Daily Industry Report - February 8

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)

Telehealth & Prescribing

No, We’re Not Talking About the DEA Rules

By Center for Connected Health Policy - On January 31, 2024, the Department of Health and Human Services (HHS) finalized rules for prescribing of buprenorphine through the use of telehealth (rules first proposed in December 2022). In these final rules, opioid treatment programs (OTPs) will be able to use telehealth to prescribe buprenorphine without an in-person visit.

VBA Article Summary

  1. Specificity of the Final Rule: The final rule is particularly tailored to Opioid Treatment Programs (OTPs) and focuses on the use of telehealth for prescribing buprenorphine and, to a lesser extent, methadone. It solidifies the temporary permissions granted during the COVID-19 Public Health Emergency (PHE), allowing for the initiation of buprenorphine via telehealth (audio-visual or audio-only) and introduces limited use of audio-visual telehealth for methadone evaluation by OTPs. This rule is distinct from broader DEA policies on telehealth and controlled substances, emphasizing its specific application to OTPs and certain controlled substances.

  2. Background and Development: The rule stems from exemptions made during the COVID-19 PHE, where the Substance Abuse and Mental Health Services Administration (SAMHSA), in consultation with the Drug Enforcement Administration (DEA), allowed for telehealth flexibilities in prescribing controlled substances by OTPs without an in-person visit. These temporary allowances, aimed at ensuring continued access to essential treatments during the pandemic, have been evaluated and adopted into a final rule by SAMHSA, reflecting positive outcomes and evidence from the pandemic period.

  3. Implications and Accessibility Enhancements: The final rule not only makes certain pandemic-era telehealth practices permanent for OTPs but also emphasizes the necessity of making telehealth platforms accessible to patients with disabilities and those with limited English proficiency. It modifies consent procedures to accommodate telehealth, allowing verbal or electronic consent documented by the provider. This move towards permanent telehealth policies for OTPs underlines the ongoing shift towards more accessible and adaptable healthcare delivery models, especially in the context of controlled substance prescribing and opioid treatment programs.

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!

The “Effective Vindication” Doctrine Gains Steam

By Peter Sessions - In an effort to prevent benefit plan participants from bringing class actions, or attempting to seek plan-wide relief, as permitted by ERISA under 29 U.S.C. § 1132(a)(2), administrators have increasingly inserted provisions into their plans to thwart them. Read Full Article…

VBA Article Summary

  1. Federal Courts on Arbitration and Collective Relief Prohibitions: Federal courts, particularly the Third, Seventh, and Tenth Circuit Courts of Appeal, have issued rulings against benefit plans that compel participants to arbitrate claims while prohibiting them from seeking collective relief on behalf of the plan. These decisions underscore the violation of the "effective vindication" doctrine, which asserts that contractual provisions preventing the effective vindication of federal statutory rights are unenforceable. Specifically, these rulings highlight that Section 1132(a)(2) of ERISA, which expressly allows participants to seek plan-wide relief, cannot be overridden by arbitration provisions that restrict such collective action.

  2. Notable Decision from the Middle District of Tennessee: A significant ruling from the Middle District of Tennessee, involving a putative class action against Churchill Holdings, Inc., further examined the effective vindication doctrine but without an arbitration provision being involved. The court found that severance agreements and a class action waiver that barred plan-wide relief were unenforceable under ERISA. This decision emphasizes the importance of allowing participants to pursue statutory remedies, including plan-wide relief, as integral to effective vindication of their rights under ERISA.

  3. Legal Developments Across Various Jurisdictions: The article details several ERISA-related decisions from courts across the United States, touching on issues ranging from disability benefit claims, discovery disputes, ERISA preemption challenges, life insurance and AD&D benefit claims, medical benefit claims, pension benefit claims, pleading issues and procedure, provider claims, statute of limitations, to statutory penalties. These cases illustrate the complex landscape of ERISA litigation, where courts are grappling with the balance between enforcing plan terms and protecting participants' rights to fair treatment and benefits under the law.

Lawsuits for Health Plan Scams Have Begun!

By Owen Scott Muir, M.D. - The headline? Johnson and Johnson1 have been hit with an extremely detailed and potentially expensive class action lawsuit for ERISA fiduciary breach. This article will tell the story of what I predicted, what has happened, why it matters, and what I see happening next. Read Full Article…

VBA Article Summary

  1. ERISA and Fiduciary Duty Enforcement: The article explains how the Employment Retirement Income Security Act (ERISA) sets standards for private industry health plans, emphasizing the fiduciary duty of employers to act in the best interest of their employees regarding health benefits. It highlights a class action lawsuit against Johnson & Johnson, alleging violations of these duties by agreeing to overpriced pharmaceuticals through their Pharmacy Benefit Managers (PBMs), which not only compromises the quality and cost-effectiveness of health care but also potentially breaches ERISA regulations.

  2. Personal Responsibility and Corporate Accountability: The author underscores the concept of personal responsibility, particularly in the context of fiduciary duties under ERISA. It suggests that corporate officers are less likely to engage in behaviors that would personally cost them, contrasting with corporate policies that may cover less ethical actions. The case of Johnson & Johnson is used to illustrate the significant personal implications for fiduciaries who fail to uphold their duties, including potential legal and financial consequences not covered by Directors and Officers (D&O) insurance.

  3. Future Implications and Solutions for Health Benefits: The piece concludes with predictions about the enforcement of ERISA regulations and the broader implications for health plans, emphasizing the necessity for companies to adopt more prudent and cost-effective strategies. This includes forming health benefits committees, pursuing self-funded plans, selecting more accountable PBMs, and investing in validated health solutions. The author argues that these steps are essential to avoid future legal challenges, ensure compliance with fiduciary duties, and ultimately provide more affordable and effective health care benefits.

Centene Turns A Profit Thanks To Big Jump In Obamacare Enrollment

By Bruce Japsen - Centene reported fourth quarter profits of $45 million as membership and premium revenue grew thanks to a big increase in sales of Obamacare coverage, the health insurer said Tuesday. Read Full Article…

VBA Article Summary

  1. Growth in Membership and Revenue: Centene reported a slight increase in its total managed care membership to 27.47 million from 27.06 million at the end of the fourth quarter of 2022. Particularly noteworthy was the near doubling of enrollment in its commercial marketplace business, jumping to 3.9 million members from 2 million a year prior. This growth contributed to a 5% increase in premium and service revenues, reaching $35.3 billion from $33.6 billion in the same period. Additionally, marketplace premium and service revenue surged by 68% to $7.4 billion.

  2. Annual Financial Performance: For the year, Centene announced profits of $2.7 billion, or $4.95 per share, on a total revenue of $154 billion. The fourth quarter revenue increase was attributed to membership growth in the Marketplace business, strong product positioning, and overall market growth, although partially offset by divestitures in the Other segment and a decrease in Medicaid membership due to redeterminations.

  3. Strategic Outlook and Challenges: Despite a decline in Medicaid enrollment to 12.75 million from 14.26 million, attributed to the end of the U.S. public health emergency, Centene has managed to maintain overall growth in health insurance enrollment. The company has adapted to the post-emergency environment and anticipates continued opportunities within its core businesses. CEO Sarah M. London expressed optimism for 2024, highlighting Centene's strategic plan, foundational asset fortification, and cost-saving drives as key factors for navigating the dynamic operating landscape and enhancing shareholder value.

What's behind Florida's health insurance crisis?

By Jakob Emerson - On top of a home insurance crisis, Florida residents face higher than average health insurance premiums due to a growing senior population and limited competition in the insurance marketplace, Newsweek reported Feb. 6. Read Full Article…

VBA Article Summary

  1. Population Growth and Aging Demographics: Florida's population experienced an 18% increase from 2010 to 2022, with adults aged 60 to 69 representing the largest demographic group. This segment is expected to expand by nearly 300,000 people annually over the next five years, leading to a rise in chronic health conditions among this age group.

  2. Insurance Market Concentration: The state's health insurance market is dominated by Florida Blue, which holds the largest commercial market share in 21 of Florida's 22 metropolitan areas, accounting for 39% of the state's total commercial market. For Medicare Advantage plans, UnitedHealthcare or Humana are the primary carriers in 20 metropolitan areas, indicating a highly concentrated insurance market that limits competition.

  3. Rising Health Insurance Premiums and Medicaid Expansion: Health insurance premiums in Florida are expected to increase, with the average monthly premium rising to $613 in 2024 from $599 in 2023. Despite these increases, Florida remains one of the 10 states that have not expanded Medicaid eligibility to all low-income adults, with a campaign ongoing to propose an expansion for the 2026 ballot.

Providence agrees to $158M of refunds, debt erasure to settle charity care billing investigation

By Dave Muoio - Renton, Washington-based Providence has cut a deal to refund or erase $157.7 million in medical care payments following allegations and a lawsuit from its home state’s attorney general that the large nonprofit had failed to inform tens of thousands of patients of charity care eligibility. Read Full Article…

VBA Article Summary

  1. Comprehensive Settlement Agreement: Providence, in a settlement announced by the system and Washington State Attorney General Bob Ferguson, agreed to a total financial restitution of over $157.8 million, which includes $20.6 million in repayments with 12% interest to 34,229 patients who may have qualified for charity care and financial assistance, with any outstanding balances also being written off. Additionally, $137.2 million of medical debt forgiveness will benefit 65,217 patients. This settlement also includes a $4.5 million payment to Ferguson's office and a commitment from Providence to streamline the process of providing patients with information about financial assistance using simple language that aligns with the organization's values.

  2. Background and Legal Action: The lawsuit, initiated by Ferguson's office in early 2022 following investigative media reports and legislative scrutiny, accused Providence of training its staff to aggressively seek payments from patients who likely qualified for financial assistance and of sending thousands of Medicaid patients to debt collectors. This legal action highlights issues around the management of charity care and financial assistance for patients, leading to significant refunds and debt forgiveness as part of the settlement.

  3. Broader Impact and Commitments: This settlement is described as the largest resolution of its kind in the country by Ferguson's office, emphasizing the importance of hospital compliance with laws ensuring access to financial assistance for healthcare. Providence has already taken steps towards rectifying past practices by refunding nearly $230,000 to Medicaid accounts and forgiving $125.8 million of medical debt prior to the settlement. Moving forward, Providence commits to a systemwide review to address any impacts of billing errors or past practices and reaffirms its dedication to providing charity care and financial assistance, highlighting its role as the largest provider of charity care in Washington.

In a 'spectacular collapse,' Cano Health files for bankruptcy

By Frank Diamond - Cano Health today announced its intentions for file for bankruptcy in an effort to stay afloat after incurring nearly $1 billion in debt. Read Full Article…

VBA Article Summary

  1. Cano Health's Restructuring Agreement: Cano Health has entered into a restructuring support agreement (RSA) with its lenders, under which the lenders will hold significant portions of the company's debt, including approximately 86% of its revolving and long-term loan debt and 92% of its senior unsecured notes. This RSA is aimed at substantially reducing Cano's debt and positioning the company for long-term success. It also includes the conversion of nearly $1 billion in secured debt into new debt and equity in the reorganized company and explores strategic partnerships and potential sale offers to maximize stakeholder value.

  2. Financial and Operational Measures: The company has secured $150 million in debtor-in-possession financing from some of its lenders, pending court approval, to support operations throughout the restructuring process. This process is expected to be approved by courts and completed in the second quarter of the year. Cano Health is focusing on maintaining its operations during this period, including paying wages, fulfilling obligations to affiliate physician groups, ensuring patient care, and managing critical vendor relationships.

  3. Strategic Shifts and External Observations: Following its public debut via a SPAC deal in 2020, Cano Health has undergone strategic shifts under CEO Mark Kent, including concentrating on its Florida Medicare Advantage and ACO REACH lines of business and divesting operations in several states. The restructuring has sparked comments from industry observers, noting Cano's financial struggles and speculating on potential acquisitions by partners like Humana. Cano's commitment to restructuring is seen as a move to improve health outcomes for patients more effectively and efficiently, amidst internal challenges and significant market value loss.

Telehealth availability for mental healthcare varies by state, study finds

By Emily Olsen - Telehealth utilization skyrocketed during the COVID-19 pandemic, boosted by relaxed regulations that aimed to preserve access to care while patients and providers avoided unnecessary in-person contact. Read Full Article…

VBA Article Summary

  1. Varying Access Across States: The study by the Rand Corporation published in JAMA Health Forum highlights significant disparities in telehealth availability for mental healthcare across the United States. While states like Delaware, Maine, New Mexico, and Oregon reported 100% availability of telehealth services at mental health treatment facilities, less than half of the facilities in Mississippi and South Carolina offered such services. Additionally, researchers were unable to reach one in five facilities, indicating potential barriers for patients seeking mental health care via telehealth.

  2. Telehealth as a Prominent Method for Mental Healthcare: Despite a general decline in telehealth usage to pre-pandemic levels in various fields of medicine, its use for mental healthcare remains elevated. Mental health conditions constituted over 66% of telehealth claims in a recent month, showcasing the critical role of virtual care in addressing mental health needs. The study's findings underscore the importance of telehealth in expanding access to care for common mental disorders, with a majority of contacted facilities accepting new patients and offering telehealth services.

  3. Challenges and Variability in Service and Wait Times: The research revealed not only the challenge of contacting and securing appointments with mental health treatment facilities but also the variability in the types of care offered and the wait times for appointments across different states and facility types. While private facilities were more likely to offer telehealth services than public ones, the wait times for a first telehealth appointment could vary dramatically, from as few as four days in North Carolina to as long as 75 days in Maine. The study also found that access to telehealth services was not significantly affected by the patient's perceived race and ethnicity or their specific mental health needs, suggesting some level of equitable access within the telehealth domain.

Novo Holdings Bolsters GLP-1 Production Capacity With $16.5B Catalent Buyout

By Frank Vinluan - Novo Nordisk can’t make enough of its metabolic disorder drugs to satisfy the market’s insatiable appetite for them. Two multi-billion dollar business deals provide the drugmaker with additional capacity to address that growing demand in the years to come. Read Full Article…

VBA Article Summary

  1. Acquisition Overview: Novo Holdings, the investment arm of the Novo Nordisk Foundation, is set to acquire Catalent in a deal valued at $16.5 billion. Novo Holdings will purchase each share of Catalent at $63.50 in cash, which represents a 16.5% premium over Catalent's last closing stock price and a 47.5% premium over its average stock price in the past two months. The acquisition is anticipated to conclude by the end of this year.

  2. Post-Acquisition Plans and Investments: Following the acquisition, Novo Nordisk plans to buy three specialized Catalent manufacturing sites from Novo Holdings for $11 billion. These sites, located in Italy, Belgium, and Indiana, are crucial for filling vials for sterile injectable drugs, including GLP-1 agonist drugs like Ozempic and Wegovy. This move aligns with Novo Nordisk's strategy to expand its production capacity to meet the increasing demand for these medications.

  3. Challenges and Opportunities for Catalent: Catalent, a leading contract development manufacturing organization, reported a 9% decline in net revenue for the fiscal year ended June 30, 2023, totaling $4.2 billion. The company faces legal challenges related to safety and revenue recognition practices. Despite these issues, Catalent sees significant growth potential in the GLP-1 drug market, expecting it to reach $100 billion by 2030. The acquisition requires approval from Catalent's shareholders, with strong support from Elliott Investment Management and a strategic review process highlighting the deal's value maximization for Catalent's stakeholders.