Daily Industry Report - March 15

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)

Legislators and advocacy groups in Washington still have their sights set on PBM reform

By Wendell Potter - [Yesterday] morning, Senate Finance Chair Ron Wyden (D-Oregon) and Ranking Member Mike Crapo (R-Idaho)…scheduled to hold a press conference to stress the need for Congressional approval of legislation to change how pharmacy benefit managers do business. Read Full Article…

VBA Article Summary

  1. Bipartisan Support for PBM Reform Amidst Industry Opposition: The article highlights that there is significant bipartisan support in both the House and Senate for reforming Pharmacy Benefit Managers (PBMs), entities that play a crucial role in determining access to medications and their prices for consumers. Despite this political consensus, PBM industry lobbyists have been actively working to derail any reforms that could potentially reduce their profit margins. Senators Wyden and Crapo are leading the charge, advocating for the inclusion of PBM reforms in an upcoming funding bill, crucial to prevent a partial government shutdown.

  2. Impact on Pharmacies and Patient Care: It emphasizes the testimony expected from representatives of both independent and chain pharmacies at a Finance Committee hearing. These testimonies aim to shed light on how the business practices of PBMs are negatively affecting pharmacy operations and, by extension, harming patient care. The practices in question contribute to financial strains on pharmacies and may limit patients' access to necessary medications.

  3. Public Awareness and Call for Action: The article addresses the lack of public awareness about PBMs and their significant influence on medication accessibility and affordability, even for those with health insurance. It points to resources like an explainer produced by the Center for American Progress to educate the public on the issue. Furthermore, it underscores the urgent need for congressional reforms to counteract the monopolistic tendencies of PBMs, exacerbated by acquisitions by large insurance companies. The piece also suggests that employers, as major customers of PBMs, have immediate opportunities to implement changes that could save billions of dollars and reduce the financial burden on employees for their medications.

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?*

Login or Subscribe to participate in polls.

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!

Senators press HHS secretary on Change HealthCare cyberattack fallout

By Sarah Owermohle - Senators want answers from the Biden administration on the recent cyberattack that froze millions of hospital and physician insurance claims, and concrete plans to prevent the next disruptive attack on health care. Read Full Article…

VBA Article Summary

  1. Cybersecurity and Accountability in Healthcare: During a Senate Finance Committee hearing, Chairman Ron Wyden and Health and Human Services Secretary Xavier Becerra discussed the importance of implementing cybersecurity requirements for hospitals and insurers. Wyden emphasized the need for accountability among executives who fail to meet safety standards in cybersecurity. Meanwhile, the committee's highest-ranking Republican, Sen. Mike Crapo, called for updates on cybersecurity efforts without pushing for specific technological requirements.

  2. HHS Investigation and Biden's Healthcare Budget: The Health and Human Services Department initiated an investigation into Change HealthCare and its parent company, UnitedHealth Group, for compliance with laws protecting patients' health information. This move aligns with President Biden's request for $130.7 billion in discretionary funding for HHS in the 2025 fiscal year, which includes significant support for hospitals' cybersecurity measures and a proposal to penalize hospitals that do not meet security standards. The budget also proposes enhancements to Medicare's drug price negotiations and the extension of Affordable Care Act tax credits.

  3. Focus on Cybersecurity and Healthcare Priorities: The Senate hearing highlighted the urgent need for cybersecurity in healthcare, with testimonies about the impact of cyberattacks on hospitals, especially rural ones. Senators discussed various topics, including drug price negotiations, handling of unaccompanied migrant children, and reproductive rights, but cybersecurity remained a central theme. Secretary Becerra outlined actions being taken to address payment issues resulting from cyberattacks and reiterated the commitment to following the law, even in contentious areas like reproductive rights and the availability of the abortion pill mifepristone.

Illinois Temp Agencies Win Temporary Relief in ERISA Preemption Fight

By Peter Sessions - Temporary employees have it tough. They often do the same work as their colleagues, but because they are not official full-time employees at their workplace they are often not entitled to the same pay or benefits their peers receive. Read Full Article…

VBA Article Summary

  1. Amendment to Illinois Day and Temporary Labor Services Act and Legal Challenge: The State of Illinois amended its Day and Temporary Labor Services Act to include Section 42, which mandates temporary staffing agencies to pay temporary employees who work at a particular site for more than ninety days within a year at least the same wages and equivalent benefits as the lowest paid, directly-hired employee of the third-party client. This amendment led to a legal challenge by two temporary staffing trade associations and three staffing agencies against Jane R. Flanagan, the Director of the Illinois Department of Labor, particularly focusing on the provision's preemption by ERISA (Employee Retirement Income Security Act).

  2. Court's Ruling on ERISA Preemption: The court agreed with the plaintiffs, ruling that Section 42’s requirement for equivalent benefits has a direct and inevitable connection to ERISA plans, making it preempted. This conclusion was based on the reasoning that the provision interferes with the uniform administration of ERISA plans across different jurisdictions, as dictated by the Supreme Court’s precedent in Egelhoff v. Egelhoff. The court highlighted that even the option for agencies to provide a cash equivalent instead of benefits does not alleviate the preemption because it still necessitates individualized and discretionary determinations about benefits eligibility and levels.

  3. Impact and Outcome: The court's decision to preempt Section 42 under ERISA was based on its finding that the provision mandates temporary staffing agencies to engage in complex, particularized, and discretionary analysis regarding benefits, contrary to ERISA's intent of uniform plan administration. This ruling led to the granting of a preliminary injunction in favor of the plaintiffs, recognizing the significant compliance costs, potential penalties, and the possibility of staffing agencies leaving Illinois if Section 42 were enforced. This outcome emphasizes the tension between state-level labor protections and federal ERISA regulations, highlighting the challenges in aligning temporary worker benefits with directly-hired employees while adhering to ERISA’s standards for uniform plan administration.

Most Physicians Down on Private Equity in Healthcare

By Michael DePeau-Wilson - Most physicians have negative views of private equity involvement in healthcare, according to a survey of internal medicine physicians. Read Full Article…

VBA Article Summary

  1. Widespread Concern Among Physicians: A significant majority of physicians (60.8%) view private equity involvement in healthcare negatively, citing concerns over autonomy, professional satisfaction, and the potential influence on clinician decision-making. Only a small fraction (10.5%) see private equity involvement positively, with a notable portion remaining neutral (28.8%). This sentiment is reflected across various aspects of healthcare, including concerns about the impact on patient care, physician burnout, and corporate profiteering.

  2. Impact on Professional Satisfaction and Autonomy: Physicians employed by private equity-owned clinics report lower levels of professional satisfaction and autonomy compared to those not working for such entities. Only 44.8% of physicians affiliated with private equity report high professional satisfaction, significantly lower than the 74.4% satisfaction rate among other doctors. Autonomy is also affected, with 48.3% of private equity-employed physicians feeling autonomous versus 66.3% of their counterparts. These findings highlight the negative repercussions of private equity involvement on the working conditions and morale of healthcare providers.

  3. Broader Implications and Concerns: The study raises significant concerns about the long-term effects of private equity ownership on healthcare, including the potential for increased healthcare spending, decreased health equity, and a focus on profit over patient care. There is a strong call for more evidence and scrutiny from physicians, regulators, and professional societies to ensure that healthcare remains focused on high-quality patient care rather than financial gain. This call to action is reinforced by concerns about the moral injury among clinicians and the exacerbation of health inequities due to the prioritization of healthier, better-insured patients.

Prescription for resilience: Health care needs financial sector-inspired regulation

By Jonathan Slotkin and David Vawdrey - In the early days after it was hit by a cyberattack on Feb. 21, Change Healthcare, one of the country’s largest claims and prescription processors, said it would be back online soon. Three weeks later, customers were still waiting — and Biden administration officials were calling its owner, the giant company UnitedHealth Group, to task, even as Medicare offered emergency funds to providers who hadn’t been paid. Read Full Article…

VBA Article Summary

  1. Establish a Dedicated Regulatory Entity for Health Care Cybersecurity: To safeguard the critical technology infrastructure of the U.S. health care system, there is an urgent need to create a new regulatory body. This entity would enforce strict cybersecurity standards, perform audits, and manage emergency protocols, similar to the regulatory authority seen in the financial sector. It would require health care technology vendors to undergo regular security audits and penetration testing to ensure resilience against cyberattacks.

  2. Implement Rigorous 'Stress Testing' and Defense Measures: Health care IT companies should be mandated to conduct stress tests to evaluate their preparedness against cyber threats and system failures. This would involve establishing minimum requirements and best practices for data backup, disaster recovery, and business continuity planning. Such measures would aim to bolster the sector's defenses and ensure a coordinated response to threats, drawing on the collaborative information-sharing models used in the financial industry.

  3. Mandate Post-Incident Investigations and Public Reporting: Following a cyberattack, comprehensive investigations should be conducted to analyze the root causes and develop preventative strategies. These investigations, akin to those performed by the National Transportation Safety Board in aviation, would be overseen by the proposed regulatory authority or another designated body. The findings and recommendations from these investigations should be publicly disclosed to inform new cybersecurity standards and practices, promoting transparency and accountability within the health care sector.

Summary of Changes to the 2024 Leapfrog Hospital Survey

By The Leapfrog Group - Leapfrog received nearly 200 public comments in response to its proposed changes for the 2024 Leapfrog Hospital Survey. Those comments, as well as the feedback collected during the pilot test, were incorporated into the final content and scoring algorithms for the Survey. We have summarized the final changes in the document below and included responses to public comments. Read Full Article…

VBA Article Summary

  1. Expression of Gratitude: The article begins by thanking all the commenters for their invaluable input on the 2024 Leapfrog Hospital Survey. The feedback from various stakeholders, including patients, family caregivers, purchasers, payors, hospitals, and the public, played a crucial role in refining the Survey to ensure it meets the needs of all constituents effectively.

  2. Updated Scoring Algorithm for Informed Consent: It highlights significant modifications to the scoring algorithm for Informed Consent. This update, detailed in Appendix VI, reflects two changes that were made after the initial publication of the Proposed Changes, aiming to improve the clarity and fairness of how informed consent processes are evaluated.

  3. Measure Removal and Updates: The article announces the removal of the Elective Deliveries measure (PC-01), with specifics provided on page 9, Section 4, indicating a shift in focus or methodology for assessing hospital performance. Additionally, it discusses updates to the Nursing Workforce questions and the corresponding scoring algorithm, as outlined in Appendix IX, which have undergone several modifications since the Proposed Changes were published, suggesting a deeper consideration of nursing roles and impacts on patient care.

UnitedHealth unit Change Healthcare's pharmacy network back online

By Reuters - UnitedHealth Group (UNH.N), said on Wednesday its unit Change Healthcare's pharmacy network was back online, weeks after a cyberattack had a knock-on effect across the country's healthcare system that depends heavily on insurance. Read Full Article…

VBA Article Summary

  1. Restoration of Services and Investigation: As of March 13, UnitedHealth has successfully restored most of its pharmacy and payment systems, with over 99% of the pre-incident claim volume now being processed. Despite this progress, some pharmacies remain offline. Concurrently, UnitedHealth Group has identified the source of the February 21 cyberattack and is in the process of restoring affected systems, with a comprehensive forensic analysis being conducted by Alphabet's cybersecurity unit Mandiant and Palo Alto Networks.

  2. Government Intervention and Attribution of the Attack: The U.S. Department of Health and Human Services has initiated an investigation into the cyberattack, which UnitedHealth attributed to the "Blackcat" ransomware group. This group, known for its disruptive cyberattacks, claimed responsibility for the breach on their darknet site, stating they had stolen millions of sensitive records, including medical insurance and health data, from UnitedHealth.

  3. Legal Challenges and Public Response: Following the cyberattack, UnitedHealth has faced at least six class action lawsuits accusing the company of failing to adequately protect the personal data of millions. These lawsuits highlight the ongoing public concern and legal scrutiny over the protection of personal and sensitive health information in the wake of significant cybersecurity breaches.

Cigna uses algorithm that auto-denied 300,000 claims, alleged in lawsuit

By Emily Cousins - Cigna was hit with another consumer class action after its algorithm to evaluate medical claims allegedly automatically denied more than 300,000 requests without review. Read Full Article…

VBA Article Summary

  1. Allegations of Systematic Denial of Claims: Andrew Sachs, a Nevada resident, filed a lawsuit against Cigna Corp. and Cigna Health and Life Insurance Co. in Connecticut federal court, alleging that Cigna systematically and wrongfully denies insured individuals the thorough, individualized physician review of claims that they are legally entitled to. The complaint accuses Cigna of using an algorithm, named PxDx (procedure-to-diagnosis), to automatically deny claims based on discrepancies between diagnoses and what Cigna considers acceptable tests and procedures, without proper review of patients' medical histories or coverage policies by medical professionals.

  2. Cigna's Defense and Explanation of PxDx: Cigna refutes the allegations, claiming the lawsuit is baseless and misrepresents the scope and purpose of the PxDx review process. The company states that PxDx is only applied to a small subset of services and primarily deals with pre-service requests for prior authorization, not affecting patient care directly. Cigna argues that the PxDx process is designed to accelerate payments for common, low-cost tests and treatments, is not powered by AI, and is similar to processes used by other entities, including CMS (Centers for Medicare & Medicaid Services).

  3. Wider Context and Additional Lawsuits: The lawsuit filed by Sachs is part of a broader pattern of legal challenges against Cigna, with similar consumer class actions alleging wrongful denial of claims already filed in various district courts across the United States. Additionally, a Cigna shareholder filed a lawsuit in the Delaware Court of Chancery seeking access to records to investigate potential mismanagement and breaches of fiduciary duty by the company, suggesting ongoing scrutiny of Cigna's practices and management beyond the immediate allegations of wrongful claim denials.

Lawsuit alleging UnitedHealth caught with ‘hand in the cookie jar’ to go to trial

By StarTribune - A class action lawsuit alleging UnitedHealth Group retained Wells Fargo investment funds as a key option in its employee retirement plan despite poor performance is headed to trial. Read Full Article…

VBA Article Summary

  1. UnitedHealth Group Faces Legal Battle Over 401(k) Investment Decisions: UnitedHealth Group and its executives, including former CEO David Wichmann and CFO John Rex, are defendants in a lawsuit alleging they improperly retained underperforming Wells Fargo investment funds in the company's employee 401(k) plan for over a decade. This decision was allegedly influenced by UnitedHealth's significant business relationship with Wells Fargo, aiming to protect its "balance of trade" with the bank. Judge John Tunheim denied key parts of UnitedHealth's motion for summary judgment, indicating that the trial would proceed as there are genuine disputes of material fact concerning breaches of duty under the Employee Retirement Income Securities Act.

  2. Accusations of Conflicted Interests and Mismanagement: The lawsuit highlights instances suggesting that UnitedHealth's business interests with Wells Fargo unduly influenced the management of its 401(k) plan. Evidence presented in court includes requests for "balance of trade" ledgers by John Rex and his efforts to maintain Wells Fargo as the plan's investment fund provider despite its poor performance. This conflict of interest is underscored by Rex's alleged attempt to use the retirement plan as a bargaining chip in negotiations with Wells Fargo, despite Wells being ranked at the bottom by an internal committee.

  3. UnitedHealth Group and Wells Fargo's Response: UnitedHealth Group has defended its actions, asserting that the claims are without merit and expressing eagerness to present its case at trial. The company argues that the Wells Fargo funds were selected for their lower-risk, lower-reward investment approach and outperformed peers when accounting for this strategy. Meanwhile, Wells Fargo has not commented on the lawsuit. The case sheds light on the complex interplay between corporate business relationships and fiduciary duties to employees, with significant implications for the management of employee retirement plans.

A New $16,000 Postpartum Depression Drug Is Here. How Will Insurers Handle It?

By April Dembosky - A much-awaited treatment for postpartum depression, zuranolone, hit the market in December, promising an accessible and fast-acting medication for a debilitating illness. But most private health insurers have yet to publish criteria for when they will cover it, according to a new analysis of insurance policies. Read Full Article…

VBA Article Summary

  1. Novel and Expensive Treatment Faces Uncertain Insurance Policies: Zuranolone, a new antidepressant targeting hormone function rather than the brain’s serotonin system, priced at $15,900 for a 14-day regimen, is under scrutiny as insurance companies have not yet issued clear coverage guidelines. This uncertainty follows the precedent set by its predecessor, brexanolone, for which many insurers implemented a fail-first policy, requiring patients to try cheaper medications before approval for the more expensive treatment.

  2. Regulatory and Advocacy Concerns Over Access and Coverage: The lack of guidance from health plans on zuranolone coverage has raised concerns among lawyers, advocates, and maternal health experts. Some fear restrictive policies that mandate trying standard antidepressants first or prescribing restrictions could delay treatment. This situation echoes challenges with brexanolone, where stringent insurance policies, particularly by Kaiser Permanente, severely limited access until recent policy changes prompted by regulatory scrutiny and advocacy.

  3. Shifting Insurance Landscape and the Path Forward: The insurance industry's approach to zuranolone will be shaped in a changing regulatory environment focused on mental health parity and increased scrutiny of health plans' coverage decisions. Recent reforms in mental health treatment coverage laws, both federally and in California, aim to ensure more equitable and clinically based decision-making by insurers. This evolving landscape offers hope for more patient-friendly policies towards zuranolone, potentially improving access to vital treatment for postpartum depression.