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Our Take: Centene to switch PBMs in 2024, awarding new contract to Express Scripts

Oct 31, 2022

When Centene announced its third-quarter earnings last week, the St. Louis-based insurer said it had awarded a new pharmacy benefit management (PBM) contract to Cigna’s Express Scripts that would begin in January 2024.

“Selecting our future PBM partner represents a major value creation plan milestone and positions us to capture significant value for our members, partners, and stakeholders in 2024 and beyond,” said Sarah London, Centene’s CEO.

The contract is valued at $35 billion and will cover approximately 20 million members.

Centene provides coverage to almost 27 million members, most of them Medicaid and Medicare beneficiaries. However, that total also includes members enrolled in TRICARE, the health care program for active-duty and retired uniformed services members and their families. Under a seven-year contract with the Department of Defense, Express Scripts already manages prescriptions for TRICARE.

Express Scripts, part of Cigna’s Evernorth subsidiary, is also based in St. Louis.

Our Take:  With this new contract, Centene is poised to become Express Scripts’ largest client.  Amy Bricker, Express Scripts’ president, said the company currently services more than 100 million Americans.

Centene initiated a bidding process for PBM services as part of its ongoing value creation plan to increase the company’s profit margin.

There’s another reason as well — a year ago, Centene announced that it would start using a third-party PBM when the existing contract with its in-house PBM, Envolve Pharmacy Solutions, expires at the end of 2023.

In the last couple of years, several states have accused Centene of using its PBM subsidiary to overcharge their Medicaid programs.

So far, in no-fault agreements, Centene has paid, or agreed to pay, approximately $553 million in settlements with at least 11 states, including Ohio, Mississippi, Arkansas, Illinois, New Hampshire, Kansas, New Mexico, Washington, Texas, and Massachusetts, and there could still be more to come. The insurer stated in SEC filings that it has reserved $1.25 billion to resolve potential claims.

Although the decision to outsource Centene’s PBM business was made before Sarah London became CEO earlier this year, she surely wants to move past the scrutiny that Centene has faced as a result of these allegations as quickly as possible.

With PBMs in general under greater scrutiny these days, both Centene and Express Scripts will need to toe the line.

What else you need to know
A breach of Advocate Aurora’s systems exposed the health information of an estimated 3 million patients. The health system notified the Department of Health and Human Services of the breach on Oct. 14. In a statement on its website, Advocate Aurora said it uses third-party vendors to track visitors’ use of its websites and applications through pixels, which are snippets of code inserted on the sites and apps. Pixels or similar technology also were installed on patient portals, such as MyChart and LiveWell, and on scheduling widgets, in some cases transmitting certain patient information to the vendors that provided the technology. The health system said it has disabled or removed the pixels from its platforms and is investigating the incident. It also said it does not believe that patients’ payment source information or Social Security numbers were involved.

Nashville, Tenn.-based HCA Healthcare is reorganizing its operations. The changes will take effect on Jan. 1 and will result in a corporate structure consisting of three operating groups: the American group, the National group, and the newly created Atlantic group. Each group will have its own president, who will report to CEO Sam Hazen, and five domestic divisions. The restructuring will involve numerous changes in regional and division leadership. The overall restructuring is intended to “streamline areas that can improve long-term performance,” the for-profit company stated in a press release. Reorganizing the divisions in the operating groups “Is designed to allow for more focused support for the company’s networks across the enterprise and more speed and agility in decision making and execution.”

Sharp HealthCare is consolidating the executive leadership at its seven hospitals, the San Diego Union-Tribune reported last week. Scott Evans, who has been CEO of the health system’s Grossmont campus since 2015, will continue to oversee that campus along with the Chula Vista and Coronado campuses as a “unified regional organization.” Trisha Khaleghi, who leads the health system’s specialty hospitals on the metro San Diego campus — Mary Birch Hospital for Women & Newborns, Sharp Mesa Vista, and the Sharp McDonal Center — will also serve as Sharp Memorial Hospital’s CEO. Brett McClain, Sharp HealthCare’s vice president and chief operating officer, said the changes will drive consistency, create operational efficiencies, and allow for “quicker and more active decisions.” The health system said front-line workers should not be affected and it does not anticipate any layoffs.

JPMorgan Chase has opened primary care centers for employees in or near its offices in the Columbus, Ohio, area in collaboration with Vera Whole Health (now part of the recently rebranded company apree health) and Central Ohio Primary Care (COPC), according to a press release. Three on-site centers offer in-person and virtual health and wellness services for more than 20,000 employees, and two near-site centers serve employees and more than 15,000 of their family members enrolled in JPMorgan Chase’s benefit plan. Last year, JPMorgan Chase’s health care arm, Morgan Health, invested $50 million in startup Vera Whole Health. Through Vera’s value-based care model, an integrated care team offers coaching, behavioral health, and wellness services along with standard primary care. COPC is one of Ohio’s largest independent physician-owned primary care groups.

Walmart Health will add another 16 health centers in Florida in 2023. The clinics, which will offer primary care, lab services, X-rays and EKGs, behavioral health, dental and hearing services, community health, and certain specialty services, will be located beside Walmart Supercenters and will span the metro areas of Jacksonville, Orlando, and Tampa, the retailer said in a news release. Walmart Health opened its first six clinics in Florida this year.

What we’re reading
Inflation Is Squeezing Hospital Margins—What Happens Next? Health Affairs Forefront, 10.25.22
Readmission Reduction as a Hospital Quality Measure: Time to Move on to More Pressing Concerns? JAMA Viewpoint, 10.6.22
Ivermectin for COVID-19: Final Nail in the Coffin. Medscape, 10.25.22 (registration required)

What else we’re reading
Being Mortal: Medicine and What Matters in the End, by Atul Gawande. A recurring theme throughout his work is how doctors and the system of medical care routinely lets patients down. Everything Dr. Gawande writes feels like he’s writing from the soul. Being Mortal is undoubtedly one of his best. 
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