Daily Industry Report - February 15

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)

Regulators look to tighten the reins on reinsurance deals

By John Hilton - Support is growing among some state insurance regulators to tighten the rules for life insurers entering into reinsurance agreements. The goal is to better protect policyholders, said David Wolf, acting assistant commissioner for the New Jersey Department of Banking and Insurance. Regulators are becoming increasingly challenged by the size and sheer number of reinsurance deals, Wolf explained during a Thursday meeting of the Life Actuarial Task Force. Read Full Article…

VBA Article Summary

  1. Proposal for Enhanced Asset Adequacy Analysis: Wolf and Kevin Clark have proposed that life and annuity reinsurance transactions should undergo an "asset adequacy analysis" using cash flow testing. This measure aims to better understand the assets, reserves, and capital supporting the business under the U.S. debt framework, addressing concerns about the potential for reinsurance transactions to significantly lower total asset requirements and possibly prejudice the interests of policyholders.

  2. Concerns Over Reinsurance Transactions: Recent large-scale reinsurance deals, like Lincoln National Life Insurance Co.'s $28 billion deal with Fortitude Re and Manulife Financial Corp.'s $13 billion agreement with Global Atlantic, highlight the growing reinsurance market. The Wolf/Clark proposal warns against the risk of such transactions leading to inadequate reserves for meeting policyholder obligations under moderately adverse conditions, potentially endangering policyholder interests.

  3. Challenges and Opposition: The proposal faces challenges and opposition, with concerns about its practicality and the potential for overreach. Brian Bayerle, from the American Council of Life Insurers, argues that the NAIC already has regulatory frameworks for asset testing, suggesting the proposal might introduce unnecessary complications. Additionally, there are concerns about the ability to perform cash flow testing due to difficulties in obtaining sufficient information from reinsurers, a problem highlighted by Vincent Tsang of the Illinois Department of Insurance.

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?

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 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!

Is the No Surprises Act backfiring on patients?

By Wendell Potter - It’s an understatement to say Capitol Hill has struggled recently to find compromise on health policy. But one area of real compromise, and policy achievement, in recent years came in December 2020 with the passage of the No Surprises Act (NSA). Read Full Article…

VBA Article Summary

  1. Impact of the No Surprises Act (NSA) on Surprise Medical Billing: The NSA emerged from two years of bipartisan effort in Congress to address the rampant issue of surprise medical bills, which often left patients facing significant, unexpected healthcare expenses after receiving out-of-network care. The law aimed to protect patients by establishing a fair, market-based mechanism for resolving payment disputes between insurers and healthcare providers without involving the patient, effectively eliminating surprise billing.

  2. Challenges with Implementation and Regulation: Despite the NSA's intentions, the implementation of its regulations by the Biden administration's Department of Health and Human Services (HHS) has skewed the law's application in favor of insurers. This was primarily achieved by empowering insurers to set Qualified Payment Amounts (QPAs), which arbitrators are to assume as a fair baseline in disputes, often disregarding other relevant factors. This approach has not only undermined the law's objective but also incentivized insurers to reduce payments to doctors, which has led to contract terminations and potential reductions in healthcare access and quality.

  3. Consequences and Criticisms of Current Enforcement: The implementation and enforcement of the NSA by HHS under Secretary Xavier Becerra have faced criticism from various stakeholders, including federal courts. Despite rulings demanding adherence to the law's intent, HHS's guidance has been perceived as lenient towards insurers, exacerbating challenges for healthcare providers and potentially compromising patient care. This has sparked concerns about increased emergency room wait times, a shortage of doctors in rural and underserved areas, and the broader implications for the U.S. healthcare system's stability and equity.

FDA unleashes multiple warning letters targeting insanitary manufacturing and online sales of unapproved Mounjaro, Ozempic

By Fraiser Kansteiner - Following an enforcement lull over the past few weeks, the U.S. FDA has unleashed a salvo of pharmaceutical warning letters targeting both manufacturing infractions and online sales of knockoff weight loss meds. Read Full Article…

VBA Article Summary

  1. FDA Inspection and Concerns at Madhu Instruments: The FDA issued a warning to Indian ophthalmology company Madhu Instruments, following an inspection of their New Delhi facility from October 11-21, 2022. The inspection led to a Form 483, highlighting the unsanitary conditions under which certain products were prepared, packed, or held, potentially leading to contamination. Despite the company's response to the FDA's concerns in November 2022, the FDA found it unsatisfactory and later placed Madhu Instruments on import alert on May 31, 2023.

  2. Specific Violations Noted: The FDA's report detailed several specific issues with Madhu Instruments' manufacturing facility, including its state of disrepair, peeling paint and broken tiles in manufacturing rooms, and a plastic bag obstructing a HEPA filter. These conditions contributed to the FDA's conclusion that the facility was not suitable for drug and device production, with equipment described as visibly dirty and stained.

  3. Actions Against Other Companies for Unapproved Drugs: In addition to actions against Madhu Instruments, the FDA issued warning letters in February to US Chem Labs in Miami and Synthetix in New York City for selling unapproved versions of obesity and diabetes medications, semaglutide and tirzepatide. These companies marketed these drugs as "research chemicals only," despite evidence of them being used for human consumption. The FDA expressed particular concern over US Chem's marketing of the peptide thymalin for use in children, emphasizing the risks associated with unapproved and misbranded medications.

Major shift: Health insurers are suddenly coveting sicker patients

By Caitlin Owens - People who are eligible for both Medicare and Medicaid — a group that is generally low-income with complex health needs — are expected to generate billions in profit for health insurers in the coming years, despite being a group that typically racks up expensive health care bills. Read Full Article…

VBA Article Summary

  1. Significant Growth in Profitability from Government Plans: Insurers are witnessing a major shift in revenue generation, increasingly profiting from government health plans like Medicare Advantage and Medicaid managed care. A McKinsey report highlights a substantial growth in profitability, particularly from covering dual eligible individuals (those eligible for both Medicare and Medicaid), with projections indicating that earnings before interest, taxes, depreciation, and amortization (EBITDA) from this segment are expected to grow from $7 billion in 2022 to $12 billion in 2027, at a growth rate of over 10%.

  2. Dual Eligibles Driving High Profit Margins: The coverage of dual eligible populations is notably lucrative, with some of the highest profit margins found among private Medicare Advantage plans in 2021. This profitability is attributed to higher reimbursement rates for these higher-risk populations, combined with the fact that costs do not necessarily increase in proportion to reimbursement levels. Additionally, the profitability of the government segment of insurance plans is anticipated to be 65% higher than the commercial segment by 2027, indicating a significant shift towards government-funded insurance enrolment among private health plans.

  3. Challenges and Opportunities in Care Coordination: Despite the financial success of these plans, there are concerns regarding how effectively private plans are managing the coordination of care between Medicare and Medicaid for dual eligibles. This population, characterized by high needs, disability, and low income, presents both a challenge and an opportunity for insurers. While the government pays more for covering higher-risk patients, this could incentivize better care management. However, there is skepticism about whether insurers are effectively targeting and serving the needs of the sickest and most vulnerable, or if they are instead selecting less costly patients to maximize profitability.

Physicians lobby Congress on Medicare pay cuts

By Jessie Hellmann - Rep. Larry Bucshon on Tuesday told doctors upset about Medicare reimbursement cuts that began in January that there’s a good chance at least part of those cuts could be addressed in a spending package Congress is supposed to pass next month. Read Full Article…

VBA Article Summary

  1. Advocacy for Reversal of Medicare Cuts: Representative Bucshon, serving as vice chair of the House Energy and Commerce Health Subcommittee, voiced concerns over the 3.4 percent cuts faced by doctors under the 2024 Medicare Physician Fee Schedule, during his speech at the American Medical Association’s advocacy conference. He expressed uncertainty about fully reversing these cuts but highlighted bipartisan recognition of the issue's urgency. Around 400 physicians converged on Capitol Hill to lobby against these cuts, mandated by a 2015 federal law aiming to keep spending increases under $20 million annually, which enforces budget neutrality by offsetting increases to one group of physicians with decreases to others.

  2. Congressional Inaction and Potential for Resolution: Despite annual interventions by Congress since 2020 to mitigate these cuts, legislative action was stalled this year due to reliance on stopgap spending bills, allowing the cuts to take effect on January 1. Bucshon remains hopeful for a reversal in the upcoming fiscal 2024 funding law, as the current temporary funding is set to expire soon. The Centers for Medicare and Medicaid Services indicated a lack of agency discretion in adjusting physician payments, underscoring the necessity for a legislative solution.

  3. Call for Long-term Solutions and Challenges Ahead: AMA President Jesse Ehrenfeld criticized Congress for missing an opportunity to address the cuts in the latest temporary funding law, reflecting a broader frustration with legislative inaction. The AMA and other groups advocate for long-term fixes to the Medicare fee schedule, including adjusting payment updates to match inflation and revising budget neutrality limits. However, Bucshon, who is retiring after this term, tempered expectations for immediate reforms, citing financial constraints and suggesting that significant changes might require efforts spanning multiple congressional sessions.

A Look Inside the Four Most Common Value-Based Care Arrangements

By Victoria Bailey - A simple explanation of value-based care is rewarding quality over quantity. However, value-based care arrangements differ in how they determine payments and the level of risk that is assumed. As healthcare organizations warm up to the idea of value-based care, CMS and commercial payers must choose which kind of arrangements they will offer to their provider partners. Read Full Article…

VBA Article Summary

  1. Performance-Based Arrangements: These models, such as the Hospital Value-Based Purchasing (VBP) Program and the Hospital Readmissions Reduction Program (HRRP), financially incentivize providers based on quality measures, offering bonus payments or higher rates for achieving specific targets. Providers risk penalties for underperformance, with the VBP Program distributing incentive payments from a pool funded by withholding a portion of hospitals’ Medicare reimbursements and the HRRP cutting rates for those with high readmission rates.

  2. Bundled Payment Models: This approach involves paying providers a single payment for all services related to a specific care episode, encouraging coordinated care and reducing unnecessary procedures. The CMS Bundled Payments for Care Improvement Advanced (BPCI Advanced) Model is a key example, holding hospitals accountable for the cost and outcomes over 90-day care episodes, with financial incentives for cost-efficiency relative to a predetermined target price.

  3. Shared Savings and Risk-Based Contracts: These models include arrangements where providers share in savings or losses relative to cost and quality benchmarks. The Medicare Shared Savings Program (MSSP) enables providers to earn a portion of any savings generated for Medicare, with options for varying degrees of risk-sharing. Similarly, capitation models offer providers a fixed, risk-adjusted payment per patient, promoting cost control and preventive care, with mechanisms like risk pools to incentivize meeting value-based care standards.

GoFundMe Has Become a Health Care Utility

By Elisabeth Rosenthal - GoFundMe started as a crowdfunding site for underwriting “ideas and dreams,” and, as GoFundMe’s co-founders, Andrew Ballester and Brad Damphousse, once put it, “for life’s important moments.” In the early years, it funded honeymoon trips, graduation gifts, and church missions to overseas hospitals in need. Now GoFundMe has become a go-to platform for patients trying to escape medical billing nightmares. Read Full Article…

VBA Article Summary

  1. Rapid Increase in Medical Crowdfunding: A study highlighted a dramatic increase in U.S. crowdfunding campaigns for medical causes, from about 200,000 in 2020, marking a 25-fold rise since 2011. Over 500 of these campaigns are specifically for financial assistance for spinal muscular atrophy treatment, spotlighting the exorbitant costs of gene therapies like Novartis' $2.1 million single-dose treatment, and underscoring crowdfunding as a normalized method for managing healthcare expenses.

  2. Normalization of Crowdfunding for Healthcare: Crowdfunding for medical expenses has transitioned from being an extraordinary measure to a commonplace solution within the U.S. health system, with platforms like GoFundMe becoming integral for patients facing unaffordable costs. This normalization is evidenced by patient advocates and hospital financial officers recommending crowdfunding to avoid debt collection, despite the challenges and uncertainties it presents for many individuals and families in need.

  3. Socioeconomic Disparities and Fundraising Challenges: The reliance on crowdfunding platforms like GoFundMe to cover medical bills underscores the socioeconomic disparities within healthcare funding. Success in crowdfunding often depends on one's social network and visibility, disadvantaging those without wealthy connections or significant online influence. Despite some success stories, many campaigns do not meet their financial goals, reflecting the inadequacy of crowdfunding as a solution to the systemic problems of high healthcare costs and limited access to affordable insurance.

Elevance lays off more employees

By Rebecca Pifer - Elevance, formerly known as Anthem, is one of the largest insurers in the U.S., serving 118 million customers. The insurer offers Blues-affiliated plans in 14 states, along with Medicare and Medicaid plans through a subsidiary called Wellpoint. Elevance also operates a health services division called Carelon. Read Full Article…

VBA Article Summary

  1. Ongoing Layoffs at Elevance Health: Elevance Health initiated rolling layoffs starting in September, continuing into the current year, with a filing in Michigan last month indicating the trend. Although the exact number of affected workers is unclear, reports suggest thousands of employees across multiple states have been laid off, potentially impacting over 10,000 individuals. The layoffs span various divisions within the company, which employs nearly 100,000 people. Despite these actions, Elevance has not publicly disclosed the full extent of the workforce reduction, nor has it responded to inquiries regarding the layoffs.

  2. Regulatory Compliance and WARN Notices: Elevance has complied with the Worker Adjustment and Retraining Notification (WARN) Act by filing notices in states like California, Minnesota, and most recently Michigan, revealing layoffs of 87, 57, and 90 employees, respectively, at different office locations. However, the scope of layoffs reported to Healthcare Dive by sources exceeds the numbers disclosed in WARN notices, highlighting potential gaps in the Act's requirements that allow significant workforce reductions without full disclosure.

  3. Company Performance and Restructuring: Despite the layoffs, Elevance Health reported a strong financial performance with nearly $6 billion in profit on $171 billion in revenue, indicating growth above Wall Street expectations. The company attributes part of this success to "business optimization" efforts, which have included substantial charges related to employee terminations. These layoffs come amidst broader industry challenges such as rising medical costs, regulatory changes affecting Medicare Advantage and Medicaid, and efforts by insurers to manage profitability and operational efficiency.

At Ohio State, a Breakthrough Leveraging AI in Pathology

By Mark Hagland - Clinician leaders are rapidly developing more and more uses for artificial intelligence (AI) in the clinical realm in healthcare. One case study that has arisen recently has been emerging at The Ohio State University Comprehensive Cancer Center/the Arthur G. James Cancer Hospital and Richard J. Solove Research Institute. Read Full Article…

VBA Article Summary

  1. AI Assists in Cancer Diagnosis and Treatment Planning: Anil Parwani, M.D., Ph.D., director of the Division of Anatomical Pathology, is utilizing AI as a decision-support tool to confirm cancer diagnoses made by pathologists. This technology is particularly useful in grading cancer risk, which is crucial for determining the likelihood of cancer spread and selecting the best treatment options. AI has shown positive impacts in breast and prostate cancer diagnosis, aiding in the pre-screening of cases to prioritize high-risk patients for quicker confirmation and treatment initiation.

  2. Digital Pathology and AI Integration Enhances Diagnostic Accuracy: The integration of digital pathology with AI has revolutionized the analysis of cellular images by creating detailed 3D images that can be examined from all angles on a computer. This advancement allows pathologists like Parwani to identify features outside the cancer cell that may not be visible to the human eye, aiding in the risk ranking of cancers and informing treatment decisions. This approach does not replace the pathologist's role but enhances their ability to diagnose accurately and recommend treatment plans, especially for rare cancers or those with specific genetic mutations.

  3. Future Directions and Process Insights: The initiative aims to further integrate AI into pathology by automating tasks like counting and measuring, which could save significant time and address the global shortage of pathologists. Lessons learned include the challenges of AI integration into clinical workflows, the importance of building trust in AI tools among pathologists, and the potential of image-based assays ("image-omics") for risk stratification and treatment personalization. This journey towards AI-assisted pathology reflects a broader strategy to improve diagnostic accuracy, efficiency, and patient outcomes while navigating the challenges of technology adoption and reimbursement.

How exercise can help ease pain for some people with cancer

By Bob Curley - Engaging in intense exercise might not be the first thing that people fighting cancer think to do, but a new study reports that a workout can help ease cancer-related pain. Read Full Article…

VBA Article Summary

  1. Exercise Reduces Cancer-Related Pain: A study conducted by Dr. Erika Rees-Punia and Dr. Christopher T.V. Swain, involving 10,651 adults with a past cancer diagnosis and 51,439 adults without, found that regular physical activity is associated with lower pain intensity in individuals, regardless of their cancer history. Specifically, cancer survivors who met or exceeded U.S. physical activity guidelines reported a 16% lower likelihood of experiencing moderate-to-severe pain compared to less active counterparts.

  2. Non-Pharmacologic Pain Management Recommended: Health experts, including Dr. Ryan Peterson, emphasize the importance of incorporating exercise as a non-pharmacologic strategy alongside traditional pain medication for managing cancer pain. Exercise is noted not only for its ability to prevent muscle atrophy and enhance endorphin release, which aids in pain relief, but also for its broader health benefits, including reducing depression, anxiety, and possibly improving survival rates for certain cancers.

  3. Careful Consideration for Exercise Regimens: While the benefits of exercise for cancer patients are clear, the type and intensity of physical activity should be carefully chosen. Low-impact exercises such as walking, yoga, and swimming are recommended, especially for individuals with compromised bone density or those at risk of falls. Healthcare professionals advise a balanced approach to exercise, tailored to each patient's medical situation, preferences, and enjoyment, to ensure safety and well-being without exacerbating the body's stress responses.