Daily Industry Report - March 7

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)

Health providers ask feds to intervene in cyber outage

By Tina Reed - Health providers are slamming UnitedHealth Group's response to the crippling ransomware attack against its subsidiary Change Healthcare and are pressing the Biden administration to intervene. Read Full Article…

VBA Article Summary

  1. Impact on the Healthcare System: Hospitals and other healthcare entities are experiencing significant delays in payment systems due to an attack on Change Healthcare. This has led to concerns about these organizations running dangerously low on cash as they await resolution. The American Hospital Association (AHA) has expressed that the Temporary Funding Assistance Program announced by UnitedHealth Group is insufficient, highlighting the critical situation faced by healthcare providers.

  2. Calls for Government Intervention: In response to the crisis, the American Hospital Association, the American Medical Association, and Senate Majority Leader Chuck Schumer have publicly urged the Department of Health and Human Services (HHS) to intervene. They are advocating for HHS to provide accelerated and advanced payments from federal health programs and to instruct commercial insurers to offer accommodations. There is also a specific demand for HHS to hold UnitedHealth Group accountable for resolving the issue and for implementing a significant financial assistance program.

  3. UnitedHealth Group's Response: UnitedHealth Group, which acquired Change Healthcare in 2022, has stated that its experts are actively working to address the attack on Change Healthcare's systems. The company is collaborating with law enforcement and third-party consultants, including Mandiant and Palo Alto Networks, to manage the situation. UnitedHealth Group emphasizes that patient care remains their top priority, assuring that they have established multiple workarounds to ensure access to necessary medications and care despite the ongoing disruptions.

HVBA Poll Question - Please share your insights

What do you believe is the primary factor contributing to the average 20% increase in pharmacy costs as a percentage of total medical spending for businesses:

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 “absolutely believe and would engage in the legal importation of specialty medications” when asked if they would advise clients to import speciality or high cost brand drugs like Ozempic, Mounjaro, Wegovy from abroad to save 35-50% off U.S. prices of $850, $1,070, $1,670 per month respectively.

26.83% of respondents have no opinion on the matter or are neutral, neutral or uncertain, 25.25% would consider it, but not too familiar with the process, while 20.41% do not believe or have trust in medications being sourced outside of the U.S. pharmacies.

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

Congress reaches spending deal with doc pay bump, delayed DSH cuts and more

By Dave Muoio - A bipartisan spending bill unveiled Sunday narrows some of this year’s cuts to physician Medicare pay, pushes back scheduled disproportionate share hospital (DSH) payment cuts and increases annual funding for community health centers, among other provisions that would prevent a partial government shutdown on March 8, if signed. Read Full Article…

VBA Article Summary

  1. Bipartisan Funding Agreement: The 1,050-page legislative package, receiving support from leaders of both red and blue parties, details funding allocations for several federal agencies, including the Food and Drug Administration and the Department of Veterans Affairs. It's part of an effort to secure funding for parts of the government by a March 22 deadline, with a second set of bills anticipated for additional departments like the Department of Health and Human Services.

  2. Healthcare Funding Adjustments: The deal proposes adjustments to healthcare funding, notably by mitigating the anticipated pay decrease for doctors under the 2024 Medicare Physician Fee Schedule with a 1.68% raise. This increment, alongside a previous increase, results in a 2.93% total payment boost for the year. Additionally, it postpones an $8 billion-per-year cut to Medicaid Disproportionate Share Hospital (DSH) payments until 2025 and extends funding for several programs benefiting hospitals and health centers, including a significant increase in funding for community health centers to $4.27 billion annually.

  3. Mixed Reactions and Future Priorities: While the legislative package has been praised for preventing immediate cuts and offering stability to healthcare providers, some express disappointment over omitted reforms. Notable concerns include delays in addressing Medicaid prescription drug costs, mental health care expansions, and practices by pharmacy benefit managers. Senate Finance Committee Chair Ron Wyden voiced frustration over the missed opportunity to incorporate these critical, bipartisan measures, indicating a commitment to advancing these priorities despite current setbacks.

Mark Cuban’s Cost Plus Drugs will begin manufacturing its own medications this week

By Lindsey Leake - The Mark Cuban Cost Plus Drug Company will begin manufacturing its own medications in Texas this week, cofounder and CEO Dr. Alex Oshmyansky announced Monday during a White House roundtable on lowering health care costs. Read Full Article…

VBA Article Summary

  1. Innovative Manufacturing Approach: Cost Plus Drugs is revolutionizing pharmaceutical manufacturing in the U.S. by leveraging advanced robotic and AI computer vision technology. This state-of-the-art approach enables the company to quickly pivot its production capabilities—from one drug type to another within just four hours—allowing it to respond swiftly to drug shortages. This flexibility is critical for producing essential medications like epinephrine and norepinephrine, and soon, pediatric oncology drugs, thereby ensuring that vital treatments are readily available, especially in urgent care scenarios.

  2. Direct-to-Consumer Model Minimizing Costs: Founded by Dr. Alex Oshmyansky and billionaire entrepreneur Mark Cuban in January 2022, Cost Plus Drugs aims to disrupt the traditional pharmaceutical supply chain by manufacturing drugs without intermediaries. The company's direct-to-consumer model facilitates low and transparent pricing for over 2,500 medications, with plans to expand its offerings as widely as regulations permit. This approach not only makes critical medications more accessible to patients but also promises sustainability and profitability without resorting to exorbitant pricing.

  3. Addressing the Role of Pharmacy Benefit Managers (PBMs): During a White House roundtable discussion, Mark Cuban and other leaders highlighted the problematic role of pharmacy benefit managers (PBMs) in the pharmaceutical industry. PBMs, which orchestrate 90% of drug purchasing in the U.S., have been criticized for undermining independent pharmacies and prioritizing profits over patient health. By offering a transparent overview of its manufacturing costs and bypassing traditional PBM-controlled supply chains, Cost Plus Drugs is positioning itself as a viable alternative that prioritizes health over profit, challenging the status quo and advocating for more equitable access to essential medications.

Whistleblower Accuses Aledade, Largest US Independent Primary Care Network, of Medicare Fraud

By Fred Schulte - A Maryland firm that oversees the nation’s largest independent network of primary care medical practices is facing a whistleblower lawsuit alleging it cheated Medicare out of millions of dollars using billing software “rigged” to make patients appear sicker than they were. Read Full Article…

VBA Article Summary

  1. Allegations of Fraudulent Practices: The civil suit claims that Aledade Inc. manipulated medical billing through its software and guidance by encouraging doctors to inflate patients' medical conditions in electronic records. Specifically, the lawsuit accuses Aledade of exaggerating diagnoses, such as misclassifying anxiety as depression and unjustifiably diagnosing substance use issues, to increase payments from Medicare, potentially boosting revenues by thousands of dollars per patient.

  2. Whistleblower Lawsuit and Aledade's Defense: Filed by Khushwinder Singh, a former Aledade employee, the lawsuit alleges that he was terminated after objecting to the company's practices. Aledade, however, has denied the accusations, calling the case "baseless" and "meritless." Despite the controversy, the company emphasizes its commitment to high-quality, value-based care and intends to vigorously defend itself in court. The case, which also implicates 19 independent physician practices, is notable as it targets upcoding within accountable care organizations (ACOs), a sector that has not previously been the focus of such allegations.

  3. Impact and Broader Context: This case shines a light on the challenges and controversies surrounding medical billing practices, particularly within the Medicare Advantage program. It raises questions about the integrity of ACOs, which are designed to promote cost savings and improve healthcare quality. The lawsuit also comes at a time when Aledade, a prominent player in the healthcare industry with significant venture capital investment, is under scrutiny for its billing practices, despite its rapid growth and stated mission to enhance healthcare outcomes.

UnitedHealth Group: vulnerable and ill-equipped to defend against modern threats like cyberattacks

By Wendell Potter - UnitedHealth's recent cyberattack underscores a critical truth: no entity, no matter how vast its resources, is immune to the ever-looming threat of cybercrime. This breach, resulting in the potential theft of sensitive patient data, is a stark reminder of the urgent need for comprehensive health care reform–and reining in the growing power for-profit corporations like UnitedHealth have over all of us. Read Full Article…

VBA Article Summary

  1. Profit-Driven Healthcare Vulnerabilities: The article criticizes the health care industry's profit-driven model, emphasizing how prioritizing financial gain over patient well-being has made the health care infrastructure susceptible to cyberattacks. It highlights a significant breach involving UnitedHealth, underscoring the risks of consolidating patient and provider data under a few large corporations. This model not only threatens patient data security but also prioritizes shareholder value, impacting the overall quality and accessibility of health care.

  2. Impact of Cyberattacks on Health Care Operations: It details the aftermath of a cyberattack on UnitedHealth Group, particularly focusing on the subsidiary Change Healthcare. The attack disrupted payments to thousands of doctors and hospitals, affecting their operations and financial stability. While UnitedHealth executives might suffer temporary losses in net worth due to stock price fluctuations, the company benefits from holding onto premium incomes longer. This situation contrasts sharply with the financial strain on health care providers, who receive inadequate support from UnitedHealth during the crisis.

  3. Call for Systemic Health Care Reform: The article advocates for health care reform that prioritizes patient safety and security over profits. It calls for robust cybersecurity regulations to protect patient data and criticizes the unchecked expansion of large health care corporations like UnitedHealth. By promoting a patient-centered model and holding corporations accountable, the author suggests that a reimagined health care system can better serve Americans, addressing both the security risks posed by cyber threats and the broader issues of corporate greed in health care.

34.5% of hospitals complying with price transparency rule, report says

By Andrew Cass - A PatientRightsAdvocate.org report from Feb. 29 found that just 689 (34.5%) of 2,000 hospitals it examined were fully compliant with federal price transparency rules. Read Full Article…

VBA Article Summary

  1. Widespread Noncompliance with Price Transparency Requirements: The latest report indicates a significant number of hospitals, 1,311 in total, are not fully compliant with price transparency regulations. The primary issue identified was the lack or significant incompleteness of pricing data, which suggests many hospitals struggle with or neglect the detailed requirements set forth for price transparency.

  2. Varying Levels of Compliance Among Major Health Systems: A notable disparity in compliance rates exists among major hospital networks. For example, hospitals owned by Community Health Systems and Universal Health Services showed high compliance rates of 100% and 96% respectively, whereas no hospitals under HCA Healthcare, Tenet Healthcare, and several others were found to be compliant. This highlights a varied landscape of adherence to transparency regulations across different healthcare organizations.

  3. Challenges and Enforcement Actions: The American Hospital Association (AHA) has expressed concerns over the methodology and fairness of compliance reports not issued by the Centers for Medicare & Medicaid Services (CMS), citing discrepancies in interpreting certain aspects of the transparency rule. Meanwhile, CMS has actively enforced these regulations, imposing fines on 14 hospitals for noncompliance as of March 1, with several of these cases currently under appeal. This indicates ongoing efforts to enforce price transparency, despite the challenges and pushback from some in the healthcare industry.

Judge rejects AstraZeneca’s challenge to Medicare drug price negotiations

By Annika Kim Constantino - A federal judge on Friday rejected AstraZeneca’s legal challenge to Medicare’s new power to negotiate the prices of certain costly prescription drugs with manufacturers. Read Full Article…

VBA Article Summary

  1. Legal Victory for the Biden Administration: The Biden administration secured another victory in its legal battle with the pharmaceutical industry over the constitutionality of price negotiations mandated by the Inflation Reduction Act, designed to lower medication costs for seniors. This clash centers around the Act's provisions that could significantly impact pharmaceutical profits. Despite this win, the industry plans to escalate the matter to the Supreme Court, highlighting the ongoing legal contention surrounding the policy.

  2. Dismissal of AstraZeneca's Lawsuit by U.S. District Judge: A crucial deadline loomed as U.S. District Judge Colm Connolly dismissed AstraZeneca's lawsuit, which argued that the price negotiations for Medicare would violate constitutional rights by forcing the sale of medicines at below-market rates. Connolly's 47-page opinion emphasized that AstraZeneca's participation in Medicare is voluntary and does not constitute a protected property interest, thereby supporting the government's position and setting a precedent for how similar cases might be judged.

  3. Navigating New Regulatory Landscapes: The First Round of Drug Price Negotiations: The first round of price negotiations under this policy involves 10 drugs, including AstraZeneca's Farxiga, with manufacturers required to respond to Medicare's initial price offers shortly. These prices will take effect in 2026, indicating a significant shift in how drug prices are determined for Medicare and Medicaid beneficiaries. Despite the ruling, pharmaceutical companies, including AstraZeneca, express concern over the potential adverse effects on patient access to future medications, indicating a fraught path forward as the industry navigates these new regulatory landscapes.

US urges court to preserve Obamacare mandate to cover cancer screenings, HIV drugs

By Brendan Pierson - President Joe Biden's administration on Monday urged a U.S. appeals court to preserve a federal mandate that requires health insurers to cover preventive care services including HIV-preventing medication and cancer screenings at no extra cost to patients. Read Full Article…

VBA Article Summary

  1. Legal Challenge to ACA's Preventive Care Mandate: A lawsuit led by Texas-based Braidwood Management, primarily over the coverage of HIV pre-exposure prophylaxis (PrEP) drugs, argues that the Affordable Care Act's (ACA) mandate giving a federal task force the power to decide which preventive services insurers must cover without co-pays violates the U.S. Constitution. The contention is that the task force has too much authority without being appointed by the president or confirmed by the Senate.

  2. Federal Judge Blocks ACA Mandate Nationwide: U.S. District Judge Reed O'Connor ruled in March 2023 that the ACA's preventive care mandate was unconstitutional, siding with the plaintiffs' argument. This ruling, if left in effect, would remove the requirement for insurers to cover a wide range of preventive services chosen by the task force, affecting millions of Americans' access to critical, life-saving services.

  3. Administration's Appeal for Narrower Court Order: The Biden administration, through lawyer Daniel Aguilar, urged the 5th U.S. Circuit Court of Appeals to overturn O'Connor's ruling or at least narrow its scope to preserve as much of the ACA's preventive care provisions as possible. The administration argues that Secretary of Health and Human Services Xavier Becerra's Senate confirmation allows him to retroactively approve the task force's decisions, a point contested by the plaintiffs.

U.S. suspending free COVID test distribution once again

By April Rubin and Sareen Habeshian - Americans won't be able to order free COVID tests from the U.S. government again after Friday, the Department of Health and Human Services told Axios Monday. Read Full Article…

VBA Article Summary

  1. Updated Health Guidelines and Vaccine Recommendations: The CDC has recently adjusted its isolation guidelines regarding COVID-19 and is advocating for older adults to get a second dose of the updated COVID-19 vaccine. This adjustment reflects ongoing efforts to adapt to the changing dynamics of the pandemic and emphasizes the importance of vaccination among vulnerable populations to mitigate the effects of the virus.

  2. Suspension and Potential Resumption of Free COVID Test Program: The Department of Health and Human Services (HHS) temporarily halted its free COVID-19 test distribution program due to a decrease in case rates following the winter respiratory season. However, the agency remains open to resuming the program if necessary. Despite the suspension, orders for free tests placed on or before a specific cutoff date will still be fulfilled. The initiative, which allowed every U.S. household to order a total of eight tests since the fall, successfully distributed over 1.8 billion tests through COVIDTests.gov and its direct affiliates since the onset of the pandemic.

  3. Ongoing Distribution of Tests and Public Health Measures Post-Emergency: Even after the suspension of the free test program and the end of the U.S.'s public health emergency status in May, which also concluded the mandate for private insurance to cover free over-the-counter COVID tests, the HHS's Administration for Strategic Preparedness and Response continues to distribute millions of tests weekly to critical sectors such as long-term care facilities, food banks, health centers, and schools. This effort highlights the government's commitment to maintaining access to testing in key areas, despite shifts in policy and the overall public health strategy.

States eye (and deny) 4-day workweek

By Alexis Kayser - A number of states are sitting on legislation that would advance a four-day workweek, while some have already begun the shift. Read Full Article…

VBA Article Summary

  1. Public Support vs. Executive Hesitancy: The Debate Over a Shorter Workweek: The concept of a shortened workweek garners significant support among the U.S. workforce, with a July survey indicating 81% of full-time employees favor a four-day schedule. Despite this, the transition faces skepticism from executives concerned about productivity post-COVID, who prefer traditional five-day workweeks. Legislation like the Thirty-Two Hour Workweek Act, introduced by Rep. Mark Takano and co-sponsored by representatives from Washington and Illinois, seeks to officially reduce the standard workweek from 40 to 32 hours, yet remains under review in the House of Representatives.

  2. State-Level Initiatives: Progress and Setbacks in the Four-Day Workweek Movement: States like Massachusetts, Maryland, and Pennsylvania have explored their own versions of the four-day workweek through proposed legislation and pilot programs, reflecting a growing interest in adapting work schedules to improve work-life balance and potentially enhance productivity. While Massachusetts moves forward with its pilot program, Maryland's efforts faced withdrawal due to lack of support, and Pennsylvania continues to develop proposals aimed at reducing work hours without cutting employee pay.

  3. The Future of Work: Navigating Challenges and Opportunities in Workweek Reform: Educational sectors in states like Missouri and Texas are experimenting with four-day school weeks, citing benefits such as improved staff recruitment and retention, alongside neutral impacts on academic performance. However, the shift has prompted mixed reactions regarding economic implications and the adequacy of services provided to the community, leading to legislative amendments and proposals to regulate or incentivize the adoption of the shorter school week based on local preferences and needs.