Daily Industry Report - January 31

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)

Building a Labor-Employer Alliance to Reform U.S. Health Care

By David Blumenthal, Lovisa Gustafsson, and Robert Galvin - Labor is on the march. Strikes by auto workers, Hollywood writers and actors, and even health care employees have won substantial gains at the bargaining table. Amazon and Starbucks have been playing whack-a-mole with local attempts to unionize at distribution centers and java outlets around the country.  Even some physician groups are organizing. Read Full Article…

VBA Article Summary

  1. Challenges in Balancing Health Care Costs and Workers' Empowerment: The rise in labor empowerment poses a significant challenge to employers seeking to implement cost-saving health care reforms. Employees, now more aware of their rights, are suspicious of changes that might limit their health care choices, fearing these reforms serve only to increase company profits. To move forward, employers must demonstrate that health care reforms will benefit employees directly. A successful example is the Taft-Hartley health plans, born from collective bargaining, which have engaged employees effectively while delivering efficient care.

  2. Employer Struggles with Rising Health Care Costs: Employers, covering over half of all insured Americans, face soaring health care costs with premiums increasing by 7% in 2023. High deductibles make health care unaffordable for many workers. Despite having significant market power, employers struggle to influence health care pricing or delivery due to the complexity of health care and limited market power in localized regions. Reform efforts are hindered by employees' reluctance to change their established health care providers, especially when these include high-cost, brand-name institutions.

  3. The Taft-Hartley Model as a Solution: The Taft-Hartley health plans offer a viable model for employer-employee collaboration in managing health care benefits. These plans achieve joint control through equal representation of labor and management on their boards, collective bargaining for funding, and jointly chosen CEOs. This structure has fostered trust among workers, leading to successful employee engagement in cost-saving measures. Examples include Unite Here's medical clinics offering free primary care, and 32BJ SEIU's centers of excellence program for specific medical procedures. This collaborative approach may be crucial for maintaining the viability of employer-sponsored insurance in an era of growing workforce empowerment and escalating health care costs.

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of Daily Industry 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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Rise in reports of fake weight-loss drugs linked to shortage of real thing, WHO says

By Patrick Wingrove - The World Health Organization (WHO) on Monday warned that global shortages last year of popular diabetes medicines that are also used for weight loss, such as Novo Nordisk's (NOVOb.CO), opens new tab Ozempic, had been linked to rising reports of suspected counterfeits. Read Full Article…

VBA Article Summary

  1. Rising Concerns Over Counterfeit GLP-1 Agonists: The World Health Organization (WHO) has raised alarms about the proliferation of counterfeit GLP-1 agonist drugs, commonly used for weight loss and type 2 diabetes treatment. These fake drugs, often sold through unregulated channels like social media, pose significant health risks due to potential contamination and lack of efficacy. Incidents in the U.S., Austria, and Lebanon involving severe hypoglycemia after the use of suspected counterfeit versions, such as fake Ozempic, highlight these dangers.

  2. Supply Shortages Fueling Counterfeit Market: The explosive demand for GLP-1 agonist drugs like Ozempic, Eli Lilly’s Zepbound and Mounjaro, and Novo’s Wegovy has led to a critical supply shortage. In 2023, the demand in the U.S. outpaced the supply, a trend expected to continue into 2024. This shortage has been exacerbated by manufacturing constraints, as noted by Lilly's CEO regarding Zepbound and Novo Nordisk for Wegovy. The FDA lists several dosages of Wegovy and one dosage of Mounjaro as in shortage, contributing to the growth of a global market for counterfeit versions.

  3. WHO's Recommendations and Warnings: The WHO warns that the ongoing shortage and increasing circulation of counterfeit drugs could disproportionately affect patients with type 2 diabetes. It advises patients to obtain medications from authorized, regulated suppliers and urges healthcare professionals to adhere to good prescribing and distribution practices. The organization emphasizes the importance of ensuring the safety and efficacy of these medications to protect public health.

Health Care Costs in Retirement for Medicare Beneficiaries Rises Again

By Brian Anderson - Another reminder that health care expenses need to be factored into retirement planning comes in the form of a new research report published today by the Employee Benefit Research Institute (EBRI). Read Full Article…

VBA Article Summary

  1. Rising Costs for Medicare Beneficiaries: In 2023, the savings required for a 65-year-old man to cover his health care costs in retirement, including Medicare Part B and D premiums and out-of-pocket expenses, increased to $184,000 from $166,000 in the previous year. For a woman, the amount rose to $217,000 from $197,000. A couple enrolled in a Medigap plan needs $351,000, up from $318,000, to have a 90% chance of covering their health care expenses. An extreme case scenario for a couple with high prescription drug costs requires savings of $413,000, up from $383,000 last year.

  2. Health Care Cost Simulation Model: The Employee Benefit Research Institute (EBRI) developed a simulation model to project the savings needed by Medicare beneficiaries. This model factors in uncertainties like mortality and return rates on retirement assets. It also incorporates recent changes to Medicare Part D from the Inflation Reduction Act of 2022 and varies assumptions about Medicare Advantage and Medigap plans.

  3. Variability in Savings Targets: The report highlights that enrollees in Medicare Advantage plans generally have lower savings targets compared to Medigap enrollees, reflecting the trade-offs in coverage. For example, a man enrolled in Medicare Advantage needs $99,000, and a woman needs $116,000, to have a 90% chance of meeting their health care costs in retirement. Couples need $189,000 for the same level of certainty. Medicare Advantage plans, however, often have limited networks and may require approval for certain services or medications.

MultiCare allegedly allowed neurosurgeon to perform, bill for unnecessary surgeries despite warnings

By Dave Muoio - MultiCare has been hit with a False Claims Act complaint by federal law enforcement and its home state of Washington over allegations that it is “knowingly endangering patients” by allowing a neurosurgeon who was under investigation to continue seeing patients and performing surgeries.  Read Full Article…

VBA Article Summary

  1. Allegations Against Jason Dreyer and MultiCare's Response: The U.S. Attorney for the Eastern District of Washington, Vanessa Waldref, announced a complaint focusing on MultiCare's employment of Jason Dreyer from 2019 to 2021. Dreyer, whose license was suspended in March 2021, was previously "permitted to resign" from Providence amidst accusations of performing unnecessary surgeries, harming patients, and falsifying diagnoses. Despite multiple internal complaints and being informed by the government of Dreyer's ongoing investigations for practicing below medical standards and fraudulent billing, MultiCare continued to allow Dreyer to treat patients.

  2. Impact on Healthcare Programs and Patient Safety: The government's complaint alleges that MultiCare's knowing conduct led to the submission of numerous false and fraudulent claims to Medicare and other federal healthcare programs, resulting in millions of dollars in revenue. This conduct reportedly endangered and harmed patients. MultiCare, a significant healthcare provider in the Pacific Northwest with over 300 care locations, has responded to the allegations, claiming they are unfounded and without merit, and plans to vigorously defend against them.

  3. Federal and State Investigations Leading to Settlements: The complaint against MultiCare follows a whistleblower complaint filed by a former patient of Dreyer in April 2022. This led to a joint investigation by the federal attorney and state health department, which had already been investigating Providence regarding Dreyer's actions there. Providence settled its liability with a $22.7 million payment and an agreement to implement a standard of care integrity agreement in April 2022. Dreyer also settled his individual liability under the False Claims Act with a $1.2 million deal a year later. Waldref emphasized the importance of collaboration in these investigations to protect patient safety and hold accountable those prioritizing profits over patient care.

WHO Releases Ethical Guidance for AI in Healthcare

By Pietje Kobus - The World Health Organization (WHO) announced new guidance on the ethics and governance of large multi-modal models (LMMs). The guidelines provide over 40 recommendations for consideration by governments, technology companies, and healthcare providers to ensure proper use of LMMs, the news release states. Read Full Article…

VBA Article Summary

  1. Large Language Models (LMMs) and Their Applications: LMMs are a rapidly evolving form of generative AI technology capable of processing various types of data inputs and producing diverse outputs. These models are anticipated to have significant applications in sectors like health care, scientific research, public health, and drug development. However, there are concerns about the risks of generating false, biased, or incomplete information, particularly when used for health-related purposes, as the data used for training these models might be of poor quality or contain biases.

  2. WHO's Ethical Guidelines and Regulatory Recommendations: The World Health Organization (WHO) has established key ethical principles for the use of AI in health care, emphasizing the need to protect autonomy, promote human well-being, ensure transparency, foster responsibility, and maintain inclusiveness and sustainability. WHO advocates for governmental regulation of LMMs in health care to align with human rights standards, including assessments by regulatory agencies and independent audits and impact assessments for large-scale deployments.

  3. Guidelines for LMM Developers and Inclusivity in Development Process: WHO advises that LMM developers should engage potential users, stakeholders, medical professionals, researchers, and patients from the early stages of AI development. This inclusive approach allows for the identification and addressing of ethical concerns and the input of diverse perspectives. Furthermore, developers are encouraged to anticipate and understand potential secondary impacts of LMMs, ensuring responsible and beneficial development of these technologies. Dr. Jeremy Farrar, WHO's chief scientist, emphasizes the importance of recognizing and addressing the risks associated with generative AI technologies in health care to harness their full potential.

Novel Approaches Are Essential for Enabling Patient-First Outcomes in Value Based Care Models

By Jason Helgerson - American healthcare is highly inefficient. Across a variety of long-term health and treatment outcomes and patient safety metrics, the U.S. has lower performance compared with countries of similar economic status, despite spending more money per capita than its peers. Read Full Article…

VBA Article Summary

  1. Challenges of the Current Healthcare System: The U.S. healthcare system, marked by its reliance on a fragmented, fee-for-service (FFS) model, faces significant challenges. In 2022, healthcare spending in the U.S. was the highest among OECD countries at $12,555 per person, nearly double the average of wealthy OECD countries. This system, incentivizing higher utilization of resources, leads to escalating costs without necessarily improving patient outcomes. The need for a shift towards efficiency without compromising care quality is emphasized, as national health expenditures are expected to outpace GDP growth.

  2. Transition to Value-Based Care Models: Value-Based Care (VBC) models are being proposed as a solution to improve healthcare efficiency and outcomes. These models focus on providing financial incentives for healthcare providers and facilities that meet specific quality metrics. Despite the introduction of various VBC programs by the Centers for Medicare & Medicaid Services, challenges remain. These include addressing infrastructure limitations, supporting technological adoption, and effectively engaging patients in managing their health. The author's experience as a Medicaid Director underlines the importance of these models but also highlights the need for innovative VBC approaches, integrating consumer engagement, advanced data usage, and early interventions.

  3. Innovative Strategies for Healthcare Improvement: The article advocates for radical improvements through continuous innovation and shifting healthcare delivery to lower-cost settings. This involves expanding VBC concepts beyond traditional hospital settings, enabling early disease detection and treatment, and enhancing patient engagement. Addressing comprehensive patient needs, including medical, behavioral, and social aspects, and expanding the pool of quality healthcare providers are crucial. Innovative initiatives like the CMS’ Enhancing Oncology Model and private sector efforts demonstrate the potential of VBC models to transform healthcare delivery, emphasizing patient-centered care and efficient resource deployment.

Walgreens exploring sale of Shields Health Solutions: Bloomberg

By Emily Olsen - Walgreens took full ownership of the specialty pharmacy in 2022 in a “major milestone” for the company’s healthcare strategy, then-CEO Roz Brewer said at the time. Read Full Article…

VBA Article Summary

  1. Strategic Shift and Financial Struggles: Walgreens is contemplating selling its specialty pharmacy business, Shields Health Solutions, as part of efforts to revitalize its faltering financial situation. Shields, potentially valued at over $4 billion, may attract interest from private equity firms or healthcare companies. This consideration comes amidst Walgreens' broader strategy to focus on delivering healthcare services, although its U.S. Healthcare division, which includes Shields, is currently not profitable. Despite Shields experiencing a 27% sales increase in its first quarter of 2024, the U.S. Healthcare division reported a $96 million adjusted operating loss.

  2. Operational Adjustments and Leadership Commentary: Walgreens is undertaking significant operational changes, including closing 60 VillageMD clinics and implementing corporate layoffs to enhance the profitability of its U.S. Healthcare unit. Tim Wentworth, Walgreens' CEO and former Cigna executive, acknowledged the healthcare segment's growing pains and expressed openness to various strategies for financial improvement. However, analysts at TD Cowen have raised questions about the rationale behind potentially selling Shields, suggesting it might be the most profitable part of the U.S. Healthcare division and that divesting it could hinder the unit's progress toward breaking even.

  3. Analysts' Perspectives and Decision Uncertainty: The TD Cowen analysts propose that selling the U.K. pharmacy chain Boots might be a more logical choice than selling Shields, considering the latter's potential as a high-margin business. They highlight that although regaining an investment-grade rating is crucial for Walgreens Boots Alliance, selling Shields, perceived as a more marketable asset, might be an odd strategy without a clear rationale. As of now, Walgreens has not confirmed any decision regarding the sale of Shields and might choose to retain the business, leaving the situation unresolved.

CEO’s targeting generative AI to reduce workforce in 2024

By Jay Asser - As workforce challenges continue to confound healthcare organizations, nearly one in five CEOs anticipate utilizing generative AI this year to cut down on staff, according to a survey by PricewaterhouseCoopers (PwC). Read Full Article…

VBA Article Summary

  1. Limited Adoption of Generative AI in Healthcare: According to PricewaterhouseCoopers' annual global survey, only 18% of healthcare leaders anticipate using generative AI to reduce their workforce by 5% or more in 2024. This figure is significantly lower than the 25% average across all industries. Healthcare, along with hospitality and leisure, and real estate, ranks third-lowest in the adoption of generative AI across 32 industries. This indicates a cautious approach towards AI implementation in healthcare compared to other sectors.

  2. Comparison with Other Industries: The survey, which included responses from 4,702 CEOs globally, shows a varying degree of generative AI impact across industries. While healthcare is at a lower adoption rate, industries like media and entertainment, banking, capital markets, and insurance are leading in AI integration. For example, media and entertainment reported a 32% likelihood of using generative AI to reduce staff numbers. This disparity highlights the cautious stance of healthcare leaders in fully investing in AI technologies at present.

  3. Reasons for Cautious AI Implementation in Healthcare: The healthcare industry's slower embrace of AI is attributed to its ongoing journey towards AI readiness and maturity. Arien Meyers, a notable figure in healthcare and AI, notes that many hospitals are still figuring out how to start with AI and assess their current level of AI maturity. This cautious approach is rooted in the need for a deep understanding of AI to ensure its safe and effective implementation in healthcare settings. The industry's focus is on reinventing business processes and cautiously approaching AI integration while considering the unique challenges of the healthcare sector.