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Our Take: Walmart discreetly steps into the health insurance business

Jul 13, 2020
Without fanfare, Walmart has launched an agency called Walmart Insurance Services LLC, through which it will sell health insurance policies directly to customers.

After posting job openings on its website for licensed insurance agents in the Dallas-Fort Worth area to sell supplemental Medicare policies, Walmart confirmed to several news outlets last week that it had filed the new business entity’s name with the Arkansas Secretary of State in late June (as a subsidiary of Walmart Apollo LLC) and would start selling health insurance plans.

The newly hired agents will enroll customers in Medicare health plans by phone, starting the first week in August, the Arkansas Democrat Gazette reported.

Though Walmart has not specifically stated so, the general consensus is that the company will focus initially on selling Medicare Advantage plans and eventually expand into other types of health plans.

Our Take: Like Amazon, Walmart has been aggressively growing its footprint in the health care world the last few years, and Walmart has been circling the health insurance market considerably longer than that through various partnerships with national insurers.

For example, in 2005, Walmart started “hosting” insurance agents in its stores to answer questions and enroll customers in health plans; that’s when Humana sales agents started selling Medicare Part D prescription drug plans in Walmart stores. Then, in 2012, MetLife teamed up with Walmart to sell “insurance in a box,” paving the way for Walmart’s kiosk program, which gives participating health insurance agents promotional support and prime space in Walmart stores. In 2014, Walmart launched Healthcare Begins Here, an in-store program developed in conjunction with DirectHealth.com, an online health insurance comparison site operated by an independent health insurance agency. Customers can use the program to learn about health insurance options and enroll in a selected plan.

In retrospect, it seems inevitable that the retail leviathan would start selling health insurance directly — and naturally it makes sense to start with highly lucrative, and increasingly popular, Medicare Advantage plans. Undoubtedly, this decision will turn out to be yet another cash cow for the self-described “largest retailer in the world.”

This step is just one of several ways in which Walmart has increased its presence in health care so far this year. The company also expanded benefits available through its telehealth program in January; opened the second, third, and fourth freestanding Walmart Health clinics (two more in Georgia, where the first clinic was opened last September, and the latest one in Springdale, Ark.); and bought CareZone’s prescription management platform in June.

And last week, as the news about Walmart’s plans to start selling health insurance was being widely reported, PBM startup Capital Rx announced its partnership with Walmart. That collaboration makes the two businesses “the first to offer employers a unit price for all prescriptions across retail, mail, and specialty,” Capital Rx noted in the announcement.

Capital Rx offers employers a guaranteed price for each prescription, which according to CEO A.J. Loiacono is a “transformational new model for an industry that has been plagued by price manipulation.” The company describes its Clearinghouse model as “an industry first pricing model that connects buyers and sellers and rebuilds trust across the supply chain.” (In case you weren’t aware, Walmart has a URAC-accredited specialty pharmacy subsidiary.)

We’re barely into the second half of the year. With the pandemic still raging on and forcing stakeholders throughout the health care industry to rethink their business operations, and in some cases their entire business model, who knows what else we might see from Walmart in the months ahead.

In the race between Walmart and Amazon to monopolize retail globally, it’s hard to say who ultimately will win, but this much is certain: Along the way there will continue to be at least hundreds of thousands of small and not-so-small businesses that will lose. As long as consumers care most about convenience and saving money, Walmart and Amazon will continue to expand their global reach.

What else you need to know
Walgreens and VillageMD will open 500 to 700 full-service physician offices in more than 30 markets within the next five years, the companies announced last Wednesday. The physician-led primary care clinics, called Village Medical at Walgreens, will be located in Walgreens stores and staffed by more than 3,600 primary care providers recruited by VillageMD. Care teams will also include pharmacists, nurses, social workers, and therapists. In addition to in-clinic services, care will be available 24/7 through telehealth and at-home visits. A range of insurance options will be accepted, and uninsured patients will be able to pay based on a sliding scale model. The rollout builds on a pilot program the two companies initiated in Houston late last year. Under their expanded partnership, Walgreens Boots Alliance will invest $1 billion in Chicago-based VillageMD over the next three years, 80% of which will be used to establish the new clinics.

In separate news, CNBC reported that Walgreens has opened more than 30 “small-format” pharmacies in a pilot program internally dubbed “Cooper,” after the BMW Mini Cooper. With a focus on the pharmacist-customer relationship, the smaller pharmacies offer fewer over-the-counter drugs and other store items. Rina Shah, Walgreen’s group vice president of pharmacy operations, said the program was inspired by Walgreens stores near health care systems that are smaller and cater to patients discharged from the hospital who need to pick up prescriptions. The company plans to open additional small pharmacies if those in the pilot program perform well.

Blue Cross and Blue Shield of North Carolina launched a program called Accelerate to Value to help keep independent primary care practices in business during the pandemic. By September, Blue Cross NC will begin making payments to participating practices, based on their 2019 revenue, to improve their financial stability through 2021. In exchange, the primary care practices will commit to joining Blue Premier, the insurer’s value-based care program, by the end of this year. They can either join an existing accountable care organization through a Blue Premier network or through Aledade. Starting in 2022, the practices will be eligible to receive fixed monthly payments through a capitation reimbursement arrangement, replacing fee-for-service payments.

Humana is working with Walmart and national laboratories to expand COVID-19 testing for its members. The insurer is the first to offer LabCorp’s at-home test collection kits and, through a collaboration with Walmart, Quest Diagnostics, and PWNHealth, is the first to offer drive-thru testing at Walmart Neighborhood Market drive-thru pharmacy locations across the U.S., Humana said in a press release. Members with Medicare Advantage, Medicare Supplement, Medicaid, or employer groups plans through Humana are eligible for the tests if they have symptoms of COVID-19 or may have been exposed to the virus, and Humana is continuing to waive their out-of-pocket costs.

St. Louis-based Centene is building a second headquarters in Charlotte, North Carolina. The company said in a news release that it would invest $1 billion “in the Charlotte community over time.” Construction of the new campus — which eventually will include more than 1 million square feet of office and meeting space, as well as a childcare center, dining venues, an auditorium, a fitness center, and a corporate learning and development center named Centene Tech University — is expected to begin in August. The plan is to complete the campus in two phases, Centene said, with each phase having the capacity to accommodate 3,000 new employees.

Cleveland Clinic opened its Florida Research and Innovation Center in Port St. Lucie, Fla., on July 1, the health system announced Wednesday, noting that the 107,000-square-foot facility will be closely integrated with the Center for Global and Emerging Pathogens Research established in April and will “complement and expand” research being conducted at the Lerner Research Institute on Cleveland Clinic’s main campus in Cleveland, Ohio. Michaela Gack, a renowned virologist who chaired the Committee on Microbiology at the University of Chicago before joining Cleveland Clinic Florida earlier this month, is the scientific director of the new Florida Research and Innovation Center.

Gilead Sciences has begun testing an inhalable version of remdesivir as a possible treatment for patients with less severe COVID-19 to help prevent hospitalization. The Phase Ib clinical trial will include approximately 60 healthy adults ages 18 to 45 and will evaluate the safety, tolerability, and pharmacokinetics of the inhalable version. The form of remdesivir currently being used to treat patients hospitalized with more severe COVID-19 is administered intravenously. “Delivering remdesivir directly to the primary site of infection with a nebulized, inhaled solution may enable more targeted and accessible administration in non-hospitalized patients and potentially lower systemic exposure to the drug,” Gilead’s chief medical officer, Merdad Parsey, explained in a statement on the company’s website.

What we’re reading
A Better Way to Scale Covid-19 Testing. Harvard Business Review, 7.7.20

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