Daily Industry Report - February 14

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)

FTC wins $195M judgment against Simple Health over its 'sham' insurance

By Paige Minemyer - The Federal Trade Commission has secured a $195 million judgement against Florida-based insurer Simple Health following allegations that it sold "sham" coverage to consumers. Read Full Article…

VBA Article Summary

  1. Financial Accountability: The CEO of Simple Health, Steven J. Dorfman, and the company are obligated to secure funds following a federal district court ruling, addressing their deceptive health insurance practices. This indicates a crucial step towards rectifying the financial harm inflicted upon consumers.

  2. Consumer Deception: The Federal Trade Commission (FTC) revealed that Simple Health's health plans failed to deliver the promised coverage, leaving consumers inadequately insured and burdened with significant medical expenses. Many enrolled individuals were misled into believing they were purchasing comprehensive insurance, only to discover they were actually enrolled in limited benefit programs or medical discount schemes.

  3. Legal Consequences and Remedial Measures: The court's decision, based on violations of the FTC Act and Telemarketing Sales Rule, underscores the seriousness of Simple Health's deceptive practices. Beyond financial penalties, the court has mandated the liquidation of the company's assets, with proceeds intended for consumer refunds. Additionally, strict prohibitions have been imposed on the defendants, preventing them from further marketing Simple Health plans and requiring the destruction of retained consumer information. This legal action aims to safeguard consumers and prevent future exploitation in the healthcare market.

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.

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

As AI adoption in healthcare grows, Senate lawmakers weigh regulation, payment approaches

By Heather Landi - As the use of artificial intelligence in healthcare grows, federal lawmakers are weighing how to protect patients without hindering innovation, and many in Congress are pushing for stronger regulation. Read Full Article…

VBA Article Summary

  1. Legislative Attention on AI in Healthcare: Senate Committee on Finance Chairman Ron Wyden highlighted the dual-edged nature of AI in healthcare, recognizing its potential to enhance efficiency while also pointing out the significant risks of bias against patients based on race, gender, sexual orientation, and disability. Wyden emphasized the need for Congress to both foster the positive impacts of AI and establish regulatory frameworks to mitigate its negative effects, particularly in the context of federal healthcare programs like Medicare and Medicaid. The introduction of the Algorithmic Accountability Act aims to ensure healthcare systems regularly evaluate AI tools for bias and adherence to intended use.

  2. Concerns and Legal Challenges Surrounding AI Algorithms: Recent lawsuits against major Medicare Advantage insurers, including Humana and UnitedHealthcare, underscore the controversy over the use of AI algorithms to make coverage decisions, which allegedly led to the denial of necessary care based on "rigid and unrealistic predictions for recovery." These legal actions, coupled with an investigation into AI's role in claims denials, prompted the Centers for Medicare & Medicaid Services (CMS) to issue guidance prohibiting the sole reliance on AI for coverage decisions, emphasizing the importance of considering individual patient circumstances and the potential for AI to exacerbate discrimination and bias.

  3. Expert Testimonies and Recommendations for Responsible AI Use: Testimonies from experts during the Senate Finance Committee hearing called for clearer guidelines and standards for the ethical use of AI in healthcare. Michelle Mello and Mark Sendak advocated for meaningful human review in AI decision-making processes and suggested infrastructure support for healthcare organizations to responsibly implement AI tools. Ziad Obermeyer highlighted AI's potential for improving care and reducing costs but cautioned against unaddressed biases that could harm patients. The discussions reflect a consensus on the need for transparent, accountable, and equitable AI practices in healthcare, with recommendations for Congress to support the development of standards and infrastructure to navigate the complexities of AI integration into healthcare systems.

HDHP enrollment sees 2% drop, study finds employees have more choices

By Scott Wooldridge - A new report has found a decline in membership of high deductible health plans (HDHPs) in 2022, the first time since 2013 that that model had seen a decline in enrollment. Read Full Article…

VBA Article Summary

  1. Decline in HDHP Enrollment: The report from ValuePenguin reveals a 2% decline in High Deductible Health Plan (HDHP) enrollment across the U.S. from 2021 to 2022, marking the first decrease since 2013. This trend was observed in 32 states, with 13 states recording HDHP enrollments below 50%. Despite this decline, 54% of private sector workers in the U.S. were still enrolled in HDHPs in 2022, indicating a significant presence of these plans in the healthcare market.

  2. Shift in Employer Health Plan Offerings: The decrease in HDHP enrollment is attributed to employers providing a broader selection of health plans, allowing employees more choice in their healthcare coverage. This diversification has led to a noticeable shift towards plans offering more comprehensive coverage, especially in the post-pandemic context where consumers prioritize health benefits. The data underscores a significant change from 2018 to 2022, where the percentage of large employers (with 20,000 employees or more) offering only HDHPs plummeted from 22% to 9%.

  3. Considerations and Trade-offs with HDHPs: HDHPs are characterized by their lower premiums but higher deductibles, presenting a balancing act for consumers, especially in the aftermath of the pandemic. The report discusses the potential financial benefits of lower premiums against the backdrop of rising daily living costs. However, it also highlights the substantial out-of-pocket expenses associated with HDHPs, which could be burdensome for many Americans. The analysis further mentions the advantages of Health Savings Accounts (HSAs) as a mitigating factor for emergency medical expenses, pointing out the importance of careful plan selection based on individual health needs and financial situations.

US hospitals see post pandemic catch-up behind insurer healthcare costs

By Sriparna Roy and Bhanvi Satija - Americans are catching up on healthcare missed during the COVID-19 pandemic, a trend driven by heart procedures and outpatient orthopedic surgeries that likely won't soon slow, according to interviews with three hospital officials in major U.S. cities, but other factors may also be at play. Read Full Article…

VBA Article Summary

  1. Rising Demand and Uncertainty Among Insurers: U.S. health insurers, including Humana, CVS Health, Elevance, and UnitedHealth, have observed a high demand for medical services as of late 2023, but there's uncertainty regarding the duration of this trend. Despite this, some insurers have already factored in elevated medical costs for 2024. This situation has led to concerns among investors and analysts about the potential for these cost increases to persist beyond 2024, contributing to a decline in sector shares.

  2. Hospital Insights on Increased Medical Services: Hospitals across the U.S., such as Providence Health System, Brigham and Women's Hospital, Tufts Medical Center, Northwestern Memorial, and Jackson Health System, have reported a "catch-up" trend in medical services across all age groups post-pandemic. This includes significant increases in oncologic, cardiac care, and surgeries, including a record number of heart transplants at Tufts Medical Center. These trends are attributed to both an aging population and the resolution of delayed care due to the pandemic.

  3. Shift to Outpatient Surgeries and Continuing High Demand: The demand for outpatient surgeries has been outstripping capacity, with hospital executives noting this trend is long-lasting and widespread rather than seasonal. Tenet Healthcare reported a significant rise in demand for outpatient procedures, including joint replacements, toward the end of 2023. Hospitals anticipate that the demand for such procedures will remain strong as staffing challenges from the past two years diminish, indicating a shift in healthcare delivery towards more outpatient and offsite surgeries.

Nearly Half of Medicare Drug Spending Goes to Middlemen

By William H Bestermann Jr MD - Nearly half of Medicare spending on medication does not buy medicines, it goes to middlemen. Go to the link. Wendell has done a great job. That fact is critically important because our country is unique among developed nations in this respect. Read Full Article…

VBA Article Summary

  1. Distribution of Medicare Drug Benefit Expenditures: Research conducted by Johns Hopkins and the University of Utah unveiled the distribution of expenditures from Medicare drug benefits, highlighting a significant portion of the spending going to intermediaries. For every $100 spent, $41 goes to pharmacy benefits managers (PBMs), $30 to manufacturers, $17 to pharmacies, and $12 to wholesalers, leaving a mere 3% for the drug manufacturers. This study, published in an October 2023 JAMA article, emphasized that a vast majority of Medicare Part D dollars spent on 45 high-utilization generic drugs were absorbed by intermediary gross profits, leaving only 29.9% of the expenditures for the intended purposes.

  2. Market Control and Conflicts of Interest: The investigation pointed out that the three largest PBMs, which control 80% of the market, are owned by major insurance companies, creating a potential conflict of interest. These insurance companies, which are accountable to their stockholders, not only decide where patients can get their medications but also own the PBMs that dictate the terms. This arrangement raises concerns about the inherent conflicts of interest in the healthcare system, where intermediaries receive the lion's share of Medicare drug benefit spending.

  3. Impact on Patient Costs and International Comparison: The research further revealed that Medicare patients often pay less by opting for the cash price of medications instead of using their insurance managed by PBMs, especially before meeting their deductibles. This discrepancy in pricing, particularly for generic drugs, suggests a systemic issue contributing to the inflated costs of medications in the U.S. compared to other developed countries. The study criticizes the profiteering allowed in the U.S. healthcare system, which results in significantly higher costs for medications and healthcare overall, urging for policy reforms to achieve better health outcomes at lower costs.

‘Behind the Times’: Washington Tries to Catch Up With AI’s Use in Health Care

By Darius Tahir - Lawmakers and regulators in Washington are starting to puzzle over how to regulate artificial intelligence in health care — and the AI industry thinks there’s a good chance they’ll mess it up. Read Full Article…

VBA Article Summary

  1. Expansive Impact and Regulatory Challenges: AI's impact on healthcare is extensive, with the FDA approving over 692 AI products for various purposes, including patient scheduling, emergency room staffing, clinical visit transcriptions, and aiding radiologists in reading MRIs and X-rays. However, this rapid integration poses regulatory challenges, as AI technology evolves over time, unlike drugs with consistent chemistry. Policymakers and health-focused agencies are developing rules to ensure transparency and privacy, with Congress showing increasing interest in AI's role in healthcare.

  2. Lobbying and Ethical Considerations: The surge in AI's healthcare applications has led to a significant increase in lobbying activities, with a 185% rise in organizations disclosing AI lobbying efforts in 2023. Ethical concerns, such as the potential for AI to perpetuate biases present in healthcare data, are critical. For example, AI trained on biased data could reinforce disparities in patient care, highlighting the need for careful consideration and regulation of AI technologies.

  3. Future Directions and Monitoring: The potential for AI in healthcare is vast, with ongoing research and development expected to introduce new products and applications. Policymakers are urged to invest in systems to monitor AI technologies over time, acknowledging that AI products adapt and change with new data. Transparent algorithms and long-term human oversight are emphasized as crucial for managing AI's evolving role in healthcare and addressing its ethical implications.

Connecticut becomes 1st state to cancel medical debt for eligible residents

By Alan Goforth - Although the details have yet to be ironed out, Connecticut plans to forgive medical debt for residents during the first half of 2024. Gov. Ned Lamont recently announced the initiative on ABC’s Good Morning America. Read Full Article…

VBA Article Summary

  1. Connecticut's Plan to Cancel Medical Debt: Connecticut aims to eliminate $1 billion in medical debt for eligible residents by utilizing $6.5 million from the 2021 American Rescue Plan Act. This initiative, in partnership with RIP Medical Debt, leverages every $100 of the investment to abolish $10,000 of debt. Eligibility is determined by either the medical debt equalling 5% or more of an individual's annual income or household income being less than 400% of the federal poverty line.

  2. National Movement Against Medical Debt: This action by Connecticut is part of a broader national movement to tackle medical debt, which gained momentum in Cook County, Illinois, and includes efforts by New York City and other municipalities across the United States. The movement seeks to alleviate the financial burden of medical debt on Americans, with RIP Medical Debt actively engaging with additional municipalities and states to expand debt relief initiatives.

  3. Federal Efforts to Address Medical Debt: The Biden administration is contributing to this cause by developing federal rules aimed at preventing unpaid medical bills from affecting patients' credit scores. Such regulations could significantly benefit individuals with medical debt on their credit reports by removing a barrier that affects their ability to secure employment, housing, and loans. This is in response to the reality that approximately 41% of U.S. adults face medical or dental bill-induced debt, highlighting the pervasive challenge of medical debt in the country.

Weight-loss drugs tied to benefit after hip replacement

By Nancy Lipid - New diabetes and weight-loss drugs may benefit patients undergoing hip replacement, without adding to complication risks, according to preliminary data released on Monday at a large meeting of orthopedic surgeons. Read Full Article…

VBA Article Summary

  1. Efficacy of Ozempic in Post-Surgical Outcomes: A study highlighted that Ozempic, a semaglutide-based medication prescribed for managing diabetes, is linked to a 44% reduction in the risk of developing infections in newly implanted joints among patients undergoing total hip arthroplasty. Additionally, those taking Ozempic experienced a 32% lower likelihood of hospital readmission post-surgery, without an increase in postoperative complications. This research was conducted on 9,465 diabetic patients at a large New York City hospital, with 1,653 of them being prescribed Ozempic. Many participants also struggled with obesity, as noted by Dr. Matthew Magruder from Maimonides Medical Center in Brooklyn, New York.

  2. Semaglutide's Safety in Hip Replacement Surgery: A separate study corroborated the safety of semaglutide (marketed as Wegovy for weight loss) in patients undergoing hip replacement surgery. Analyzing 1,232 obese patients, half of whom were prescribed Wegovy, researchers found no significant increase in postoperative complications such as infections, dislocation of the hip implant, the need for reoperation, or severe complications like lung or heart issues and death. This group was carefully matched for age, weight, and risk factors to ensure the reliability of the findings.

  3. Need for Further Research: Despite these promising outcomes, the duration of pre-surgical semaglutide use remains unclear from both studies, and there was no commercial funding involved. Importantly, these findings do not conclusively prove that semaglutide or other GLP-1 agonist drugs are entirely safe or beneficial for patients undergoing total hip replacement. Dr. Magruder emphasized the necessity for high-quality, prospective, randomized controlled trials to definitively recommend the preoperative use of GLP-1 agonists like semaglutide for such surgical patients.

US schools are sending more kids to psychiatrists out of fears of violence. Clinicians are concerned

By Rebecca Redelmeier - The nine-year-old had been drawing images of guns at school and pretending to point the weapons at other students. He’d become more withdrawn, and had stared angrily at a teacher. The principal suspended him for a week. Educators were unsure whether it was safe for him to return to school – and, if so, how best to support him. Read Full Article…

VBA Article Summary

  1. Increased Use of Psychiatric Evaluations in Schools: Amid growing concerns over school violence, schools are increasingly sending students to psychiatrists for evaluations, sometimes due to threats or violence, and other times under less clear circumstances. This trend was highlighted at a professional meeting of child and adolescent psychiatrists in the US, where the effectiveness and challenges of conducting these evaluations were discussed. The practice aims to prevent violence and support students in crisis, but is often criticized for being misused and misunderstood by schools, potentially keeping students out of school for extended periods and overburdening the youth mental health system.

  2. Challenges and Inequities in Current Practices: The article points out several problems with the current approach to psychiatric evaluations by schools, including a lack of comprehensive national data, inequitable use of evaluations (with reports of higher rates among Black children and those with special needs), and a shortage of mental healthcare providers. These issues highlight the need for better policies, transparency, and support for schools and clinicians to avoid cycles of removals that fail to address the underlying issues facing students in crisis.

  3. Personal Impact and Legislative Responses: The story of Carter, a first grader with ADHD who was repeatedly removed from school for psychiatric evaluations, illustrates the personal impact of these practices. Despite his grandmother's efforts to get him evaluated and supported, he faced long suspensions and was kept out of school for months. This case underscores the importance of early intervention and appropriate support to prevent such situations. Some legislators are responding to these concerns with proposed bills aimed at creating statewide policies on psychiatric clearances for students and requiring data collection on the number of students removed from school for mental health evaluations.