Daily Industry Report - February 26

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)

VIP Admission & CE’s On Us!

‘Nation-State’ Cyberattack Hits Change Healthcare, Disrupting Pharmacy Services Across the Country

By Katie Adams - Pharmacy chains across the country are facing disruptions due to a cyberattack on Change Healthcare, a Nashville-based company that processes patient payments for healthcare organizations. Read Full Article…

VBA Article Summary

  1. Cyberattack on Change Healthcare: Change Healthcare, owned by Optum (a subsidiary of UnitedHealth Group), experienced a cyberattack where unauthorized access to its IT systems was discovered. The incident was reported to the Securities and Exchange Commission, and the company isolated the affected systems to mitigate the situation. As a result, Change Healthcare's systems were offline as of Friday afternoon following the discovery on Wednesday.

  2. Impact on Pharmacies and Response: The cyberattack disrupted operations across military and some U.S. retail pharmacies, including CVS, affecting the processing of insurance claims. CVS and Walgreens stated they have business continuity plans and procedures in place to minimize service disruption and continue filling prescriptions. The American Hospital Association recommended healthcare organizations disconnect from Optum until it is deemed safe.

  3. Broader Implications and Responses: UnitedHealth attributed the cyberattack to a "suspected nation-state associated cyber security threat actor," emphasizing the elevated threat to national security from adversaries like China, Russia, North Korea, and Iran. The incident highlights the ongoing cyber threats facing the healthcare sector, underscoring the need for transparency, investment in cybersecurity defenses, and proactive measures to protect against future attacks.

HVBA Poll Question - Please share your insights

What do you believe is the primary factor contributing to the average 20% increase in pharmacy costs as a percentage of total medical spending for businesses:

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 “absolutely believe and would engage in the legal importation of specialty medications” when asked if they would advise clients to import speciality 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.

26.83% of respondents have no opinion on the matter or are neutral, neutral or uncertain, 25.25% would consider it, but not too familiar with the process, while 20.41% do not believe or have trust in medications being sourced outside of the U.S. pharmacies.

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

HCA Healthcare must face antitrust case over health costs, US judge says

By Mike Scarcella - Hospital operations giant HCA Healthcare (HCA.N), opens new tab has lost a bid to dismiss a proposed class action in North Carolina federal court accusing it of scheming to restrict competition and artificially drive up costs for health plans. Read Full Article…

VBA Article Summary

  1. Ruling on Antitrust Claims: Chief U.S. District Judge Martin Reidinger in Asheville has allowed the prospective class of North Carolina health plans to proceed with antitrust claims against HCA, the largest for-profit hospital system in the U.S. Reidinger noted that the plaintiffs have "plausibly assert that defendants’ conduct has harmed competition."

  2. Defendants' Responses: HCA, based in Nashville and acquired Mission Health in 2019, described the plaintiffs' claims as "baseless," arguing that such litigation only increases hospitals' operational costs due to high legal expenses. Meanwhile, Mission Health, also a defendant, declared its intention to "vigorously" fight the allegations.

  3. Nature of the Lawsuit: The consolidated lawsuit involves cities and counties from western North Carolina, including Asheville, who first filed suit in 2022. They accuse HCA and its Mission Health system of maintaining an unlawful monopoly over general acute care and outpatient services by forcing health plans into "all or nothing" contracts, thereby restricting competition and inflating healthcare costs. The plaintiffs, represented by Eric Cramer, express optimism about gathering sufficient evidence to support their claims of anticompetitive behavior by HCA, which operates nearly 200 hospitals in 21 states and reported nearly $65 billion in revenue last year.

Is AI in Prior Authorization Promising or Dangerous?

By Marissa Plescia - Health insurers are beginning to adopt AI to support prior authorization decisions. But is this a good thing? Experts weighed in during a panel discussion held by KFF on Thursday. Read Full Article…

VBA Article Summary

  1. Concerns about Transparency and Data Quality in AI Use for Prior Authorization: Panelists, including Anna Schwamlein Howard from the American Cancer Society Cancer Action Network, expressed concerns over the lack of transparency in the use of AI for prior authorization in healthcare. Questions were raised about the data feeding these AI algorithms, including the relevance, currency, and potential biases within the data. The frequency of updates to these algorithms and their propensity to deny care were also questioned.

  2. Scrutiny and Regulatory Interest in AI's Role in Healthcare: The growing use of AI in healthcare has led to increased scrutiny and regulatory interest, highlighted by recent Senate hearings on the topic. Kaye Pestaina from KFF noted this as a positive development, emphasizing the need for oversight in how AI is applied within healthcare settings, particularly in processes like prior authorization.

  3. Potential for AI to Improve Efficiency but with Caveats for Equity and Understanding: Panelists acknowledged the potential benefits of AI in streamlining the prior authorization process, as pointed out by Dr. Troyen Brennan, who emphasized the importance of reducing delays in patient care. However, concerns were raised about the equity of AI systems, with Dr. Fumiko Chino highlighting the risk of perpetuating biases against marginalized populations through flawed datasets. The overarching theme was the need for transparency and understanding of AI algorithms to ensure they contribute positively to healthcare processes without compromising patient trust or care quality.

Walmart’s Health Sales Rise, but Amazon Closes In

By PYMNTS - U.S. healthcare technology giant Change Healthcare has confirmed a cyberattack on its systems. In a brief statement Wednesday, the company said it was “experiencing a network interruption related to a cyber security issue.” Read Full Article…

VBA Article Summary

  1. Walmart's Strong Performance in Health and Wellness: Walmart reported significant growth in its health and wellness sales, with a mid-teens year-over-year increase in the United States, contributing to a 4% rise in comparable sales growth in the country. This category was highlighted as a key driver of sales growth in Walmart's fourth-quarter fiscal 2024 earnings report.

  2. Amazon's Competitive Pressure: Amazon is rapidly expanding its share in the health and personal care market, posing a challenge to Walmart's dominance in this sector. Amazon CEO Andy Jassy and CFO Brian Olsavsky emphasized the company's growth in nonperishables, including health and personal care products, attributing part of this success to improved delivery speeds and fulfillment efficiencies.

  3. Market Share Battle and Consumer Preferences: The PYMNTS “Whole Paycheck Report” series indicates a closely contested battle between Walmart and Amazon for market share in the health and personal care category, with Walmart holding a slight lead as of Q3 2024. Additionally, consumer preferences are shifting towards online shopping for personal and healthcare products, a trend that favors Amazon's eCommerce strengths and challenges Walmart's traditional retail model.

Change Healthcare Forced to Cut IT Systems Following Cyber Attack

By Katie Baker - Change Healthcare has fallen victim to a cyber attack impacting over 100 services including dental, pharmacy, medical records, clinical, patient engagement, revenue, and payment services. Read Full Article…

VBA Article Summary

  1. Cyber Attack Incident and Immediate Response: Change Healthcare, a significant player in the U.S. healthcare sector based in Nashville, Tennessee, experienced a cyber attack that led to a network interruption due to a cybersecurity issue. The company responded quickly by disconnecting its systems to protect partners and patients, anticipating the disruption to last at least through the day. This proactive measure was taken in response to an unspecified cyber threat, with speculation around it being a ransomware attack based on the action of disconnecting affected systems.

  2. Impact on Healthcare Transactions and Patient Data: Change Healthcare plays a critical role in the U.S. healthcare system, handling over 15 billion healthcare transactions annually and affecting one in three U.S. patient records through its clinical connectivity solutions. The cyber attack's impact is significant, with disruptions to services like prescription processing, highlighting the vulnerability of healthcare data to cybercriminals who may seek to sell stolen information or extort companies for its return.

  3. Calls for Improved Cybersecurity Measures: The incident has prompted calls from cybersecurity experts for organizations to develop and implement robust cyber incident response plans and invest in data-centric security measures like tokenization. Such measures can help minimize damage during breaches, ensure business continuity, and protect sensitive information from unauthorized access. The Change Healthcare cyber attack underscores the critical need for enhanced cybersecurity practices in the healthcare industry to mitigate risks and maintain trust with stakeholders.

Most doctors say they feel burnout regularly, many consider leaving medicine

By Ron Southwick - Nearly all physicians say they are experiencing burnout on a regular basis, according to a new report released Wednesday. Read Full Article… 

VBA Article Summary

  1. Widespread Physician Burnout: The athenahealth’s third Physician Sentiment Survey, conducted by the Harris Poll among 1,003 primary and specialty care doctors, reveals a startling 93% of doctors experience feelings of burnout. A significant portion of their distress is attributed to the 15 hours of additional work outside office hours, colloquially known as “pajama time.” This overwhelming sense of burnout has led over half of the respondents (56%) to consider leaving the medical profession altogether, signaling a deep crisis within the healthcare system according to Nele Jessel, athenahealth's Chief Medical Officer.

  2. Administrative Hassles and the Role of Technology: Administrative burdens are identified as a primary cause of doctor burnout, with technological challenges highlighted as a significant contributor. Despite the frustration with information overload, with 63% of doctors feeling overwhelmed to the point of increased stress levels, there remains optimism towards technology's potential to alleviate these pressures. Digital tools aimed at reducing administrative tasks are seen as a promising solution to allow doctors to refocus on patient care, which is their primary passion. The survey also introduces artificial intelligence (AI) as a potential aid, with 83% of doctors believing AI could ease some of their burdens, particularly in administrative duties and diagnostic accuracy.

  3. Financial Strain and the Hope for AI: The financial health of medical practices is another area of concern highlighted by the survey, with less than half of the physicians (38%) viewing their organizations as financially stable. This financial uncertainty is exacerbated by the pandemic's lingering effects, including higher costs and inadequate reimbursements. However, there is a silver lining with the introduction of AI into the healthcare sector, where a majority of doctors see AI as a means to improve work efficiency and reduce stress, despite concerns over the loss of human touch and the potential for AI to complicate healthcare further.

FDA approves a drug to treat severe food allergies, including milk, eggs and nuts

By Juliana Kim - Milk, eggs, walnuts and peanuts — this is not a grocery list, but some of the food allergies that could be more easily tolerated with a newly approved drug. Read Full Article…

VBA Article Summary

  1. FDA Approval and Purpose: Xolair was approved by the Food and Drug Administration (FDA) as the first medication designed to help reduce severe allergic reactions to multiple food allergens through accidental exposure. It is not meant to be used during an allergic reaction but is administered every few weeks to decrease the risk of such reactions over time. The FDA emphasizes the importance of continuing to avoid known food allergens while on this medication.

  2. Development, Side Effects, and Cost: Developed and co-promoted by Genentech and Novartis in the U.S., Xolair has been associated with side effects such as fever and reactions at the injection site, and it carries a risk of triggering anaphylaxis. The cost of the drug ranges from $2,900 a month for children to $5,000 a month for adults, with potential reductions through insurance coverage.

  3. Efficacy and Impact on Patients: In a study involving 168 patients allergic to peanuts and at least two other foods, 68% of participants were able to consume about 2.5 peanuts without adverse symptoms after 4 to 5 months of treatment with Xolair. The drug also showed efficacy in reducing reactions to eggs, milk, and cashews in significant portions of the study group, demonstrating its potential to improve tolerance to certain food allergens over time.

Health Care Workers Push for Their Own Confidential Mental Health Treatment

By Katheryn Houghton - Scientists have issued a warning after finding a common food additive may be associated with an increased risk of cancer. In the U.S, over half of our daily energy intake comes from ultra-processed foods—foods that usually contain a long list of unrecognizable ingredients like preservatives, emulsifiers, sweeteners and artificial flavorings and colors. Read Full Article… 

VBA Article Summary

  1. Health Care Worker Mental Health and Substance Use Issues: Health care workers often delay seeking help for mental health or substance use disorders, impacting their work and patient care. Jean Branscum, CEO of the Montana Medical Association, highlights the reluctance among medical professionals to seek treatment due to fear of jeopardizing their careers. Despite the existence of recovery programs like Montana's, which aim to support health professionals with substance use disorder or mental illness, the invasive monitoring and ambiguity around the disclosure of mental health issues deter many from seeking voluntary care.

  2. Efforts to Enhance Confidential Care: In response to the challenges faced by health care workers in accessing care, Montana and other states are exploring ways to boost confidential support for professionals without compromising patient safety. Inspired by Virginia's 2020 legislation, states are considering or have introduced confidential wellness programs to assist with early intervention for mental health issues and career burnout. These initiatives aim to remove barriers to treatment by reworking medical licensing questions and establishing programs that offer broad privacy protections for those seeking help before their work is impaired.

  3. Challenges and Advocacy for Change: Despite these efforts, challenges persist, including the stigma around mental health in the medical community and the fear of professional repercussions. A Medscape survey revealed that 20% of physicians reported feeling depressed, citing job burnout as a significant factor, yet many are hesitant to seek help due to concerns about confidentiality and professional consequences. Advocates in Montana and beyond are pushing for reforms to encourage early treatment and reduce workforce burnout, emphasizing the need for a supportive, non-disciplinary approach to mental health and substance use issues among health care workers.

Massachusetts 1115 waiver success can translate to New York: experts

By Noah Tong - The blueprint set forth by Massachusetts accountable care organizations to improve population health metrics and reduce costs can be applied to New York, after Centers for Medicare & Medicaid Services (CMS) approved its amended section 1115 demonstration in January. Read Full Article…

VBA Article Summary

  1. Massachusetts' Flexible Services Program Achievements: Initiated by Massachusetts' 1115 waiver, the Flexible Services Program was designed to combat food insecurity and housing issues among eligible members. This initiative has led to significant health improvements, notably for members with diabetes achieving better blood sugar control and a decrease in emergency room reliance. The program's success, as observed by C3, is attributed to the integration of social services with healthcare, facilitated by technology solutions like Hyphen's case management platform. This platform effectively connects members from federally qualified health centers to necessary social services, showing a high success rate in connecting individuals to support, contrasting markedly with lower rates in other regions like New York.

  2. Role of Section 1115 Waivers in Addressing Social Needs: The Section 1115 waivers are instrumental in allowing state Medicaid agencies to allocate Medicaid funds towards addressing health-related social needs such as nutrition, housing, and transportation. Massachusetts leveraged this waiver to run its program through Accountable Care Organizations (ACOs), which collaborate extensively with community-based organizations and providers to enhance capacity and improve service delivery. The data from these initiatives underscore the critical impact of addressing basic needs on health outcomes, including improved food security and housing stability, and reduced emergency department visits.

  3. Comparative Analysis with New York's Approach: While Massachusetts focuses on ACOs for implementing its waiver program, New York adopts a different strategy by establishing social care networks with a significant financial commitment of over $3 billion to address high-risk social needs. This includes investments in technology infrastructure, as emphasized by Suzanne Wogelius of Hyphen, to streamline referrals and improve health outcomes. New York's initiative aims to create a similar impact by connecting managed care organizations with community-based organizations through a comprehensive care plan, demonstrating a shared understanding of the importance of social determinants in healthcare across different states.