Dive Brief:
- CVS Health has acquired startup Medicare Advantage broker Hella Health, according to a LinkedIn post from Hella’s chief executive officer.
- The acquisition will add Hella’s range of insurance offerings and digital capabilities for seniors to CVS’ technology platform, according to CEO Rafal Walkiewicz’s post on Tuesday.
- Founded in 2021, Hella Health sells insurance through a licensed agency and partners with another platform for telephone-enabled shopping. The company says it offers “thousands” of MA plans from insurers like CVS, UnitedHealthcare, Humana and Cigna. Terms of the deal were not disclosed.
Dive Insight:
MA plans, which are Medicare coverage offered by private insurers, have becoming increasingly popular among seniors. As the plans have proliferated, so too have brokers — roughly a third of MA beneficiaries say they use the intermediaries to help shop for plans, according to the Commonwealth Fund.
However, MA brokers have come under heightened scrutiny from regulators over concerns the intermediaries are using predatory marketing tactics, including misleading advertisements, to gain lucrative compensation from insurers.
Last month, the Biden administration released a final rule capping how much MA plans can compensate brokers. Before the rule, brokers could collect upwards of $1,300 per enrollee each year through add-on payments, more than double the prior compensation limit set by regulators.
Analysts previously said the final rule, which was first proposed last year, could also help smaller plans with fewer marketing resources compete for MA members.
For its part, Hella’s website says that, although it receives a commission for selling plans, it does not profit from “marketing incentives from insurance carriers.”
A CVS spokesperson declined to comment on its acquisition of Hella. However, the buy suggests CVS is interested in bolstering the digital capabilities of its health services unit, which sells a range of services to other health insurers and companies.
CVS is snapping up Hella despite significant turbulence in MA. On Wednesday, the insurer announced first quarter earnings results that were worse than either the healthcare giant or Wall Street analysts expected, as the company grappled with high medical utilization from MA seniors. CVS slashed its 2024 guidance as a result.
CVS purchased Hella from Boston-based venture capital firm Cue Ball.