Daily Industry Report - March 14

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)

HHS opens probe into UnitedHealth’s cybersecurity as hack fallout continues

By Dan Diamond - The Biden administration is opening an investigation into UnitedHealth Group following a cyberattack on a subsidiary that has crippled health-care payments and probably exposed millions of patients’ data. Read Full Article…

VBA Article Summary

  1. Investigation Initiated by HHS: The Department of Health and Human Services (HHS) has announced an investigation into a major cyberattack on UnitedHealth and its subsidiary, Change Healthcare. The probe aims to assess the extent of the breach and evaluate compliance with the Health Insurance Portability and Accountability Act (HIPAA), which safeguards patient data. This action follows an unprecedented cyberattack that targeted Change Healthcare, leading to significant data theft and system encryption, prompting a ransom demand. The HHS Office for Civil Rights (OCR) emphasized the investigation's importance due to the attack's magnitude and its potential impact on patients and healthcare providers.

  2. UnitedHealth's Response and Industry Impact: UnitedHealth has committed to cooperating with the HHS investigation, focusing on system restoration, data protection, and support for affected individuals. The cyberattack, occurring on February 21, has been described as the most significant in U.S. health system history, disrupting the nation's largest medical claims processing operations. In response to a similar incident, Anthem settled for $16 million in 2020 for a breach affecting 79 million people. The industry has faced ongoing challenges, with healthcare payments still delayed weeks after the attack, affecting hospitals and doctors' ability to meet financial obligations.

  3. Federal and Industry Reaction: The federal investigation into the cyberattack has garnered support from healthcare organizations, with advocacy for uncovering the breach's root causes and mitigating fallout. The White House and lawmakers have engaged with UnitedHealth and other industry leaders to expedite recovery efforts, particularly concerning delayed healthcare payments. Senator Maggie Hassan highlighted the severe impact on rural hospitals in New Hampshire, requesting urgent financial support from UnitedHealth to maintain patient care. Despite the insurance industry's efforts to resume services and support affected providers, critics argue that the response has been inadequate, with calls for increased accountability and immediate relief for healthcare providers.

HVBA Poll Question - Please share your insights

What is your opinion on RWJBarnabas' decision to drop coverage for GPL-1 medications for weight loss among employees, as reported in the article referenced below?*

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Our last poll results are in!


of Daily Industry Report readers who responded to our last polling question believe PBM practices like spread pricing and increasing hidden fees” is the primary factor contributing to the average 20% increase in pharmacy costs as a percentage of total medical spending for businesses. 

25.13% of respondents believe the primary factor for the increase in pharmacy costs is due to “higher utilization of specialty medications and a lack of resources for discounts on specialty medication,” 23.74% believe it’s due to “increased utilization of prescription drugs,” while 23.49% responded that “rising medication prices” is the main factor. 

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

Pharmacy benefit design: Johnson & Johnson lawsuit ushers in new 'duty of prudence' standard

By Jonathan E. Levitt, Esq. and Dae Y. Lee, Pharm.D., Esq., CPBS - A groundbreaking lawsuit was filed on February 5, 2024, by a class of Johnson & Johnson (JNJ) employees against JNJ and the Pension & Benefits Committee, as well as the committee members (collectively, the "trustees"). Regardless of its outcome, this class action will dramatically change pharmacy benefit management and the standard of care to which management will be held on benefit design. Read Full Article…

VBA Article Summary

  1. Urgency in Auditing PBMs for Large Employers: The Employee Retirement Income Security Act (ERISA) mandates that trustees of health care plans, including prescription drug benefits, must adhere to fiduciary duties of "loyalty" and "prudence". This involves careful management of pharmacy benefit managers (PBMs) to ensure formulary decisions, rebate collections, and consultant payments align with these duties. The recent class action against Johnson & Johnson (JNJ) for mismanaging pharmacy benefits underscores the legal and financial risks of not auditing PBMs, spotlighting the necessity for transparency and diligence in managing pharmacy benefits to avoid similar legal challenges.

  2. Fiduciary Duties and Legal Implications: The JNJ class action highlights the critical nature of fiduciary duties in the management of pharmacy benefits, including the duties of loyalty and prudence. Trustees are tasked with acting in the best interest of plan participants, which involves selecting the appropriate PBM, negotiating favorable terms, and ensuring transparency in rebates and consultant relationships. The lawsuit also points to the broader issue of the pharmacy benefits industry's opaque operations and the need for plan sponsors to actively manage and audit their PBMs and benefit consultants to fulfill their fiduciary responsibilities and avoid potential class actions.

  3. Beyond Compliance: Transparency and Proactive Management: The complexity of the PBM industry, characterized by vertical integration and potential conflicts of interest, requires a proactive approach from plan sponsors. Auditing PBMs and demanding greater disclosure are crucial steps in managing pharmacy benefits prudently. The JNJ lawsuit serves as a wake-up call for plan sponsors to diligently manage their pharmacy benefits by conducting thorough audits, ensuring compensation transparency, and engaging experts to navigate PBM contracts. By adhering to fiduciary duties and embracing transparency and proactive management, plan sponsors can protect themselves from litigation and advance the interests of their plan participants.

Artificial Intelligence, Extinction-Level Threat or Solution?

By AIHC Education Department - The U.S. State Department commissioned the first-ever assessment of proliferation and security risk from weaponized and misaligned AI. In February 2024, Gladstone AI, a four-person company which runs technical briefings on AI for government employees, completed that assessment. Read Full Article…

VBA Article Summary

  1. The Urgency of AI Regulation: The Gladstone AI report, highlighted by Time on March 11, 2024, emphasizes the critical need for the U.S. to act decisively in regulating artificial intelligence (AI) to prevent an "extinction-level" threat. It suggests the establishment of a new federal AI agency to set thresholds for AI development, requiring companies to obtain government permission for training and deploying new AI models beyond certain limits. This recommendation underlines the potential risks associated with the uncontrolled advancement of AI and artificial general intelligence (AGI), comparing its potential global security destabilization to the introduction of nuclear weapons.

  2. The Dual-Edged Sword of AI in Cybersecurity: The article sheds light on the increasing use of AI by cybercriminals to enhance their capabilities, particularly in ransomware attacks targeting healthcare organizations. The National Cyber Security Centre (United Kingdom) warns that AI is expected to significantly elevate the global ransomware threat over the next two years by enabling even relatively unskilled cyber actors to execute more effective attacks. This situation underscores the urgent need for advanced AI-driven cybersecurity measures to protect sensitive sectors.

  3. Leveraging AI for Defensive Purposes: In response to the escalating threats, government agencies, such as the Cybersecurity & Infrastructure Security Agency (CISA), are actively employing AI to bolster cybersecurity defenses. AI algorithms are being utilized to analyze extensive datasets, identify potential threats, and predict cyberattacks before they occur. This proactive approach to cybersecurity exemplifies how AI can be a powerful tool for good, providing crucial intelligence and defense mechanisms to secure vital sectors against the growing sophistication of cyber threats.

Despite employer insurance, Americans unprepared for medical bills, delay care

By Alan Goforth - Many Americans feel financially unprepared to handle unexpected medical expenses despite being covered by employer-provided health insurance and may delay care as a result. Read Full Article…

VBA Article Summary

  1. Increased Focus but Unchanged Outcomes in Financial Wellbeing: Meghan Shea of New York Life Group Benefit Solutions highlighted a growing emphasis on employees' financial wellbeing in collaborations with employers. Despite this increased focus, their recent research indicates that there has been no significant progress in addressing the financial strain caused by unexpected health care costs. The survey reveals a strong desire among over 70% of respondents for lower out-of-pocket health care expenses, underscoring the financial burden that health care costs impose on individuals.

  2. Survey Findings on Health Care Costs and Behaviors: The New York Life survey presented several key findings regarding individuals' experiences and attitudes towards health care costs. It showed a growing concern over rising out-of-pocket expenses, with half of the adults surveyed reporting increased personal spending on health care compared to the past. Additionally, 57% have delayed medical treatments due to cost concerns, particularly among millennials (70%). The survey also uncovered a lack of preparedness for unexpected medical costs, with 40% of adults feeling unprepared and a notable disparity between men and women's preparedness.

  3. Consequences of Rising Health Care Costs: The consequences of increasing health care costs include not only delayed medical treatments and a lack of preparedness for unexpected expenses but also the potential for increased debt. Forty-four percent of surveyed adults indicated they would need to incur additional debt to cover unexpected medical costs, primarily through credit cards and payment plans. The survey also highlighted confusion around existing medical coverage, with only one-third of respondents fully understanding their health insurance plan's coverage, pointing to a need for better educational resources and assistance in selecting benefits to fill coverage gaps.

Diet drinks may boost risk of dangerous heart condition by 20%, study says

By Sandee LaMotte - Drinking two liters or more per week of artificially sweetened beverages — the equivalent of a medium-sized fast-food diet soda a day — raised the risk of an irregular heartbeat called atrial fibrillation by 20% when compared to people who drank none, a new study found. Read Full Article…

VBA Article Summary

  1. Associations Between Sweetened Beverages and Atrial Fibrillation: A study has found that drinking beverages sweetened with no- and low-calorie sweeteners, as well as those with added sugar, increases the risk of atrial fibrillation (A-fib), a condition characterized by an irregular heartbeat. Specifically, consumption of added-sugar beverages raised the risk by 10%, while unsweetened pure juices like orange or vegetable juice were associated with an 8% lower risk. This marks the first study to highlight such associations, emphasizing the need for further research to confirm these findings and understand the broader health implications.

  2. Risks of Atrial Fibrillation and Recommendations: Atrial fibrillation is a leading cause of stroke in the United States, with severe long-term risks including blood clots, heart failure, heart attack, dementia, and kidney disease. With nearly 40 million people globally affected by A-fib, experts recommend replacing diet and added sugar sodas with water to mitigate the risk. The condition's prevalence is expected to rise due to factors such as aging populations, obesity, high blood pressure, diabetes, and lifestyle choices, highlighting the importance of awareness and preventive measures.

  3. Study Insights and Dietary Recommendations: The study, which analyzed data from nearly 202,000 participants in the UK Biobank over an average of ten years, suggests that higher consumption of artificially sweetened beverages is more common among females, younger individuals, and those with a higher prevalence of type 2 diabetes. Conversely, higher consumption of sugar-sweetened beverages is more typical among males, younger individuals, and those with a higher prevalence of heart disease. Given these findings, the researchers recommend reducing or avoiding artificially sweetened and sugar-sweetened beverages, challenging the assumption that low-sugar and low-calorie drinks are inherently healthy.

Medicare Advantage patients get less home health care: study

By Tina Reed - Medicare Advantage patients were found to get skimpier home health care and worse outcomes than their counterparts in traditional Medicare in a study published in JAMA Health Forum. Read Full Article…

VBA Article Summary

  1. Growing Concerns Over Medicare Advantage (MA) Plans: More than half of Medicare beneficiaries are enrolled in MA plans, sparking significant worries about how these plans operate. Concerns specifically revolve around the possibility that the plans' coverage guardrails might be restricting access to essential care. The focus on home health services is particularly critical, as they play a key role in preventing the need for long-term or nursing facility care.

  2. Comparative Study on Home Health Services: A study reviewing around 285,000 patients who received care between 2019 and 2022 found that MA patients received fewer home health visits from nurses, therapists, and other providers—with the exception of social workers—and nearly two fewer days of service from admission to discharge. This reduction in care was associated with a 3% lower likelihood of improved mobility and a 4% lower chance of improved self-care among MA patients compared to those in traditional Medicare.

  3. Implications for MA Patients: The differences in home health services could have significant consequences for MA patients, who are more likely to live alone and may not require care until facing serious health issues. Despite MA patients having higher rates of being discharged back to the community, the lower levels of functional improvement observed could potentially diminish their independence and increase the care burden on family members and other caregivers.

UnitedHealth details Change attack recovery timeline: 5 updates for payers

By Jacob Emerson - UnitedHealth Group detailed a timeline March 7 for restoring key Change Healthcare systems following the unprecedented cyberattack on the company in late February. Read Full Article…

VBA Article Summary

  1. Significant Impact on Healthcare Operations: Following a cyberattack on the U.S. health system, payers have observed a notable decline in the number of claims received from healthcare providers. This incident has severely disrupted operations for hospitals, physician practices, and pharmacies. In response, UnitedHealth CEO Andrew Witty emphasized the company's commitment to aiding those impacted, focusing on rapid recovery efforts to support providers in patient care and practice management, and ensuring patients' access to medications.

  2. Immediate Measures for Relief and Recovery: In light of the cyberattack's consequences, UnitedHealth has implemented several temporary measures to ease the burden on healthcare providers and ensure continuity of care for patients. These measures include suspending prior authorizations for Medicare Advantage and D-SNP outpatient services, excluding certain procedures, until March 31. Additionally, utilization reviews for inpatient admissions and drug formulary exception reviews for pharmacy benefits are temporarily on hold. UnitedHealth is also coordinating with state Medicaid programs to address necessary actions during this period.

  3. Restoration and Support Initiatives: To mitigate the impact of the cyberattack and support the healthcare ecosystem's recovery, UnitedHealth has outlined a plan to restore essential services and offer financial assistance to providers. Electronic prescribing and claim processing for pharmacy services have been reinstated. Electronic payments and the operation of Change's claims network and software are scheduled to resume shortly. Furthermore, UnitedHealth urges all payers to provide temporary financial support to healthcare providers to address immediate cash flow challenges and facilitate uninterrupted patient care.

Change Healthcare faces potential class action as lawsuits rack up

By Emily Olsen - The outage at Change, which began on Feb. 21, has had wide-ranging impacts on the healthcare sector, hamstringing key pharmacy and revenue cycle operations. Read Full Article…

VBA Article Summary

  1. Accumulating Lawsuits: Change Healthcare is facing a growing number of lawsuits, with at least six seeking class-action status, as the healthcare industry struggles with disruptions from a cyberattack. The suits, filed in Tennessee and Minnesota, allege inadequate cybersecurity measures led to potential exposure of sensitive health and personal information. The incident has significantly impacted healthcare transactions and patient record accessibility.

  2. Operational Challenges and Responses: The cyberattack has caused significant operational challenges for healthcare providers, including issues with patient payments, insurance verifications, and clinical record exchanges. With Change Healthcare processing a vast number of healthcare transactions and affecting a large portion of patient records, the industry faces substantial service interruptions. In response, CMS introduced flexibilities to support providers, though some argue that further relief is needed.

  3. Specific Patient Impacts and Legal Claims: Patients have reported difficulties in accessing prescriptions due to the outage, with some facing financial burdens from having to pay full prices for medications. Lawsuits also highlight concerns over sensitive data exposure, citing claims from the ransomware group AlphV about exfiltrating critical information. The legal actions extend beyond Change Healthcare to include UnitedHealth and its subsidiaries, spotlighting the broader implications of cybersecurity in the healthcare sector.

FDA Approves Sandoz Biosimilars for Two Blockbuster Amgen Bone Drugs

By Frank Vinluan - A blockbuster Amgen antibody that treats bone conditions is set to face its first biosimilar competition. The FDA on Tuesday approved two Sandoz drugs as interchangeable with and approved for all uses of the Amgen products. Read Full Article…

VBA Article Summary

  1. FDA Approves First Interchangeable Biosimilar for Bone Diseases: The FDA has approved Sandoz's biosimilars, Jubbonti and Wyost, as the first interchangeable treatments for osteoporosis and cancer-related bone issues, respectively. These drugs are biosimilar to Amgen's Prolia and Xgeva, which target the RANKL protein to prevent bone degradation by osteoclasts, aiming to enhance bone mass and strength. The approval is grounded in comparative clinical data demonstrating that Sandoz's biosimilars achieve similar body exposure, efficacy, safety, and immune response as the Amgen counterparts.

  2. Safety and Regulatory Measures: The Sandoz biosimilars come with specific safety warnings and regulatory measures consistent with their reference products. Both the Sandoz and Amgen drugs have warnings regarding the risk of hypocalcemia. Jubbonti's approval also includes a Risk Evaluation and Mitigation Strategy (REMS) to educate patients and prescribers about potential risks, mirroring the REMS associated with Prolia. This consistency in safety profiles is crucial for healthcare professionals and patients when considering treatment options.

  3. Market Impact and Patent Litigation: Amgen's Prolia and Xgeva have shown significant financial success, with Prolia generating $4 billion in revenue and Xgeva $2.1 billion in the latest fiscal year. The approval of Sandoz's biosimilars introduces potential competition in the market, though the immediate availability of these biosimilars is uncertain due to ongoing patent litigation initiated by Amgen. The lawsuit reflects a common strategy by brand-name drug manufacturers to delay the market entry of generic or biosimilar competitors. Despite these challenges, Sandoz's emergence as an independent entity from Novartis underscores the growing importance and profitability of the biosimilars market.