Daily Industry Report - April 10

Your summary of the Voluntary and Healthcare Industry’s most relevant and breaking news; brought to you by the Health & Voluntary Benefits Association®

Jake Velie, CPT
Vice Chairman, President & COO
Health & Voluntary Benefits Association® (HVBA)
Daily Industry Report (DIR)

Robert S. Shestack, CCSS, CVBS, CFF
Chairman & CEO
Health & Voluntary Benefits Association® (HVBA)
Daily Industry Report (DIR)

Bill would exempt Missouri Farm Bureau health insurance plans from federal rules

By Clara Bates - The Missouri Farm Bureau would be allowed to sell health insurance plans that skirt certain federal regulations under legislation critics worry could leave consumers without proper protections or adequate coverage. Read Full Article…

VBA Article Summary

  1. Missouri's Proposed Bill to Exempt Farm Bureau from ACA Regulations: The proposed bill in Missouri allows the Farm Bureau to offer health plans exempt from Affordable Care Act (ACA) regulations, enabling them to deny coverage for pre-existing conditions and offer more limited benefits, aimed at providing less-expensive plan options to uninsured farmers and Farm Bureau members who find ACA plans unaffordable or ineligible due to income levels. Proponents argue this will provide coverage options to young farmers and ranchers, emphasizing choice and accountability within the Farm Bureau membership, while the bill has cleared the Missouri House and awaits a Senate committee hearing.

  2. Concerns Over Consumer Protections and Market Disruption: The bill has sparked opposition from some House Democrats, patient advocacy groups, and other insurance companies, raising concerns about the lack of consumer protections, potential for inadequate coverage, and market disruption. Critics, including the American Cancer Society Cancer Action Network, warn that reverting to pre-ACA practices like medical underwriting could lead to significant disparities in coverage and costs for individuals with pre-existing conditions, particularly detrimental to cancer patients and others with chronic conditions.

  3. Comparisons and Consequences: Missouri Joins Other States in ACA Exemption Trend: The legislation would position Missouri alongside six other states with similar exemptions for Farm Bureau insurance plans, challenging the ACA's universal coverage standards. While proponents highlight the high satisfaction and retention rates among Farm Bureau enrollees in states with the program, opponents argue the exemption creates unequal market treatment and could lead to a segmentation of the health insurance market, potentially drawing healthier individuals away from ACA plans and driving up costs for those remaining in the ACA marketplace.

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Change Healthcare attack sheds light on industry's weak points

By Tina Reed - The expansive impact of the Change Healthcare cyberattack was a wake-up call for a health care system that's now racing to safeguard itself against another industry-rattling hack. Read Full Article…

VBA Article Summary

  1. The Vulnerability of Healthcare to Cyberattacks: The healthcare sector's heavy reliance on a few technology companies for critical operations was highlighted by the Change Healthcare hack, exposing a significant vulnerability. This incident revealed a "single point of failure" in the healthcare industry, suggesting that other companies could pose similar risks if targeted by cyberattacks.

  2. Consolidation and Technological Patchworks Increase Risk: The consolidation of healthcare technology companies through mergers and acquisitions has led to a scenario where a vast number of healthcare providers depend on a handful of software solutions. This concentration, combined with the melding of old and new technologies, introduces potential weaknesses that are hard to fully address. The Change Healthcare hack also illustrated how industry contracting practices can expose providers to risks, even if they do not have direct relationships with the company, due to exclusive agreements between insurers and technology vendors.

  3. The Need for Systemic Cyber Risk Assessment and Network Resiliency: Experts and industry insiders stress the urgent need for a comprehensive assessment of systemic cyber risks in healthcare, akin to the financial industry's response after the 2007-08 crisis. Emphasizing the importance of network resiliency, the incident calls for the establishment of minimum security standards for healthcare providers and vendors, along with the development of clear backup plans to mitigate the impact of future cyberattacks.

HVBA Poll Question - Please share your insights

When it comes to receiving compensation on insurance programs, which payment structure do you prefer?

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Our last poll results are in!


of Daily Industry Report readers who responded to our last polling question “strongly disagree” with “RWJBarnabas’ decision to drop coverage of medications for weight loss among employees, as reported in the article referenced below*.”

14.06% of respondents “disagree,” 11.68% strongly agree,” 10.19% agree” while 10.11% are “neutral.” 

*Article Reference: States clamping down on coverage of weight-loss drugs

Have a poll question you’d like to suggest? Let us know!

Employees are paying more to manage their diabetes: How employers can help

By Anson Jones - A new study from research from GoodRx finds that the average out-of-pocket cost for diabetes medications has increased by nearly 130% since 2018. Those taking the newest, most modern medications are feeling the increase the most. Read Full Article…

VBA Article Summary

  1. Rising Out-of-Pocket Costs for Diabetes Medications: The cost for diabetes prescriptions has significantly increased from $13 in 2018 to over $30 in recent years, out-of-pocket, even as some generic options exist but aren't widely accessible. This is especially burdensome for individuals with Type 2 diabetes who often require multiple medications, including insulin and other drugs like SGLT2 inhibitors or GLP-1 agonists, leading to high cumulative expenses.

  2. Impact of Insurance Coverage on Medication Costs: The amount a person pays out-of-pocket for diabetes medication is heavily influenced by their insurance coverage. GLP-1 agonists, in particular, are noted for having the highest out-of-pocket costs, surpassing even insulin. Fluctuations in medication prices or changes in insurance formularies (the list of drugs covered by insurance) can further increase these costs, with some patients finding that their insurance does not cover, or stops covering, certain classes of diabetes medications, forcing them to cover the full cost on their own.

  3. Strategies to Mitigate High Medication Costs: To address the rising costs of medications, experts like Tori Marsh from GoodRx emphasize the importance of employer support. Employers can assist by providing resources that help employees understand their health benefits and by informing them of cost-saving measures such as Flexible Spending Accounts (FSAs) and recommending services like GoodRx. These approaches can help employees find ways to save on their medication and overall health expenses, mitigating the financial burden of managing conditions such as diabetes.

Ten Doctors on FDA Panel Reviewing Abbott Heart Device Had Financial Ties With Company

By David Hilzenrath and Holly K. Hacker - When the FDA recently convened a committee of advisers to assess a cardiac device made by Abbott, the agency didn’t disclose that most of them had received payments from the company or conducted research it had funded — information readily available in a federal database. Read Full Article…

VBA Article Summary

  1. Financial Ties and Transparency Concerns: A report reveals that members of an FDA advisory panel, tasked with reviewing the TriClip G4 System, a device designed to treat heart valve leakage, had received significant payments from Abbott, the device's manufacturer. The government's "Open Payments" database showed that 10 out of 14 voting members received a total of about $650,000 from Abbott between 2016 and 2022. Despite these financial ties, the panel voted almost unanimously in favor of the device's benefits outweighing its risks, raising questions about the transparency and potential bias in the approval process.

  2. FDA and Industry Relationships: The situation underscores the broader issue of medical industry money's influence on FDA advisory panels, which are crucial in the regulatory approval process for drugs and medical devices. While the FDA maintains that it follows rigorous vetting procedures to avoid conflicts of interest, critics argue that the agency's current standards for disclosure and conflict management are insufficient. This case highlights the complexity of relationships between regulatory agencies, industry funding, and the individuals tasked with evaluating new medical technologies.

  3. Calls for Greater Disclosure: Experts and former FDA advisory committee members argue that the financial relationships between panel members and device manufacturers should be disclosed more transparently to ensure objectivity and maintain public trust in the FDA's decision-making process. The incident has sparked a debate about the adequacy of current transparency measures and the need for potential reforms to prevent undue influence on critical health care decisions.

In Battle Over Health Care Costs, Private Equity Plays Both Sides

By Chris Hamby - Insurance companies have long blamed private-equity-owned hospitals and physician groups for exorbitant billing that drives up health care costs. But a tool backed by private equity is helping insurers make billions of dollars and shift costs to patients. Read Full Article…

VBA Article Summary

  1. MultiPlan's Rise and Data iSight's Role in Health Care Payments: MultiPlan, a key player in the medical payments industry, has grown significantly with the development of Data iSight, a tool that advises on the payment amounts for medical bills. Backed by substantial private equity investments, including those from Hellman & Friedman and the Saudi Arabian government's sovereign wealth fund, MultiPlan has become a central figure in the lucrative field of medical payments. Data iSight, by making the most frugal payment recommendations, has been a significant revenue generator for the company, often at the expense of patients, medical professionals, and employers funding health plans.

  2. Controversial Impact on Patients and Health Care Providers: The implementation of Data iSight has led to numerous challenges for patients and health care providers. Patients, often unaware of Data iSight's influence, have faced unexpectedly large medical bills, while doctors and medical facilities have encountered slashed payments. This has resulted in financial strain and the potential for legal disputes over unpaid bills. The system benefits insurers by lowering their payout amounts, which, in turn, raises processing fees collected from employers, yet it places an undue burden on patients and providers, sparking concerns over fairness and transparency.

  3. Data iSight's Evolution and Future Prospects: Initially designed to offer a more data-driven approach to determining fair reimbursements for medical services, Data iSight's methodology and its impact have evolved significantly. Despite MultiPlan's claims of fairness and commitment to reducing out-of-network costs, the tool's recommendations have led to decreased payments to providers and increased financial burdens on patients. As MultiPlan plans further enhancements, including the use of artificial intelligence, the debate over private equity's role in healthcare and the ethical implications of such cost-containment tools continues to intensify, highlighting the need for a balance between cost savings and equitable payment practices in the healthcare system.

New Diabetes Treatments Will Take Your Raises and Increase Your Insurance Premiums

By William H Bestermann Jr MD - Providing care for patients with type 2 diabetes is very expensive. One in 4 dollars spent on healthcare in the United States goes is used to treat patients with diabetes. Their direct care costs consume nearly one third of a trillion dollars. Read Full Article…

VBA Article Summary

  1. Economic and Health Burden of Diabetes: The article details the substantial financial burden diabetes imposes on individuals and society, with average annual medical expenditures for those with diabetes reaching $19,736, of which $12,022 is directly attributable to the disease. This spending is 2.6 times higher than it would be for individuals without diabetes. It also notes a significant increase in the direct medical costs of diabetes—estimated to rise 7% from 2017 and 35% from 2012—largely due to the growing number of people with diabetes and their increased expenses related to inpatient hospital stays and prescription medications. The major cost drivers include high usage of prescription medications beyond glucose-lowering drugs, inpatient services, diabetes-specific medications and supplies, and office visits.

  2. Impact on Employers and Insurance: Highlighting the role of employers in health insurance, the article explains how high healthcare costs, including those for managing diabetes, can reduce direct employee compensation and hinder company competitiveness by increasing product costs. It mentions new diabetes drugs like Wegovy, costing $15,600 annually, nearly doubling the expense of managing type 2 diabetes, thus affecting employer costs and employee compensation. However, it suggests that controlling diabetes through less expensive means could alleviate these economic pressures.

  3. Prevention and Management Strategies: The final section presents an optimistic view on managing diabetes cost-effectively through diet, exercise, and medication. It critiques the food industry's role in the obesity and diabetes epidemics, advocating for whole foods and reduced carbohydrate intake as permanent solutions to avoid or manage diabetes. It contrasts the modest benefits of expensive drugs with the substantial advantages of optimal medical therapy (OMT), including diet, exercise, and affordable medications like metformin, which can significantly reduce the risk and progression of diabetes and its complications. The author, sharing personal success in managing prediabetes with lifestyle changes and metformin, argues for OMT over costly medications as the most effective and economical approach to diabetes management.

City of Hope discloses data breach impacting 827K patients' personal and health information

By Heather Landi - City of Hope, a cancer hospital operator and clinical research organization, disclosed a data breach that potentially compromised the personal and health information of nearly 1 million patients. Read Full Article…

VBA Article Summary

  1. Breach and Immediate Response: City of Hope experienced suspicious activity on its systems on October 13, 2023, and subsequently identified a data breach where hackers accessed and stole files containing sensitive patient information, including names, contact information, Social Security numbers, and medical records, among other data, from September 19, 2023, to October 12, 2023. An investigation with a leading cybersecurity firm is ongoing.

  2. Mitigation and Support Measures: Following the discovery of the cyberattack, City of Hope implemented immediate mitigation measures, introduced enhanced security safeguards, launched a comprehensive investigation to identify affected individuals, reported the incident to law enforcement and regulatory bodies, and began providing two years of free identity monitoring services to those impacted. A total of 827,149 individuals were reported to be affected by this security incident.

  3. Industry-Wide Challenge: The incident at City of Hope is part of a broader trend of escalating cyberattacks and data breaches within the healthcare industry. The HIPAA Journal noted a record 725 large security breaches in healthcare in 2023, with more than 133 million records exposed. Other healthcare organizations, including HCA Healthcare and Ardent Health Services, have also been targeted in cyberattacks, highlighting the growing challenge of protecting sensitive patient information in the healthcare sector.

HHS 'misses the mark' in drug shortage proposal, ASHP says

By Paige Twenter - The American Society of Health-System Pharmacists partly welcomed HHS' 18-page policy recommendations for drug shortage strategies, but the organization said it "proposes concerning penalties." Read Full Article…

VBA Article Summary

  1. HHS's Proposal to Encourage Responsible Drug Sourcing: On April 2, the Department of Health and Human Services (HHS) proposed that Congress establish programs to evaluate and rank pharmaceutical manufacturers based on their reliability. This initiative aims to incentivize hospitals to source their drugs from diverse and dependable suppliers by offering rewards or imposing penalties according to their purchasing behaviors.

  2. Balancing Cost and Reliability in Generic Drug Production: The proposal includes a system where the Centers for Medicare & Medicaid Services (CMS) would issue incentives or penalties to drug manufacturers, hospitals, and intermediaries based on a reliability scorecard. This approach stems from HHS's observation that the pharmaceutical industry's focus on minimizing costs may compromise the security of generic drug production lines by discouraging investments in resiliency plans.

  3. The Debate Over Financial Penalties for Hospitals with Limited Resources: The American Society of Health-System Pharmacists (ASHP) expressed a mixture of approval and concern regarding the proposal. While pleased to see many of its suggestions incorporated, the ASHP criticized the idea of penalizing hospitals for not adhering to HHS-mandated inventory and purchasing standards. The organization is particularly worried about the impact on hospitals with fewer resources, which may struggle to implement measures like maintaining buffer inventories to avoid drug shortages. Despite these concerns, the HHS proposal acknowledges the need to consider a hospital's size and purchasing capacity in the evaluation process.

Mayo Clinic employee files class action lawsuit over high health care costs

By Max Nesterak - A worker at Mayo Clinic’s Arizona hospital filed a proposed class action lawsuit against the health system and insurer Medica in federal court Tuesday, alleging they were saddled with enormous health care bills after their claims were “systemically underpaid.” Read Full Article…

VBA Article Summary

  1. High Health Care Costs for Employees: Mayo Clinic workers reported facing substantial health care costs, exceeding $10,000 annually for some, due to poor insurance that necessitated the use of expensive out-of-network providers. This situation led to significant financial strain, with some employees avoiding medical care altogether to evade the high costs, despite being employed by a globally recognized health care institution.

  2. Lawsuit Allegations Against Medica: A lawsuit filed against Medica, the administrator of Mayo Clinic’s self-insured plan, accuses the company of employing "deceptive, misleading, arbitrary" pricing strategies. These practices allegedly keep plan members uninformed about health care costs and result in inconsistent reimbursement rates. The legal action highlights issues like a faulty provider portal that misdirects employees to out-of-network providers and a lack of transparency in coverage determinations, violating federal laws and Medica’s fiduciary duties.

  3. Inequitable Access to In-Network Care: The article underscores a disparity in health care access among Mayo employees, particularly those working remotely or away from major Mayo campuses in Minnesota, Florida, or Arizona. These employees often encounter what is described as a “phantom network” of supposedly in-network providers who are unavailable due to not taking new patients, no longer accepting the insurance, or having retired. Meanwhile, Mayo’s higher-echelon staff, including doctors and executives, receive an annual allowance to mitigate the cost difference between in-network and out-of-network care, further highlighting the inequities within the system.

5 FDA decisions to watch in the second quarter

By BioPharma Dive staff - The year started well for the biotechnology industry. Steady dealmaking coupled with a rebound in initial public offerings helped lift investor confidence and, with it, drugmaker stocks. Read Full Article…

VBA Article Summary

  1. Expansion of CAR-T Therapies for Multiple Myeloma: The FDA is considering broadening the approval of Johnson & Johnson and Legend Biotech’s Carvykti and Bristol Myers Squibb’s Abecma for treatment of multiple myeloma after just one relapse. These decisions could significantly impact the market, opening up these therapies for earlier use in the disease's progression, potentially worth billions of dollars. However, regulatory scrutiny regarding the increased risk of death in early clinical trials might lead to new safety restrictions on these therapies.

  2. Moderna's RSV Vaccine Review: Moderna's mRNA-1345, a vaccine aimed at preventing respiratory syncytial virus (RSV) infection, is under FDA review, with a decision expected by May 12. This follows the approval of RSV vaccines from GSK and Pfizer for adults over 60. Moderna's vaccine, which has shown 84% efficacy in preventing infection in older adults, is noteworthy for its convenience as a pre-filled, single-dose vaccine. However, its long-term efficacy and safety, particularly in comparison to existing vaccines which have rare associations with Guillain-Barré syndrome, are points of consideration.

  3. Geron's Imetelstat for Myelodysplastic Syndromes and Additional FDA Decisions: Geron awaits FDA approval by June 16 for imetelstat, a treatment for myelodysplastic syndromes, marking the culmination of nearly two decades of research. This approval could position Geron as a significant player in the market, potentially challenging existing treatments like Bristol Myers Squibb’s Reblozyl. Additionally, the FDA is reviewing new applications for existing drugs, including Sanofi and Regeneron’s Dupixent for COPD, and a new gene therapy for hemophilia B from Pfizer, with decisions impacting market dynamics and offering new therapeutic options.