Daily Industry Report - March 25

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)

Biden signs $1.2T spending package to fund HHS, other healthcare programs

By Dave Muio - President Joe Biden on Saturday signed a $1.2 trillion spending package, averting a partial federal shutdown. The package funds the Department of Health and Human Services (HHS) and other large swaths of the government through the end of September. Read Full Article…

VBA Article Summary

  1. Government Funding Bill Passed to Avert Shutdown: The Senate voted 74-24 to pass a crucial government funding bill early Saturday morning after surpassing the deadline due to intense negotiations. This bill is part of a broader effort to prevent a government shutdown, with other parts of the federal government already funded by earlier legislation. This latest package secures funding for several critical departments including Health and Human Services (HHS), the Department of Labor, and the Department of Education. It supports numerous healthcare grant programs, including those for provider training, federally funded health centers, and national disease-targeting programs like the Ryan White HIV/AIDS Program.

  2. Budget Details and Increases: The legislation allocates over $117 billion for HHS, marking a roughly 1% increase from the fiscal year 2023 budget. This compromise figure falls between the initial budget request from the White House and a lower proposal from House Republicans. Significant funding boosts include a $300 million increase for the National Institutes of Health (NIH), with substantial portions directed towards the National Cancer Institute, the National Institute on Aging, and the National Institute of Mental Health. The CDC also sees increased funding, focusing on areas such as safe motherhood, infant health, and food safety.

  3. Legislative Process and Political Dynamics: The passage of this funding package followed a rushed legislative process, with the House passing the six-bill, $1.2 trillion package and the Senate urgently voting to avoid a partial shutdown. The expedited process drew criticism for breaching the customary 72-hour review period, particularly from hard-right lawmakers. Bipartisan support from key Senate figures and strategic concessions in the funding allocations—for national defense, border patrol, childcare, and education—highlighted the complex political negotiations underlying the bill's passage. A notable exclusion from the package was major healthcare policy reform, an issue likely deferred to future spending negotiations.

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. 

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Change Healthcare to start processing $14B claims backlog as it restores clearinghouse platforms

By Paige Minemyer - In its latest update on the response to the cyberattack on Change Healthcare, UnitedHealth Group said on Friday that its largest clearinghouse, called Relay Exchange, will be back online by the end of the weekend and the company will begin processing $14 billion in medical claims. Read Full Article…

VBA Article Summary

  1. Restoration and Financial Support: UnitedHealth Group has made significant progress in restoring services affected by the ransomware attack, including restoring 99% of Change Healthcare's pharmacy network services by March 7, and other key platforms at subsequent dates. The company has also advanced $2.5 billion to providers impacted by reimbursement and pharmacy disruptions, indicating a large-scale effort to support healthcare providers during the recovery phase.

  2. Legislative Response: In reaction to the cyberattack's impact on healthcare providers and the potential risk to patient care, U.S. Senator Mark Warner introduced the Health Care Cybersecurity Improvement Act of 2024. This legislation aims to provide financial incentives for healthcare providers to enhance their cybersecurity measures by allowing advance and accelerated payments in the event of cyber incidents, provided they meet minimum cybersecurity standards.

  3. Legal and Regulatory Challenges: Following the cyberattack, UnitedHealth Group faces legal challenges from providers and patients affected by the disruptions, with several lawsuits filed across the country alleging negligence in cybersecurity protocols. Additionally, federal investigations into the incident and its impact on protected health information are underway, with the Office for Civil Rights and other regulatory bodies examining compliance with HIPAA rules and the broader implications for patient privacy and healthcare delivery.

CBO Score For The Bipartisan Primary Care And Health Workforce Act Recognizes The Value Of Primary Care Health Investments

By Leighton Ku and Sara Rosenbaum - In its February 2024 cost estimate for Senators Bernie Sanders’ (I-VT) and Roger Marshall’s (R-KS) Bipartisan Primary Care and Health Workforce Act (S.2840)—which proposes to bolster primary care services in the US, including through higher funding for community health centers—the Congressional Budget Office (CBO) reported that additional mandatory spending for community health centers would create savings by lowering federal Medicaid and Medicare expenditures. Read Full Article…

VBA Article Summary

  1. CBO's Innovative Estimation Approach: For the first time, the Congressional Budget Office (CBO) has incorporated research demonstrating that investments in primary and preventive care at community health centers lead to lower Medicaid and Medicare costs, due to reduced expenses on emergency, inpatient, and other high-cost care. This shift reflects a broader understanding of how effective care at health centers not only improves patient outcomes but also reduces overall medical expenses, potentially leading to net federal savings of $3.4 billion over a decade, despite some additional federal costs associated with enrollment assistance.

  2. Challenges in Budget Scorekeeping: The CBO's methodology and the resulting savings from the bill do not straightforwardly impact the federal budget due to technical scorekeeping guidelines. Specifically, the CBO's guidelines prevent the direct inclusion of savings from regular public health spending in the budget tabulations for mandatory programs like Medicaid or Medicare. Additionally, a unique interpretation of these guidelines has led to the savings being noted in a memorandum as "Nonscorable Changes in Direct Spending," rather than being directly accounted for in budget estimates. This reveals the complexity and potential limitations of current federal budget scorekeeping practices.

  3. Implications for Health Policy and Federal Budgeting: This precedent-setting estimation by the CBO highlights the significant role of community health centers in the healthcare ecosystem, particularly for disadvantaged populations. It underscores the potential of incorporating research findings into federal budget estimates to more accurately reflect the financial impacts of healthcare investments. Moreover, the analysis signals an opportunity for future policy and budgetary considerations to take into account the broader benefits of public health and social investments, such as those in nutrition assistance or housing, in reducing healthcare costs. However, the polarized political landscape and procedural hurdles pose challenges to the realization of these potential savings and reforms.

Diabetes management tools not worth the cost, study finds. But digital health companies push back on 'flawed' analysis

By Heather Landi - A new analysis pours cold water on the effectiveness of widely used digital diabetes management solutions, stirring up discussion about how best to evaluate the growing market of digital health tools. Read Full Article…

VBA Article Summary

  1. Critical Evaluation of Diabetes Monitoring Apps: The Peterson Health Technology Institute (PHTI) released a report asserting that diabetes monitoring apps fall short of delivering meaningful clinical benefits and lead to increased healthcare spending. This conclusion is based on the analysis of eight widely used digital health tools designed to support individuals with Type 2 diabetes. Despite initial promises of improved health outcomes and financial savings, the report indicates these digital solutions achieve only minor and unsustainable reductions in hemoglobin A1c (HbA1c) levels, insufficient to alter the long-term health trajectory of users, including cardiovascular risks.

  2. Methodology and Findings: The PHTI conducted its analysis with the help of health technology assessment experts, clinical advisors, and economic analysis partners. The study meticulously evaluated clinical effectiveness and economic impact, reviewing over 1,100 articles and considering input from companies like DarioHealth, Omada, and Virta. Despite a vast investment in digital health tools for diabetes management—surpassing $58 billion—the report concludes that these tools not only fail to deliver on clinical improvements but also contribute to a net increase in healthcare spending for patients enrolled in Medicare, Medicaid, and commercial insurance plans.

  3. Industry Response and Future Directions: The report's findings have sparked significant debate within the digital health community, with some stakeholders questioning the PHTI's methodology and the breadth of its analysis. Critics, including representatives from DarioHealth and the Digital Therapeutics Alliance, argue the evaluation lacked precision, excluded real-world data, and made broad conclusions based on a limited sample. Conversely, Virta Health's approach to diabetes management through personalized nutrition therapy was highlighted as a promising solution. Moving forward, the PHTI plans to explore digital solutions for other health conditions, emphasizing the need for digital health tools to demonstrate clinically meaningful improvements and evidence-based benefits.

Nearly half of health systems are considering dropping Medicare Advantage plans

By Andrew Cass - "Onerous" authorization requirements and high denial rates have health systems considering whether to drop Medicare Advantage plans, according to a report from the Healthcare Financial Management Association and Eliciting Insights. Read Full Article…

VBA Article Summary

  1. Increasing Resistance to Medicare Advantage Plans: The HFMA Health System CFO Pain Points Study 2024 highlights a growing trend among health systems pushing back against Medicare Advantage (MA) plans. Specifically, 16% of health systems are planning to stop accepting one or more Medicare Advantage plans within the next two years, with an additional 45% considering such action. This decision stems from challenges such as delayed payments and inadequate reimbursements, with significant financial losses reported by entities like Scripps Health, which experienced a $75 million annual loss on MA contracts.

  2. Impact on Health Systems and Staffing: The dissatisfaction with Medicare Advantage plans is having tangible impacts on health system operations and staffing. For example, Bristol Health in Connecticut announced the elimination of 60 positions, including 21 layoffs, attributing these cuts directly to the financial strain caused by inadequate insurance payments and reimbursements from Medicare Advantage. This illustrates the broader operational and financial challenges health systems face as they navigate the complexities of Medicare Advantage contracts.

  3. Debate Over the Future of Medicare Advantage: While some health system leaders and executives criticize Medicare Advantage for its payment models and financial sustainability, others, including Sachin Jain, CEO of SCAN Group, and former CMS Administrator Don Berwick, MD, caution against abandoning Medicare Advantage. They argue that despite its flaws, the program is essential for serving low-income populations and has received high quality satisfaction ratings from enrollees. These contrasting views highlight the ongoing debate over the role and effectiveness of Medicare Advantage in the broader healthcare ecosystem, suggesting a need for systemic reforms to address underlying issues.

Medicare to cover Novo’s obesity drug for some patients

By Ben Fidler - Medicare will cover the costs of Novo Nordisk’s obesity drug Wegovy for some patients with a history of heart disease, a policy shift that could significantly open up access to the in-demand weight loss medicine. Read Full Article…

VBA Article Summary

  1. Medicare Part D Coverage Expansion for Obesity Drugs: The Centers for Medicare & Medicaid Services (CMS) announced a significant policy update allowing for obesity drugs, which gain Food and Drug Administration (FDA) approval for an “additional medically accepted indication,” to be covered under Medicare Part D plans. This includes drugs approved for reducing the risk of heart problems or treating diabetes. This new policy, initially applicable only to Novo’s Wegovy following its FDA approval expansion for heart health protection, represents a pivotal shift in Medicare’s approach to obesity treatment.

  2. Wegovy’s Clinical Success and Market Impact: Wegovy distinguished itself from competitors through clinical trials demonstrating a 20% reduction in the risk of heart attacks, strokes, or cardiovascular death, marking a significant advancement over other obesity and diabetes medications. This clinical evidence has been crucial in advocating for insurance coverage, despite Wegovy’s high list price exceeding $1,300 per month. The drug has achieved rapid sales growth, generating approximately $4.5 billion in 2023, amid challenges in meeting demand due to manufacturing constraints.

  3. Potential for Wider Access and Industry Implications: The CMS’s updated guidance is anticipated to foster broader access to Wegovy and similar obesity drugs by enabling Medicare Part D coverage for uses beyond mere weight loss, contingent upon prior authorization to verify medical necessity. This development, coupled with Wegovy’s commercial success, underscores the substantial market potential for obesity treatments, with projections suggesting that obesity drugs could generate $158 billion in annual sales by 2032, potentially elevating them among the most lucrative sectors in pharmaceutical history.

FDA Settles Ivermectin Case, Agrees to Remove Controversial ‘Stop It’ Post

By Zachary Stieber - The U.S. Food and Drug Administration (FDA) has agreed to remove social media posts and webpages that urged people to stop taking ivermectin to treat COVID-19, according to a settlement dated March 21. Read Full Article…

VBA Article Summary

  1. FDA Settlement and Page Removal: The FDA has agreed, as part of a settlement with doctors who sued the agency, to remove specific pages and social media posts that advised against the use of ivermectin for treating or preventing COVID-19. This includes a page explicitly stating individuals should not take ivermectin for COVID-19 and a notable tweet cautioning that "You are not a horse. You are not a cow. Seriously, y’all. Stop it." The settlement follows a federal court ruling in southern Texas, mandating these actions within a stipulated timeframe.

  2. Ivermectin's Status and FDA's Position: Despite removing the contentious materials, the FDA maintains that ivermectin is not authorized or approved for preventing or treating COVID-19 in humans or animals. The agency continues to assert that existing clinical trial data do not support ivermectin's effectiveness against COVID-19. This stance is part of the FDA's broader mandate to ensure public health safety and the efficacy of regulated medical products, despite ivermectin being FDA-approved since 1996 for other conditions.

  3. Legal and Medical Controversy: The lawsuit that led to the settlement was initiated by doctors who faced professional and legal repercussions for prescribing ivermectin to COVID-19 patients. They argued that the FDA's public statements and guidance exceeded its statutory authority, affecting doctors' ability to practice medicine and interfering with the doctor-patient relationship. While a U.S. District Judge initially dismissed the case, an appeals court later ruled in favor of the doctors, emphasizing that the FDA can inform the public but does not have the authority to recommend that consumers stop taking a medicine. This landmark ruling and subsequent settlement have been framed by the plaintiffs as a victory against FDA overreach and a protective measure for the doctor-patient relationship.

HHS Secretary Becerra: We’re with You on Telehealth Flexibilities

By Jim Parker - Telehealth flexibilities must become permanent U.S. Health and Human Services (HHS) Secretary Xavier Becerra indicated in a congressional hearing [March 20th, 2024]. Read Full Article…

VBA Article Summary

  1. Expiration of Pandemic-Era Telehealth Flexibilities: The flexibilities in telehealth services, which were implemented during the pandemic, are set to expire by the end of this year. The U.S. Department of Health and Human Services (HHS) Secretary, Becerra, emphasized the importance of these services at a U.S. House Ways and Means Committee hearing, stating HHS's willingness to make these flexibilities permanent. However, he highlighted the necessity of closer collaboration with state governments due to the state-specific licensing of healthcare providers, which affects the ability to offer telehealth services across state lines.

  2. Legislative Efforts to Make Telehealth Permanent: In response to the impending expiration of telehealth flexibilities, bipartisan efforts in Congress aim to secure their permanence. U.S. Senator Chuck Grassley (R-Iowa) and 59 bipartisan co-sponsors have reintroduced the Creating Opportunities Now for Necessary and Effective Care Technologies (CONNECT) for Health Act. This proposed legislation seeks to extend Medicare coverage of telehealth services beyond the pandemic, remove geographic restrictions, expand originating sites to include homes, and allow health centers and eligible professionals to provide telehealth services, highlighting the essential role telehealth has played in the healthcare system.

  3. Impact on Hospice and Palliative Care: The potential expiration of telehealth flexibilities poses a significant concern for hospice and palliative care services, as noted by Patrick Harrison, senior director of regulatory and compliance at the National Hospice and Palliative Care Organization (NHPCO). Telehealth has facilitated equitable care, increased patient and family interaction, and enhanced visibility into patients' conditions amid staffing challenges. The CONNECT for Health Act is seen as a critical measure to protect and improve access for U.S. hospice patients, emphasizing the urgent need for legislative action to maintain telehealth services in the post-pandemic era.

HSA Balances on the Rise, Despite Higher Spending on Health Care

By Remy Samuels - In the face of rising health care expenditures and out-of-pocket spending, average health savings account balances have also steadily increased since the COVID-19 pandemic, according to new data from the Employee Benefit Research Institute. Read Full Article…

VBA Article Summary

  1. Substantial Increase in HSA Balances: The average balance in Health Savings Accounts (HSAs) saw a significant increase, rising from $2,711 at the start of 2022 to $4,418 by the end of the year, according to the Employee Benefit Research Institute (EBRI). This trend is expected to continue through 2023 and into early 2024, as individuals have the opportunity to make contributions to their 2023 HSAs up until the tax filing deadline in April.

  2. Factors Influencing HSA Balances: EBRI identified two main factors associated with higher HSA balances: age and account tenure. Older accountholders tend to have higher balances due to more disposable income and greater healthcare expenses, which motivates higher contributions. Similarly, longer account tenure results in higher balances as a result of sustained contributions from both the account holder and their employer over time. Despite high participation in withdrawals (with an average of $1,868 in 2022), few account holders depleted their HSAs, indicating a strategic use of these accounts to benefit from tax-free contributions, growth, and withdrawals for healthcare expenses.

  3. Diverse Utilization and Contributions Strategy: The report highlighted a varied approach to HSAs among workers, with some viewing them as short-term spending accounts and others as long-term savings vehicles. Employer contributions play a significant role in how accountholders use their HSAs, with those receiving employer contributions more likely to take larger distributions. Conversely, accountholders without employer contributions tend to contribute more personally. The study also found that accountholders with higher balances are more inclined to invest their HSAs, though overall, a small percentage (13%) choose to invest, reflecting a cautious approach towards maintaining liquidity for healthcare expenses. EBRI emphasizes the critical role of plan sponsors and administrators in guiding accountholders towards understanding the long-term benefits and tax advantages of HSAs.

Providers 'wasted' $10.6B in 2022 overturning claims denials, survey finds

By Dave Muoio - More than 100 provider organizations want the Centers for Medicare & Medicaid Services (CMS) to take a tougher stance on Medicare Advantage (MA) plans’ practices following an industry survey estimating billions per year are spent fighting claims denials. Read Full Article…

VBA Article Summary

  1. Significant Financial Burden on Providers: Providers spent nearly $20 billion in 2022 on the process of addressing delays and denials for reimbursement claims across all payer types. This process proved particularly expensive when dealing with private insurance plans. Premier's analysis, based on a survey of 516 acute care hospitals, highlighted that over half of this cost—about $10.6 billion—was essentially wasted on disputes over claims that should have been approved at the initial submission. The administrative cost per claim was markedly higher for private payers compared to Medicare, indicating a substantial financial strain on healthcare providers.

  2. High Rate of Denials and Administrative Challenges: Nearly 15% of all claims submitted to private payers were initially denied, with a small percentage of these denials including claims that had been pre-approved through prior authorization. The process of overturning these denials is both time-consuming and costly, with hospitals and health systems reporting an average expenditure of $43.84 per claim. This not only impacts the financial health of healthcare providers but also delays patient care, with hospital discharges to post-acute care settings being particularly affected.

  3. Advocacy for Policy Changes and Accountability: Premier's report served as a foundation for a collective appeal to CMS, advocating for stricter regulations and oversight of Medicare Advantage (MA) plans. The organization, along with 118 partnered providers, urged CMS to enforce transparency and timely payment practices, highlighting the negative repercussions of payment delays on both patient care and healthcare providers' financial viability. They recommended policy adjustments to hold MA plans accountable, including more stringent monitoring and the inclusion of delayed payment metrics in MA plan quality scores.