 MANAGED CARE / DECEMBER 2018

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 A Wide Angle Lens on Adverse Events
Blue Health Intelligence attempts to paint a fuller picture of ‘what went wrong’
by limiting exclusions.

By Peter Wehrwein that were related to the hospitalization may also fall
outside the count.
Editor
Spiro and his BHI colleagues have conducted an
analysis of a commercial health plan claims database

T
he Institute of Medicine’s To Err is Human:
Building a Safer Health System report came
out 19 years ago. Rarely do reports live up to
appellations like “landmark” and “watershed.” To
Err is Human is the exception. Health Affairs paid
homage to the report by making patient safety the
theme of its November issue. There’s a documentary
film with the same name. To Err is Human has led to
countless efforts to reduce errors and improve patient
safety. And now there is real money is at stake. One of
the main tools in the value-based payment toolkit is
linking payment to performance on safety measures.
But which events get tallied as errors or adverse
events remains a fraught issue. “Terms like complica-
tions, medical errors, adverse events, never events—
they are emotionally laden terms,” notes Alan Spiro,
senior vice president and CMO at Blue Health Intel-
ligence, a health analytics company in Chicago that
is an independent licensee of the Blue Cross Blue
Shield Association.
In many contexts, adverse events are identified, with
good reason, for the purpose of identifying errors or
where processes can be improved. But as a result, some
adverse events may be excluded from those counts
because they are “clinically expected” given patient
comorbidities and other issues. Post-discharge events
and adverse events that is designed to paint a fuller,
real-world picture of adverse events. The database
included patients, ages 18–64, admitted to the hospital
in 2016 and 2017 whose complications happened
during their admission.
“We wanted to begin a dialogue with payers, provid-
ers, and patient/consumers about how the industry
might show, and more transparently communicate,
risks associated with inpatient care,” Spiro said in a
prepared statement.
The BHI analysis compares adverse event counts
and rates using BHI methods with counts and rates
using Agency for Healthcare Research and Quality
(AHRQ) methods.
One way that BHI cast a wider net was by tapping
into professional as well as facility claims. But the more
salient difference was that the BHI didn’t include many
of the exclusions that the methodologies of AHRQ
and other patient safety and quality organizations
typically use. For example, certain infections in cancer
or transplant patients may be excluded because those
patients have compromised immune systems. Again,
that is reasonable from an error-prevention point of
view; infections can occur in those patients without
anyone having made any kind of mistake. But if
you are trying to present a complete picture of what

Four complications: BHI vs. AHRQ rates

Central line–associated bloodstream infections (CLABSI)
BHI facility/
professional claims BHI facility claims AHRQ facility claims
Included cases All inpatient Admits with eligible Admits with eligible medical DRG or surgical DRG
admissions medical DRG or
surgical DRG
Excluded cases None Principal diagnoses Principal or secondary diagnosis of CLABSI present
of CLABSI; stays of on admission; stays of less than 2 days; immune-
< 2 days compromised and/or cancer patients
# of measured cases 4,712,596 3,655,053 3,104,040
# of excluded Cases None 1,057,543 1,608,556
# of adverse events 3,393 1,194 507
Complication rate 0.072% 0.033% 0.016%

34 MANAGED CARE / DECEMBER 2018

Inpatient falls with hip fracture
BHI facility/
professional claims BHI facility claims AHRQ facility claims
Included cases All inpatient Admits with eligible Admits with eligible medical DRG, or surgical DRG
admissions medical DRG, or and OR procedure
surgical DRG and
operating room (OR)
procedure
Excluded cases Diagnosis-related Admits with eligible Principal diagnosis of hip fracture; major diagnosis
group (DRG) with hip medical DRG or code of musculoskeletal or connective tissue,
or femur fractures, surgical DRG and OR pregnancy, or childbirth. Excluded diagnoses of
procedures procedure seizure disorder, syncope, stroke, occlusion of
arteries, coma, cardiac arrest, poisoning, trauma,
delirium or other psychoses, anoxic brain injury, or
conditions associated with fragile bone (metastatic
cancer, lymphoid malignancy, or bone malignancy.
# of measured cases 4,695,571 4,369,780 3,059,798
# of excluded cases 17,025 342,816 1,652,798
# of adverse events 4,116 1,417 0
Complication rate 0.90% 0.03% 0.00%

Iatrogenic pneumothorax
BHI facility/
professional claims BHI facility claims AHRQ facility claims
Included cases All inpatient Admits with eligible Admits with eligible medical DRG or surgical DRG
admissions medical DRG or
surgical DRG
Excluded cases Principal diagnosis Principal diagnosis Principal diagnosis of iatrogenic pneumothorax;
of iatrogenic of iatrogenic major diagnosis code of pregnancy, or childbirth.
pneumothorax pneumothorax Excluded diagnoses of chest trauma, pleural
effusion. Excluded procedures include thoracic
surgery, lung or pleural biopsy, diaphragmatic
repair, and cardiac procedures.
# of measured cases 4,712,596 4,500,983 3,376,939
# of excluded cases 0 211,613 1,335,657
# of adverse events 5,568 3,279 617
Complication rate 0.12% 0.07% 0.02%

Sepsis (post-operative)
BHI facility/
Measure source professional claims BHI facility claims AHRQ facility claims
Included cases All inpatient Admits with eligible Admits with eligible surgical DRG and OR
admissions medical DRG or procedure
surgical DRG
Excluded cases Principal diagnosis Principal diagnosis of Principal diagnosis of sepsis; major diagnosis code
of sepsis, DRGs for sepsis of pregnancy, or childbirth. Excluded diagnoses of
sepsis or infectious infections.
disease
# of measured cases 4,712,596 4,559,123 235,469
# of excluded Cases  154,755 153,473 4,477,127
# of adverse events 88,605 50,179 3,371
Complication Rate 1.94% 1.10% 1.43%

DECEMBER 2018 / MANAGED CARE 35

 Our 2019 Editorial
Comparing complication rates Calendar—and Something
Central line–associated bloodstream infections
0.072%
Brand New Next Year!
0.033% We will be publishing two MANAGED CARE
0.016% SPECIAL REPORTS, one in January and the
other in July.
Inpatient falls with hip fracture
0.90%
Each of these Special Reports will take an in-depth
look at a crucial issue in the payer-provider intersec-
0.03%
tion—that crossroads where health costs, delivery,
0.00%
and outcomes are at stake.
Iatrogenic pneumothorax
Only our digital subscribers will get the Special
0.12%
Reports delivered free to their email addresses.
0.07% If you’re not a digital subscriber, sign up today
0.02% at www.managedcaremag.com/subscribe
Sepsis (post-operative)
2019 Editorial Calendar
1.94%
1.10% MONTH THEME

1.43% January/ Medicare Advantage and the Future

February of Medicare
BHI facility and professional claims
Women’s health
BHI facility claims
AHRQ facility claims March Disintermediation: The War Against
the Middlemen in Health Care
happens to cancer and transplant patients—a picture Real-world evidence
that includes additional costs and, for patients, in- April Emergency Medicine
convenience and suffering—that exclusion could be HIV/AIDS
misleading. BHI only excluded cases from its adverse
event calculations when the person was admitted for May Opaqueness: What’s Hidden in
that event or condition. American Health Care
The results for inpatient falls with hip fracture are Oncology
the clearest example of the difference between the BHI June General Interest
and AHRQ adverse events. Using just facility claims, Evidence-based medicine
BHI’s analysis identified 1,417 inpatients falls with hip
fracture. Because of exclusions, the AHRQ methods July/August Second Annual Innovation Issue
identified zero such falls. Diabetes; biosimilars

September The Formulary—What It Was, What It

Has Become, What It Might Be
CALL FOR PAPERS The future of primary care

Managed Care is seeking article submissions. October Health Care Executives—and the
Consultants Who Advise Them
We welcome a wide variety of manuscripts, includ-
Behavioral health
ing drug class reviews, value-based payment stud-
November The 10 Most Important Numbers in
ies, pharmacoeconomic analyses, and outcomes
American Health Care
research. Interested? Write to our managing editor, Autoimmune disease
Frank Diamond, at Frank.Diamond@iconplc.com. December Managed Care: Imagining Its Future
General interest

36 MANAGED CARE / DECEMBER 2018

VIEWPOINT
Improving Behavioral Health Access
In a Time of Severe Provider Shortage
By Petra Esseling
Advisory Board
B
ehavioral health needs are highly prevalent,
comorbid with other chronic conditions, and
associated with increased clinical care and cost.
The 20% of Medicaid patients with behavioral health
problems account for 46% of total Medicaid spending
on health services. Spending on behavioral health ser-
vices in total is projected to reach
almost $240 billion by 2020, up
from about $150 billion in 2009.
Despite high need and urgency,
patient adherence is low. One
might think that puts the onus on
patients, but a major reason for
this gloomy picture is the severe
Petra Esseling shortage of mental health pro-
fessionals across the country—a
shortage that’s only going to increase. We already fail
to meet 50% of demand. Many in the current cohort
of psychiatrists is getting ready to retire. Medical stu-
dents enter more lucrative specialties than psychiatry.
But there is good news. Health systems are launch-
ing new ways of delivering and organizing behavioral
health services.
Here are four ways they are improving access and
meeting the surging demand:
1) A new wave of primary care-based services. The
integration of mental health services in primary care
is common best practice nowadays. The collaborative
care model has shown positive financial return on in-
vestment (5% to 10% in lower overall health care costs)
and is increasingly reimbursed by CMS and other
payers. Health systems are now looking for ways to
scale integrated behavioral health through virtual care
and to expand services to substance abuse treatment.
Despite the uncertainties surrounding the reim-
bursement, health systems have stepped up their
investment in centralized behavioral health service
units, staffed by behavioral health consultants and psy-
chiatrists, to connect virtually to patients in affiliated
primary care offices. The assessment and treatment of
behavioral health problems doesn’t require a physical
assessment, making virtual treatment a viable option
to achieve scale.
So far, integrated behavioral health services focused
predominantly on anxiety and depression. Providers
increasingly screen for substance abuse disorders and
are starting to offer medication-assisted treatment.
2) IT-enabled care delivery. In addition to virtual
care, providers are deploying technologies to enable
cross-team collaboration, engage patients in their care,
and monitor response to treatment. While many health
systems partner with third-party vendors, some health
systems are building out their own capabilities. Tools to
facilitate improved team-based care, care team reach,
and self-management are the major trends I’ve seen.
Despite the fact that behavioral health and physical
conditions are highly comorbid, providers commonly
work in siloes. Digital communication platforms fa-
cilitate collaboration among multidisciplinary care
team members and allow providers to engage patients
between visits. This is less costly (and frustrating)
than playing phone tag with patients and can prevent
costly interventions, including hospitalizations. Mobile
health apps and virtual platforms are helping patients
to practice evidence-based self-management.
3) Specialized emergency care. Approximately
one in eight emergency department visits is associ-
ated with behavioral health needs. These visits are
three times longer than those of patients with non-
psychiatric needs and significantly more costly. Many
emergency departments are too loud, bright, and busy
to help patients in a behavioral health crisis stabilize.
Health systems are investing in a variety of specialized
emergency services, including telepsychiatry, holding
units, ED co-located crisis services, and behavioral
health-specific emergency units.
4) Partnership-enabled community resources
access. Given limited resources, community part-
nerships are as important to a sustainable behavioral
health management strategy as they are to addressing
patients’ nonclinical needs. Health systems are invest-
ing in a wide range of partnerships, including those
with schools, to offer preventive and early interven-
tion services, EMS providers to ensure appropriate
referrals and prevent avoidable acute utilization, and
community behavioral health centers to enable post-
discharge and ongoing support.
Petra Esseling is a consultant with the Advisory
Board’s research division.
DECEMBER 2018 / MANAGED CARE 37
 VIEWPOINT
Population Health Service Organizations:
Managed Care Gets a New 4-Wheel Drive Vehicle
To Navigate the Value-based Terrain
By Richard G. Stefanacci, DO, MBA,
and Terri Schieder, RN, MS, MBA
AtlantiCare/Geisinger
T
he shift of risk to providers continues to grow
as a means for managed care organizations
to improve clinical and financial outcomes.
This shift of risk to providers, along with a migra-
tion of more providers into hospital-based health
systems, means health systems are fast becoming the
provider entities that most often shoulder managed
care risk. As a result, an increasing number of health
systems have created teams within their organizations
called population health service organ-
izations (PHSOs). They are supplanting
the management service organization
(MSO) that gained popularity in the
’90s to assist practices with back-office
functions so providers could concen-
trate on seeing more patients.
Value-based health care and payment
is another reason for the emergence of Richard G.
the PHSO. Many health systems are Stefanacci, DO, MBA
using PHSOs as the vehicle to manage
care through this new terrain. Value-based care
imposes new requirements and obligations on health
systems, making them responsible for the health and
successful outcomes for populations, not just individu-
als. This new focus means that what we call health care
has grown beyond what occurs in the confines of the
traditional health care environment. Rather than taking
place only inside the hospital or doctor’s office, health
care has extended its reach—into the community, the
neighborhood, and people’s homes. The MSO, which
was designed and organized to improve provider ef-
ficiency by increasing volume-based revenue and lim-
iting facility-based expenses, is no longer adequate.
Value-based care is reshaping the health care landscape,
especially for health systems. Many are using PHSOs
as the vehicle to manage care through this new terrain.
We were involved in the early MSOs and now a
PHSO. Although we are just now getting comfortable
with the PHSO term, we are experiencing firsthand
how today’s PHSOs are performing many of the same
functions as traditional MSOs. But they have a dif-
38 MANAGED CARE / DECEMBER 2018
ferent orientation, providing overall strategic vision
and direction to internal and external stakeholders in-
volved in delivering on the outcomes for which health
care systems are now being held accountable. This
accountability stems from both payers and patients
holding health care systems responsible for improved
clinical and financial outcomes. In some cases, health
care systems have set up ACOs to take measure of, and
manage, clinical and financial outcomes. But other or-
ganizational structures and methods are used, includ-
ing clinically integrated networks, bundled payments,
and percentage of premium-based reimbursement.
PHSOs should be the leaders in pulling stakeholders
together to assess their community’s health needs and
then, once identified, drive the process
to fill those gaps. A community health
needs assessment (CHNA) can help
a PHSO take on that role and serve
as an important jumping-off point for
subsequent efforts. The ACA requires
tax-exempt hospitals to create a hospital
CHNA every three years, so the PHSO
Terri Schieder, RN, can serve as a lead organization for a
MS, MBA health system’s CHNA.
With the CHNA as its guide, the
PHSO can go about filling identified gaps in the health
of the population the health system serves. Filling
these gaps commonly involves addressing social de-
terminants of health (SDOH), post-acute and home
P
HSO-managed patient navigation
services can assist patients with
decisions related to something as com-
plex as cancer care or simpler choices,
such as whether to go to the emergen-
cy department or urgent care.
health services, and the use of care coordinators and
teleservices. A coordinated effort led by a dedicated
team under the PHSO stands a greater chance of
succeeding than the often fragmented efforts made
by most health systems.
The importance of addressing SDOH is highlighted
by Healthy People 2020, which included the creation
of social and physical environments that promote
good health as one of its four goals. The World Health
Organization is also emphasizing SDOH; a decade
ago, it pushed Closing the Gap in a Generation: Health
Equity Through Action on the Social Determinants of
Health. There are also U.S. health initiatives, such as
the National Partnership for Action to End Health
Disparities and the National Prevention and Health
Promotion Strategy.
Hospitals break out into the community
The Healthy People 2020 website includes a SDOH
topic area that contains information on ways to create
social and physical environments that promote good
health. The website highlights an organizing frame-
work reflecting five key areas of SDOH: economic
stability, education, social and community context,
health and health care, and neighborhood and the
built environment. Research has shown that addressing
SDOH can strongly influence clinical (and financial)
outcomes for vulnerable populations. Despite this
knowledge, sustainable financing for interventions that
improve SDOH factors is not yet available. A recent
article in Health Affairs argues that there is under
investment in SDOH because such investments are,
in effect, public goods, and the benefits cannot be ef-
ficiently limited to those who pay for them. As a result,
capturing a financial return from these investments
for health systems can be difficult. The article, drawing
on lesser-known economic models and available data,
showed how a properly governed, collaborative ap-
proach to financing could enable self-interested health
stakeholders to earn a financial return and sustain
their SDOH investments.
This is another opportunity for PHSOs, because
these investments can be orchestrated through a
PHSO. Some PHSOs are beginning to work directly
with Medicare Advantage plans as a result of CMS
expanding the kind of services that plans can offer. This
expansion harkens back to a long-forgotten model for
funding SDOH. Almost 40 years ago, the predecessor
to CMS, the Health Care Financing Administration,
developed the social health maintenance organiza-
tion concept. Although it failed to gain approval for
national expansion because it didn’t reduce costs,
these social HMOs bear a strong resemblance to what
some of the Medicare Advantage plans may look like
once they start offering services that are not tradition-
ally seen as medical. Some of the services that the
Medicare Advantage plan will be able to offer include
adult daycare, home-based palliative care, help with
transportation, and home safety equipment, such as
grab bars in the bathroom. Given that these tend to
represent new offerings for health systems, the PHSO
can be positioned to manage these services with an
aim at improving population health.
Benefit for navigation
Beyond the identification of care needs through the
CHNA and filling of gaps with regard to SDOH,
PHSOs are also assisting patients in navigating the
system and caring for their needs. The roots of the
patient navigation movement that PHSOs are leading
can be traced back to the 2001 President’s Cancer Panel
report titled “Voices of a Broken System: Real People,
Real Problems” to President George W. Bush. The
report said that despite “profound advances” in cancer
research, the health care delivery system is “the root
of vast and unnecessary suffering, personal financial
ruin, and loss of dignity for millions of people with
cancer, who must fight their way into and through a
dysfunctional system even as they struggle to save
their very lives.”
PHSO-managed patient navigation services can
assist patients with decisions related to something
as complex as cancer care or simpler choices, such
as whether to go to the emergency department or an
urgent care center. Here again, these new services,
managed through the PHSO, can drive health systems
to improve outcomes for the population they serve.
Although health systems have historically focused
on facility-based services, better clinical and financial
outcomes are often possible through home-based
services. The hospital-at-home models are on the
far end of the spectrum; telemonitoring and visiting
primary care services are in the middle ground. Still,
these nontraditional types of new services need cham-
pions within a health system to thrive. The PHSO can
play that role. Nontraditional services also need to be
integrated into an overall population health strategy.
Otherwise, they may be viewed as extraneous add-ons
and suffer from lack of leadership, funding, or both.
In summary, in today’s value-based care envi-
ronment the PHSO is emerging as the organization
within health systems that can improve the clinical
and financial outcomes of the populations the health
systems serve. PHSOs can begin with identifying a
population’s needs through a health system’s CHNA
process and then go about filling gaps in health care.
Often, innovative approaches are needed, including
services outside those traditionally provided by hos-
pitals, doctors, and other providers.
Richard Stefanacci is the medical director for popula-
tion health for AtlantiCare/Geisinger, a health system
in New Jersey and Pennsylvania. Terri Schieder is
vice president of population health and business
development for the health system.
DECEMBER 2018 / MANAGED CARE 39
 VIEWPOINT
Accelerating the Move Toward Value:
Strategies for 2019 and Beyond
By Emad Rizk, MD
Cotiviti
I
n his first remarks on value this past spring, HHS
Secretary Alex Azar made a bold statement about
the urgency facing those of us who work in health
care. “This is no time to be timid,” Azar told the Fed-
eration of America’s Hospitals. “Today’s health care
system is simply not delivering outcomes commen-
surate with its cost.”
Strong collaboration among
payers, providers, and other key
stakeholders builds the momen-
tum necessary for health care
consumers to receive greater
value from our nation’s health
care system. The past decade has
Emad Rizk, MD seen advances in payer–provider
collaboration and data sharing
that reflect clinical, economic, and administrative
alignment. What’s needed now is a deeper level of
commitment to drive sustainable improvements in
quality and cost.
Payers and providers can take three key actions to
accelerate value creation in partnership with other
key stakeholders in 2019.
Leverage each other’s resources—and those of
community service agencies. Research on social de-
terminants of health—the social and economic factors
that affect about 60% of health outcomes (estimates
vary)—shows that payers and providers would be more
likely to address these factors if they could point to
a return on investment from their efforts. Evidence
also suggests, however, that the SDOH investments
by payers and providers often duplicate existing com-
munity services because local resources are unreliable
or their availability is not well known.
Payers and providers should seek ways to partner
with community service agencies and employers to
address the social and economic factors that influence
effective chronic disease management. Opportunities
exist to leverage data from a variety of key stakeholders
to identify unmet needs or to jointly fund initiatives
that have the potential to improve population health.
When payers and providers work together with other
interests and groups in improving value, they can make
40 MANAGED CARE / DECEMBER 2018
a deeper impact on member health and well being.
Commit to shared-risk arrangements—and
provide the data necessary to support these arrange-
ments. When health care claims data are combined
with clinical data, employer health- and wellness-
initiative data, and consumer-reported data (e.g.,
data voluntarily reported through wearable health
technologies), a view of the quality and cost of care for
complex populations emerges. This view is critical to
measuring the value of this care. A broad perspective
also establishes the foundation for targeted interven-
tions that improve health for member populations—
and ultimately reduce costs. For example, in Chicago
a collaboration between Northwestern Medicine and
Cigna provides Northwestern clinicians with daily
access to data that identifies members who may be at
risk of readmission, overdue for health screenings, or
haven’t refilled prescriptions.
Organizations pursuing a similar approach may
wish to consider partnering with members to add
insights from wearable tech devices, which have the
added benefit of decreasing sick days by 44% among
members who wear them daily.
Develop a tightly integrated approach to care
management. Quality-improvement efforts are often
hindered by the overwhelming volume of metrics that
exists. Payers, providers, and employers should agree
on a carefully curated set of shared quality metrics.
These metrics should form the foundation of a care
management model that:
• Uses high-tech tools to engage members in man-
aging their health
• Eliminates duplicative services
• Maintains open lines of communication to both
communicate progress toward goals and course-
correct as needed.
Accelerating momentum toward value is a joint
effort for all health care stakeholders. Shared commit-
ment, insights, incentives, and approaches establish
the type of partnerships that culminate in improved
clinical and financial outcomes.
Emad Rizk, MD, is president and CEO of Cotiviti, a
health care information company based in Atlanta,
and a member of the Managed Care
Editorial Advisory Board.
VIEWPOINT
Payer Collaboration Leaders
Could Ease Payer, Provider Tensions
By Jesse Ford
Salud Revenue Partners
T
he chasm between payers and providers, not that
long ago the site of open warfare over market
control, coverage, and charges, has now eased
into something approaching a demilitarized zone.
Though considerable tensions remain over narrow
(and narrowing) provider networks and coverage and
claims disputes, I see a continuing
shift toward greater cooperation.
With all of the financial pressures
on both sides of the chasm, build-
ing bridges seems more fruitful
than lobbing mortar shells.
There are partnerships, as seen
in ACOs, where the payer takes
Jesse Ford the lead in managing population
health. There is also a blending of
payers and providers, with health plans hiring physi-
cians and seeking mergers with health systems and
health systems starting health plans (though with
less-than-stellar success).
I’ve seen all of this personally, having been a revenue
cycle director at large and small health systems and
now leading a company that provides hospitals and
medical practices with outsourced revenue cycle ser-
vices, including claims adjudication. That is where
most of the interactions between payers and providers
take place, and it remains the source of daily tensions.
With imperfection on both sides, we sometimes
end up with payment disputes that anger and frus-
trate everyone. Providers rightfully argue that claims
should be paid because services have been rendered
to patients. When they are not paid, they may escalate
the claim to a provider representative at the insurance
company, complain to the state insurance depart-
ment, or both.
One potential solution is for providers to actively
partner with payers by creating a new position within
their organizations (or turn to an outside company
that works with the revenue cycle team). The new
position might be called “payer collaboration leader.”
Whoever is working in that role should work closely
with the organization’s leadership and staff to develop
everyone’s understanding of payer requirements and
assist provider teams in resolving challenges associ-
ated with payers.
Having a payer collaboration leader is especially
important for large health systems that have yet to
fully consolidate revenue cycle operations following
a merger or have far-flung operations in multiple
states. They may vary in some details, but the same
payer issues tend to crop up across a health system.
A lot of time and effort is wasted, and health systems
leave millions of dollars on the table. Someone with
a broad view can see patterns and prevent provider-
payer disagreements from occurring in the first place.
The job, though, requires someone who has built
relationships across the payer landscape, from the
national commercial players to Medicaid HMOs. It
also requires billing expertise and a knack for over-
coming challenges.
Understanding payer requirements should be a core
competency for everyone in revenue-cycle manage-
ment, but unfortunately, it is all too often lacking. At
my company, the payer collaboration leader not only
works with payer representatives to find solutions to
claims disputes but also serves as an internal resource
to educate our staff on payer reimbursement models.
The collaborative aspect of this model works partic-
ularly well in the world of revenue-cycle outsourcing,
when provider representatives work with multiple
organizations. When a payer issue is identified for
one client, they can “scrub” accounts receivable of
others to see if the issue exists elsewhere. One payer
representative can follow through on a solution and
end a situation in which multiple representatives are
fielding the same complaint from many providers.
Approaching payers with a collaborative mindset
and developing a positive relationship with their
leaders can be a winning strategy for providers. True,
insurers may not always be motivated to fix issues
quickly. Complaining to higher authorities may be
required. But it shouldn’t be the first step.
This all may sound small bore, but I believe it is the
kind of change that if carried out more generally would
add up to significant savings for providers and payers
alike, while reducing another source of inefficiency
in our health care system.
Jesse Ford is the founder and CEO of Salud Revenue
Partners in Lafayette, Ind.
DECEMBER 2018 / MANAGED CARE 41

A Financial Analysis of New York City Start-up Health
Plans and Reasons for Their Losses
Adam E. Block, PhD
Department of Public Health, New York Medical College School of Health Sciences and Practice, Valhalla, N.Y.
INTRODUCTION
In 2014, New York City was widely
considered an ideal market for the
structured competition among health
plans envisioned by the Affordable
Care Act (Rabin 2013a). Large-market
demand stemmed from a sizable self-
employed labor force of independent
consultants, artisans, and day-traders
and artists, while market supply in-
cluded robust Medicaid managed care
and commercial markets, plus three
brand-new start-up insurers. Table 1
(page 44) summarizes the 2014 ex-
change market structure including
10 plans, all with premiums far below
2013 individual market levels (Rabin
2013b).
Publicly available rate submission
data show that New York City’s start-
up health plans, Health Republic,
CareConnect, and Oscar, had dis-
proportionately poor financial per-
formance between 2014 and 2016
(NYS-DFS 2017).
Undercapitalization led Health Re-
public to a forced closure by the New
York State Department of Financial
Services (NYS-DFS) effective Nov. 30,
2015 (Waldholz 2016). CareConnect
voluntarily ended individual contracts
effective Dec. 31, 2017 (Lynam 2017).
When CareConnect exited the market
in 2017, its membership was not of-
fered the chance to renew during the
2018 open enrollment period. When
Health Republic closed, the mem-
bership was distributed to alterna-
tive plans.
Figure 1 (page 45) shows that be-
tween 2014 and 2016, Oscar accumu-
lated losses of $182 per member per
month (PMPM), totaling $235 mil-
lion or 46% of its 2014–2016 revenue
(see Table 3, page 47, for calculation).
42 MANAGED CARE / DECEMBER 2018
Original Research
ABSTRACT
Purpose: Using New York City as an example, this research explores rea-
sons for the consistently poor financial performance of three start-up health
plans (Health Republic, CareConnect, and Oscar) while other health plans
have performed relatively well in the same market.
Design and Methods: This study compiles insurer data from financial
years 2014 through 2016, submitted to the New York State Department of
Financial Services as part of the rate-review process, including premium
revenue, claims cost, risk adjustment, administrative costs, net income, and
premium. The financial data were used to create a novel metric, adjusted
net income, that evaluates the financial performance of an insurer exclud-
ing risk adjustment and assuming a market average administrative cost.
Descriptive statistics were used to compare the performance of start-up
plans, commercial plans, and Medicaid plans in the ACA exchange market.
Results: Premiums for start-up plans were within 9% of median silver
premiums yet adjusted net income was negative (–$190 PMPM) for all
three start-ups while it is positive (+$27 PMPM) for the non–start-ups. The
difference in adjusted net incomes shows that poor financial performance
of start-ups was due to claims costs, not high administrative costs and poor
performance in risk adjustment.
Conclusion: The consistent financial losses by New York City start-ups is
driven by higher-cost provider contracts for the start-ups relative to com-
petitors.
Those financial losses were larger than For this study, the NYS-DFS data
any other company in the New York for plan years 2016 to 2018 were
City individual market except Health compiled manually into a database.
Republic. The database includes individual
The objective of this analysis is to plans (on and off the ACA exchange)
better understand why start-ups in and the Essential Plan. (The Essen-
the New York City market performed tial Plan was the name given to the
poorly relative to traditional commer- Basic Health Program in New York.
cial plans and Medicaid plans entering Under the ACA, states were allowed
the ACA exchange market in 2014. to set up Basic Health Programs that
offered health plans for low-income
METHODS people whose incomes were too high
The NYS-DFS requires submission of for them to be eligible for Medicaid).
aggregate historical financial data for Financial data pertain to all counties
each ACA exchange product for the where the plan participated, including
most recent year available in Exhibit those outside of the New York City
17 of the rate submission (NYS-DFS rating region.
2017). Claims data are two years old, Five financial metrics were ex-
meaning rate submissions for the 2018 tracted from the DFS financial reports
plan year contain data from 2016. including total incurred claims, total
 Financial Analysis of New York City Start-up Health Plans

reinsurance, total risk adjustment,
total administrative expenses, and
premium revenue. These metrics
were used to construct a new met-
ric, net income, which is calculated
this way: premiums – (total incurred
claims + administrative costs + total
risk adjustment + total reinsurance)
(Figure 1).
Adjusted net income, shown in
Figure 4 (page 46), is another new
metric and is calculated this way: net
income – (risk adjustment + admin-
istrative costs – average administra-
tive costs for all plans). This metric
was developed and applied because
it compares the net income across
health plans as if 1) risk adjustment
did not exist and 2) administrative
costs were the same across all health
plans. This is important because it will
show whether the poor financial per-
formance of start-up plans is due to
risk adjustment, administrative costs,
or for some other reason.
Putting aside the complexities for
a moment, the reasons for a health
plan’s poor financial performance can
be grouped into four categories:
1. High risk adjustment
2. High administrative costs
3. Low revenue
4. High claims costs
This study included a financial
analysis of each of these metrics to
identify the driving factor for the
closure of two of the three start-up
health plans in New York. Strategic
pricing below market price with
the objective of acquiring share was
considered, so a premium compari-
son was performed. Premium data
were compiled from New York State
of Health (NYSOH) data releases of
average premiums by plan and region
(NYS-DFS 2015, NYS-DFS 2016,
NYS-DFS 2013). For simplicity’s sake,
the financial analysis is limited to the
individual market only.
RESULTS
Risk adjustment
Risk adjustment is an ACA-required
program where fully insured com-
mercial health plans must submit in-
formation to CMS on the medical risk
of their populations. CMS calculates
the relative risk of each health plan’s

Glossary of terms used in this article

Administrative costs: All nonmedical costs associ-
ated with a health plan, including but not limited to
labor, rent, claims processing costs, and information
technology.
Claims costs: All medical costs paid by the insurer,
including hospital, physician, and pharmaceutical costs
on behalf of members. Dental and vision costs may be
part of claims costs if those services are covered.
Commercial health plan: A plan that has maintained
a commercial insurance license and participated sub-
stantially in the individual and or group markets prior to
2014.
Individual market: Health insurance purchased by
an individual, not through an employer.
Medicaid health plan: A plan entering the individual
market that previously has exclusively or primarily
offered insurance in government products, such as
Medicaid or Medicare.
Medical management: Activities performed by a
health plan to reduce patient medical expenses, such as
requiring preauthorization for advanced imaging.
New York State Department of Financial Services:
The department in New York State government that
oversees insurance regulation and enforcement.
Per member per month (PMPM): Revenue and
expenses in health insurance markets are frequently
analyzed on a per member per month basis so they can
easily be compared with premiums, which are generally
calculated as per member per month payments.
Premiums: Monthly payments made by a beneficiary
to a health plan. If a member is eligible for tax credits,
this includes both the member share and the tax credit.
Rate submission: A New York State requirement that
premiums be submitted to the Department of Financial
Services of New York State with actuarial support in
June for individual market insurance products sold in
January of each year. The state can then approve, deny,
or request modification of premiums.
Rental network: A network licensed by a health plan
from another organization rather than having contracts
written directly with the plan.
Risk adjustment: Federal program required for all
plans participating in the individual market (on- and
off-exchange) where health plans with a lower risk
population relative to plans in the same market make
a risk adjustment payment and plans with a higher risk
population receive a risk adjustment payment.
Risk corridors: A temporary program created by the
Affordable Care Act, effective 2014–2016, designed to
collect profits above a certain level from successful plans
and redistribute them to plans losing above a certain
level. The program was initially guaranteed by the
federal government, but this guarantee ended in 2015.
Plans “owed” payments were paid pennies on the dollar
for 2014 and nothing for 2015 or 2016.
Start-up health plan: A health plan that did not have
a license to sell health insurance in the commercial or
Medicaid markets prior to the start of 2014.

DECEMBER 2018 / MANAGED CARE 43

 Financial Analysis of New York City Start-up Health Plans

population. Plans with healthier-
than-average populations make pay-
ments to plans with unhealthy popu-
lations throughout the state. Exhibit 3
shows that in 2016, the PMPM cost of
risk adjustment for start-ups exceeded
the cost for commercial plans but was
far below the cost of risk adjustment
to Medicaid plans. In addition, finan-
cial losses of start-ups far exceeded
their risk-adjustment payments.
Oscar’s 2016 loss was $200 PMPM,
of which $61 PMPM (30%) was due
to risk-adjustment payments. Simi-
larly, CareConnect’s 2016 loss was
$165 PMPM, of which $57 PMPM
(35%) was due to risk adjustment (see
Technical Appendix 1, pp 48–49, for
calculation). This means risk adjust-
ment played only a part of the poor
financial performance of these start-
up plans. Health Republic’s risk-ad-
justment payment of $6 PMPM was
about 1% of its massive $529 PMPM
loss in 2015, its final year of participa-
tion in the New York State exchange.
Administrative costs
Figure 3 shows that start-up adminis-
trative costs in 2016 were higher than
administrative costs of established
plans—more than $100 PMPM for
Health Republic and Oscar. The 2016
weighted average of the three start-
ups’ administrative costs was $104
PMPM while the weighted average
of all other plans’ administrative costs
was $49 PMPM, meaning start-up
administrative costs were an addi-
tional $55 PMPM more than com-
petitor administrative costs. How-
ever, this additional $55 PMPM is
only 28% of the 2016 losses of Oscar
($200 PMPM) and 34% of the loss of
CareConnect ($165 PMPM). Note:
Health Republic exited the market
during 2015.
Revenue
Table 2 (page 46) shows that the aver-
age premiums for plans at the silver
level (the most commonly sold plan
among the “metal” levels) of the three
start-up plans between 2014 and 2016
ranged from 2% below the median
to 9% above the median premium
of $414 PMPM for a single adult be-

TABLE 1
Overview of New York City individual market plans
Enrollment
Plan name Description (% of plans listed) 2018 status
Start-up
Health Health Republic was an ACA CO-OP funded with 147,744 (17%) NYS forced exit Nov. 30,
Republic federal loans 2015a
CareConnect CareConnect, a subsidiary of Northwell the largest 52,298 (6%) Exited market Jan. 1,
hospital system in New York State 2018b
Oscar Oscar, a pure tech venture aiming to apply Silicon 107,569 (12%) Expanded into N.J., Calif.,
Valley solutions to health insurance Texas, Tenn., Ohioc
Medicaid
Affinity Bronx-based Medicaid plan 24,600 (3%) Exited individual market
in 2018d
Fidelis Catholic Church-affiliated plan: purchased by 161,431 (18%) Offers coverage
Centene for $3.75B in Sept, 2017e
Healthfirst Health plan owned by a consortium of New York 52,601 (6%) Offers coverage
City regional hospitals
MetroPlus Health plan owned by the City of New York 62,454 (7%) Offers coverage
Commercial
Emblem Regional commercial plan insuring NYC employees 62,233 (7%) Offers coverage
Empire BCBS Anthem-owned, for-profit Blues plan in NYC region 191,895 (22%) Redeveloped products
in 2018f
United National commercial plan 21,755 (2%) Offers coverage
Sources: Waldholz 2016, Lynam 2017, Schlosser 2017, NYS-DH 2017, Coombs 2017, Schreiber 2017 and author’s analysis of health
a b c d e f

plan websites
Notes: Queens County had the largest enrollment in the New York City Exchange Plan region and was used as the base county for deter-
mining health plan participation. Start-ups are defined for this paper as insurers that had not previously offered insurance in the individual
market or in New York’s Medicaid Advantage market as prepaid health service plans.
BCBS=Blue Cross Blue Shield, CO-OP=Consumer Operated and Oriented Plan, NYC=New York City, NYS=New York State.

44 MANAGED CARE / DECEMBER 2018

 $24 $25
Financial Analysis of New York City Start-up Health Plans
–$8
FIGURE 1
Net income (individual market) for 2014–2016 –$59 –$55 tween 2014 and 2016. Premiums for
–$75PMPM
–$85 other metal levels may vary.
Health Oscar Care- Emblem Affinity Metro- United Health- Fidelis Empire
Republic Connect –$151 Plus first
$24 $25 Adjusted net income
–$182
Figure 4 shows adjusted net income
–$8 (Net income – [risk adjustment + ad-
–$59 –$55 ministrative costs – average adminis-
–$85 –$75 trative costs]) for all plans were –$83
PMPM at CareConnect, –$86 PMPM
–$359
–$151 at Oscar, and –$305 PMPM at Health
–$182 Start-up plan Republic. Meanwhile, adjusted net
Commercial plan income of all other plans was +$27
Medicaid plan PMPM.

DISCUSSION
–$359
The financial data, which are all pub-
Source: NYS-DFS Exhibit 17 compiled by author licly available but never have been
FIGURE 2
compiled and analyzed in this way,
Risk adjustment PMPM in 2016 show the key driver of the dispropor-
tionately poor financial performance
Metro- Fidelis Health- Affinity Oscar Care- Health Empire Emblem United
Plus first Connect Republic HMO of start-up plans in New York City
was neither risk adjustment nor ad-
$142 ministrative costs nor premiums, so
therefore, losses must be primarily
driven by provider claims costs.
$95 $94
Weighted average
$66
market risk adjustment Risk adjustment
$61 $54 PMPM
$57 While CareConnect and Oscar lead-
ership both directly attributed their
poor financial performance to the
$6 risk-adjustment program (Goldberg
-$2
2016, Lynam 2017), this analysis of
the data shows that risk adjustment
-$20 -$24
Source: NYS-DFS Exhibit 17 compiled by author
was responsible for only about 30%
of the net loss of these plans in the
FIGURE 3 individual market. In addition, while
Individual market administrative costs PMPM 2016* start-ups have less experience in risk
adjustment, the program is a level
Oscar Health Emblem Affinity United Care- Empire Metro- Fidelis Health-
Republic Connect HMO Plus first playing field for all plans because the
rules of risk adjustment are created by
$111 $110 CMS as a part of the formal regula-
$100 tory development process, including
$95
$83 a comment period and rule finaliza-
$71 tion (CMS 2014). The rules of risk
adjustment were available for all the
$52 players in the market in advance of
$45
the start of the plan year, making the
$31 practical application of risk adjust-
$23
ment equal across all plans, although
there is some anecdotal evidence that
newer plans have performed poorly
*Health Republic administrative costs from 2015 because plan did not participate in 2016
Source: NYS-DFS Exhibit 17 administrative costs compiled by author. PMPM=per member per month (Goldberg 2016).

DECEMBER 2018 / MANAGED CARE 45

 $66 $66
$47 $40
$25 $24
$11
Financial Analysis of New York City Start-up Health Plans
-$8
FIGURE 4 -$39
Adjusted and unadjusted net-$55
income PMPM
-$59 total, 2014–2016
-$75
-$90 -$85 -$83 -$86
Empire HMO Fidelis Healthfirst United MetroPlus Affinity Emblem Care Oscar Health
$66 $66 Connect Republic
$47 $40 -$151
$25 $24
$11 -$182

-$8
-$39
-$55 -$59
-$75
-$90 -$85 -$83 -$86
-$305

-$151 -$359

-$182
Adjusted net income Net income
Start-up plan Start-up plan
Commercial plan Commercial plan
Medicaid plan Medicaid plan

-$305

Source: NYS-DFS Exhibit 17 compiled by author -$359

Adjustedhealth
Three start-up net income Net income
plans had cial performance. While this paper Administrative costs
a combined net income of –$966Startup
Startup plan focuses
plan on the individual market, Similarly, the results section showed
million, of which $158 million CareConnect
Commercial plan Commercial plan faced a 2016 risk ad- that start-ups had administrative
(16%) was due to risk adjustment. justment payment of $112 million
Medicaid plan Medicaid plan costs of $104 PMPM while non-start-
Non–start-up health plans had a net in the small-group market, and al- up health plans had administrative
income of –$46 million in spite of though plans can enter or exit mar- costs of $49 PMPM, a difference of
making $338 million in risk adjust- kets independently, the small-group $55 PMPM. Net losses for start-ups
ment payments. Therefore, while risk market payment played a role in the exceeded $150 PMPM, so excess ad-
adjustment may be a contributor, it decision in the individual market ministrative costs were only about a
is not the sole driver of poor finan- (Dowling 2018). third of those net losses.
Relatively high administrative
TABLE 2 costs for start-up health plans are ex-
Average silver plan premiums from 2014–2016 in New York City pected because start-up health plans
region have large initial administrative costs,
Average silver plan Premium relative including developing claims process-
Health plan Rank premium 2014–2016 to median ($414) ing systems, building work facilities,
United 1 $579 39.9% licensing insurance products, training
new staff, and developing a provider
Empire HMO 2 $498 20.3%
network. In addition, initial enroll-
Oscar 3 $449 8.6% ment may be small while established
Healthfirst 4 $420 1.5% health plans can distribute fixed costs
Emblem 5 $416 0.5% across a broader membership. There-
fore, the administrative costs per
Health Republic 6 $412 –0.5%
member of health plan start-ups was
CareConnect 7 $407 –1.7% expected to be higher than the admin-
Affinity 8 $403 –2.6% istrative costs of established plans, but
Fidelis 9 $394 –4.8% the excess administrative costs made
up only a third of the losses, meaning
MetroPlus 10 $370 –10.5%
a large portion of the loss was unre-
Source: NYS-DFS premium releases
lated to this expected expenditure.

46 MANAGED CARE / DECEMBER 2018

 Financial Analysis of New York City Start-up Health Plans

TABLE 3
Net income as a proportion of premium
Sum of member Sum of total Sum of net Sum of % net
Plan months premiums ($) income ($) income of premium PMPM ($)
Affinity 295,199 107,917,557 –22,110,421 –20% –75
CareConnect 627,571 257,547,975 –94,774,476 –37% –151
Emblem 746,795 322,185,003 –63,839,792 –20% –85
Empire HMO 2,302,745 1,105,591,889 56,571,839 5% 25
Fidelis 1,937,176 697,921,470 46,653,626 7% 24
Health Republic 1,772,932 818,192,488 –636,187,001 –78% –359
Healthfirst 631,215 259,013,426 –5,202,112 –2% –8
MetroPlus 749,442 292,386,663 –44,313,356 –15% –59
Oscar 1,290,830 508,835,581 –235,206,464 –46% –182
UnitedHealthcare 261,061 145,510,703 –14,485,621 –10% –55
PMPM=per member per month.

Revenue
Table 2 shows that start-up health
plan premiums were within 9% of the
market median, so the prices the start-
ups plans charged were competitive;
they did not egregiously underprice
their premiums to gain market share.
Healthfirst, Fidelis, and MetroPlus—
plans sold primarily in the Medicaid
market—were financially stable be-
tween 2014 and 2016 at a premium
similar to what the start-ups charge.
Claims costs
Figure 4 shows that after controlling
for administrative costs and risk ad-
justment, start-up health plans still
had disproportionate financial losses.
This suggests that in New York City,
start-up health plans had a systemic
issue leading to persistent financial
losses in addition to high adminis-
trative costs and poor performance
on risk adjustment. Financial data
from the New York City individual
market health plans show that start-
up plan premiums were in the same
range as established plan premiums,
yet insufficient to cover costs even af-
ter adjusting for risk adjustment and
above-average administrative costs.
Therefore, the financial performance
issues are due to claims costs.
Here are three possible explana-
tions for why claims could be higher
for start-ups:
• The health of the start-up
population was worse.
It is unlikely that all three start-
ups selected for worse risk while
simultaneously having low risk-
adjustment scores, indicating the
populations had better than aver-
age risk.
• Medical management was less
effective at start-ups.
The magnitude of any possible
medical management differential
is dwarfed by the financial losses,
which are in excess of 35% of pre-
mium revenue for each start-up.
• Start-up networks were more
expensive.
The most likely reason for the
poor financial performance of the
start-up plans in New York City
is start-up plan networks were
expensive. The high cost may in-
clude a broader network or con-
tracts with higher reimbursements
for all providers. Both Oscar and
Health Republic licensed a rental
network called MagnaCare, which
was known for having high re-
imbursement rates, providing some
evidence that network contract
costs drove start-ups’ poor financial
performance (Fischer 2014, Wald-
holz 2016). Oscar recognized the
provider network as a driver of loss
and redesigned its strategy, shift-
ing away from rental networks for
years 2017 and beyond. While still
unprofitable in 2017, its loss was
$64 million, or $124 PMPM (down
from $200 PMPM in 2016), and
Oscar’s New York business had its
first profitable quarter in Q1 2018.
Corresponding author:
Adam E. Block, PhD
Assistant Professor of Health Policy and
Management
Department of Public Health
New York Medical College School of
Health Sciences and Practice
40 Sunshine Cottage Road, Skyline
Building, Room 2N-B10
Valhalla, NY 10595
Office: (914) 594-2041
ablock4@nymc.edu
Disclosures: None.
Acknowledgements: I would like to
thank Jacob Wallace, Michael Cohen,
Erin Strumpf, Mike Adelberg, Drew
Franklin, and Chris Koller for helpful
ideas and comments.

DECEMBER 2018 / MANAGED CARE 47

 Financial Analysis of New York City Start-up Health Plans

CONCLUSION
Starting a health plan is difficult. Of
the three 2014 start-up health plans
in New York City, one closed during
2015 and another closed after 2017.
Only Oscar remains, and it racked
up cumulative losses of $235 million
from 2014 to 2016 (NYS-DFS 2018).
Although administrative costs and
risk adjustment contributed to finan-
cial losses, expensive network con-
tracts were the critical driver in the
poor financial performance of these
start-ups. Success of the exchanges
can be enhanced by improving the
environment for programs like risk
corridors that reduce risk to plans. At
the same time, start-ups must recog-
nize that efficient network contracts
are essential for financial success.

TECHNICAL APPENDIX 1
Grouping of companies with varying names
Technical Appendix 1 shows how company names that varied in financial statements from year to year were aggregated.
For example, North Shore–LIJ CareConnect Insurance Co. Inc., CareConnect, and CareConnect Insurance were all
aggregated into CareConnect.

Part I: Health plans in financial statements

Company names* Company name grouped
Affinity Affinity
Affinity Health Plan Inc. Affinity
CareConnect CareConnect
CareConnect Insurance CareConnect
CDHP-Grp. HSA Empire HMO
CR-GR-PPO.A/Rev Empire HMO
Empire HealthChoice HMO Inc. Empire HMO
Empire HealthChoice HMO Inc. Empire HMO
EPO SG INN Cert 0407 Empire HMO
EPO SG INN Cert 0407 with rider: R-Prism EPO-SG.Rev0110 Empire HMO
G-HMO-IN with OON contract: G-POS-OUT Empire HMO
Health Insurance Pla Emblem
Health Insurance Plan of Emblem
Health Republic Insurance of New York Health Republic
Healthfirst PHSP Inc. Healthfirst
HNY HMO-CERT-44; HNY HMO-CERT Empire HMO
HNY HMO-CERT-44B; HNY HMO-CERT-B Empire HMO
MetroPlus MetroPlus
MetroPlus Health Plan Inc. MetroPlus
New York State Catholic Fidelis
New York State Catholic Health Plan Inc. dba Fidelis Care New York Fidelis
North Shore–LIJ CareConnect Insurance Co. Inc. CareConnect
NY State Catholic Health Fidelis
Oscar Oscar
Oscar Insurance Corp. Oscar
R-EPO-Blue Essential 2011 Empire HMO
UnitedHealthcare of New UnitedHealthcare
UnitedHealthcare of New York Inc. (UHC) UnitedHealthcare
*The plan names, include some incomplete names, are how as they appeared on financial statements examined by the author.

48 MANAGED CARE / DECEMBER 2018

 Financial Analysis of New York City Start-up Health Plans

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HealthNow NY HealthNow NYS-DFS (New York State Department of
Financial Services). Annual Statement
Managed Health Managed Supplement: Oscar Insurance Corpora-
United HIC United tion. New York State Department of
Financial Services. 2018.
*Variations in the spelling of names reflect their appearance in the financial statements
examined by the author.
 Financial Analysis of New York City Start-up Health Plans

TECHNICAL APPENDIX 2
Net income by plan in 2016 only
Sum of net
income without Sum Sum of net income
risk adjustment of net without risk Sum of
and avg admin Sum of net income adjustment and Sum of total member
Plan Name costs of plan income PMPM avg admin PMPM premiums months
Empire HMO $10,568,160 $21,863,496 $30 $14 $428,191,738 734,880
Fidelis $36,672,069 –$3,752,340 –$6 $55 $250,214,045 670,296
Healthfirst $3,990,025 –$4,364,044 –$27 $25 $70,324,097 162,270
MetroPlus $5,522,697 –$21,155,503 –$96 $25 $85,237,821 219,694
Affinity –$3,936,974 –$11,655,717 –$143 –$48 $31,037,143 81,464
Emblem –$18,847,336 –$20,860,521 –$143 –$130 $72,212,446 145,388
UnitedHealthcare –$14,391,876 –$13,805,591 –$144 –$150 $50,484,767 96,127
CareConnect –$35,674,392 –$57,534,599 –$165 –$102 $144,905,455 348,549
Oscar –$67,179,599 –$144,574,167 –$200 –$93 $289,633,058 724,467

NYS-DFS. Exhibit 17–Historical claims data https://khn.org/news/new-york-and- new-york-individual-aca-health-

by policy forms included in rate adjust-
ment filing. 2017.
NYS-DFS. 2017 Average approved pre-
mium rates. Updated 2016. https://
www.crainsnewyork.com/assets/pdf/
CN106720824.PDF. Accessed Nov. 7,
2018.
NYS-DFS. 2015 and 2016 average approved
premium rates–individual market. Up-
dated 2015.
NYS-DFS. Approved monthly premium
rates–individual standard plans. Up-
dated 2013.
Rabin RC. Analysis: N.Y. insurance market
is ‘poster child’ for individual mandate.
Kaiser Health News. July 19, 2013a.
individual-mandate. Accessed Nov. 7,
2018.
Rabin RC, Abelson R. Health plan cost for
New Yorkers set to fall 50%. New York
Times. July 16, 2013b. https://www.
nytimes.com/2013/07/17/health/health-
plan-cost-for-new-yorkers-set-to-
fall-50.html. Accessed Nov. 7, 2018.
Schreiber L. Empire changes New York ACA
individual health plans in 2018. July 27,
2017. Empire Blue Cross Blue Shield
website. July 27, 2017. https://www.
empireblue.com/blog/member-news/
empire-to-discontinue-many-
plans-in-2018. Accessed Nov. 7, 2018.
Schlosser M. Looking ahead to our 2018
map. Oscar website. 2017. https://www.
hioscar.com/blog/looking-ahead-to-
our-2018-map. Accessed Nov. 7, 2018.
Waldholz M. The short and chaotic life of an
Obamacare darling. Crain’s New York
Business. April 17, 2016. http://www.
crainsnewyork.com/article/20160417/
HEALTH_CARE/160419890. Accessed
July 30, 2018.
Brief summary of Full Prescribing Information for
ONPATTRO™ (patisiran) injection—Please consult
Full Prescribing Information.
INDICATIONS AND USAGE
ONPATTRO is indicated for the treatment of the polyneuropathy of
hereditary transthyretin-mediated amyloidosis in adults.
DOSAGE AND ADMINISTRATION
General Dosing Information
ONPATTRO should be administered by a healthcare professional.
ONPATTRO is administered via intravenous (IV) infusion. Dosing is
based on actual body weight. For patients weighing less than 100
kg, the recommended dosage is 0.3 mg/kg once every 3 weeks. For
patients weighing 100 kg or more, the recommended dosage is 30 mg
once every 3 weeks.
Missed Dose
If a dose is missed, administer ONPATTRO as soon as possible.
If ONPATTRO is administered within 3 days of the missed dose,
continue dosing according to the patient’s original schedule.
If ONPATTRO is administered more than 3 days after the missed dose,
continue dosing every 3 weeks thereafter.
Required Premedication
All patients should receive premedication prior to ONPATTRO
administration to reduce the risk of infusion-related reactions
(IRRs) [see Warnings and Precautions (5.1)]. Each of the following
premedications should be given on the day of ONPATTRO infusion
at least 60 minutes prior to the start of infusion: intravenous
corticosteroid (e.g., dexamethasone 10 mg, or equivalent);
oral acetaminophen (500 mg); intravenous H1 blocker (e.g.,
diphenhydramine 50 mg, or equivalent); and intravenous H2 blocker
(e.g., ranitidine 50 mg, or equivalent).
For premedications not available or not tolerated intravenously,
equivalents may be administered orally.
For patients who are tolerating their ONPATTRO infusions but
experiencing adverse reactions related to the corticosteroid
premedication, the corticosteroid may be reduced by 2.5 mg
increments to a minimum dose of 5 mg of dexamethasone
(intravenous), or equivalent.
Some patients may require additional or higher doses of one or
more of the premedications to reduce the risk of IRRs [see Warnings
and Precautions (5.1)].
CONTRAINDICATIONS
None.
WARNINGS AND PRECAUTIONS
Infusion-Related Reactions
Infusion-related reactions (IRRs) have been observed in patients
treated with ONPATTRO. In clinical studies, all patients received
premedication with a corticosteroid, acetaminophen, and
antihistamines (H1 and H2 blockers) to reduce the risk of IRRs.
In a controlled clinical study, 19% of ONPATTRO-treated patients
experienced IRRs, compared to 9% of placebo-treated patients.
Among ONPATTRO-treated patients who experienced an IRR, 79%
experienced the first IRR within the first 2 infusions. The frequency
of IRRs decreased over time. IRRs led to infusion interruption in 5% of
patients. IRRs resulted in permanent discontinuation of ONPATTRO in
less than 1% of patients in clinical studies. Across clinical studies, the
most common symptoms (reported in greater than 2% of patients)
of IRRs with ONPATTRO were flushing, back pain, nausea, abdominal
pain, dyspnea, and headache [see Adverse Reactions (6.1)]. One
patient in the ONPATTRO expanded access program had a severe
adverse reaction of hypotension and syncope during an ONPATTRO
infusion.
Patients should receive premedications on the day of ONPATTRO
infusion, at least 60 minutes prior to the start of infusion [see Dosage
and Administration (2.2)]. Monitor patients during the infusion
for signs and symptoms of IRRs. If an IRR occurs, consider slowing
or interrupting the ONPATTRO infusion and instituting medical
management (e.g., corticosteroids or other symptomatic treatment)
as clinically indicated. If the infusion is interrupted, consider resuming
at a slower infusion rate only if symptoms have resolved. In the case of
a serious or life-threatening IRR, the infusion should be discontinued
and not resumed.
Some patients who experience IRRs may benefit from a slower
infusion rate or additional or higher doses of one or more of the
premedications with subsequent infusions to reduce the risk of IRRs.
[see Dosage and Administration (2.2)].
Reduced Serum Vitamin A Levels and Recommended
Supplementation
ONPATTRO treatment leads to a decrease in serum vitamin A levels.
Supplementation at the recommended daily allowance of vitamin
A is advised for patients taking ONPATTRO. Higher doses than the
recommended daily allowance of vitamin A should not be given to try to
achieve normal serum vitamin A levels during treatment with ONPATTRO,
as serum vitamin A levels do not reflect the total vitamin A in the body.
Patients should be referred to an ophthalmologist if they develop
ocular symptoms suggestive of vitamin A deficiency (e.g.,
night blindness).
ADVERSE REACTIONS
Clinical Trials Experience
Because clinical studies are conducted under widely varying
conditions, adverse reaction rates observed in the clinical studies of
ONPATTRO cannot be directly compared to rates in the clinical studies
of another drug and may not reflect the rates observed in practice.
A total of 224 patients with polyneuropathy caused by hereditary
transthyretin-mediated amyloidosis (hATTR amyloidosis) received
ONPATTRO in the placebo-controlled and open-label clinical studies,
including 186 patients exposed for at least 1 year, 137 patients exposed
for at least 2 years, and 52 patients exposed for at least 3 years. In the
placebo-controlled study, 148 patients received ONPATTRO for up to 18
months (mean exposure 17.7 months).
Upper respiratory tract infections and infusion-related reactions were
the most common adverse reactions. One patient (0.7%) discontinued
ONPATTRO because of an infusion-related reaction.
Table 1: Adverse Reactions from the Placebo-Controlled Trial that
Occurred in at Least 5% of ONPATTRO-treated Patients and at Least
3% More Frequently than in Placebo-treated Patients
ONPATTRO Placebo
Adverse Reaction N=148 N=77
% %
Upper respiratory tract 29 21
infectionsa
Infusion-related reactionb 19 9 ONPATTRO and any potential adverse effects on the breastfed infant
Dyspepsia 8 4
Dyspneac,d 8 0
Muscle spasmsc 8 1
Arthralgiac 7 0
Erythemac 7 3
Bronchitise 7 3
Vertigo 5 1
a
Includes nasopharyngitis, upper respiratory tract infection, respiratory tract infection,
pharyngitis, rhinitis, sinusitis, viral upper respiratory tract infection, upper respiratory
tract congestion.
b
Infusion-related reaction symptoms include, but are not limited to: arthralgia or pain
(including back, neck, or musculoskeletal pain), flushing (including erythema of face or
skin warm), nausea, abdominal pain, dyspnea or cough, chest discomfort or chest pain,
headache, rash, chills, dizziness, fatigue, increased heart rate or palpitations, hypotension,
hypertension, facial edema.
c
Not part of an infusion-related reaction.
d
Includes dyspnea and exertional dyspnea.
e
Includes bronchitis, bronchiolitis, bronchitis viral, lower respiratory tract infection,
lung infection.
Four serious adverse reactions of atrioventricular (AV) heart block
(2.7%) occurred in ONPATTRO-treated patients, including 3 cases of
complete AV block. No serious adverse reactions of AV block were
reported in placebo-treated patients.
Ocular adverse reactions that occurred in 5% or less of ONPATTRO-
treated patients in the controlled clinical trial, but in at least 2% of
ONPATTRO-treated patients, and more frequently than on placebo,
include dry eye (5% vs. 3%), blurred vision (3% vs. 1%), and vitreous
floaters (2% vs. 1%).
Extravasation was observed in less than 0.5% of infusions in clinical
studies, including cases that were reported as serious. Signs and
symptoms included phlebitis or thrombophlebitis, infusion or
injection site swelling, dermatitis (subcutaneous inflammation),
cellulitis, erythema or injection site redness, burning sensation, or
injection site pain.
USE IN SPECIFIC POPULATIONS
Pregnancy
Risk Summary
There are no available data on ONPATTRO use in pregnant women to
inform a drug-associated risk of adverse developmental outcomes.
ONPATTRO treatment leads to a decrease in serum vitamin A
levels, and vitamin A supplementation is advised for patients
taking ONPATTRO. Vitamin A is essential for normal embryofetal
development; however, excessive levels of vitamin A are associated
with adverse developmental effects. The effects on the fetus of a
reduction in maternal serum TTR caused by ONPATTRO and of vitamin
A supplementation are unknown [see Clinical Pharmacology (12.2),
Warnings and Precautions (5.2)].
In animal studies, intravenous administration of patisiran lipid
complex (patisiran-LC) to pregnant rabbits resulted in developmental
toxicity (embryofetal mortality and reduced fetal body weight) at
doses that were also associated with maternal toxicity. No adverse
developmental effects were observed when patisiran-LC or a rodent-
specific (pharmacologically active) surrogate were administered to
pregnant rats (see Data).
In the U.S. general population, the estimated background risk of major
birth defects and miscarriage in clinically recognized pregnancies is
2 to 4% and 15 to 20%, respectively. The background risk of major birth
defects and miscarriage for the indicated population is unknown.
Data
Animal Data
Intravenous administration of patisiran-LC (0, 0.15, 0.50, or 1.5 mg/
kg) or a rodent-specific (pharmacologically active) surrogate (1.5
mg/kg) to female rats every week for two weeks prior to mating and
continuing throughout organogenesis resulted in no adverse effects
on fertility or embryofetal development.
Intravenous administration of patisiran-LC (0, 0.1, 0.3, or 0.6 mg/kg)
to pregnant rabbits every week during the period of organogenesis
produced no adverse effects on embryofetal development. In a
separate study, patisiran-LC (0, 0.3, 1, or 2 mg/kg), administered to
pregnant rabbits every week during the period of organogenesis,
resulted in embryofetal mortality and reduced fetal body weight at
the mid and high doses, which were associated with maternal toxicity.
Intravenous administration of patisiran-LC (0, 0.15, 0.50, or 1.5 mg/
kg) or a rodent-specific surrogate (1.5 mg/kg) to pregnant rats every
week throughout pregnancy and lactation resulted in no adverse
developmental effects on the offspring.
Lactation
Risk Summary
There is no information regarding the presence of ONPATTRO in
human milk, the effects on the breastfed infant, or the effects on milk
production. The developmental and health benefits of breastfeeding
should be considered along with the mother’s clinical need for
from ONPATTRO or from the underlying maternal condition.
In lactating rats, patisiran was not detected in milk; however, the
lipid components (DLin-MC3-DMA and PEG2000-C-DMG) were present
in milk.
Pediatric Use
Safety and effectiveness in pediatric patients have not been
established.
Geriatric Use
No dose adjustment is required in patients ≥65 years old [see Clinical
Pharmacology (12.3)]. A total of 62 patients ≥65 years of age, including
9 patients ≥75 years of age, received ONPATTRO in the placebo-
controlled study. No overall differences in safety or effectiveness were
observed between these patients and younger patients, but greater
sensitivity of some older individuals cannot be ruled out.
Hepatic Impairment
No dose adjustment is necessary in patients with mild hepatic
impairment (bilirubin ≤1 x ULN and AST >1 x ULN, or bilirubin >1.0 to
1.5 x ULN) [see Clinical Pharmacology (12.3)]. ONPATTRO
has not been studied in patients with moderate or severe
hepatic impairment.
Renal Impairment
No dose adjustment is necessary in patients with mild or moderate
renal impairment (estimated glomerular filtration rate [eGFR] ≥30
to <90 mL/min/1.73m2) [see Clinical Pharmacology (12.3)]. ONPATTRO
has not been studied in patients with severe renal impairment or
end-stage renal disease.
Manufactured for: Alnylam Pharmaceuticals, Inc.
300 Third Street, Cambridge, MA 02142
By: Ajinomoto Althea, Inc.
11040 Roselle Street, San Diego, CA 92121
ONPATTRO is a trademark of Alnylam Pharmaceuticals, Inc.
© 2018 Alnylam Pharmaceuticals, Inc. All rights reserved.
 NOW APPROVED

ONPATTRO is the first and only FDA-approved

RNAi treatment for the polyneuropathy of hereditary
transthyretin-mediated (hATTR) amyloidosis in adults.1

For the latest news and updates, sign up at www.onpattro.com

Indication
ONPATTRO™ (patisiran) is indicated for the treatment
of the polyneuropathy of hereditary transthyretin-
mediated amyloidosis in adults.
Important Safety Information
Infusion-Related Reactions
Infusion-related reactions (IRRs) have been observed in
patients treated with ONPATTRO. In a controlled clinical
study, 19% of ONPATTRO-treated patients experienced
IRRs, compared to 9% of placebo-treated patients. The
most common symptoms of IRRs with ONPATTRO were
flushing, back pain, nausea, abdominal pain, dyspnea,
and headache.
To reduce the risk of IRRs, patients should receive
premedication with a corticosteroid, acetaminophen,
and antihistamines (H1 and H2 blockers) at least 60
minutes prior to ONPATTRO infusion. Monitor patients
during the infusion for signs and symptoms of IRRs. If an
IRR occurs, consider slowing or interrupting the infusion
and instituting medical management as clinically
indicated. If the infusion is interrupted, consider
resuming at a slower infusion rate only if symptoms have
resolved. In the case of a serious or life-threatening IRR,
the infusion should be discontinued and not resumed.
Reduced Serum Vitamin A Levels and Recommended
Supplementation
ONPATTRO treatment leads to a decrease in serum
vitamin A levels. Supplementation at the recommended
daily allowance (RDA) of vitamin A is advised for patients
taking ONPATTRO. Higher doses than the RDA should not
be given to try to achieve normal serum vitamin A levels
during treatment with ONPATTRO, as serum levels do not
reflect the total vitamin A in the body.
Patients should be referred to an ophthalmologist if
they develop ocular symptoms suggestive of vitamin A
deficiency (e.g. night blindness).
Adverse Reactions
The most common adverse reactions that occurred in
patients treated with ONPATTRO were upper respiratory
tract infections (29%) and infusion-related reactions (19%).
Please see Brief Summary of Full Prescribing
Information on the adjacent page.
Reference: 1. ONPATTRO [package insert]. Cambridge, MA: Alnylam
Pharmaceuticals, Inc; 2018.

ONPATTRO is a trademark of Alnylam Pharmaceuticals, Inc.

© 2018 Alnylam Pharmaceuticals, Inc. All rights reserved.
TTR02-USA-00048-032018