Federal officials trumpet record high ACA enrollment

By Noah Tong - More than 21.3 million people will be enrolled in an Affordable Care Act during this year's open enrollment period, Centers for Medicare & Medicaid Services (CMS) announced today. Read Full Article…

VBA Article Summary

1. Enrollment Surge: Open enrollment numbers surged this year, with nearly five million additional people signing up compared to last year. Health & Human Services Secretary Xavier Becerra emphasized the significance of the Affordable Care Act (ACA), equating its importance to that of established federal programs like Medicare, Medicaid, and Social Security. The enrollment is ongoing until the end of January in four states and Washington, D.C.

2. Record Demand and Affordability: CMS Administrator Chiquita Brooks-LaSure highlighted the all-time high demand for Marketplace insurance coverage and noted that the majority of Healthcare.gov customers found very affordable coverage, with four out of five paying $10 or less per month after subsidies. The Biden Administration's contribution of nearly $100 million in Navigator awards, which support organizations in assisting consumers, was also recognized for enhancing the enrollment process.

3. Enhanced Accessibility for Low-Income Households: This year's open enrollment saw a significant increase, with 4.2 million more individuals from households earning less than 250% of the federal poverty level (approximately $75,000 per year for a family of four) enrolling compared to the previous year. While the healthcare.gov platform's enrollment ended on January 16, CMS noted that Medicaid and CHIP applications remain open throughout the year, offering continuous support for eligible individuals.

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HHS releases voluntary cybersecurity goals for the healthcare sector

By Emily Olsen - Healthcare data breaches — particularly those stemming from hacking — have risen over the past decade, exposing hundreds of millions of patients’ sensitive personal information or protected health data. Read Full Article…

VBA Article Summary

1. Introduction of Cybersecurity Goals by HHS: The Health and Human Services (HHS) has released a set of voluntary cybersecurity goals for healthcare and public health organizations. This initiative comes in response to the growing threat of data breaches and ransomware attacks within the industry. The goals are categorized into essential and enhanced safeguards, designed to aid organizations in preventing cyberattacks, enhancing their response during incidents, and reducing residual risks post-implementation of security measures. This release follows an earlier concept paper by the HHS, hinting at future cybersecurity requirements through Medicare and Medicaid and potential updates to the HIPAA rule.

2. Significance and Impact of Cyberattacks in Healthcare: Cybersecurity breaches pose not just significant financial repercussions for healthcare institutions but also threaten patient safety by disrupting hospital operations. Ransomware attacks, exemplified by the incident involving Ardent Health Services, can lead to prolonged disruptions in patient care and require extensive recovery periods. The HHS's cybersecurity goals are structured to establish multi-layered defense mechanisms for healthcare organizations, ensuring continuity in operations and safeguarding patient information, with an emphasis on resilience and patient protection.

3. Details and Reception of the Cybersecurity Goals: The HHS's cybersecurity performance goals are divided into essential and enhanced categories. Essential goals focus on basic safeguards like email security, multifactor authentication, and employee cybersecurity training. Enhanced goals promote advanced measures such as vendor threat management, network segmentation, and comprehensive cybersecurity testing. While these voluntary goals have been well-received by the healthcare sector, with endorsements from entities like the American Hospital Association, concerns linger about potential mandatory cybersecurity standards and their financial implications on healthcare resources dedicated to cyber defense.

Georgia lawmaker files bill to ban AI use for health coverage decisions

By Jakob Emerson - A Georgia state lawmaker filed legislation Jan. 9 that would prohibit the use of artificial intelligence technology to determine insurance, health coverage, or public assistance award decisions. Read Full Article…

VBA Article Summary

1. Human Oversight on AI Decisions: The proposed regulations mandate that any decision made by artificial intelligence or automated tools regarding public assistance—such as awarding, denying, reducing, or terminating benefits—must undergo subsequent review by a human. This individual holds the authority to amend or overturn the AI's initial decision, ensuring a human element in critical decision-making processes.

2. Prohibition and Scrutiny on AI in Healthcare and Insurance: The proposal explicitly prohibits any healthcare actions based solely on AI or automated tool outputs. This forms part of a broader trend where states are intensifying their scrutiny over the use of AI in various insurance sectors, particularly concerning underwriting practices. At the federal level, there's increasing concern over the use of AI in internal operations of health insurers, especially in functions like claims review and prior authorization. Prominent insurers, such as UnitedHealthcare and Cigna, face legal challenges alleging improper use of automated tools to deny medical claims.

3. State Initiatives for Transparency and Non-Discrimination: Colorado has emerged as the pioneer in adopting regulations that demand transparency about the use of insurance algorithms, focusing particularly on life insurers. Following suit, Pennsylvania and New Jersey are considering legislation that would either compel insurers to disclose their use of AI in claims review or prohibit discriminatory practices stemming from AI systems. Concurrently, states like New York, California, Connecticut, and Washington, D.C., are issuing warnings and directives to insurance companies, urging them to steer clear of discriminatory practices that may arise from automated decision-making systems.

‘A serious erosion’ of affordability: Health costs eating a bigger chunk of household budgets in California

By Catherine Ho - Health care affordability is worsening in California, with health care costs rising significantly faster than household income, and more than half of the state’s residents saying they or a family member skipped or delayed care in the past year because of cost, according to a report released Tuesday by the UC Berkeley Labor Center. Read Full Article…

VBA Article Summary

1. Rising Costs Outpace Income Growth: The study highlights the significant disparity between the growth of median household income and the escalating costs of job-based health coverage in California from 2002 to 2022. While the median household income saw a modest annual increase of 3%, the premiums and deductibles associated with health care surged disproportionately, growing at an average rate of 7% and 9% per year, respectively. This trend led to a substantial erosion of the affordability of job-based health coverage.

2. Strain on Household Budgets: The analysis reveals a striking increase in the proportion of median household income consumed by health care costs over two decades. In 2002, insurance premiums accounted for 4.2% of the median household income, as most employer-based health plans did not include deductibles. By 2022, with the introduction and growth of large deductibles, the combined expense of premiums and deductibles soared to 12.2% of the median household income. This shift underscores the growing financial burden of health care on Californian families, emphasizing that health care costs are not just rising, but are also taking up a larger share of household budgets.

3. Urgent Need for Policy Intervention: The report's findings come at a critical time as the California Office of Health Care Affordability convenes its advisers to deliberate strategies to curb the rapid growth of health care spending. Miranda Dietz, a policy research specialist at the UC Berkeley Labor Center and coauthor of the report, expressed alarm at the pace at which health care affordability has deteriorated over the last two decades. The stark contrast between the rates of increase in health care costs and income growth highlights the urgency for targeted policy actions to address the disproportionate rise in health care expenses.

Drug costs are 3X in the U.S. what other countries pay, study finds

By Scott Wooldridge - A comparison of drugs targeted for price negotiations under recent legislation finds that currently, retail prices for those drugs are on average three times higher in the U.S. than in other high-income countries. Read Full Article…

VBA Article Summary

1. Medicare's Negotiations and Savings: The Commonwealth Fund's analysis highlights that Medicare's decision to negotiate drug prices for its enrollees will result in significant savings for both the enrollees and the federal agency. This change is part of the Inflation Reduction Act of 2022, allowing a phased-in program to negotiate prices for a select list of ten drugs currently covered by Medicare, spanning treatments for diabetes, blood diseases, heart failure, psoriasis, rheumatoid arthritis, and Crohn's disease. The Congressional Budget Office estimates these negotiations will save the U.S. government $100 billion over the next decade.

2. Persistent Price Disparity: Despite these efforts and expected savings, the study indicates a stark difference between drug prices in the U.S. and those in other OECD countries. Even after accounting for discounts and rebates, U.S. drug prices remain considerably higher, with U.S. consumers paying from three to eight times more than consumers in other countries, depending on the drug and the country. The report pinpoints significant room for further reductions in U.S. prices in the future, demonstrating the need for ongoing efforts to close the price gap.

3. Broader Implications and Debates: The move to negotiate drug prices aligns with the Biden Administration's broader initiative to reduce costs for consumers. However, it fuels debates about the potential long-term impact, including concerns about drug companies offsetting lost revenues by charging higher prices to those not on Medicare or the possibility of increased pressure from other payers on drug companies to lower prices more broadly. Industry experts caution about the resistance from drug companies and suggest that the high U.S. drug prices may, in part, subsidize lower prices in other countries, reflecting the complexities of the pharmaceutical market and pricing strategies.

Medicare Part D must start covering anti-obesity medications

By Joseph Nadglowski and Anthony Comuzzie - Between 2017 and 2020, nearly half of all Americans were living with obesity. As the prevalence and impact of this complex condition has grown, so too has our understanding of how to treat the disease effectively for patients. Read Full Article…

VBA Article Summary

1. Complexity of Obesity and Need for Comprehensive Care: The article emphasizes the complexity of obesity as a chronic disease that affects nearly every system in the body, leading to severe health complications and constituting a major economic burden on the healthcare system. Despite the evolved understanding of obesity and the availability of effective, FDA-approved anti-obesity medications, CMS (Centers for Medicare and Medicaid Services) lags in its coverage policies. Unlike other federal agencies and states that have recognized the necessity of covering anti-obesity medications, CMS has not expanded its coverage in Medicare Part D to include these vital treatments.

2. Evolving Treatment Landscape and Federal Inaction: Over the past three decades, significant advancements in the medical field have led to the development of new, effective treatments for obesity. Current anti-obesity medications have proven effective in treating the disease and reducing the risk of associated health problems, including heart attacks and strokes. While federal agencies like the FDA, U.S. Departments of Defense and Veterans Affairs, and state governments have taken steps to cover these treatments, CMS remains steadfast in its outdated policy, refusing to cover anti-obesity drugs in Medicare Part D based on an antiquated interpretation of federal statutes.

3. Call for CMS to Align with Modern Science and Policy: The article advocates for CMS to modernize its approach and align with current scientific understanding and policy trends by providing comprehensive obesity care, including coverage for FDA-approved anti-obesity medications in Medicare Part D. As obesity prevalence is expected to rise, eliminating barriers to effective treatment becomes imperative. The article underscores that CMS has both the authority and precedent to change its stance and calls for immediate action to address this pressing public health issue.

Elevance controls medical costs to $6B profit in 2023

By Rebecca Pifer - Stocks of managed care companies fell in the first few weeks of 2024, as UnitedHealth and Humana warned that elevated medical costs that dampened earnings had persisted into the new year. Medicare seniors receiving more healthcare than payers expected led Humana to slash its 2023 profit outlook and UnitedHealth to report its highest medical costs since the start of the COVID-19 pandemic. Read Full Article…

VBA Article Summary

1. Financial Performance and Outlook: Elevance Health reported a solid financial performance in 2023, exceeding Wall Street's expectations with a profit of $6 billion on revenues exceeding $171 billion. This success was attributed to higher premiums, growth in its pharmacy benefit manager CarelonRx, better-than-expected medical costs, and higher investment income. Despite initial investor concerns and a 5% year-over-year decrease in fourth-quarter profit, the company's stock rallied after announcing these results. The medical loss ratio (MLR) improved in both the fourth quarter and the entire year, indicating efficient spending on patient care. For 2024, Elevance projects a stable MLR of around 87%, although this assumption is considered aggressive by some analysts due to higher utilization rates.

2. Membership Trends and Market Dynamics: Elevance faced challenges in membership numbers, with a notable drop of 570,000, concluding 2023 with 47 million members. This decline was partly due to Medicaid redeterminations, although nearly 30% of those unenrolled by September rejoined an Elevance product. The company anticipates a continued decrease in total medical membership in 2024. In the Medicare Advantage (MA) sector, Elevance didn't foresee significant growth due to increased competition and regulatory changes affecting MA rates and quality ratings. These factors, along with strategic exits from underperforming markets, led to a loss of approximately 174,000 members.

3. Strategic Adjustments and Future Prospects: In response to the challenges, Elevance is taking several strategic steps to mitigate losses and position itself for future growth. These include revising MA bids, cost-cutting measures, integrating artificial intelligence into operations, and initiating layoffs affecting multiple states. Despite the anticipated reset year in 2024, CEO Gail Boudreaux expressed optimism for growth in the health benefits business in 2025. Elevance is also actively contesting federal changes to MA quality ratings, which could significantly impact its revenue from quality bonus payments.

When CEOs are out, CFOs are in

By Amanda Norris - There seems to be a growing trend of CFOs moving into CEO or president roles, according to a report by Bloomberg. As previously highlighted by HealthLeaders, this shift shows the changing nature of the CFO's role in healthcare and the need for finance leaders to possess a deep understanding of what drives growth to succeed in top leadership positions. Read Full Article…

VBA Article Summary

1. Increasing Transition from CFO to CEO: There has been a notable increase in CFOs transitioning to CEO roles, with a 5.8% rise in the last decade, particularly in sectors like healthcare. This trend is attributed to the expanded role of CFOs, evolving from traditional financial management to encompassing broader operational responsibilities. The shift has been propelled by the challenges and opportunities presented by the COVID-19 pandemic and the Great Resignation, which have significantly increased the workload and the scope of responsibilities for healthcare CFOs, necessitating skills beyond conventional finance, such as handling stimulus funds, adhering to new regulations, and managing healthcare accounts.

2. Expansion of CFO Responsibilities in Healthcare: Healthcare CFOs like Terry Lutz and Carlos Bohorquez illustrate the evolution of the CFO role, which now includes not only financial oversight but also operational and strategic planning, human resources, and market analysis. This transformation has been accelerated by the pandemic, requiring CFOs to manage additional funding, comply with new regulations, and adapt to market changes. Furthermore, the Great Resignation has compelled CFOs to delve into areas not strictly related to finance, such as talent recruitment and retention, highlighting the necessity for a comprehensive skill set in modern CFOs.

3. Pathways and Strategies for CFOs Aspiring to Become CEOs: To ascend to CEO positions, CFOs are encouraged to broaden their operational expertise, encompassing areas like supply chain management, revenue cycle management, and strategic planning. Building strong internal and external networks is also crucial for career advancement. However, it's noteworthy that while the route from CFO to CEO is becoming more accessible, traditionally, the path through COO roles has been the most established trajectory to CEO positions. Gaining experience in operational leadership is still considered a vital stepping stone, providing insights and experiences that are highly valuable for those aiming for the top leadership role.

Most rural hospitals aren't offering labor and delivery services, forcing mothers to travel

By Dave Muoio - Over half of the country’s rural hospitals aren’t offering labor and delivery services, and many of those that are could soon be forced to end maternity care due to financial losses, according to the Center for Healthcare Quality and Payment Reform (CHQPR). Read Full Article…

VBA Article Summary

1. Decline in Rural Maternity Services: A new report from CHQPR highlights a significant decline in maternity services at rural hospitals in the U.S. Over the past decade, more than 200 rural hospitals have ceased providing maternity care, leading to 55% of such hospitals no longer offering these services. The financial strain of maintaining 24/7 maternity care and insufficient reimbursements from private and Medicare payments are contributing factors. Additionally, over a third of the remaining rural hospitals providing maternity care reported overall patient care losses in 2022, placing the sustainability of these services in jeopardy, especially in smaller communities which face even higher operational losses.

2. Consequences and Challenges: The scarcity of maternity care facilities in rural areas forces expectant mothers to travel longer distances, increasing the risks of complications and mortality for both mother and child. The report by CHQPR points out that the average travel time to a hospital with labor and delivery services in rural areas is significantly longer than in urban areas. Addressing the decline in rural maternity services requires tackling challenges in workforce recruitment and financial sustainability. Recruitment is a national issue, necessitating a broader solution to prevent shifting staffing shortages from one rural hospital to another. Financially, rural hospitals face losses not just in maternity care but across various service lines, mainly due to inadequate payments from commercial and Medicare Advantage plans.

3. Call for Immediate Action: The report stresses the urgent need for immediate action to mitigate the crisis in rural maternity care. CHQPR recommends strategies including targeted clinician training, remote specialty support, and new staffing models to address workforce challenges. Financially, it urges employers and states to ensure that health insurance and Medicaid plans offer adequate payments for maternity services. Furthermore, there's a call for stakeholders to exert pressure on private insurers to ensure they provide fair payments to rural hospitals for all services, not just maternity care, to sustain their overall operations. The report emphasizes that delaying these critical steps increases the risk of preventable fatalities among women and babies in rural areas.