Daily Industry Report - April 16

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)

Fight Brewing Over Health Benefits Preemption Gets House Hearing

By Sara Hansard - The growing tension between state law and federal preemption over regulating drug benefits will be high on lawmakers’ agenda at an upcoming House hearing on strengthening the Employee Retirement Income Security Act as the law turns 50. Read Full Article…

VBA Article Summary

  1. ERISA and State Regulations: James Gelfand, the president of the ERISA Industry Committee (ERIC), emphasized the importance of preemption in discussions about ERISA in Congress, pointing out that while large employers favor preemption, state interest groups oppose further strengthening of these measures. This division is highlighted by recent state laws attempting to regulate pharmacy benefits under ERISA, which large business groups argue infringe on federal protections. These groups are advocating for legislative amendments that reaffirm ERISA's preemption to prevent a patchwork of state regulations that complicate healthcare plans management.

  2. Supreme Court Decisions and State Legislation: A pivotal 2020 Supreme Court decision, Rutledge v. Pharmaceutical Care Management Association, held that Arkansas's law on pharmacy benefit manager (PBM) reimbursement rates was not preempted by ERISA. This ruling has prompted several states, including Oklahoma, Tennessee, and Florida, to enact similar laws regulating PBMs. However, these state efforts have been challenged by large employers who argue they restrict their ability to design cost-effective health plans, with a recent ruling by the US Court of Appeals striking down part of Oklahoma’s PBM law.

  3. Impacts on Small vs. Large Employers: There is a stark contrast between the interests of large multinational companies and smaller, regional businesses regarding ERISA preemption. Large companies rely on ERISA to avoid differing state laws that could affect their nationwide health plans, while smaller companies might benefit from state regulations that address specific local issues, such as high pharmacy costs. This ongoing debate reflects broader concerns about healthcare costs, transparency, and the ability of small businesses to maintain self-funded plans under the current regulatory framework.

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Biden faces deadline to finalize key health care rules

By Victoria Knight - The Biden administration has just weeks to finish health policy regulations on Medicaid, tobacco, reproductive care and other key areas, to avoid any chance of them being repealed by the next Congress. Read Full Article…

VBA Article Summary

  1. Potential Impact of a GOP Sweep: If Republicans win the upcoming elections, they could potentially use the Congressional Review Act (CRA) to dismantle key elements of President Biden's legislative agenda. This act allows the new Congress to review and possibly reverse regulations enacted by the outgoing administration during the final 60 legislative days of its term, similar to actions taken in 2017 when the Republican-led Congress, along with President Trump, repealed 16 regulations from the Obama era.

  2. Scope and Mechanics of the CRA: The CRA provides a mechanism for the newly elected Congress to disapprove rules made by the previous administration through a simple majority vote in both chambers and a subsequent approval by the president. Rules that may be targeted include regulations on nursing home staffing, a ban on menthol cigarettes, and policies concerning reproductive care disclosure, reflecting Republican priorities and their interpretations of legislative intent.

  3. Timing and Strategic Considerations: There is a critical window before the CRA's "lookback period" becomes active, generally considered to be from mid-May to Memorial Day, during which the current administration will rush to finalize their regulations to avoid potential nullification. This urgency underscores the strategic legislative maneuvers both parties employ to solidify or negate policies based on their governing agendas and interpretations of congressional intent, as noted by figures like Rep. Brett Guthrie and health policy director Leigh Feldman.

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!

AHIP criticizes hospital lobby's response to Change hack

By Giles Bruce - AHIP's chief executive criticized the hospital lobby's response to the Change Healthcare cyberattack as "opportunistic" and "maintaining the status quo." Read Full Article…

VBA Article Summary

  1. Criticism of the Hospital Lobby: AHIP President and CEO Mike Tuffin criticized hospital lobbyists for using recent hacking incidents as a reason to oppose site-neutral payments and cybersecurity mandates. He argued that their stance is merely another tactic to maintain the status quo, which he believes makes the healthcare system more vulnerable to increasingly sophisticated cyberattacks.

  2. Call for Proactive Measures: In his April 12 article, Mr. Tuffin lamented the hospital lobby's approach of pointing fingers and avoiding responsibility during cybersecurity crises. He advocated for a shift from this defensive posture to a more constructive and proactive role in safeguarding consumers and the healthcare system.

  3. Emphasis on Unified Action: Mr. Tuffin emphasized the need for all industry stakeholders to move beyond political maneuvers and focus on the critical tasks of preventing and preparing for future cyber threats to healthcare. He stressed that unified and dedicated efforts are essential for enhancing the sector's cybersecurity resilience.

FDA is ready to eliminate the interchangeability designation for biosimilars

By Zachary Brennan - As part of efforts to level the playing field between biologics and biosimilars, the FDA is calling on Congress to remove the interchangeability designation for biosimilars, claiming that the two-tier system is only causing confusion. Read Full Article…

VBA Article Summary

  1. Origin and Evolution of Interchangeability Designation: Established in 2009, the interchangeability designation aimed to clarify which biosimilars could be switched at pharmacies without a doctor's intervention. However, over time, it has led to misconceptions and no longer aligns with scientific rationale, prompting the FDA to reconsider its utility.

  2. Challenges in Biosimilar Uptake and Regulatory Response: Despite efforts to promote biosimilar adoption, sales, especially in competitive markets like AbbVie's Humira, have faltered. The FDA is advocating for legislative changes, urging Congress to eliminate the interchangeability distinction to streamline regulatory processes and address confusion among stakeholders.

  3. Future Outlook and Industry Response: The proposed shift towards eliminating the biosimilar-interchangeable dichotomy has garnered mixed reactions from industry players. While some, like Amgen, advocate for retaining regulatory flexibility, the FDA emphasizes the need for alignment with international standards and the elimination of unnecessary distinctions to bolster confidence in biosimilar products.

Health systems urge Congress to lay down a permanent road map for telehealth services as clock ticks on December deadline

By Heather Landi - A major House subcommittee is considering 15 bills to expand access to telehealth services as the clock ticks on a Dec. 31 deadline on pandemic-era flexibilities. Read Full Article…

VBA Article Summary

  1. Legislative Action and Advocacy: The American Telemedicine Association has labeled 2024 as a pivotal year for telehealth regulation, urging Congress to make permanent the Medicare telehealth flexibilities introduced during the COVID-19 pandemic. Lawmakers are currently considering whether to extend these provisions temporarily or to enact permanent changes, as many health systems advocate for stability in Medicare coverage for telehealth services to ensure clarity and payment consistency.

  2. Support from Healthcare Providers and Systems: Prominent health officials, including Lee Schwamm from Yale New Haven Health System, emphasized the significant benefits of telehealth, such as improving access to care for vulnerable populations and integrating virtual care into routine healthcare. These benefits are threatened by uncertainty over future telehealth policy, which could lead to a reduction in service accessibility, especially for Medicare beneficiaries.

  3. Challenges and Considerations for Permanent Adoption: While there is strong support for making telehealth flexibilities permanent, concerns remain about potential increases in healthcare costs and the risk of fraud. Additionally, experts like Ateev Mehrotra of Harvard suggest that while telehealth increases healthcare spending slightly, it significantly enhances access and quality of care, arguing that policy decisions should focus on the value provided by telehealth rather than just cost savings.

Hospitals that make profits should pay taxes

By Marty Makary - As diligent taxpayers breathe a sigh of relief that the hassle of filing their tax forms is over for another year, the Internal Revenue Service continues to let most U.S. hospitals pay nothing in federal taxes. It’s time for Congress to take a hard look at the IRS’s hand in health care. Read Full Article…

VBA Article Summary

  1. Misuse of Tax-Exempt Status by Nonprofit Hospitals: Despite their nonprofit designation, many hospitals exploit tax exemptions while engaging in practices that contradict their supposed community benefit mandates. These hospitals often inflate bills, sue low-income patients, and engage in aggressive financial tactics, such as charging exorbitant facility fees for routine care, that effectively fleece the American public. Studies show that some nonprofit hospitals even provide less charity care than their for-profit counterparts.

  2. Legal and Policy Inconsistencies: The tax-exempt status of hospitals is heavily criticized given their financial practices. For example, certain hospitals report substantial income surpluses and pay their top executives hefty salaries while benefiting from tax exemptions worth billions annually. This has spurred calls for reform, including demands from U.S. senators for increased IRS transparency and the revocation of property tax exemptions by state courts when hospitals fail to meet community benefit standards.

  3. IRS Policies and Public Health Implications: The IRS's restrictive policies on health-related expenses and its failure to adapt to innovative healthcare models, such as direct primary care, reflect a reactionary rather than proactive approach to health management. This is occurring against a backdrop of increasing chronic disease prevalence and a high dependency on medication in the U.S. Critics argue for a systemic overhaul where the IRS holds hospitals accountable for tax obligations and supports preventive health care initiatives.

Because of 340B, our healthcare safety net is stronger

By 340BHealth - Because of 340B, patients in need have access to a vital safety net for essential health care. 340B bridges critical gaps in access to specialized services, connecting underserved patients and communities with the care they need. 340B helps improve patients’ outcomes and improves their lives. At no cost to taxpayers. Read Full Article…

VBA Article Summary

  1. Enhancing Healthcare Accessibility and Services: The 340B drug pricing program significantly reduces outpatient pharmaceutical costs for eligible health centers, hospitals, and clinics, mainly serving low-income and rural communities. This allows these facilities to expand access to affordable medications, enhance the range of services offered, and invest in community-specific healthcare initiatives such as mental health, HIV/AIDS care, and opioid treatment programs.

  2. Accountability and Transparency: 340B maintains high standards of accountability and transparency to ensure the benefits reach the intended patients. Participating entities undergo rigorous annual audits and recertification, maintaining detailed reports to comply with federal regulations. This system of oversight guarantees that the savings from 340B are used effectively to improve patient care and community health.

  3. Support for the 340B PATIENTS Act: The 340B PATIENTS Act is crucial for continuing the benefits of the 340B program by ending detrimental restrictions imposed by pharmaceutical companies on drug pricing savings. The act aims to protect the program's integrity, ensuring that hospitals can continue to provide essential healthcare services to underserved populations without incurring additional taxpayer costs. Learn more.

More Medicare $$ Needed to Pay Docs for Treating the Chronically Ill, Senators Told

By Joyce Frieden - Physicians need to be paid better for taking care of chronically ill patients, and they should also be relieved of onerous paperwork burdens such as prior authorizations, senators and witnesses agreed Thursday at a Senate Finance Committee hearing. Read Full Article…

VBA Article Summary

  1. Decline in Medicare Physician Payments: Senator Mike Crapo highlighted the significant decline in Medicare Physician Fee Schedule payments over the past two decades, stressing that payments have dropped by more than 25%. This reduction comes as medical professionals face increasing costs related to overhead, equipment, supplies, and staffing. Crapo emphasized that the disparity between stagnant payment rates and rising inflation poses a severe threat to the long-term accessibility of patient care.

  2. Regulatory Changes and Payment System Challenges: Crapo further noted that recent regulatory adjustments have exacerbated financial strains, particularly for specialists. The introduction of new billing codes and valuation adjustments has led to drastic payment cuts due to the program's budget neutrality rules. This system also creates a situation where increases in payments for one service result in cuts for others, affecting the overall efficiency and fairness of the payment system.

  3. Systemic Issues and Reform Needs: The fragmentation within the Medicare system was criticized for complicating care coordination, especially for patients with chronic conditions. Amol Navathe pointed out the inefficiencies of current billing practices and suggested significant reforms, such as setting a fixed monthly fee for primary care physicians to better manage care coordination tasks. Additionally, there was broad criticism of the Medicare Access and CHIP Reauthorization Act (MACRA) and the Merit-based Incentive Payment System (MIPS), with experts arguing that these initiatives have failed to reduce administrative burdens and effectively incentivize quality care.

Where the GLP-1 weight loss market goes will depend on data

By Amy Baxter - GLP-1 drugs have taken the cardiometabolic space by storm. While the popularity of the anti-obesity drugs have created ongoing shortages and increased drugmakers’ investments in R&D, it’s not yet clear how high the market could go in the coming years. Read Full Article…

VBA Article Summary

  1. Varied Growth Projections: Analysts project the GLP-1 market to potentially surpass $100 billion or $200 billion by 2030. However, the absence of long-term weight loss data raises uncertainties about consumer usage patterns and therapeutic applications in the future.

  2. Expanding Clinical Applications: Originally intended for diabetes and weight management, GLP-1s are diversifying into new treatment areas like metabolic syndrome, kidney disease, cardiovascular conditions, and addiction. This expansion hints at their potential to outpace traditional cardiovascular drugs, akin to the trajectory of SGLT2 inhibitors.

  3. Addressing Cardiovascular Challenges: Despite advancements in cardiovascular medications, including statins and ACE inhibitors, the plateauing of outcomes underscores the need for multifaceted approaches. GLP-1s offer promise in improving cardiovascular health, especially in conjunction with lifestyle modifications, early intervention, and broader insurance coverage contingent upon further evidence of sustained weight loss benefits.

Feds investigating if Sentara's payer arm unfairly increased premiums

By Andrew Cass - The Justice Department is investigating whether Norfolk, Va.-based Sentara Health's insurance arm unfairly increased premiums in 2018 and 2019 as it received more than $655 million in federal subsidies, The Virginian-Pilot reported April 9. Read Full Article…

VBA Article Summary

  1. Premium Increases and Market Monopoly: Optima Health, now Sentara Health Plans, raised 2018 premiums in Hampton Roads, Va., by an average of 81% for individual plans. This surge followed Anthem Blue Cross Blue Shield's exit from the marketplace, leaving Optima as the sole option for consumers, amplifying concerns about monopolistic practices.

  2. Legal Scrutiny and Compliance: A federal judge mandated Optima's President and CEO, Michael Dudley, and chief actuary, James Juillerat, to provide additional testimony within 60 days due to alleged non-compliance with Justice Department requests. Despite providing substantial documentation and interviews, Sentara Health Plans faces legal pressure to fully cooperate with the ongoing investigation.

  3. Market Entry and Access Concerns: Sentara defended its market entry post-Anthem's departure, highlighting the urgency of the situation and the potential risk of 350,000 Virginians losing access to ACA-eligible plans. The spokesperson emphasized the rigorous validation of premium rates by independent actuaries and Virginia regulators, underscoring their commitment to providing essential healthcare coverage despite regulatory and competitive challenges.

Nearly 80% of physicians now employed by hospitals, corporations: 5 things to know

By Alan Condon - More than 77% of U.S. physicians are employed by hospitals, health systems or corporate entities, according to an Avalere study sponsored by Physicians Advocacy Institute. Read Full Article…

VBA Article Summary

  1. Increase in Employed Physicians: From 2022 to 2023, there was a 5.1% increase in the number of physicians employed by hospitals and other corporate entities, with hospitals being the primary drivers of this growth in physician employment.

  2. Acquisition of Physician Practices: Over the last two years, hospitals and corporate entities acquired 8,100 physician practices. This acquisition activity represents a 6% increase in the percentage of practices owned by hospitals or corporations since 2022.

  3. Corporate Ownership Surpasses Hospital Ownership: As of January 1, 2024, corporate ownership of physician practices, including entities like payers, private equity firms, and large pharmacy chains, surpassed hospital and health system ownership for the first time, accounting for 30.1% of practices.