Insurance Covers Four In Five Visits To CVS And Walgreen Clinics

Insurance coverage for retail health clinics, once a cash-only proposition, now accounts for more than four in five visits reimbursed at such centers run by CVS Health (CVS) and Walgreens Boots Alliance (WBA).

Commercial coverage and reimbursement from the Medicare health insurance program for the elderly and Medicaid programs for low income Americans are becoming more common. It’s good for patients looking for more choices and it’s also fattening bottom lines at retailers like CVS, Walgreens, Wal-Mart (WMT) and grocers in the retail clinic business.

“84% of MinuteClinic visits were paid for by third parties with MinuteClinic included in most payer networks as an accessible and cost-effective provider,” Larry Merlo, president and chief executive officer of CVS Health, told analysts on the company’s first quarter earnings call.

The widening insurance coverage contributed to 21 percent increase in revenues at CVS’ MinuteClinic subsidiary. It helped CVS raise the low end of its 2015 guidance, saying higher earnings per share would be from $5.08 to $5.19 compared to an earlier forecast of $5.05 to $5.19.

Walgreens, too, confirmed that more than 80% of its clinic visits are now covered by insurance.

Insurance companies see retailers providing higher quality and lower cost services beyond treatment for routine maladies like pink eye or minor scrapes and bruises to wellness and primary care services like routine physicals. These centers are staffed by nurse practitioners and some physician assistants. These providers are gaining the ability to perform more services thanks to changing scope of practice laws.

A study last month by consulting firm Manatt Health said the cost of care at a retail clinic can be about $110 for commercially insured customers though co-payments can be less while similar care at a doctor’s office is $166. Manatt said broader reimbursement from government health programs like Medicare and Medicaid for certain retail health services would allow the retail clinic model to better manage populations of patients.

“Increasingly, retailers are bundling clinic services with pharmacy, nutrition, lifestyle and obesity management programs to deliver more comprehensive offerings,” authors of the Manatt study, which was funded by the Robert Wood Johnson Foundation, said. “The business case for providing those services can be compelling, especially when they are aligned with incentives from payers.”

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