Becker's Hospital Review

28 CFO / FINANCE Cigna's net income falls 46%: 5 things to know By Morgan Haefner C igna, which now owns pharma- cy benefits manager Express Scripts, saw its net income fall in the fourth quarter of fiscal year 2018, according to financial documents released in February. Five things to know: 1. Cigna posted net income of $144 million in the fourth quarter of fiscal year 2018, down 46 percent from $266 million in the same period a year prior. 2. The health insurer's quarterly prof- it was better than expected; however, Cigna's revenue and earnings forecast was below Wall Street estimates for its first full year running Express Scripts, according to Reuters. The health insur- er expects 2019 adjusted revenue be- tween $131.5 billion and $133.5 billion. 3. In addition, Cigna's shares fell 5 percent Feb. 1 after HHS proposed to end rebates to pharmacy benefit managers. 4. Cigna's medical care ratio, or the amount it spends on medical claims in relation to premium income, was 80.9 percent in the fourth quarter. 5. The health insurer's total membership climbed 3.6 percent in the fourth quar- ter of fiscal year 2018 to nearly 17 mil- lion when compared to the same period a year prior, according to Reuters. n OptumRx sets demands for drugmaker price reductions By Alia Paavola O ptumRx, UnitedHealth Group's pharmacy benefit manager unit, reportedly sent a letter to phar- maceutical companies in December out- lining several demands drugmakers must meet if they decide to lower list prices, according to a Bernstein investor memo. e memo, written by Ronny Gal of Sanford C. Bernstein & Co., claimed that OptumRx wants a seven-quarters notice before any price reduction. In ad- dition, it wants rebates to remain "equiv- alent." It is not clear if the PBM wants rebates to remain the same or the same percentage of a price. e letter from OptumRx only applies to Medicare Part D plans. According to the investor memo, phar- maceutical companies are unhappy with the demands in the letter, especially as many of them are looking to lower the list price for high gross-to-net products to lower patient copays. In addition, drugmakers said they were displeased with the tone of the letter, which indicates the PBM wants too much of a say in big-decision, large-scale reductions. News of the letter comes as the public debate between pharmaceutical compa- nies and PBMs heats up. "Our goal in asking for advance no- tice of price changes in the lengthy Part D bid process is to achieve greater transparency and predictability in con- sumer premiums and out-of-pocket costs," OptumRx said in a statement to Becker's Hospital Review. OptumRx told Becker's that the ma- jority of the Part D rebates are passed back to health plans, so the negotia- tions "have virtually no impact on our bottom line." n Mayo Clinic adds Mexico hospital to care network By Leo Vartorella R ochester, Minn.-based Mayo Clinic has added Centro Médico Puerta de Hierro in Guadalajara, Mexico to the Mayo Clinic Care Net- work, a group of independent health systems that work closely with Mayo to improve quality standards. Centro Médico Puerta de Hierro oper- ates five hospitals and other facilities in the Guadalajara metropolitan area. As part of the network, the system will have access to a database of medical information created by Mayo Clinic specialists that offers medical proto- cols and treatment recommendations, electronic consultations and second opinions with Mayo physicians as well as live video conferences with Mayo specialists to discuss complex cases. "By providing a second medical opin- ion, we at Centro Médico Puerta de Hierro are now capable of providing our patients the advantage of broad- er diagnostic results supported by the advice and expertise of Mayo Clin- ic," said Alejandro Gil Luna, general director of Centro Médico Puerta de Hierro. "Mayo Clinic specialists are not only prestigious in the U.S., but around the world." n New York health system cuts jobs after poor financial performance By Ayla Ellison O lean, N.Y.-based Upper Allegheny Health System laid off 31 employees from two hospitals on Feb. 19, according to the Olean Times Herald. The health system laid off 16 employees from Olean General Hospital and 15 em- ployees from Bradford (Pa.) Regional Medical Center. The affected employees rep- resent about 2 percent of the hospitals' workforce, according to the report. Upper Allegheny Health System, part of Buffalo, N.Y.-based Kaleida Health, made the cuts due to its financial performance in 2018. The system is expected to report a $5.1 million loss for last year, a spokesperson told the Olean Times Herald. n

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