Daily Industry Report - March 18

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)

Will The Change Healthcare Incident Change Health Care?

By Jeff C. Goldsmith - Sometimes, the biggest problems in the world are created by solutions. On February 21, 2024, cybercriminals affiliated with hacker collective AlphV infiltrated and crippled the nation’s largest medical claims clearinghouse, Change Healthcare, interrupting the flow of perhaps as much as a third of all US health payments from health insurers to care providers. Read Full Article…

VBA Article Summary

  1. Cyberattack on Change Healthcare: A massive cyberattack on Change Healthcare, owned by UnitedHealth Group, compromised the medical records of up to 85 million patients. This incident not only highlighted the vulnerabilities of the complex, proprietary medical payment system but also led to financial crises for healthcare providers and patients. Described as the "Deepwater Horizon" moment in American healthcare finance, it underscores the need for robust security measures within the healthcare payment infrastructure.

  2. Evolution of Change Healthcare: Change Healthcare's payment system originated in the mid-1990s, evolving from paper-based claims to an electronic data interchange framework boosted by the HIPAA Act. Its growth included mergers and acquisitions, culminating in its acquisition by UnitedHealth Group’s Optum subsidiary for $13 billion in 2021. This consolidation under UnitedHealth Group has raised concerns over the concentration of control over medical payments, which may pose a threat to the financial viability of the U.S. healthcare system.

  3. Policy Recommendations and Future Directions: The article suggests significant policy changes to mitigate future risks, including the decentralization of health care payment systems, implementing strict data security protocols, and establishing a unified set of rules for processing claims. It advocates for a model similar to Medicare’s Administrative Contractor system to ensure a stable, secure, and simplified healthcare payment infrastructure, emphasizing the crucial role of federal oversight and regulation in preventing similar cyberattacks and ensuring the continuity of healthcare payments as a matter of national security.

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!

Fed Seen Sticking With Three 2024 Cuts Despite Higher Inflation

By Steve Matthews and Kyungjin Yoo - A recent pickup in inflation isn’t likely to shift Federal Reserve policymakers’ forecasts for three interest-rate cuts this year and four in 2025, according to economists surveyed by Bloomberg News. Read Full Article…

VBA Article Summary

  1. Fed's Rate Decision and Economic Projections: The Federal Open Market Committee (FOMC) is expected to maintain interest rates steady at 5.25% to 5.5% in their next meeting, marking a consistent approach for the fifth consecutive time. However, economists predict the FOMC will initiate rate reductions starting in June, with a median forecast of three quarter-point cuts within the year. The upcoming March 19-20 meeting will also see the FOMC updating their economic and rate projections for the first time since December, with anticipated minor adjustments to their outlook but no change to the projected rate path.

  2. Economic Forecasts and Inflation Expectations: Survey respondents foresee an upward revision in the 2024 forecasts for U.S. gross domestic product (GDP) growth to 1.7% from 1.4% and an increase in the inflation projection to 2.5% from 2.4%. Despite recent sticky inflation, Fed Chair Jerome Powell highlighted the central bank's progress towards the 2% inflation target, indicating a cautious approach towards rate cuts. Economists also anticipate that the FOMC might modestly adjust their interest-rate cuts projection for 2024, reflecting continued solid growth for the U.S. economy.

  3. Market and Economic Outlook: The survey reflects a growing optimism among economists regarding the economic outlook, with only 17% predicting a recession in the next 12 months, a significant decrease from 58% in July. This optimism is attributed to the resilient American consumer and the strong performance of the economy. Nonetheless, the majority of economists believe the Fed is not yet in a position to declare a successful soft landing, characterized by low inflation and a robust labor market, despite former Vice Chairman Alan Blinder's suggestion that such an outcome has already been achieved.

SIIA Government Relations Update

By SIIA - State of the Union Address – Last Thursday, President Biden delivered the annual State of The Union (SOTU) Address. Within the speech, he made the case for a second term by highlighting some of his first-term accomplishments and drawing a contrast between his vision for the future and that of his Republican challenger (whom President Biden did not refer to by name). Read Full Article…

VBA Article Summary

  1. Presidential Priorities and Legislative Updates: President Biden emphasized the Democratic health care priorities during his State of the Union (SOTU) Address, focusing on improving and expanding Medicare Rx drug price negotiation requirements, extending Medicare's cost-sharing caps to private health plans, and imposing limits on short-term health plans. This comes amid his and former President Trump's official nominations as their party's Presidential Candidates, turning the address into a significant campaign speech. Additionally, a potential government shutdown was averted with the passage of a $460 billion spending bill, requiring further action by March 22 to prevent future shutdowns. President Biden also proposed a $7.3 trillion Fiscal Year 2025 Budget, aiming to extend health care reforms.

  2. Healthcare Reform Negotiations and Cybersecurity Concerns: Bipartisan negotiations on healthcare reforms, specifically transparency and Prescription Drug Manager (PBM) reforms, failed to produce agreement for inclusion in the recent spending bill, pushing potential action to after the November elections. Separately, a cyberattack on Change Healthcare, a major healthcare payment processor, disrupted financial transactions within the healthcare system, leading to emergency federal interventions to support affected providers and a broader discussion on healthcare cybersecurity.

  3. State and National Insurance Priorities: The National Association of Insurance Commissioners (NAIC) and the State of Michigan have outlined priorities focusing on the use of AI, cyber risk, marketing of insurance, race and insurance equity, and objections to stop-loss rate filings. Additionally, reference-based drug pricing proposals in Maine and Rhode Island represent emerging trends in state-led efforts to control prescription drug costs, with implications for national health policy discussions.

Feds sue 6 health plans for allegedly hiding overpayments

By Andrew Cass - The Justice Department is suing six health plans participating in the Uniformed Services Family Health Plan program for allegedly concealing overpayments for services provided to retired military members and their families. Read Full Article…

VBA Article Summary

  1. Allegations of Concealment and Overpayment: The Justice Department has alleged that six health plans knowingly received overpayments due to calculation errors in 2012 and took deliberate steps to conceal these errors from the government. Despite being aware of the inflated rates, they continued to submit invoices at these higher rates and, in the following year, even requested to keep being paid at these incorrect rates.

  2. Health Plans Involved and Their Response: The accused health plans are Brighton Marine Health Center, Christus Health Services, Johns Hopkins Medical Services Corp., Martin's Point Health Care, Pacific Medical Center, St. Vincent's Catholic Medical Centers of New York, and the US Family Health Plan Alliance, their trade group. The US Family Health Plan Alliance expressed disappointment in the Justice Department's decision to join what they consider a meritless lawsuit, arguing that the payment rates were negotiated over a decade ago in fixed-rate contracts and that the services were provided based on those agreed rates.

  3. Settlement with a Defense Contractor: As part of the broader investigation and legal action related to these allegations, the Justice Department has reached a settlement with Kennell & Associates, a consulting firm that provided actuarial services to the Defense Health Agency. The firm agreed to pay nearly $780,000 plus interest and additional contingent payments based on future revenues and cash reserves, acknowledging its part in the circumstances that led to the inflated payments to the health plans.

94% of hospitals take financial hit from Change hack: AHA survey

By Madeline Ashley - A survey from the American Hospital Association found that 94% of hospitals have felt financial impact from the Change Healthcare cyberattacks and over half have reported a "significant or serious" impact. Read Full Article…

VBA Article Summary

  1. Financial Impact and Revenue Loss: The survey highlights significant financial strain on hospitals due to the cyberattack, with 82% reporting a cash flow impact. Over a third of these hospitals have seen more than half of their revenue affected, nearly two-thirds report a daily revenue impact of $1 million or more, 44% anticipate the negative revenue impact to last 2-4 months, and over 20% are uncertain about the full extent of the financial damage.

  2. Effects on Patient Care: Seventy-four percent of hospitals noted a direct negative effect on patient care, with nearly 40% experiencing difficulties in patient access to care due to delays in processing health plan utilization requirements. This underlines the cyberattack's significant disruption to healthcare services and patient experience.

  3. Operational Challenges and Responses: Hospitals face considerable challenges in implementing effective workarounds, with 67% finding it difficult to switch clearinghouses, 81% stating that these workarounds have only been somewhat successful, and 11% reporting complete failure. Despite these efforts, the pervasive impacts of the cyberattack underscore the urgent need for additional support and intervention from government and industry stakeholders, as emphasized by AHA's call for action to mitigate the ongoing fallout.

How Your In-Network Health Coverage Can Vanish Before You Know It

By Elisabeth Rosenthal - Sarah Feldman, 35, received the first ominous letters from Mount Sinai Medical last November. The New York hospital system warned it was having trouble negotiating a pricing agreement with UnitedHealthcare, which includes Oxford Health Plans, Feldman’s insurer. Read Full Article…

VBA Article Summary

  1. Dispute Between Providers and Insurers Affects Patients: A series of communications between a hospital and an insurance company about their ongoing dispute led to confusion among patients, oscillating between assurances and warnings. Ultimately, the hospital, Mount Sinai, ceased to be in-network with the insurer as of March 1, causing patients like Feldman to scramble to find new healthcare providers, including essential services from primary care physicians to specialists.

  2. Systemic Flaws in Medical Insurance: The article highlights a fundamental issue in the medical insurance system where patients, who select insurance plans based on specific doctors or treatments they need, find themselves at a disadvantage. Insurance contracts with healthcare providers can change any time outside the patient's control, often with little to no warning. This problem is exacerbated by the fact that patients can typically only change their insurance plans during end-of-year enrollment periods or due to qualifying life events, leaving them vulnerable to sudden changes in their healthcare coverage.

  3. Rising Disputes and Regulatory Challenges: The frequency of disputes between insurers and healthcare providers is increasing, with reports citing a 91% rise in such conflicts over a year. These disputes often leave patients without coverage for their chosen doctors and necessary medical care. Experts suggest that the rise in disputes may be connected to hospital price transparency regulations that began in 2021, allowing healthcare providers to compare reimbursement rates. The article calls attention to the need for regulatory action to protect patients, highlighting that continuity of coverage is a critical yet unaddressed issue at the federal level, despite the potential for state and federal regulators to intervene.

When Copay Assistance Backfires on Patients

By Julie Appleby - In early 2019, Jennifer Hepworth and her husband were stunned by a large bill they unexpectedly received for their daughter’s prescription cystic fibrosis medication. Their payment had risen to $3,500 from the usual $30 for a month’s supply. Read Full Article…

VBA Article Summary

  1. Impact of Copay Accumulator Programs: Copay accumulator programs have fundamentally altered how out-of-pocket healthcare costs are calculated for patients using copay assistance from drugmakers. These programs, adopted by insurers and employers, prevent payments made by drugmakers on behalf of patients from counting toward their annual deductibles. This change can significantly increase the out-of-pocket expenses for families like Hepworth's, who rely on expensive medications. Before the implementation of such programs, copay assistance would often cover a large portion or the entirety of a family's deductible, but now, patients find themselves responsible for larger portions of their medical expenses, leading to financial strains and reliance on credit cards.

  2. Financial and Legislative Repercussions: Employers and health insurance plans justify the use of copay accumulator programs as a cost-saving measure, claiming savings of 10% to 15% on prescription plan claims. However, this approach has faced criticism from lawmakers, advocacy groups, and a U.S. District Court ruling. Nineteen states have enacted laws limiting these programs, and bipartisan legislation at the federal level seeks to require that financial assistance from drugmakers count toward deductibles and out-of-pocket costs. Critics argue that the programs prioritize savings for insurers at the expense of patients, who may skip essential medications due to increased costs.

  3. Future Changes and Industry Responses: The future of copay accumulator programs is uncertain, with legal challenges, potential new federal regulations, and growing advocacy against them. A recent court ruling has temporarily rolled back a policy allowing the expansion of these programs, and the Biden administration has indicated a shift in enforcement pending new rulemaking. Moreover, proposed 2025 federal rules could further restrict insurers' abilities to exclude drugmaker assistance from deductible calculations. These developments suggest a contentious ongoing debate between insurers, pharmaceutical companies, and patient advocacy groups over the balance between making medications affordable for patients and controlling healthcare costs.

Spending Bill Cements Physician Pay Cuts, Delays Medicaid Reductions

By Jasmyne Ray - President Biden signed the bipartisan spending bill for $460 million on Sunday evening. Most notably, with the bill’s passage, the 3.37% cut to Physician Fee Schedule reimbursements was lowered to 1.69%. Read Full Article…

VBA Article Summary

  1. Opposition from Healthcare Groups: The American Medical Association and other healthcare groups have expressed strong opposition to proposed pay cuts, arguing that they would negatively impact hospitals financially. Catherine "Mindy" Chua, DO, Chief Medical Officer of Davis Health System, highlighted that while individual physicians might not directly feel the pay cuts due to being employed by hospital systems, the financial health of these systems and their ability to maintain physician employment without reducing pay could be adversely affected.

  2. Impact on Physician Practices and Hospital Systems: Despite the proposed cuts, hospitals are committed to not reducing the pay for their employed physicians, according to Chua. This decision underscores the importance of maintaining stable physician staffing levels, even in the face of reduced Medicare reimbursements. However, the financial strain on hospital systems could have broader implications for the sustainability of physician practices and overall hospital operations.

  3. Legislative Adjustments and Industry Response: The proposed legislation has made adjustments by eliminating Medicaid Disproportionate Share Hospital (DSH) payment cuts for the fiscal year 2024 and delaying cuts for 2025. This move has been met with cautious optimism by healthcare leaders, such as Bruce Siegel and Steven P. Furr, who see it as an opportunity for policymakers to find long-term solutions. However, they also warn that short-term extensions pose risks to patient care access and create uncertainty for family medicine residents and healthcare providers in underserved areas, emphasizing the need for a stable, multi-year reauthorization to ensure continuity and quality of care.

Why benefit brokers should think like human capital managers do

By Chris Labrecque - Benefit brokers face some significant challenges in 2024. Employer health insurance costs are expected to jump 6.4%, KFF reports, after years of steady increases. This is a result of higher hospital labor costs trickling first to insurers and then to employers. Meanwhile, a recent Federal Reserve survey showed fewer Americans adults can afford a $400 emergency expense. Read Full Article…

VBA Article Summary

  1. Empowering Employees with Tailored Benefits and Accessibility: Successful benefit brokers are evolving to think like human capital managers, focusing on crafting benefits packages that not only attract and retain talent but also enhance employees' physical, mental health, and workplace performance. This approach includes considering national and local trends, seeking employee feedback to adapt benefits packages, and providing options like health savings accounts, flexible spending accounts, and health payment accounts (HPAs) to make care more accessible and affordable.

  2. Adjusting to Economic Realities and Enhancing Access to Care: With the changing economic landscape, such as rising inflation and healthcare costs, benefit brokers are tasked with making benefits more accessible by addressing cost barriers. Innovations like HPAs, which are available to employees from day one without interest or fees, play a crucial role in enabling employees to manage healthcare expenses more effectively. This is especially important in a time when many are seeking care deferred during the pandemic, highlighting the need for early prevention, detection, and treatment of illnesses.

  3. The Role of Price Transparency in Future Healthcare Management: Looking ahead, the movement towards price transparency in healthcare could significantly empower employees to manage their healthcare costs proactively. Despite challenges in processing vast amounts of pricing data, the development of digital tools leveraging this data will likely become a game-changer in how employees choose and access healthcare services. Benefit brokers acting as human capital managers will need to stay informed about these developments to incorporate such tools into benefits packages, thereby improving healthcare accessibility and affordability for employees.

How a cheap, generic drug became a darling of longevity enthusiasts

By Daniel Gilbert - To keep himself healthy into his eighth decade, David Sandler recently decided to go beyond his regular workouts and try something experimental: taking rapamycin, an unproven but increasingly popular drug to promote longevity. Read Full Article…

VBA Article Summary

  1. Rising Popularity and Regulatory Challenges: Rapamycin, originally approved by the FDA for transplant patients, is gaining traction as an anti-aging treatment based on its potential to modify cellular communications and extend lifespan in animal studies. Despite its growing use, spearheaded by longevity researchers and celebrity doctors, there's no definitive evidence of its life-extending effects in humans. The FDA's current stance, viewing aging not as a disease and considering rapamycin's generic status, poses significant hurdles for its approval as a longevity drug, leading to its marketing beyond its regulatory label by doctors and telehealth companies.

  2. Scientific Divisions and User Experiences: The scientific community remains divided over rapamycin's role as a longevity drug, citing promising animal studies against concerns about optimal dosing, potential side effects, and the lack of comprehensive human trials. Anecdotal reports from users, like a 77-year-old retired accountant who chose to experiment with the drug, and various physicians prescribing it for anti-aging, reflect a willingness among some to explore its benefits despite these uncertainties. Research highlights both potential health benefits and risks, indicating a complex balance that users and prescribers must navigate.

  3. Cultural Impact and Future Prospects: Rapamycin's journey from a soil sample on Easter Island to the forefront of longevity medicine captures the imagination of the public and researchers alike. Its historical significance, coupled with high-profile endorsements and emerging telehealth platforms offering the drug, underscores the growing fascination with anti-aging solutions. However, experts caution that without clearer guidelines on dosing and long-term effects, coupled with rigorous scientific validation, the true potential of rapamycin remains speculative. The ongoing exploration of rapamycin, from its use in personalized regimens to its role in broader aging research, reflects a dynamic intersection of science, hope, and the quest for extended healthspan.

Biden Administration Calls for Greater Access to Overdose Antidote

By Robin Foster - The White House on Wednesday launched a nationwide call for more training and better access to the lifesaving opioid overdose drug naloxone. Read Full Article…

VBA Article Summary

  1. Initiative Launch and Purpose: The White House launched the Challenge to Save Lives from Overdose initiative, urging organizations and businesses to train employees on the use of opioid overdose medications, particularly naloxone. This includes keeping naloxone in emergency kits and distributing it to employees and customers to potentially save lives in various settings. This call to action is in response to the increasingly dangerous and lethal drug supply, emphasizing the collective responsibility to keep communities safe.

  2. Naloxone Accessibility and Approvals: Naloxone, known under the brand name Narcan, is a medication capable of rapidly reversing opioid overdoses and now available over-the-counter in forms like nasal sprays. The U.S. Food and Drug Administration (FDA) approved Narcan for over-the-counter sales in March 2023, followed by the approval of the first generic nasal spray in July. Despite these approvals, public health officials highlight challenges in naloxone accessibility and affordability for some individuals.

  3. Responses and Impact: Various organizations have begun to implement measures in response to the White House's call. The American Library Association is providing libraries with overdose response training and naloxone distribution. Southwest Airlines has added naloxone to emergency medical kits on a significant portion of its fleet, with plans for full coverage by year-end. These efforts come against the backdrop of a stark increase in overdose deaths in recent years, largely driven by synthetic opioids like fentanyl, underscoring the critical need for widespread naloxone availa