Daily Industry Report - April 4

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)

Yes, Congress Finally Funded Health Spending for 2024

By Joyce Frieden - Something important for the world of healthcare happened very quietly a week and a half ago: President Biden signed the fiscal year (FY) 2024 appropriations bill for HHS into law. Read Full Article…

VBA Article Summary

  1. Bipartisan Compromise and Funding Priorities in Biden's $1.2 Trillion Package: President Biden signed a $1.2 trillion funding package, including six bills that support various sectors, emphasizing a compromise that avoided extreme cuts proposed by House Republicans. This package notably funds child care expansion, cancer research, mental health and substance use care, international leadership, and border security. Biden highlighted the balance of interests and the protective measures against drastic budget reductions, underscoring the benefits to the American public.

  2. Strategic Allocations within HHS: Focus on Public Health, Research, and Workforce Development: The Health and Human Services (HHS) received $117.4 billion, a slight increase from the previous year, with allocations emphasizing public health preparedness, behavioral health workforce education, and significant funding for the National Institutes of Health (NIH), including the Advanced Research Projects Agency for Health (ARPA-H). The funding reflects cautious adjustments within the constraints of fiscal policies, with notable increases in areas such as maternity care and efforts against HIV/AIDS and antibiotic resistance.

  3. Fiscal Constraints and Future Funding Challenges: Analyzing the Impact of Spending Caps: The funding approach faced limitations due to the Fiscal Responsibility Act, which imposes caps on discretionary spending, affecting the flexibility in budget allocation across various programs. Despite these constraints, certain areas received incremental funding boosts, yet the overall strategy suggests a continued trend of flat funding into the next fiscal year. This approach raises concerns about the sustainability and effectiveness of health services amidst rising costs, with implications for future budget decisions by Congress regarding essential public services and healthcare initiatives.

HVBA Poll Question - Please share your insights

What is your opinion on RWJBarnabas' decision to drop coverage for GPL-1 medications for weight loss among employees, as reported in the article referenced below?*

Login or Subscribe to participate in polls.

Our last poll results are in!


of Daily Industry Report readers who responded to our last polling question believe PBM practices like spread pricing and increasing hidden fees” is the primary factor contributing to the average 20% increase in pharmacy costs as a percentage of total medical spending for businesses. 

25.13% of respondents believe the primary factor for the increase in pharmacy costs is due to “higher utilization of specialty medications and a lack of resources for discounts on specialty medication,” 23.74% believe it’s due to “increased utilization of prescription drugs,” while 23.49% responded that “rising medication prices” is the main factor. 

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

AAMC Predicts Significant Physician Shortage by 2036

By Pietje Kobus - A new report published on March 21 by the Association of American Medical Colleges (AAMC) concludes that the U.S. is expected to face a physician shortage of between 13,500 and 86,000 by 2036. According to the study, The Complexities of Physician Supply and Demand: Projections from 2021 to 2036, many physicians will reach retirement age within the next decade. Read Full Article…

VBA Article Summary

  1. Trends in Healthcare and Workforce Dynamics Influence Projected Doctor Shortage: The latest healthcare analysis highlights a projected doctor shortage, which, while less severe than previously reported in 2021, remains significant due to a complex interplay of factors including healthcare delivery trends and workforce dynamics. This change in projection is attributed to the introduction of new scenarios that account for potential increases in medical residency positions and investments in graduate medical education (GME) by various stakeholders, including states, teaching health systems, Congress, and the Centers for Medicare & Medicaid Services (CMS).

  2. Critical Funding Needs for GME and the Impact of Healthcare Disparities and Worker Burnout: The report emphasizes the critical role of funding in realizing the growth in GME necessary to mitigate the physician shortage, with AAMC President David J. Skorton, M.D., stressing that without an increase in current funding levels, the hypothesized growth in medical education will not occur. Furthermore, the need for more physicians, especially specialists, is driven by population growth and aging, with disparities in healthcare access exacerbating the situation. The COVID-19 pandemic has also heightened awareness of healthcare disparities and the mental and physical toll on healthcare workers, leading to calls for addressing workforce burnout.

  3. Challenges Ahead: Addressing the Looming Doctor Shortage Amid Growing Healthcare Demands: Despite potential measures to address the shortage, such as lifting the federal cap on Medicare support for GME, significant challenges remain. The AAMC warns of substantial future doctor shortages that could worsen with efforts to improve healthcare access for the growing and aging population. This situation highlights the urgent need for systemic changes in healthcare education and delivery to prevent exacerbating the already strained healthcare system.

Senate Hearing Tackles Private Equity's Impact on Healthcare Amid Steward Saga

By Jennifer Henderson - In the wake of a deal for financially strapped Steward Health Care to sell its nationwide physician practice to UnitedHealth Group subsidiary Optum, a Senate subcommittee meeting was held in Boston on Wednesday to address ongoing concerns that the corporatization of healthcare is putting patients and providers at risk. Read Full Article…

VBA Article Summary

  1. Concerns Over Healthcare and Private Equity Involvement: Senator Edward Markey chaired a meeting focusing on the impact of private equity in healthcare, highlighting the detrimental effects on healthcare professionals and patients due to a lack of transparency in transactions. The discussions underscored how private equity practices, prioritizing profit over patient care, infiltrate various healthcare sectors, from fertility to hospice care, negatively affecting community health services and prioritizing corporate profits over community needs.

  2. Specific Case Study and Broader Implications: The acquisition of the Caritas Christi health system by Cerberus Capital Management was examined as a case study, illustrating the pattern of private equity firms buying healthcare facilities, loading them with debt, and then selling them for profit, often leaving them financially unstable. Senators Markey and Warren, along with witnesses, argued that these practices contribute to a broader problem of corporatization in healthcare, affecting not just Steward Health Care System but the entire healthcare landscape, emphasizing the need for legislative action to increase transparency and accountability.

  3. Testimonies Highlighting Negative Impacts on Healthcare Delivery: Testimonies from healthcare professionals like Dr. Ellana Stinson and Eileen O'Grady provided firsthand insights into the detrimental effects of private equity on healthcare delivery. These included compromised patient safety and care quality due to profit-driven decisions, reduced access to healthcare for vulnerable populations, and the adverse impact on the healthcare workforce, such as the unfilled emergency residency positions and increased financial strain on healthcare facilities due to debt and operational cost-cutting measures by private equity firms.

Massachusetts lawmakers say Cerberus got $800M profit from Steward exit

By Madeline Ashley - Massachusetts lawmakers say Cerberus Capital Management, a private equity firm that founded Dallas-based Steward Health Care, profited by around $800 million and "looted" the health system when it exited in 2020. Read Full Article…

VBA Article Summary

  1. Financial Transactions and Investments: Cerberus Capital Management acquired the Boston-based nonprofit health system Caritas Christi (now Steward Health Care) for $246 million in 2010, taking on over $220 million in pension liabilities and agreeing to make at least $400 million in capital investments. From 2010 to 2016, Steward reinvested around $880 million across its facilities, which facilitated growth in its infrastructure and services. Notably, Cerberus did not retain profits or dividends from Steward during this period, indicating a reinvestment strategy aimed at enhancing the health system's capabilities and reach.

  2. Sale and Ownership Transfer: In May 2020, Cerberus sold its controlling equity interests in Steward to Ralph de la Torre, MD, CEO of Steward, and other management members for $350 million, facilitated through a convertible promissory note. This note was subsequently purchased by Medical Properties Trust for approximately $334 million, effectively financing the buyout of Cerberus. This transaction marked a significant ownership transfer, with Cerberus ceasing further capital investment into Steward post the 2016 investment from Medical Properties Trust, emphasizing a period where all internal cash flows were reinvested into Steward by its management.

  3. Legislative Scrutiny and Public Health Concerns: Senators Elizabeth Warren and Edward Markey have criticized Cerberus for not providing clear answers regarding the financial benefits reaped from Massachusetts' residents through its involvement with Steward Health Care. The senators highlight complex financial arrangements that they believe undermined public access to high-quality healthcare and placed health providers in difficult positions. Their demand for transparency and accountability from Cerberus seeks to uncover the extent of profits made and potentially recover funds from those deemed responsible for what they describe as detrimental impacts on healthcare provision.

Expanding cost-effective health care options for all employees

By Joey Truscelli - In the competitive landscape of modern business, a comprehensive benefits package is more than a perk — it's a critical factor in a company's appeal to potential employees. This is particularly true when it comes to health benefits, which have become a cornerstone of employer attractiveness. Read Full Article…

VBA Article Summary

  1. Linking Employee Health to Workplace Productivity: Employee health directly influences productivity, with insured or properly covered employees being more engaged, focused, and productive. Conversely, uninsured or underinsured employees may delay seeking medical care due to cost concerns, leading to deteriorated health, increased absenteeism, and reduced productivity. Employers can mitigate these issues by incorporating diverse, cost-effective health options into their benefits packages, such as standalone telehealth services, thereby improving employee well-being and enhancing company performance.

  2. Expanding Health Benefits Beyond Telehealth: Employers are extending their health benefits packages beyond telehealth services to include wellness programs, preventive care initiatives, and Flexible Spending Accounts (FSAs). These additions aim to encourage healthy lifestyles, facilitate early detection and management of health issues, and offer financial flexibility for medical expenses, respectively. This comprehensive approach not only ensures immediate access to health care but also addresses long-term health, thereby reducing absenteeism, lowering healthcare costs, and improving employee satisfaction and productivity.

  3. Closing Coverage Gaps and Enhancing Employee Retention with a Comprehensive Approach: By combining telehealth with wellness programs, preventive care, and FSAs, employers can fill the gaps left by the Affordable Care Act and ensure comprehensive health care coverage for all employees. This strategy not only reinforces an employer's commitment to employee well-being but also boosts morale, retention rates, and the company’s attractiveness to potential talent. Benefit brokers play a crucial role in guiding employers towards these diversified health solutions, highlighting the importance of a varied benefits package in attracting and retaining top talent, thus fostering a supportive workplace culture focused on long-term wellness and productivity.

The cost of a hospital stay vs. minimum wage in all 50 states

By Alexis Kayser - In the majority of U.S. states, a person making minimum wage would have to work upwards of 1,000 hours to afford an average hospital stay, according to a recent study. Read Full Article…

VBA Article Summary

  1. Scope and Methodology of the Study: The analysis by ValuePenguin, a research and analytics arm of LendingTree, focused on the correlation between the cost of an average hospital stay and the minimum wage across the U.S. Utilizing data from the Kaiser Family Foundation (KFF), Definitive Healthcare, and the Bureau of Labor Statistics (BLS), the study defined an average hospital stay as 4.5 days. It compared these costs to state minimum wages to determine how many hours a minimum wage worker would need to work to afford a hospital stay.

  2. Findings on the Cost of Hospital Stays: The study revealed a dramatic increase in hospital costs, showing that the average cost per day has surged to $2,883 in recent times, marking a 161.7% rise from $1,102 in 1999. This significant increase underscores the growing financial burden of healthcare on individuals, especially those earning minimum wage.

  3. State-Specific Outcomes: The analysis ranked all 50 states and the District of Columbia based on the hours of minimum wage work needed to cover an average hospital stay. Utah emerged as the state requiring the most work hours (1,973 hours), signaling the highest disparity between healthcare costs and minimum wage earnings. Conversely, South Dakota was found to be the most affordable state, requiring the least amount of work hours (680 hours), illustrating a varied landscape of healthcare affordability across the United States.

Medicare spending on GLP-1 drugs reached $5.7 billion in 2022

By Victoria Bailey - Medicare spending on GLP-1 drugs, including Ozempic, surpassed $5 billion in 2022 and is likely to continue growing as coverage expands, according to a KFF analysis. Read Full Article…

VBA Article Summary

  1. GLP-1 Drugs' Rise in Demand and Medicare Coverage: GLP-1 drugs like Ozempic, Wegovy, and Mounjaro, originally developed for type 2 diabetes treatment, have gained popularity as anti-obesity medications. While Medicare does not cover weight loss drugs directly, Part D plans cover GLP-1s for diabetes treatment and cardiovascular risk reduction. This loophole has made these drugs among the top-selling under Part D, with coverage beginning for Ozempic in December 2017, Rybelsus in September 2019, and Mounjaro in May 2022.

  2. Surge in Medicare Spending on GLP-1 Drugs: The total gross spending on Ozempic, Rybelsus, and Mounjaro soared from $56.8 million in 2018 to $5.7 billion in 2022, not accounting for manufacturer rebates. The spending surge is highlighted by Ozempic's dramatic increase from $56.8 million in 2018 to over $4.6 billion in 2022, positioning it prominently among Medicare Part D's top expenditures and signaling a potential for Medicare price negotiation by 2025.

  3. Implications for Medicare Part D and Policy Considerations: The expanding use of GLP-1 drugs for conditions beyond diabetes, coupled with their substantial cost, is expected to escalate Medicare spending, Part D plan costs, and premiums. However, potential changes in coverage terms for drugs like Wegovy and legislative moves to allow Medicare to cover weight loss medications could address access disparities, especially among Black beneficiaries who face higher obesity rates and economic challenges.

Healthcare Docket: The Telehealth Boom is Inciting Action by Lawmakers and Fraudsters Alike

By Arundhati Parmar - Ever since the Covid-19 pandemic pushed telehealth to the forefront of American healthcare modalities, the genie has emerged from the lamp to quite a mixed crowd of cheerleaders and cheaters. Read Full Article…

VBA Article Summary

  1. Bipartisan Legislative Efforts to Enhance Telehealth Accessibility: A group of lawmakers from both sides of the aisle has proposed the "Telehealth Modernization Act of 2024" aiming to extend telehealth flexibilities for Medicare beneficiaries. This includes ending geographic restrictions for certain services, enabling rural and federally qualified health centers to receive Medicare reimbursements, and adding audio-only telehealth coverage to better serve those without internet access.

  2. State-Level Legislative Actions on Telehealth Services: Various state legislatures have recently passed bills to either regulate or expand telehealth services. This expansion ranges from allowing nutritionists, dieticians, and veterinarians to provide telehealth services, to enabling more complex medical procedures like remote ultrasounds to be covered under Medicare. Some states are also tightening regulations on telehealth practitioners to ensure quality and safety.

  3. National Discussions on Cost Savings and Fraud Prevention in Telehealth: At the national level, Congress is exploring ways telehealth can offer cost savings, with debates on whether telemedicine visits should be reimbursed at lower rates than in-person visits. Meanwhile, instances of telehealth-related fraud, including a significant telemarketing scheme and illegal dispensing of controlled substances, highlight the ongoing challenges in regulating and ensuring the integrity of telehealth services.

FDA Clears the First Digital Therapeutic for Depression, But Will Payers Cover It?

By Frank Vinluan - A software app that modifies behavior through a series of lessons and exercises has received FDA clearance for treating patients with major depressive disorder, making it the first prescription digital therapeutic for this indication. Read Full Article…

VBA Article Summary

  1. Development and Commercialization of Rejoyn: The product, initially named CT-152, has been developed through a collaboration between Otsuka Pharmaceutical and Click Therapeutics. It is set to be commercialized under the brand name Rejoyn. This product offers a digital approach to cognitive behavioral therapy (CBT), intended for patients undergoing treatment for depression. The app provides digitized CBT lessons, exercises, and reminders, aiming for use three times weekly over six weeks, with the possibility of revisiting lessons for an additional four weeks.

  2. FDA Clearance and Clinical Trial: Rejoyn has been cleared by the FDA to be used as an adjunct to antidepressant medication. This decision follows a clinical trial named MIRAI, which enrolled 386 adults to use Rejoyn or a sham app for six weeks, aiming to evaluate the change in depression severity scores. Despite the Rejoyn group showing an average score improvement, the difference was not statistically significant compared to the sham group. However, the trial did indicate a trend towards continued improvement with no reported adverse events, showcasing Rejoyn's potential as a novel treatment approach within the framework of digital therapeutics.

  3. Market Viability and Future Prospects: The successful commercialization of Rejoyn, including securing payer coverage, remains crucial. Previous digital therapeutics by companies such as Pear Therapeutics and Better Therapeutics struggled with achieving commercial viability due to reimbursement challenges. However, Rejoyn benefits from the backing of Otsuka, a large company with a significant market presence, potentially enhancing its prospects for success. Otsuka plans to make Rejoyn available for download on iOS and Android platforms, with licensed prescribers issuing electronic prescriptions that grant patients access to the treatment.