Daily Industry Report - January 16

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)

Federal mandates bring big lawsuit worries for health plan administrators

By John Hilton - The Consolidated Appropriations Act of 2021 is imposing new disclosure requirements on health plan providers and the potential for big lawsuits. Read Full Article…

VBA Article Summary

  1. Increased Transparency in Health Benefits Plans: The CAA, signed into law on December 27, 2020, amends the Employee Retirement Income Security Act of 1974 to enhance transparency in employee health benefit plans. One of its main provisions is the elimination of gag clauses on price and quality information. This means plan sponsors are prohibited from entering into agreements that restrict access to cost and quality of care information, and are required to provide this information to participants.

  2. New Requirements for Disclosing Compensation and Managing Mental Health Benefits: The act introduces new requirements for the disclosure of compensation paid to plan service providers, emphasizing that such compensation must be reasonable. This aligns with the Department of Labor’s regulations under ERISA. Additionally, the CAA mandates improved parity in benefits for mental health and substance use disorders, ensuring they are not disproportionately worse than benefits for medical and surgical care.

  3. Reporting Obligations and Advanced Explanation of Benefits (EOB): The CAA updates the law to require group health plans to report specific information related to prescription drugs and drug costs. Furthermore, it introduces advanced EOB requirements, mandating providers to make public the costs for certain procedures before plan participants receive their Explanation of Benefits. This aims to provide greater clarity to participants about potential expenses for in-network or out-of-network procedures.

VBA Poll Question - Please share your insights

What is your opinion on Eli Lilly's direct-to-consumer website for telehealth prescriptions and drug delivery, such as Zepbound? Do you think it will positively affect patient access and disrupt the traditional drug supply chain?

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Our last poll results are in!


of Daily Insurance Report readers who responded to our last polling question on how prepared they felt they were for the implementation of the Consolidated Appropriations Act (CAA) and its requirements said “What is the Consolidated Appropriations Act?

37.78% of respondents stated they were “Somewhat prepared, 12.59% shared they were “Not prepared”while only 8.15% felt “Very preparedfor the implementation of the CAA and its 2024 requirements. 

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Insurers ask CMS to press pause on increased limits to non-standardized ACA plans

By Paige Minemyer - Enrollment in individual market coverage continues to grow, and insurers are expressing concern about their ability to tailor coverage to different populations given limits on nonstandard plan options. Read Full Article…

VBA Article Summary

  1. Proposed Changes to ACA Plan Options: The Centers for Medicare & Medicaid Services (CMS) is considering a reduction in the number of non-standardized plan designs offered by insurers on the Affordable Care Act's exchanges. For the 2024 plan year, insurers were limited to offering four non-standardized plan designs per tier in a service area, but the new proposal for 2025 aims to reduce this limit to just two. This change is intended to simplify the selection process for enrollees, but insurers argue that it may hinder innovation and limit specialized coverage for individuals with specific health conditions.

  2. Impact on Specialized Health Plans: Insurers like Oscar Health have expressed concerns about the potential impact of these limitations on their ability to offer specialized plans. Oscar Health has developed plans with unique benefits for specific conditions, such as the Diabetes Care Plan, which includes tailored benefits like $0 diabetic foot and retinopathy exams. Insurers argue that such plans have shown positive outcomes, like higher rates of medication adherence and disease screenings, but the proposed limitations may force them to scale back these offerings, increasing out-of-pocket costs for patients with specific needs.

  3. Insurers' Response and Enrollment Trends: In response to the proposed changes, insurers have suggested that CMS delay the implementation of the new limit to gather more data on the impact of the current four-plan limit. They point out that historically, a significant majority of enrollees prefer nonstandard plans. For instance, Oscar Health reported that 88% of its members chose a nonstandard plan for 2023. The debate over standardized versus non-standardized plans coincides with a surge in ACA exchange enrollments, indicating a growing and diverse market with varying health care needs.

Trump Official Who OK’d Drugs From Canada Chairs Company Behind Florida’s Import Plan

By Phil Galewitz - The Food and Drug Administration’s unprecedented approval of Florida’s plan to import drugs from Canada was made possible only after Alex Azar, as the Trump administration’s Health and Human Services secretary, certified that bringing medicines over the border could be done safely. Read Full Article…

VBA Article Summary

  1. Azar's Transition to LifeScience Logistics: After his tenure as the Health and Human Services (HHS) Secretary under the Trump administration, Alex Azar took a chairman position at LifeScience Logistics, a company contracted by Florida for managing its Canadian drug importation program. This move illustrates the common practice of U.S. officials transitioning from government roles to lucrative positions in the private sector, particularly in industries they previously regulated. Notably, Azar had approved drug importation, which was contrary to the stance of the pharmaceutical industry where he formerly worked.

  2. Criticism and Conflict of Interest Concerns: The article highlights concerns over potential conflicts of interest with Azar's position at LifeScience Logistics. Critics, including Robert Weissman of Public Citizen, argue that such moves by former Cabinet secretaries into industries they regulated can lead to unavoidable conflicts of interest. Ivana Katic from Yale School of Management also notes that Azar's policy decisions as HHS secretary, which later seemed to benefit him professionally, could be perceived as a conflict of interest.

  3. Implications and Challenges of the Drug Importation Program: The article discusses the broader context and challenges of the Canadian drug importation program, which Azar had authorized. Despite being labeled a "gimmick" by Azar in 2018, the program aims to lower drug costs for U.S. state agencies by importing from Canada, where drug prices are generally lower. The program, now under LifeScience Logistics' management in Florida, faces hurdles like Canada's reluctance to participate, restrictions by drug manufacturers, and potential legal challenges from the pharmaceutical industry. The program's goal is to save costs for state agencies, but it does not directly benefit consumers.

By Adriel Bettelheim - A preliminary Food and Drug Administration review found no evidence linking a class of blockbuster obesity drugs to suicidal thoughts or actions, the agency said on Thursday. Read Full Article…

VBA Article Summary

  1. Recent Study and FDA Review: A recent study analyzing over 240,000 patients' health records revealed that individuals using diabetes and weight-loss drugs like Wegovy and Ozempic had a lower risk of suicidal thoughts compared to those on other medications for the same conditions. However, the FDA, upon reviewing reports in its adverse event reporting system, did not find a clear link between suicidal thoughts and the use of GLP-1 agonists, the class of drugs to which Wegovy and Ozempic belong.

  2. Ongoing Investigation and Health Advisory: The FDA continues to investigate the potential risks associated with GLP-1 agonists, acknowledging that a small risk cannot be completely ruled out. The agency advises patients against discontinuing these medications without consulting healthcare professionals, as it could worsen their condition.

  3. Surge in Demand and Future Plans: Demand for GLP-1 agonists has surged, partly because they are popular not just for diabetes treatment but also for weight loss in individuals without diabetes. The long-term effects and efficacy in certain populations remain under-researched. The FDA plans to further review postmarketing data, including health insurance claims and patient health records, to assess the safety of these drugs. Additionally, GLP-1 drugs already include warnings about the risk of suicidal thoughts on their labels.

Americans overwhelmingly favor health care price transparency: survey

By Joseph Choi - Americans are nearly unanimously in favor of legally requiring health care entities like hospitals, insurance providers and doctors to disclose their prices in an easily accessible place, according to a new survey. Read Full Article…

VBA Article Summary

  1. Overwhelming Support for Price Transparency: A recent Marist poll for Patient Rights Advocate (PRA) revealed that a significant majority (94%) of U.S. adults support the legal requirement for hospitals, insurance companies, and doctors to disclose all prices, including discounts and insurance-negotiated rates, in an easily accessible online format. This consensus was consistent across various demographics, including political affiliations, age groups, education levels, income brackets, and regions.

  2. Demand for Upfront Pricing in Healthcare: The poll also found strong public backing (93%) for hospitals to post actual prices in advance for planned care, rather than just estimates. Despite a 2021 mandate requiring U.S. hospitals to publish comprehensive price lists in a readable format, compliance has been slow, with only about a third of hospitals following the rule effectively, as per PRA's July analysis.

  3. Impact on Healthcare Decisions and New Initiatives: The survey indicated that 91% of participants would seek the best quality healthcare at the lowest price if they had access to transparent pricing. Furthermore, 88% said transparent pricing would likely increase their willingness to pursue routine and elective healthcare. In response, the PRA has introduced the Hospital Price Files Finder Tool, a free online dashboard to help consumers navigate the price transparency lists by state. The survey, conducted with 1,130 adults on Dec. 13-14, has a margin of error of ±3.5 percentage points.

UnitedHealth’s stock suffers biggest drop in 7 months as costs disappoint

By Tomi Kilgore - Shares of UnitedHealth Group Inc. took a dive Friday, after the health insurer reported a big jump in medical costs relative to revenue in the fourth quarter, but also earnings that continued to beat forecasts. Read Full Article…

VBA Article Summary

  1. Impact on Dow Jones Industrial Average: UnitedHealth Group's (UNH) stock experienced a significant selloff, dropping 3.37%, which notably affected the Dow Jones Industrial Average (DJIA) due to its high price relative to other components in the index. The stock, the highest priced among the Dow's 30 components, fell 5.7% in premarket trading, marking its largest one-day decline in seven months. This decline was expected to reduce the Dow's value by approximately 202 points, while Dow futures also indicated a potential drop ahead of the market opening.

  2. Financial Performance and Expectations: UnitedHealth's medical care ratio, a measure of medical costs to premium revenue, rose to 85%, exceeding the expected 84.1% and marking the seventh time in ten quarters that it surpassed expectations. Net income increased to $5.46 billion, with adjusted earnings per share of $6.16 beating expectations. Revenue grew by 14.1% to $94.43 billion, with significant increases in UnitedHealthcare and Optum revenues. Despite these gains, the company anticipates the sale of its Brazil operations in the first half of 2024 to impact earnings.

  3. Outlook and Market Performance: At an investor conference, CEO Andrew Witty highlighted that a rate notice on Medicare Advantage, effectively a price cut, would significantly impact the company's Medicare Advantage portfolio. Looking ahead to 2024, the company maintained its adjusted EPS guidance of $27.50 to $28.00 and projected revenue of $400 billion. Over the past three months, the stock has seen a modest increase of 2.7%, contrasting with higher gains in the Health Care Select Sector SPDR ETF and the overall Dow.

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Telehealth more likely to have follow-ups compared with office visits, study finds

By Emily Olsen - Virtual care visits in most specialties were more likely to have a follow-up within seven days, but the gap between telehealth and office appointments narrowed after 30- or 90-day intervals. Read Full Article…

VBA Article Summary

  1. Higher Initial Follow-Up Rates for Telehealth: A study by Epic Research revealed that telehealth visits generally result in more follow-up appointments compared to in-person care across most specialties. Specifically, within the first seven days after a telehealth appointment, 17 out of 24 specialties showed higher rates of follow-up visits. However, this trend diminishes over longer periods, with fewer specialties showing higher follow-up rates at 30 and 90 days post-initial visit.

  2. Steady Follow-Up Rates Over Time: Despite the initial spike in follow-up appointments after telehealth visits, the overall follow-up rates for both telehealth and office visits have remained consistent over the past three years. The study noted that the follow-up rate was below 40% within 90 days, under 25% within 30 days, and below 10% within seven days for both visit types.

  3. Telehealth Use and Speciality Trends: The surge in telehealth use, initially driven by the COVID-19 pandemic, has led to sustained higher utilization compared to pre-pandemic levels. The study highlighted specialties with varying follow-up rates: obstetrics and gynecology, podiatry, and primary care showed the highest follow-up rates after telehealth visits, whereas physical medicine and rehabilitation, mental health, and sleep care had higher rates following in-person visits. Additionally, the study addresses concerns about telehealth potentially leading to duplicative care and increased healthcare costs.

Insurance Switch and Claims Drive Near-9% Hike in Westport School Budget

By Sophia Muce - Superintendent Thomas Scarice blamed “unprecedented” levels of health insurance claims as a key driver in a proposed 8.83 percent school budget hike, warning that they would also be a hindrance to staffing requests. Read Full Article…

VBA Article Summary

  1. Significant Insurance Rate Increase: The school district, which switched from a state insurance plan to Aetna's high-deductible plan in 2022, is now facing a substantial 40-45% increase in health insurance rates. This increase is a marked contrast to the initial savings experienced in the first two years and significantly exceeds the rate increases of surrounding towns. The district's insurance budget is set to rise by approximately $8 million, resulting in a total of almost $25.8 million.

  2. Impact on the District's Budget: The 2024-2025 proposed budget by Scarice is $148.3 million, over $12 million more than the current budget. Employee benefits account for 5.93% of the 8.83% total budget increase. Due to the high insurance costs, the district had to forgo including new personnel requests in the budget, which could have included two assistant principals, a high school math coach, and other vital positions. Without the healthcare cost, the budget increase would have been only 2.9%.

  3. Comparison with State Plan Projections: Initially, the district’s switch to Aetna helped avoid an anticipated 10% increase in the state’s insurance rates in 2023. However, the actual increase in the state plan was lower than expected at 7.2% for 2023, with a modest projected increase of 1-5% for 2024. The state's lower-than-expected increase contrasts sharply with the district's current situation, challenging the initial decision to switch from the state plan to a private insurer.

CFPB Kicks Off Rulemaking to Remove Medical Bills from Credit Reports

By Victoria Bailey - The Consumer Financial Protection Bureau (CFPB) today announced it is beginning a rulemaking process to remove medical bills from Americans’ credit reports. The CFPB outlined proposals under consideration that would help families financially recover from medical crises, stop debt collectors from coercing people into paying bills they may not even owe, and ensure that creditors are not relying on data that is often plagued with inaccuracies and mistakes. Read Full Article…

VBA Article Summary

  1. Medical Debt and Credit Reports: The Consumer Financial Protection Bureau (CFPB) Director, Rohit Chopra, highlights the negligible predictive value of medical bills in credit decisions. Despite this, a significant portion of American households—approximately 20%—face the burden of medical debt on their credit reports. The CFPB's research indicates that medical billing data is less predictive of future repayment behaviors compared to traditional credit obligations. The presence of inaccuracies and disputes in medical billing exacerbates this issue.

  2. Proposed Changes to Medical Debt Reporting: The CFPB proposes significant reforms regarding medical debt in credit reporting. These changes, outlined in a recent document, include removing medical debts from consumer credit reports and prohibiting creditors from using medical billing data for credit underwriting decisions. This move aims to mitigate the impact of medical debt on credit assessments and curb coercive collection practices, as unpaid medical bills would no longer be leveraged in credit reporting.

  3. Public Engagement and Broader Consumer Protection Efforts: Prior to commencing the rulemaking process, the CFPB actively sought public input on the matter, including discussions on the negative effects of poor medical billing practices. This initiative aligns with the CFPB’s broader efforts to empower consumers over their financial data, exemplified by inquiries into data brokers and the tracking of personal information. These actions, along with the proposed changes to the Fair Credit Reporting Act, are part of the CFPB's commitment to enhance consumer protection in financial practices.