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Industry support gathers for expanding MA benefits in 2020

Posted by www.psmbrokerage.com Admin on Wed, Feb 06, 2019 @ 03:01 PM

Industry support gathers for expanding MA benefits in 2020

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By Amy Baxter – HealthExec – February 5, 2019

Since CMS proposed expanding supplemental benefits for Medicare Advantage for the 2020 plan year at the end of January, several industry groups have voiced their support, seeing opportunities to improve care for individuals with chronic illnesses and lower costs.

The proposal allows MA plans––which are private health insurers that contract with Medicare to provide all healthcare services under original Medicare––more flexibility to design benefits centered around specific chronic conditions. CMS previously expanded supplemental benefits for the 2019 plan year to include services such as in-home care, which can keep older adults out of acute care settings and improve health and wellness.

The new expansion, if finalized, would enable plans to cover more benefits that directly address social determinants of health, such as home modifications, transportation and meals. For people with chronic conditions, addressing these issues can prevent or delay more serious health events. The benefits would also extend to those affected by opioid addiction seeking treatment.

“Meeting the needs of patients with chronic disease requires a team-based approach to care,” president and CEO of the American Medical Group Association (AMGA), Jerry Penso, MD, MBA, said in a statement following the proposal. “This also may include services that traditionally were not thought of as healthcare-related, including ones that deal with socioeconomic barriers to care. That is why AMGA is supportive of CMS’ effort to provide flexibility in how Medicare Advantage plans in order to help support the total needs of a patient by, for instance, ensuring their nutrition and transportation needs are met.”

The expanded benefits could help attract more Medicare beneficiaries to MA plans if plans include them in their 2020 bids. Over the next several years, MA enrollment is expected to significantly rise. In 2019, enrollment is anticipated to reach an all-time high of 22.6 million, or 36.7 percent of all Medicare beneficiaries, according to CMS.

With this in mind, Matt Eyles, president and CEO of association group America’s Health Insurance Plans (AHIP), is taking a close look at the proposal and its potential impact.

“We appreciate the ongoing bipartisan commitment from both Congress and the Administration to protect the Medicare Advantage program — ensuring its long-term stability, so that it can continue to improve seniors’ access to quality, affordable health care that meets their individual needs,” he said in a statement. “We will continue to review the advance rate notice carefully and look forward to participating in the comment period.”

Better Medicare Alliance, which advocates for MA through healthcare policy and research, also plans to comment on the proposal and voiced stronger support for the expansion of the supplemental benefits to people with chronic illness and those affected by opioid addiction.

“We are encouraged by CMS’ proposals to allow Medicare Advantage plans and providers greater flexibility to meet the needs of chronically ill beneficiaries with the expansion of supplemental benefits,” BMA President and CEO Allyson Y. Schwartz said in a statement. “Evidence has shown that beneficiaries in Medicare Advantage experience lower rates of opioid use. CMS’ proposals will build on this success by increasing access to effective treatments for opioid addiction and promote non-opioid therapies available in Medicare Advantage.”

Source: https://www.healthexec.com/topics/policy/industry-support-gathers-ma-benefits-2020

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Tags: Humana, Medicare Advantage, Medicare, UnitedHealthcare, aetna, CVS, WellCare

As Democrats Talk Single Payer, Private Medicare Advantage Soars

Posted by www.psmbrokerage.com Admin on Wed, Feb 06, 2019 @ 02:42 PM

Medicare Advantage Enrollment Surges


By Bruce Japsen – Forbes – February 5, 2019

Health insurers are reporting unprecedented growth in the number of seniors flocking to private Medicare Advantage plans amid talk of a single payer government-run approach that could uproot such coverage.

The same week U.S. Sen. Kamala Harris (D-California) made news with her support for “Medicare for All,” insurers Anthem and Cigna reported strong growth from Medicare Advantage, private coverage sold via contracts with the federal government.

Anthem’s Medicare Advantage enrollment jumped by 35% to more than 1 million at the end of 2018 compared to 746,000 in the fourth quarter of 2017, the operator of Blue Cross and Blue Shield plans reported last week. “Our individual Medicare Advantage business is on track to achieve our mid-double digit growth target,” Anthem CEO Gail Boudreaux told analysts during the company’s fourth quarter earnings call last week. “In total, we estimate our Medicare Advantage growth will exceed 20% by the end of 2019.”

Meanwhile, Cigna reported Friday that its Medicare Advantage enrollment was up one percent to 436,000 from 432,000 and UnitedHealth Group ended 2018 with 4.9 million Medicare Advantage enrollees, which was up nearly 12% from 4.4 million at the end of 2017. Other insurers including Aetna, which is now part of CVS Health, are expected to report higher Medicare Advantage enrollment later this month after these plans expanded into new markets.

The industry is tapping into a market of more than 10,000 baby boomers aging into the Medicare population every day . The insurers that have reported 2018 earnings thus far are reporting overall industry growth that’s slightly ahead of the projected record growth the Centers for Medicare & Medicaid Services (CMS) predicted for Medicare Advantage last fall. “We completed a strong Medicare Advantage enrollment season . . . and are on track to achieve 2019 growth within the 400,000 to 450,000 range of expectations,” Steve Nelson, CEO of UnitedHealthcare, UnitedHealth’s insurance business told analysts two weeks ago.

Medicare Advantage plans contract with the federal government to provide extra benefits and services to seniors, such as disease management and nurse help hotlines, with some even providing vision and dental care and wellness programs. CMS is changing regulations to allow Medicare Advantage plans to provide broader coverage in the future, which is also expected to boost enrollment. L.E.K. has projected Medicare Advantage enrollment will rise to 38 million, or 50% market penetration by the end of 2025.

As seniors flock to Medicare Advantage, analysts say it’s going to make it difficult for Democrats on the presidential campaign trail to support a Medicare for All approach that would bring an end to the private insurer’s role.

The insurance industry worries most about so-called “single payer” forms of health insurance that would conceivably replace the private insurer’s role with a government-administered form of coverage. U.S. Sen. Bernie Sanders of Vermont has espoused the single payer approach for years but the Medicare for All Act of 2017 that he, Harris and others supported does mention “the ability to enroll in a Medicare Advantage plan.”

America’s Health Insurance Plans, the health insurance lobby that includes Anthem, Cigna and other insurers that sell Medicare Advantage, said Americans don’t want a “a one-size-fits-all health care system.”

“Today, health insurance providers deliver coverage that is working for hundreds of millions of Americans – including 180 million Americans who are covered through an employer, 20 million covered through Medicare Advantage, 55 million covered through Medicaid managed care, and 20 million who buy their own coverage,” AHIP spokeswoman Kristine Grow said.

”The vast majority of these 300 million Americans are satisfied with their existing coverage," Grow added. "One of the reasons they like their coverage is it provides them with choice and control. Health care is personal – all Americans are unique individuals with different health care needs depending on their stage of life, where they live, their income and resources, and physical and mental health. People should be able to get the care they need, when they need it, at a cost they can afford.”

Source: https://www.forbes.com/sites/brucejapsen/2019/02/03/as-democrats-talk-single-payer-private-medicare-advantage-soars/#71a5c29458f3

 
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Tags: Humana, Medicare Advantage, Medicare, UnitedHealthcare, aetna, CVS, WellCare

Medicare Advantage Enrollment Surges For Centene And WellCare

Posted by www.psmbrokerage.com Admin on Wed, Feb 06, 2019 @ 01:42 PM

Medicare Advantage Enrollment Surges For Centene And WellCare


By Bruce Japsen – Forbes – February 5, 2019

Centene and WellCare Health Plans are the latest to report a surge in seniors signing up for private Medicare coverage administered by health insurers.

Centene and WellCare, which reported earnings Tuesday, have been expanding beyond their historic business lines dominated by administering Medicaid benefits for states into Medicare Advantage. Centene also has a large business offering subsidized individual coverage offered under the Affordable Care Act.

But these health insurers are joining the parade of health plans and startups taking advantage of more than 10,000 baby boomers turning 65 every day and rule changes administered by the Centers for Medicare & Medicaid Services (CMS) to allow private insurers to offer more benefits in Medicare Advantage plans they sell.

Centene’s enrollment in Medicare plans, including Medicare Advantage, rose 25% to 416,900 in the fourth quarter compared to 333,700 in the fourth quarter of 2017. Meanwhile, WellCare reported Tuesday its enrollment in Medicare plans including Medicare Advantage increased nearly 10%, or by 49,000, to 545,000 in the fourth quarter of last year compared to 496,000 in the fourth quarter of 2017.

Such growth reported by Centene and WellCare Tuesday comes following double-digit percentage growth in Medicare Advantage enrollment already released by Anthem and UnitedHealth Group. Humana reports its earnings later this week and Aetna, now owned by CVS Health, reports its fourth quarter results later this month.

Medicare Advantage plans contract with the federal government to provide extra benefits and services to seniors, such as disease management and nurse help hotlines, with some even providing vision and dental care and wellness programs. CMS' rule changes to allow Medicare Advantage plans to provide broader coverage in the future is also expected to boost enrollment. L.E.K. Consulting has projected Medicare Advantage enrollment will rise to 38 million, or 50% market penetration by the end of 2025.

The rising enrollment in privately-administered Medicare Advantage plans comes as members of Congress and Democrats running for president in 2020 talk about expanding Medicare to all Americans. 

Some of the plans include allowing private insurers to maintain their role offering Medicare Advantage but others urging "Medicare for All" including Sen. Bernie Sanders of Vermont and Sen. Kamala Harris of California have talked about a diminished role for the health insurance industry in administering Medicare benefits.

Source: https://www.forbes.com/sites/brucejapsen/2019/02/05/medicare-advantage-enrollment-surges-for-centene-and-wellcare/#2db5bf1610f0

Image: Freepik

 
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Tags: Humana, Medicare Advantage, Medicare, UnitedHealthcare, aetna, CVS, WellCare

Aetna: "Don't worry, Walmart is still an in-network pharmacy for 2019 MAPD and PDP products"

Posted by www.psmbrokerage.com Admin on Wed, Jan 16, 2019 @ 10:46 AM

Aetna: "Don't worry, Walmart is still an in-network pharmacy for 2019 MAPD and PDP products"

CVS Health recently announced that Walmart has opted to leave its pharmacy network for Commercial and Medicaid plans. As stated in the press release, this has no impact on Medicare plans. Please let your clients know:

  1. There’s no impact to our Medicare pharmacy network.
  2. Walmart continues to participate in the pharmacy network for our Medicare Advantage plans (MAPD), Prescription Drug Plans (PDP), Dual-eligible Special Needs Plans (DSNP) and Employer Group plans.
    • Walmart continues to be a preferred pharmacy for any Medicare Advantage plans that offer a preferred pharmacy network, as well as for Aetna Medicare Rx Saver (PDP) and Aetna Medicare Value Plus (PDP) plans.
    • Walmart will remain an in-network, non-preferred pharmacy for the Aetna Medicare Rx Select (PDP) plan.
  3. Aetna Medicare members can continue to receive their medicines at Walmart or at any of our 65,000+ network pharmacies nationwide.

If members have any questions, they can call Member Services using the number on their member ID card.

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Tags: aetna, CVS, Walmart

Walmart to Leave CVS Network, Roiling Drugstores

Posted by www.psmbrokerage.com Admin on Wed, Jan 16, 2019 @ 10:30 AM

Walmart to Leave CVS Network, Roiling Drugstores

 Robert Langreth and Matthew Boyle / Bloomberg News / Employee Benefit Adviser

Walmart will leave CVS Health’s network that administers drug benefits for millions of Americans, in a dispute over costs that could roil the business of filling prescriptions.

Walmart, the world’s largest retail chain, was demanding higher reimbursements for its in-store pharmacies where customers who have CVS pharmacy-benefit management plans could pick up their prescriptions, CVS said in a statement announcing the split.

Walmart said that it was resisting efforts by CVS to steer consumers to certain pharmacies to have their prescriptions filled. The Bentonville, Arkansas, company said in an emailed statement that it was committed to giving customers access to affordable healthcare, “but we don’t want to give that value to the middle man.”

90(Image: Bloomberg)

“This issue underscores the problems that can arise when a PBM can exert their unregulated power to direct members on where to fill their scripts, disrupting patients’ healthcare,” the statement said. “Walmart is standing up to CVS’s behaviors that are putting pressure on pharmacies and disrupting patient care.” 

“Walmart’s requested rates would ultimately result in higher costs for our clients and consumers,” CVS Caremark President Derica Rice said in the statement. “We simply could not agree to their recent demands for an increase in reimbursement.” 

CVS isn’t only one of the U.S.’s biggest pharmacy chains, with almost 10,000 locations. It also oversees drug benefits for about 93 million people, including setting up networks of drugstores where they can pick up their prescriptions. 

Walmart is a major pharmacy operator as well, and dispenses drugs in most of its almost 5,000 locations. It has also flirted with getting more involved in the healthcare industry, looking at offering wellness services and other offerings that will become a key part of CVS’s business with its takeover of health insurer Aetna last year.

The split won’t affect Medicare beneficiaries in CVS’s Part D drug plans. It also won’t apply to Walmart’s Sam’s Club stores, CVS said in the statement.

CVS said the move won’t materially impact its 2019 results. News of the split was reported earlier by the Wall Street Journal.

ARTICLE

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Tags: CVS, Walmart

Cigna closes $67B Express Scripts acquisition, promising affordability and choice

Posted by www.psmbrokerage.com Admin on Wed, Dec 26, 2018 @ 02:23 PM

Cigna closes $67B Express Scripts acquisition, promising affordability and choice

Express Scripts is now part of Cigna after the $67 billion acquisition closed on Thursday. (Express Scripts)

By Evan Sweeney – FierceHealthCare – December 20, 2018

Cigna officially absorbed one of the largest pharmacy benefit managers in the country on Thursday, closing its $67 billion purchase of Express Scripts.

The acquisition gives Cigna significant leverage in a market in which insurers are increasingly partnering, acquiring or being bought by PBMs. With Express Scripts under its wing, Cigna joins CVS, UnitedHealth and Humana and Anthem as the primary vertically integrated powerhouses in the insurance industry.

Combined, Cigna and Express Scripts brought in more than $141 billion in revenues in 2017. In a statement, Cigna said the merger will "dramatically accelerate the number and breadth of value-based relationships."

“Today’s closing represents a major milestone in Cigna’s drive to transform our healthcare system for our customers, clients, partners and communities," Cigna President and CEO David M. Cordani said in a statement.

Continue Reading

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Tags: Humana, Cigna, Medicare Advantage, UnitedHealthcare, CVS

Fed Nearing Approval of Mergers: CVS-Aetna, Cigna-Express Scripts May Soon Merge

Posted by www.psmbrokerage.com Admin on Thu, Sep 13, 2018 @ 08:31 AM

Fed Nearing Approval of Mergers:
CVS-Aetna, Cigna-Express Scripts May Soon Merge

Fed Nearing Approval of Mergers
Justice Department antitrust enforcers are preparing to give the green light to two deals in the health-care industry: CVS Health Corp.’s planned acquisition of health insurer Aetna Inc.; and Cigna Corp.’s planned purchase of Express Scripts Holding Co., according to people familiar with the matter. Both deals could receive formal antitrust approval as soon as the next few weeks.

The CVS-Aetna and Cigna-Express Scripts deals underscore how the health care and insurance industries are changing, with the biggest players seeking to incorporate multiple lines of business, forming behemoths that stretch from insurance to pharmacy-benefit management to – in some cases – drugstores, clinics and physician practices. CVS has the largest market share in the Medicare drug-plan business, with around 6.1 million members. Aetna is the fifth-biggest Part D seller with around 2.2 million members. To preserve competition where CVS and Aetna sell Part D plans head-to-head, the Justice Department will require the companies to sell off parts of their Part D business to one or more companies that would compete with the newly merged firm, some of the people familiar with the matter said.

Read the full article here

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Tags: Cigna, Part D, aetna, CVS, Express Scripts

CVS Health to Acquire Aetna

Posted by www.psmbrokerage.com Admin on Mon, Dec 04, 2017 @ 01:09 PM

CVS Health to Acquire AetnaCVS Health to Acquire Aetna

WOONSOCKET, R.I. and HARTFORD, Conn., Dec. 3, 2017 /PRNewswire/ -- CVS Health (NYSE: CVS), a company at the forefront of changing the health care landscape, and Aetna (NYSE: AET), one of the nation's leading diversified health care benefits companies, today announced the execution of a definitive merger agreement under which CVS Health will acquire all outstanding shares of Aetna for a combination of cash and stock. Under the terms of the merger agreement, which has been unanimously approved today by the boards of directors of each company, Aetna shareholders will receive $145.00 per share in cash and 0.8378 CVS Health shares for each Aetna share. The transaction values Aetna at approximately $207 per share or approximately $69 billion1. Including the assumption of Aetna's debt, the total value of the transaction is $77 billion.

This transaction fills an unmet need in the current health care system and presents a unique opportunity to redefine access to high-quality care in lower cost, local settings whether in the community, at home, or through digital tools.

CVS Health President and Chief Executive Officer Larry J. Merlo said, "This combination brings together the expertise of two great companies to remake the consumer health care experience. With the analytics of Aetna and CVS Health's human touch, we will create a health care platform built around individuals. We look forward to working with the talented people at Aetna to position the combined company as America's front door to quality health care, integrating more closely the work of doctors, pharmacists, other health care professionals and health benefits companies to create a platform that is easier to use and less expensive for consumers."

This is a natural evolution for both companies as they seek to put the consumer at the center of health care delivery. CVS Health has steadily become an integrated health care company, and Aetna has moved beyond being a traditional insurer to focus more on consumer well-being.

"This is the next step in our journey, positioning the combined company to dramatically further empower consumers. Together with CVS Health, we will better understand our members' health goals, guide them through the health care system and help them achieve their best health,"

said Mark T. Bertolini, Aetna chairman and CEO. "Aetna has a proud tradition of continually innovating to address unmet consumer needs and providing leading products and services to the marketplace."

Bertolini continued, "Aetna has a talented and dedicated group of employees working to build a healthier world every day. Our combined company will be more competitive in the marketplace and accelerate progress toward achieving this mission."

Today, increasing numbers of consumers are taking on more and more responsibility for paying for their health care as the burden of costs is being shifted to them. Together, CVS Health and Aetna will be a trusted community partner who will help consumers better manage the cost of the health care they need. The combined company will also be well positioned to more effectively meet the health needs of many more people, especially the 50 percent of Americans with chronic conditions that account for more than 80 percent of all health care costs. Finally, capabilities developed following this transaction will directly benefit clients of both companies and enable them to better manage their health care costs.

BENEFITS FOR CONSUMERS

Uniquely Integrated, Community-Based Health Care Experience

Consumers will benefit from a uniquely integrated, community-based health care experience. The combined company will also be able to better understand patients' health goals, guide them through the health care system, and help them achieve their best health. There will be expanded opportunities to bring health care services to consumers every day. CVS Pharmacy locations will include space for wellness, clinical and pharmacy services, vision, hearing, nutrition, beauty, and medical equipment, in addition to the products and services our customers currently enjoy. An entirely new health services offering available in many locations will function as a community-based health hub dedicated to connecting the pathways needed to improve health and answering patients' questions about their health conditions, as well as prescription drugs and health coverage.

This personalized health care experience will be delivered by connecting Aetna's extensive network of providers with greater consumer access through CVS Health. This includes more than 9,700 CVS Pharmacy locations and 1,100 MinuteClinic walk-in clinics as well as further extensions into the community through Omnicare's senior pharmacy solutions, Coram's infusion services, and the more than 4,000 CVS Health nursing professionals providing in-clinic and home-based care across the nation. As a result, there will be a better opportunity to utilize local care solutions in a more integrated fashion with the goal of improving patient outcomes.

More Integrated Data and Analytics

The entire health care system will also benefit from broader use of data and analytics, leading to improved patient health at substantially lower cost. This will be achieved, for example, by helping patients avoid unnecessary hospital readmissions. Twenty percent of Medicare patients are readmitted to the hospital soon after being discharged at significant annual costs, much of which is avoidable. Readmission rates can be cut in half if patients have a complete review of their medications after discharge from the hospital to help them manage their care at home. In addition, home devices to monitor activity levels, pulse, and respiratory rates can be used to prevent readmissions. Rather than feeling lost and confused, selected high risk patients discharged from the hospital, or their caregivers, will be able to stop at a health hub location to access services such as medication evaluations, home monitoring and use of durable medical equipment, as needed. All of these services will complement and be integrated with the care provided by their physician and medical team.

Opportunity to Better Fight Chronic Disease

The combined entity will be able to help address the growing cost of treating chronic diseases in important ways. For example, there are 30 million Americans suffering from diabetes, costing the health care system approximately $245 billion annually. Patients with diabetes will receive care in between doctor visits through face-to-face counseling at a store-based health hub and remote monitoring of key indicators such as blood glucose levels. When needed, patients can receive text messages to let them know when their glucose levels deviate from normal ranges. As a follow up, patients can receive counseling on medication adherence, pick up diabetes-related supplies and engage ancillary services such as counsel on weight loss and programs designed to reverse diabetes through nutrition. This will result in better control of their blood sugar levels and better health, which should be appreciated by both patients and their doctors.

"These types of interventions are things that the traditional health care system could be doing," commented Merlo, "but the traditional health care system lacks the key elements of convenience and coordination that help to engage consumers in their health. That's what the combination of CVS Health and Aetna will deliver."

BENEFITS FOR SHAREHOLDERS

As a result of this transaction, shareholders are expected to benefit from a number of outcomes, including enhanced competitive positioning; low- to mid-single digit accretion in the second full year after the close of the transaction, including the ability to deliver $750 million in near-term synergies; and a platform from which to accelerate growth. The combination over the longer term has the potential to deliver significant incremental value as it will spur the development of new products and generate significant new growth opportunities as a uniquely integrated retailer, pharmacy benefits manager and health plan. Aetna shareholders will receive attractive value from the transaction, including $145 per share in cash, and the ability to participate in the future success and high growth potential of the combined company.

TRANSACTION DETAILS

Transaction Terms

Under the terms of the merger agreement, each outstanding share of Aetna common stock will be exchanged for $145.00 in cash and 0.8378 shares of CVS Health common stock. Upon closing of the transaction, Aetna shareholders will own approximately 22% of the combined company and CVS Health shareholders will own approximately 78%.

The transaction is expected to close in the second half of 2018. It is subject to approval by CVS Health and Aetna shareholders, regulatory approvals and other customary closing conditions.

Financing of the Transaction

CVS Health intends to fund the cash portion of the transaction through a combination of existing cash on hand and debt financing. The transaction is not contingent upon receipt of financing. Barclays, Goldman Sachs and Bank of America Merrill Lynch are providing $49 billion of financing commitments.

Governance Details

Upon the closing of the transaction, three of Aetna's directors, including Aetna's Chairman and CEO Mark T. Bertolini, will be added to the CVS Health Board of Directors. In addition, members of the Aetna management team will play significant roles in the newly combined company. Aetna will operate as a stand-alone business unit within the CVS Health enterprise and will be led by members of their current management team.

Advisors

Barclays and Goldman Sachs are serving as financial advisors to CVS Health, and Centerview Partners also provided financial advice to the CVS Health Board of Directors. The company was advised on legal matters by Shearman & Sterling LLP, Dechert LLP, and McDermott Will & Emery LLP. Lazard and Allen & Company LLC are serving as financial advisors to Aetna and Evercore is serving as financial advisor to Aetna's Board of Directors. Davis Polk & Wardwell LLP is acting as Aetna's legal advisor.

About CVS Health

CVS Health is a pharmacy innovation company helping people on their path to better health. Through its 9,700 retail locations, more than 1,100 walk-in medical clinics, a leading pharmacy benefits manager with nearly 90 million plan members, a dedicated senior pharmacy care business serving more than one million patients per year, expanding specialty pharmacy services, and a leading stand-alone Medicare Part D prescription drug plan, the company enables people, businesses and communities to manage health in more affordable and effective ways. This unique integrated model increases access to quality care, delivers better health outcomes and lowers overall health care costs. Find more information about how CVS Health is shaping the future of health at https://www.cvshealth.com.

About Aetna

Aetna is one of the nation's leading diversified health care benefits companies, serving an estimated 44.6 million, at September 30, 2017, people with information and resources to help them make better informed decisions about their health care. Aetna offers a broad range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, group life and disability plans, and medical management capabilities, Medicaid health care management services, workers' compensation administrative services and health information technology products and services. Aetna's customers include employer groups, individuals, college students, part-time and hourly workers, health plans, health care providers, governmental units, government-sponsored plans, labor groups and expatriates. For more information, see www.aetna.com and learn about how Aetna is helping to build a healthier world. @AetnaNews

Source: https://cvshealth.com/newsroom/press-releases/cvs-health-acquire-aetna-combination-provide-consumers-better-experience

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Tags: Medicare Advantage, aetna, CVS

CVS Makes Blockbuster Aetna Bid

Posted by www.psmbrokerage.com Admin on Mon, Oct 30, 2017 @ 11:54 AM

CVS Makes Blockbuster Aetna BidCVS Makes Blockbuster Aetna Bid

Amazon may upend another industry without even launching a product. CVS Health (CVS) is said to be in talks to acquire Aetna (AET) for $66 billion in a blockbuster merger that could reshape the health insurance industry. And one of the factors rumored to be driving the deal is Amazon (AMZN, Tech30).

The Wall Street Journal reports the merger is at least partly intended to guard against the threat of Amazon entering the pharmacy market.

Both CVS and Aetna have declined to comment on the rumored deal.

In recent months, there has been a drumbeat of reports about Amazon's interest in selling prescription drugs as part of its bottomless ambition to offer every consumer product and service imaginable.

As analysts at Goldman Sachs put it in one investor note this summer, "Imagine a day when you can ask Alexa to have your Lipitor refill arrive at your doorstep in under two hours."

It may sound like a stretch for a company that started as an online bookseller. But Amazon now owns the Whole Foods grocery chain and is testing its own corner stores. It also offers one-hour delivery in certain markets. That potentially puts it in a strong position to deliver prescription drugs online and offline.

On an earnings call in August, CVS CEO Larry Merlo tried to play down the threat of Amazon as a competitor.

Related: Are prescription drugs the next target for Amazon?

"There are many barriers to entry when you're looking at pharmacy," Merlo said on the call. "It's highly regulated, so the barriers to entry are high."

Amazon may be scaling those barriers, however. On Thursday, the St. Louis Post-Dispatch reported Amazon had gotten the green light for wholesale pharmacy licenses in at least a dozen states.

Amazon's "speculated entry into the Drug Value Chain is becoming more real with wholesale pharmacy licenses," Ana Gupte, an analyst at Leerink, a boutique investment firm focused on the health care industry, wrote in an investor note Thursday.

Gupte said Amazon posed "a massive threat to CVS" at a time when it's struggling to get enough foot traffic into its stores.

Asked about its plans on an earnings call Thursday, Amazon CFO Brian Olsavsky said he "can't confirm or deny any of the rumors related to pharmacy."

171027105118-amazon-cvs-aetna-780x439.jpg

If the rumors are true, it certainly wouldn't be the first time Amazon disrupted a market with little more than a rumor. All it took was a whisper of Amazon's interest in meal-kit delivery services to shatter Blue Apron (APRN)'s stock this year.

One analysis found Amazon was mentioned on more than 100 earnings calls last quarter, including the CVS call, as businesses and investors weigh the "Amazon effect" across a wide range of industries.

For Amazon, "every new opportunity represents a $500B-$1T market, including food/restaurant and pharmaceutical," according to an investor note Friday from James Cakmak, an analyst with Monness, Crespi, Hardt.

Source:http://money.cnn.com/2017/10/27/technology/business/amazon-cvs-aetna/index.html

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Tags: Medicare Advantage, aetna, CVS

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