Daily Industry Report - February 13

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)

States Target Health Insurers’ ‘Prior Authorization’ Red Tape

By Bram Sable-Smith - Christopher Marks noticed an immediate improvement when his doctor prescribed him the Type 2 diabetes medication Mounjaro last year. The 40-year-old truck driver from Kansas City, Missouri, said his average blood sugar reading decreased significantly and that keeping it within target range took less insulin than before. Read Full Article…

VBA Article Summary

  1. Challenges with Prior Authorization: The article illustrates the ordeal faced by an individual named Marks who struggled with his health insurer, Cigna, over the approval of a higher dose of the expensive drug Mounjaro, which is used for diabetes treatment. Despite the necessity for a dosage increase, Cigna initially declined to cover the cost, leading to a lengthy appeal process. This scenario highlights the broader issue of prior authorization—a practice insurers claim helps control costs and ensure patient safety but often leads to delays in treatment, provider burnout, and increased administrative expenses.

  2. Legislative Efforts and Industry Response: In response to the widespread frustration with prior authorization, both federal and state levels are seeing legislative actions aimed at streamlining or reforming the process. Notably, the Biden administration announced new rules to improve the process for certain health plans, and states like Missouri are considering bills to introduce "gold carding" programs, which would exempt medical providers with a high approval rate from the prior authorization process for a period. However, the insurance industry and some business groups oppose these reforms, citing concerns over increased costs and inappropriate care.

  3. Patient Experiences and Future Outlook: Marks' experience with Cigna and the subsequent switch to Blue Cross and Blue Shield, which approved the higher dose of Mounjaro without issues, underscores the variability in how different insurers handle prior authorizations. The article suggests that while there is recognition of the need for improvement in the prior authorization process, significant opposition exists from various stakeholders. The impact of legislative changes and industry practices on patient care and administrative burdens remains to be seen, as efforts continue to balance cost control with timely and effective medical treatment.

HVBA Poll Question - Please share your insights

Would you advise clients to import specialty or high cost brand drugs like Ozempic, Mounjaro, Wegovy from abroad to save 35-50% off U.S. prices of $850, $1,070, $1,670 per month respectively?

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Our last poll results are in!


of Daily Industry Report readers who responded to our last polling question think Eli Lilly’s direct-to-consumer website for Telehealth prescriptions and drug delivery, feel this will somewhat positively affect patient access and disrupt the traditional drug supply chain.

24.03% of respondents are neutral or uncertain, 22.79% feel it will negatively affect patient access and have minimal or adverse effects on the supply chain while 16.61% are highly positive this will affect and and improve patient access and disrupt the traditional supply chain.

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Independent doctors win dispute with health systems over insurance access

By Jonathan Ellis - A decade-long battle among health care providers has run its course in the South Dakota Supreme Court, with victory going to a group of independent physicians. Read Full Article…

VBA Article Summary

  1. Court Ruling on Provider Inclusion: The Court confirmed a lower court's decision requiring Sanford Health Plan to incorporate qualified physicians, optometrists, and nurses in its provider networks for insurance plans. This ruling came as a response to a lawsuit led by physicians from the Orthopedic Institute and supported by various independent physician groups, challenging Sanford's exclusionary practices.

  2. Background of the Lawsuit: Independent healthcare providers filed a lawsuit against Sanford Health Plan in 2021, arguing that the exclusion of independent physicians from certain Sanford insurance offerings to businesses and individuals forced covered individuals to bear the full cost of out-of-pocket expenses if they opted for care from these independent providers. This legal action highlighted the significant financial burden placed on patients choosing providers outside of Sanford's network.

  3. Violation of the Any Willing Provider Law: The independent providers' legal challenge was grounded in the assertion that Sanford Health Plan's conduct was in direct violation of the "Any Willing Provider" law, passed by a 62 percent majority vote in a 2014 ballot measure. This law mandates that health insurance companies cannot bar qualified healthcare providers from their panels if these providers are willing to abide by the terms of the insurance plans and are located within the geographic coverage area of these plans.

How financially vulnerable are people with medical debt?

By Aubrey Winger, Gary Clayton, Matthew Rae, Anthony Damico, and Shameek Rakshit - Medical debt can be a significant financial burden on people and families. Having medical debt can exhaust savings, force families to delay or forgo basic necessities, and divert resources from other important family needs such as housing, education, and retirement. Read Full Article…

VBA Article Summary

  1. Increased Financial Vulnerability and Distress: People with medical debt experience a higher incidence of financial vulnerability compared to those without such debt. Indicators of this vulnerability include spending more than one's income, lacking a "rainy day" fund, and feeling financially stretched to the point of "just getting by." This group is also more likely to engage in financially risky behaviors, such as overdrawing their checking account, carrying a credit card balance with high interest, taking cash advances, and being pursued by debt collectors.

  2. Higher Likelihood of Utilizing High-cost Financial Options: Adults with medical debt are significantly more inclined to resort to high-cost financial solutions, such as payday loans, pawn shops, rent-to-own stores, or loans against a vehicle title. Such choices often come with steep interest rates or penalties, exacerbating the financial strain on already vulnerable households. This pattern underscores the deep financial impact of medical debt, beyond just the immediate bills to be paid.

  3. Impact on Medical Care Access and Affordability: Individuals carrying medical debt are far more likely to delay or forego necessary medical care, including tests, treatments, and prescription medications, due to cost concerns. This behavior is observed across all income levels and insurance statuses, indicating a broad and systemic issue where medical debt not only affects financial stability but also compromises health outcomes by inhibiting access to essential care.

Former CMS administrator: 'I would like to see Medicare Advantage slowed or stopped'

By Jakob Emerson - Medicare Advantage is now the dominant form of Medicare in the U.S., with a projected 54% share by the end of 2024, or more than 33 million enrollees. Read Full Article…

VBA Article Summary

  1. Dr. Don Berwick's View on Medicare Advantage's Development: Dr. Berwick, a former CMS administrator and current health policy lecturer, reflects on the inception of Medicare Advantage, which was intended to provide Medicare beneficiaries with more efficiently managed care leading to lower costs and improved services. However, he criticizes its evolution, noting that financial interests, particularly from insurance companies, have diverted the program from its original cost-saving promise. According to Berwick, Medicare Advantage now costs more for taxpayers and beneficiaries compared to traditional Medicare, contradicting its initial goal of reducing healthcare expenses.

  2. Proposed Reforms for Medicare Advantage: Berwick advocates for several changes to Medicare Advantage, emphasizing the need to address the coding issues that allow plans to inflate patient risk scores unjustly, thereby increasing payments. He suggests overhauling the current risk adjustment system, increasing transparency in contracts, enforcing stricter network requirements, and revising payment systems including the quality bonus and star ratings. Berwick commends CMS for seeking public feedback on improving data collection and transparency, indicating a move in the right direction albeit facing potential political resistance.

  3. Concerns and Future Outlook for Medicare: Expressing concern over the potential atrophy of traditional Medicare due to the dominance of Medicare Advantage, Berwick warns of a future where traditional Medicare may become unsustainable, catering only to the least desirable patients for insurers. He calls for immediate actions to mitigate the influence of Medicare Advantage by holding insurers accountable for genuinely lowering costs and improving quality. Berwick envisions an improved traditional Medicare, expanded to offer benefits comparable to Medicare Advantage, funded by reclaiming excess subsidies, thereby ensuring a fair choice for beneficiaries between the two programs.

House panel passes PBM bill that bans spread pricing, only allows a flat service fee

By Alan Goforth - A House panel this week advanced a bipartisan bill that would ban pharmacy benefit managers from charging fees based on drug list prices. The House Committee on Oversight and Accountability voted 29-11 to approve the so-called Delinking Revenue from Unfair Gouging (DRUG) Act. Read Full Article…

VBA Article Summary

  1. Legislation Introduction and Purpose: The bill introduced by Rep. Mariannette Miller-Meeks aims to address the high cost of prescription drugs by implementing regulations on Pharmacy Benefit Managers (PBMs). It proposes to limit PBMs to charging only a flat service fee, separate from list prices, and seeks to ban spread pricing and the steering of patients to affiliated pharmacies. These regulations are designed to reduce the financial burden on consumers and are specifically targeted at the Federal Employees Health Benefits program, affecting over eight million federal employees among the nearly 160 million Americans with employer-provided health insurance.

  2. Support and Opposition: The National Association of Manufacturers supports the bill, arguing that PBMs contribute to higher healthcare costs by increasing the prices paid for medicines, pocketing manufacturer rebates, and lacking transparency. On the other hand, PBMs argue that the bill could remove incentives for lowering drug prices for consumers by delinking compensation from drug prices, thus hindering their ability to negotiate lower prices with manufacturers and pharmacies.

  3. Legislative Action and Views: The bill has sparked a mix of support and opposition within Congress. Nine Democrats, including Rep. Jamie Raskin, and two Republicans, Rep. Eric Burlison and Paul Gosar, voted against the bill, reflecting concerns over its potential impact on price negotiations and consumer costs. Meanwhile, the Senate has passed a similar bill targeting Medicare Part D, indicating a legislative effort to address the issue of high prescription drug costs through regulation of PBMs across different facets of the healthcare system.

FTC cracking down on drugmakers' delivery device patents

By Elisabeth Rosenthal - The Federal Trade Commission has challenged the validity of over 100 drug product patents, focusing on devices used to deliver medicines, like inhalers and autoinjectors, in an effort to increase competition and potentially lower some prices. Read Full Article…

VBA Article Summary

  1. FTC's New Strategy Against Patent Thickets: The Federal Trade Commission (FTC) is employing a novel approach by challenging the legitimacy of patents listed in the FDA’s “Orange Book” by drugmakers, aimed at preventing competition from cheaper generic alternatives. This action targets patents not on the active ingredients of drugs but on the delivery devices and methods, such as inhalers for asthma or autoinjectors for severe allergic attacks, which drugmakers tweak to extend patent protections beyond their original terms.

  2. Aggressive Stance Under Biden Administration: Under the directive of President Joe Biden and the leadership of FTC Chairperson Lina Khan, the FTC is aggressively utilizing its powers to curb pharmaceutical industry practices that hinder the entry of generic drugs into the market. The agency’s efforts include challenging the so-called “patent thickets” - multiple patents covering not just the active ingredient but various aspects of drug delivery and production methods, which complicate the introduction of generic versions.

  3. Implications for Drugmakers and Generics: The FTC’s actions have prompted some drugmakers, like GSK and Amneal Pharmaceuticals, to withdraw patents on certain drugs, signaling initial successes in the FTC’s campaign. However, the pharmaceutical industry seeks more clarity on patent listings, arguing the need for FDA guidance on the matter. Meanwhile, the FTC is prepared to extend its scrutiny to other patents it deems invalid, indicating a broader challenge to the practice of extending drug patents through modifications to delivery methods rather than the drugs themselves.

By Nirmita Panchal - In light of growing mental health concerns among adolescents in the United States, a National State of Emergency in Child and Adolescent Mental Health was issued in 2021, followed by advisories from the U.S. Surgeon General in 2021 and 2023. Read Full Article…

VBA Article Summary

  1. Rising Mental Health Concerns and Substance Use Among Adolescents: The article highlights a significant increase in mental health issues among adolescents, including a spike in feelings of sadness, hopelessness, anxiety, and depression, particularly among female and LGBT+ youth. It also reports a more than doubling in drug overdose deaths among adolescents from 2018 to 2022, with the largest increases among Hispanic and Black adolescents. Furthermore, suicides remain the second leading cause of death in this age group, although rates have declined slightly in recent years.

  2. Limited Access to Mental Health Services and Unmet Needs: Despite the growing mental health crisis, many adolescents are not receiving the mental health services they need. The article points out that in 2021 and 2022, only 20% of adolescents reported receiving mental health therapy, and 14% were taking prescription medication for mental health issues. Barriers to accessing care include cost, stigma, and lack of knowledge on how to obtain help. Additionally, there's a significant unmet need for mental health services, particularly among female and LGBT+ adolescents.

  3. Impact of Adverse Experiences and the Role of National and Local Initiatives: The article discusses various adverse experiences that negatively impact adolescent mental health, such as bullying, emotional abuse, neighborhood violence, and excessive screen time. It also mentions the rise in gun violence and its psychological effects on youth. In response to these challenges, national efforts are underway to address youth mental health concerns, including recommendations for mental health screenings, social media safety protocols, and expanding school-based mental health services. State and local initiatives are also aiming to improve access to mental health care for young people.

Hospital lobbying could sink effort to trim Medicare costs

By Peter Sullivan - Hospitals intensely lobbying to stop a bipartisan measure that would trim their Medicare payments are emphasizing how the policy may hobble already struggling rural hospitals. Read Full Article…

VBA Article Summary

  1. Political Resonance and Senate Skepticism: The hospital lobby's arguments against site-neutral payments, which propose equal Medicare reimbursement for services whether provided in hospitals or physician offices, are gaining traction in the U.S. Senate. This lobby's influence raises doubts about Congress's ability to enact reforms aimed at reducing Medicare expenditures, despite the potential for taxpayer and patient savings. Hospitals, particularly those serving rural communities, have been active in lobbying against these reforms, highlighting the potential impact on vulnerable populations.

  2. Rural Hospitals and Political Dynamics: The debate over site-neutral payments is intensified by the concern for rural hospitals, which serve as crucial health care providers in poorer and sicker regions. These facilities have faced numerous closures, and the prospect of reduced Medicare payments adds to the concern. Senators from rural states, including Sen. Ron Wyden (D-Ore.), chair of the Senate Finance Committee, express hesitancy about the reforms due to potential adverse effects on rural health care infrastructure, illustrating the complex interplay between health policy and rural economic stability.

  3. Industry Lobbying and Legislative Challenges: Despite bipartisan expert support for site-neutral payments as a method to control escalating health care costs, the hospital industry's lobbying efforts are formidable. With increased spending on lobbying and targeted ad campaigns against the policy, the industry argues that higher reimbursements for outpatient services are justified by the superior level of care provided. These lobbying efforts, combined with the political sensitivity surrounding health care access in rural areas, contribute to the stalled progress of site-neutral payment legislation in the Senate, highlighting the challenges of enacting policy reforms in the face of powerful interest groups.

CVS Health cuts earnings guidance amid rising Medicare Advantage costs

By Rylee Wilson - Facing rising spending in Medicare Advantage, CVS Health lowered its 2024 earnings guidance. Read Full Article…

VBA Article Summary

  1. Revision of 2024 Earnings Guidance: CVS Health announced a downward revision in its 2024 earnings guidance on February 7, with the per-share earnings now expected to be $7.06, reduced from the previously projected $7.26. Adjusted earnings per share are also adjusted down to $8.30 from $8.50, reflecting caution in the company's financial outlook.

  2. Challenges in Medicare Advantage Business: The company's Medicare Advantage business is anticipated to be "marginally profitable" in 2024, as CFO Tom Cowhey reported higher than expected medical benefit ratios, which rose to 88.5% in Q4 2023 from 85.8% the previous year. This increase in medical benefit ratios, along with accelerated outpatient costs, and higher expenses in dental, vision, and vaccinations, underline the financial pressures CVS Health is facing.

  3. Medicare Advantage Membership Growth and Industry Challenges: Despite the financial challenges, CVS Health outperformed its Medicare Advantage membership growth expectations during open enrollment, planning to add 800,000 members in 2024. However, the entire Medicare Advantage sector is experiencing rising costs, with major insurers like Humana and UnitedHealth Group also reporting financial strain. Additionally, proposed reductions in benchmark payments from CMS are expected to exacerbate the situation, though CVS Health CEO Karen Lynch remains optimistic about the long-term prospects of the Medicare Advantage market.