Insurers Reap Hidden Fees by Slashing Payments. You May Get the Bill.

By Chris Hamby - Weeks after undergoing heart surgery, Gail Lawson found herself back in an operating room. Her incision wasn’t healing, and an infection was spreading. Read Full Article…

VBA Article Summary

1. Unexpected Financial Burden for Patients Due to Insurance Negotiations: Ms. Lawson underwent a complex surgical procedure by Dr. Rabinowitz, an out-of-network provider, resulting in her facing a substantial medical bill exceeding $100,000 after her insurance, UnitedHealthcare, paid a fraction of the doctor's charges. This left her battling with her insurer over the balance, highlighting the issue of patients being unexpectedly burdened by large bills due to insurers' negotiations with out-of-network providers.

2. Investigation Reveals Insurers' Financial Incentives to Minimize Out-of-Network Reimbursements: A New York Times investigation uncovered that a data analytics firm, MultiPlan, collaborates with major insurers like UnitedHealthcare, Cigna, and Aetna to determine the payments for out-of-network medical providers. The investigation revealed that MultiPlan and insurers have financial incentives to minimize reimbursements, often leaving patients to cover the significant difference, raising questions about the fairness and transparency of health care billing practices.

3. Calls for Reform Amid Transparency and Fairness Concerns in Health Care Billing: The complexities of the health insurance system and its reliance on firms like MultiPlan have led to patients facing unexpectedly high medical bills, while insurers and MultiPlan benefit from the savings generated by reduced reimbursements. This system, criticized for its lack of transparency and potential conflicts of interest, has prompted calls for regulatory scrutiny and reform to protect patients from unforeseen financial burdens.

Nightmare on Wall Street for Medicare Advantage Companies

By Wendell Potter - Wall Street has fallen out of love with big insurers that depend heavily on the federal government’s overpayments to the private Medicare replacement plans they market, deceptively, under the name, “Medicare Advantage.” Read Full Article…

VBA Article Summary

1. CMS Stands Firm Against Insurance Demands, Announces Payment Increase Plan: The Centers for Medicare and Medicaid Services (CMS) announced its decision to stick to its plan of increasing payments to Medicare Advantage plans by 3.7% for the year 2025, amounting to more than $16 billion. This decision came after a high-pressure campaign by large insurers like UnitedHealthcare, Humana, and Aetna, who argued they deserved more due to unexpected increases in prescription drug use and doctor visits by enrollees. Despite these demands, CMS's decision, influenced by petitions and letters from taxpayers and Medicare enrollees, meant the total payments to companies would be between $500 and $600 billion, less than the insurers wanted.

2. Investor Shock and Market Fallout: Insurers Lose Billions in Market Cap: The reaction to CMS's announcement was immediate and significant, with shocked investors selling off their shares, leading to a massive drop in market capitalization for the companies involved. Specifically, UnitedHealth, Humana, and CVS/Aetna lost nearly $95 billion in market capitalization. The shares of these companies plummeted, with Humana, the second-largest Medicare Advantage company, experiencing one of the most significant drops, losing over 13% of its value initially and nearly 12% by the end of the specified period.

3. Shifting Strategies: Insurers to Invest in Political Influence Post-Announcement: Following CMS's announcement and the subsequent market response, the affected companies are expected to shift their focus to the political arena. They plan to invest substantial amounts of money from premiums into campaigns to elect candidates who are favorable to their interests in Congress and the presidency. This strategic pivot aims to prevent similar financial impacts in the future and secure a more favorable regulatory environment for their Medicare Advantage businesses.

Change cyberattack serves as wake-up call for healthcare cybersecurity

By Emily Olsen - The healthcare sector needs to get serious about cybersecurity and resilience planning in the wake of the cyberattack against Change Healthcare, as attacks are likely to continue plaguing the industry, experts told Healthcare Dive. Read Full Article…

VBA Article Summary

1. Severe Industry Impact and Ongoing Challenges: The outage at the UnitedHealth Group subsidiary has significantly disrupted the healthcare industry for over a month, causing various challenges for providers such as payment disruptions and delays in prior authorization requests. The situation has forced hospital staff to work extensive overtime, including weekends and nights, to cope with the increased workload. Smaller providers and those heavily reliant on Change for claims processing have been particularly hard hit, facing serious financial strain, delayed payments to vendors, and the need to tap into lines of credit or prioritize payroll.

2. Cybersecurity as a Persistent Threat: The attack underscores the evolving cybersecurity threats facing the healthcare sector as it becomes more digitized, highlighting vulnerabilities that cybercriminals can exploit. Despite advancements in cybersecurity, experts believe the industry still lags in preparedness. The need for comprehensive risk analysis, redundancy in vendor selection, and robust cybersecurity protocols is emphasized to protect against future attacks. Providers are advised to assess their data, identify potential threats, evaluate third-party vendors' cybersecurity measures, and prepare for the financial impacts of such outages.

3. Strategic Response and Federal Support: The incident has sparked a broader discussion about the need for healthcare providers to invest in cybersecurity, recognize the importance of redundancy among vendors, and understand the financial implications of cyberattacks. However, smaller and financially weaker providers face challenges in implementing these measures due to resource constraints. The federal government has signaled intentions to strengthen the sector's cybersecurity resilience, including proposed funding and potential financial penalties for non-compliance, highlighting the critical need for a proactive and strategic approach to cybersecurity in healthcare.

Views: Producers beware: CAA amplifies litigation risks

By Cheryl Larson - Your employer clients should not get too comfortable about having avoided employee lawsuits over how they have managed their medical and pharmacy benefit plans, nor should you become complacent about the growing need for transparent pricing of your services. Read Full Article…

VBA Article Summary

1. Expansion of Fiduciary Duties and Regulatory Focus: The Consolidated Appropriations Act (CAA) extends the Employee Retirement Income Security Act of 1974 (ERISA), establishing a framework for employees to challenge their employer's handling of benefits administration, akin to past ERISA class-action lawsuits regarding 401(k) and pension management. The Department of Labor is emphasizing higher governance standards for employer-sponsored health plans, mirroring those of 401(k) plans. This shift includes heightened enforcement efforts to ensure employers act in their employees' best interests, particularly in disclosing direct and indirect compensation paid to brokers and administrators.

2. Rising Legal Risks and Audit Obligations: Employers are now at a greater risk of facing class-action lawsuits if they fail to adequately disclose and manage the fees associated with medical and prescription drug claims. Law firms are targeting large employers, encouraging employees to participate in lawsuits similar to one already filed against Johnson & Johnson. To mitigate these risks, employers must be able to demonstrate comprehensive audit trails showing their diligence in obtaining necessary fee disclosures from vendors, despite potential objections related to proprietary data or HIPAA constraints. Contracts that limit data access are overridden by legal compliance obligations, challenging employers to reassess their vendor relationships and audit practices.

3. Strategies to Mitigate Litigation and Liability Risks: To address and reduce the risk of litigation, employers need to adopt a series of proactive measures. These include ensuring ongoing access to comprehensive data on payments made under health plans, revising contracts to facilitate continuous auditing and collaboration with independent third parties, and employing data analytics to identify and rectify any issues related to fraud, waste, or abuse. Additionally, employers must consider the legal implications of their prescription drug benefit designs, especially in light of strategies that prioritize cost savings over patient safety, potentially leading to legal challenges. Implementing these strategies can help employers prepare for the evolving regulatory landscape and mitigate potential litigation risks.

HHS: Medicare incentives, penalties for hospitals could help stem drug shortages

By Dave Muoio - To address the nation’s drug shortages, the Department of Health and Human Services (HHS) is floating a plan that would attach new Medicare payments and penalties to hospitals’ supply chain practices. Read Full Article…

VBA Article Summary

1. Introduction of the Hospital Resilient Supply Program (HRSP): The HRSP, outlined in a recent white paper by the Department of Health and Human Services (HHS), aims to enhance supply chain resilience within hospitals. This program plans to grade hospitals using a scorecard system based on their adoption of practices that prevent shortages and promote supply chain resilience. This initiative requires new congressional authorities and will be introduced gradually over several years, initially focusing on generic sterile injectable medications before potentially expanding to other priority products.

2. Incentives and Penalties: The HRSP is designed to provide incentives and penalties to hospitals based on their performance in managing supply chain resilience. In the first five years, hospitals could receive rewards for maintaining buffer stock inventories and securing contracts that ensure supply chain resilience, with penalties introduced later to further enforce compliance. The success of this program hinges on the idea that financial incentives and penalties should be significant enough to motivate hospitals to invest in resilient supply practices, with adjustments made based on the size of the hospital or health system.

3. Financial Implications and Broader Strategy: Implementing the HRSP is estimated to cost the government between $2.5 billion and $4.4 billion over a decade. Alongside HRSP, the white paper also discusses the Manufacturer Resiliency Assessment Program (MRAP), a proposal aimed at drug manufacturers to encourage resilience in drug production through a public-private partnership. This program, requiring $750 million over the same period, would rate manufacturers on resilience metrics to be used by hospitals in making purchasing decisions. These initiatives are part of HHS's broader effort to address the long-standing issue of drug shortages, which was highlighted during the COVID-19 pandemic, and to enhance overall healthcare system resilience and patient care.

The puzzle of matching psychiatric drugs to patients

By Caitlin Owens and Alison Snyder - Understanding of psychiatric disorders is catching up to a reality all too familiar to the doctors who treat patients: one-size-fits-all treatments for complex conditions like depression or bipolar disorder are coming up short. Read Full Article…

VBA Article Summary

1. Importance of Understanding Disorders Beyond Symptoms: The article highlights the ongoing challenge in treating mental health disorders such as depression, bipolar disorder, schizophrenia, and ADHD. Despite advancements, the effectiveness of treatments remains limited due to a traditional focus on symptoms rather than the biological underpinnings of these conditions. A study in Taiwan suggests that individuals with a family history of treatment-resistant depression (TRD) are at a higher risk for TRD and other disorders, advocating for an early and more intensive treatment approach based on biological understanding rather than trial-and-error.

2. The Evolution Toward Precision Psychiatry: The field is gradually shifting towards "precision psychiatry," aiming to tailor treatments to the biological specifics of individual patients. This approach is fueled by the analysis of vast datasets and machine learning tools that uncover the biological diversity underlying psychiatric symptoms. The concept challenges the one-size-fits-all treatment model, pushing for a reevaluation of how psychiatric disorders are diagnosed and treated. It opens the door for utilizing existing drugs more effectively by matching them to the patients' specific biological profiles, as well as for the development of new drugs.

3. The Need for Broad-Spectrum and Personalized Treatments: While the move towards precision psychiatry is promising, the article acknowledges the current utility of broad-spectrum drugs and treatments. These are seen as essential tools for clinicians until more personalized approaches become widely available. Advances in various fields, including imaging, genetics, and biomarkers, are paving the way for this shift, but there's a consensus that no single solution will be a "magic bullet." The transition also requires considering social and environmental factors, highlighting the complexity of mental health disorders and the multifaceted approach needed for effective treatment.

CVS Caremark leader jabs Cost Plus Drugs; Mark Cuban responds

By Paige Twenter - David Joyner, executive vice president of CVS Health and president of CVS Caremark, called out Mark Cuban's drug company in a paid op-ed Fortune published April 3. Read Full Article…

VBA Article Summary

1. CVS' Defense of Pharmacy Benefit Managers (PBMs): Mr. Joyner, leading CVS' pharmacy segment, defended the role of PBMs in the healthcare system amid an FTC investigation into their business practices. He highlighted the complexity of the healthcare and pharmacy landscape, suggesting that criticisms of PBMs often come from a place of misunderstanding. CVS Caremark, as the nation's largest PBM, dominates with a 33% market share in 2022, underscoring its significant influence in the pharmacy industry.

2. Critique of Mark Cuban's Cost Plus Drug Company: Mr. Joyner criticized Mark Cuban's pharmacy venture, Cost Plus Drug Co., for focusing on generic drug prices, a problem he believes was already solved. He argued that the company's model is not innovative and criticized it for supply chain issues and the stocking of treatments with short expiration dates. This critique extends to a broader skepticism in the industry regarding the disruptive impact of Cost Plus Drugs, despite its partnership with independent and grocery chain pharmacies and its role in manufacturing drugs for some hospitals.

3. Competition and Pharmacy Pricing: The article highlights the contrasting views between CVS Caremark and Mark Cuban on the state of competition and pricing in the pharmacy sector. Mr. Joyner claimed CVS Caremark welcomes competition and aims for transparent, predictable drug pricing. In contrast, Mark Cuban accused CVS' PBM of practices that undermine independent pharmacies, suggesting CVS Caremark's actions harm the broader healthcare community and independent pharmacy entrepreneurship. This debate reflects ongoing tensions in the pharmacy industry over the role of PBMs, drug pricing, and the viability of new pharmacy business models.

Personalized medicine: We’re not there yet

By Edward Abrahams and Christopher J. Wells - When Francis Collins, then-director of the National Human Genome Research Institute, testified before Congress in 2003 about the significance of sequencing the human genome that year, he introduced personalized medicine as a new concept. Read Full Article…

VBA Article Summary

1. Progress and Predictions in Personalized Medicine: Over two decades, personalized medicine has seen significant advancements, aligning closely with Collins's early 2000s predictions. Innovations have improved lives and increased the efficiency of health systems. Key achievements include the development and market introduction of over 100,000 molecular tests and 350 molecularly targeted medicines, particularly in cancer care where treatments are now often tailored to the genetic profiles of individual patients. Early detection technologies, like blood tests for cancer and genomic tests for genetic conditions, have also become more prevalent, offering the potential to treat diseases before they advance.

2. Access and Inequality Issues: Despite these scientific achievements, a gap has emerged between the potential of personalized medicine and its practical application in healthcare. A significant portion of patients, especially those with advanced non-small cell lung cancer, have not benefitted from available genetic tests and treatments due to various barriers. This discrepancy raises concerns about the equitable distribution of personalized medicine's benefits and highlights the need for a focused effort to bridge this gap, ensuring all patients have access to these potentially life-saving technologies.

3. The Future of Personalized Medicine and Coalition Efforts: The Personalized Medicine Coalition and other advocacy groups are dedicating resources to address the challenges of affordability, access, and clinical implementation of personalized medicine. They aim to build a health system that prioritizes cost-effective prevention and treatment strategies without imposing undue financial burdens on patients. Through partnerships and implementation science studies, these organizations seek to demonstrate practical ways to make personalized medicine more accessible, aiming to fulfill the promise of personalized medicine for all, reflecting on Collins's vision and the necessity of continued investment and innovation in the field.

Teladoc leadership shakeup: CEO Jason Gorevic steps down, CFO steps in

By Heather Landi - In a major corporate shift, Jason Gorevic has stepped down as CEO of virtual care giant Teladoc after leading the company for 15 years. Read Full Article…

VBA Article Summary

1. Leadership Transition: Jason Gorevic Steps Down, Mala Murthy Steps Up: Jason Gorevic has stepped down as CEO of Teladoc after 15 years at the helm, with Mala Murthy, the company's CFO since 2019, stepping in as acting CEO. The Board of Directors is conducting a search for a permanent successor, engaging an executive search firm to evaluate both internal and external candidates.

2. Teladoc's Growth and Challenges Under Gorevic's Leadership: During Gorevic's leadership, Teladoc expanded significantly, going public in 2015 and growing its revenue from $77 million that year to boasting 90 million users today. The company has faced challenges, including a sharp stock decline and market saturation, but also reported growth in revenue and adjusted EBITDA in 2023.

3. Strategic Focus and Financial Outlook Amidst Leadership Change: The leadership transition is happening at a time when Teladoc is focusing on financial stabilization and strategic growth amidst a crowded virtual care market. Despite recent financial losses, the company is projecting modest revenue growth for 2024 and maintains a strong financial position with over one billion dollars in cash reserves, aiming for long-term success and value creation.

Cybercriminals pose as hospital finance employees, divert payments

By Laura Dyrda - A cybercriminal group is targeting health system IT help desks in a new scheme to gain access to the organization's computer systems and divert payments, according to an April 4 warning from the American Hospital Association. Read Full Article…

VBA Article Summary

1. Increased Sophistication in Cyber Attacks: Cybercriminals are impersonating revenue cycle and finance employees to manipulate IT help desk protocols for resetting passwords and enrolling new devices. Successfully enrolled devices provide attackers with "phishing-resistant" multi-factor authentication access to sensitive email and other accounts, demonstrating a high level of sophistication in bypassing current cybersecurity measures.

2. Financial and Systemic Risks: Utilizing their unauthorized access, these threat actors have been able to redirect payments to fraudulent accounts and introduce malware into healthcare systems' networks. This not only poses significant financial risks but also threatens the integrity and security of critical healthcare infrastructure.

3. Proactive and Reactive Measures Recommended by AHA: To combat this evolving threat, the American Hospital Association (AHA) has urged healthcare systems to adopt more stringent IT security protocols. Recommendations include verifying employee identities through callback procedures, video calls for password requests, and requiring photos with government-issued IDs before authorizing changes. Additionally, the AHA highlighted the FBI's success in recovering diverted payments when notified promptly, underscoring the importance of swift action and reporting in mitigating the impacts of such cyber attacks.