House price transparency legislation passes with bipartisan support

By Noah Tong - The Lower Costs, More Transparency Act, which advances policies to force pharmacy benefit managers and hospitals to meet price transparency standards, passed on the House floor Monday by a vote of 320 to 71. Read Full Article…

VBA Article Summary

1. Legislative Progress and Opposition: The comprehensive healthcare package, which initially seemed doomed due to being pulled from a vote months ago, has recently gained momentum with bipartisan support. Despite this resurgence, it faced opposition in the House with 39 Republicans and 31 Democrats voting against it, and one Democrat voting present. The bill required a two-thirds majority to pass under suspension of the rules.

2. Bill Provisions and Funding Allocations: The legislation mandates healthcare providers and Pharmacy Benefit Managers (PBMs) to list prices publicly before charging patients and requires hospitals to publish charges in machine-readable files. It aims to eliminate $16 billion in cuts to the Disproportionate Share Hospital (DSH) program through 2025 and allocates $7 billion to the Medicaid Improvement Fund, with an additional $15 billion directed towards community health centers and addressing physician shortages in underserved areas.

3. Debate and Perspectives on Price Transparency and Funding: The bill, championed by leading House members, seeks to enhance price transparency, allowing consumers to compare health insurers’ rates and hospital charges. Despite the Congressional Budget Office’s analysis predicting $715 million in savings from 2024 to 2033, concerns persist about the bill's potential to increase deficits in the initial years. The bill has sparked debates over site-neutral Medicare cuts and the impact of private equity on healthcare costs. Hospital groups have expressed concerns over site-neutral payment provisions for Medicare Part B, and amendments are anticipated to address privacy concerns related to drug price data for employees.

Healthcare Is Chaotic: 5 Lessons Drawn From Colliding Spaces To Inspire Better Health

By Bill Frist - Healthcare in the U.S. is costly, confusing, inconsistent, and poorly organized. The patient suffers. It is notoriously not consumer friendly, yet we all entrust our lives to it. At its best, it is the best in the world. But on average, it’s inefficient, chaotic, and uneven. But we can change that. We can by listening to others. Read Full Article…

VBA Article Summary

1. Innovative Collaboration in Healthcare: Nashville, often likened to the Silicon Valley of health services, hosted an event by Frist Cressey Ventures that brought together healthcare CEOs, thought leaders, and entrepreneurs with leaders from diverse industries like information technology and entertainment. This event, set in a picturesque farm near Nashville, aimed to foster innovative solutions in healthcare by integrating insights from various sectors.

2. Leadership Insights and Passion for Change: The conference featured influential speakers like Alex Gorsky, former Chairman and CEO of Johnson & Johnson, and Larry Ellison, Chairman and CTO of Oracle. They emphasized the importance of passion, leadership, and embracing change in the healthcare sector. For instance, Gorsky discussed the significance of personal mission and passion in leadership, while Ellison highlighted the potential of technology and AI in transforming healthcare.

3. Emphasizing Discipline, Culture, and Personal Health: Other key messages from the event included the importance of discipline in business (highlighted by HCA Healthcare CEO Sam Hazen), the impact of organizational culture on success (mentioned by Gorsky and others), and the need to prioritize personal health and well-being, as discussed by Alex Gorsky and Dr. Marc Watkins of Kroger Health. These insights aimed to inspire healthcare leaders to integrate these principles into their practices for better outcomes.

HR 101: The history of the healthcare FSA

By Amanda Schiavo - The history. FSAs are an employer-provided specialized pre-tax account designed to help employees pay for specific out-of-pocket medical expenses, according to healthcare.gov. They were created in response to the Revenue Act of 1978, a key piece of tax reform legislation that aimed to reduce income taxes, among other things. Read Full Article…

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1. Use-It-or-Lose-It Rule and Its Impact: Since 1983, Flexible Spending Accounts (FSAs) have been governed by the IRS-imposed "use-it-or-lose-it" rule, which mandates that employees spend their FSA funds within the year or forfeit them to their employer. This rule, implemented to prevent the use of FSAs for income hiding, has been a major deterrent for employees considering FSA enrollment.

2. Evolution of FSA Rules and Utilization Trends: In 2014, the IRS introduced a modification allowing employers to permit employees to roll over up to $500 of unspent FSA funds. Despite this change and the fact that nearly two-thirds of U.S. employers offered healthcare FSAs in 2023, a significant knowledge gap remains among employees. Many are unaware of the full extent of eligible FSA expenses, leading to 68% of FSA holders having unspent funds by the end of 2021, with an average of $455 left unused.

3. The Role of HR in FSA Education: Human Resources departments are encouraged to educate employees about FSA benefits and the importance of the use-it-or-lose-it rule. Lisa Myers, director of client services for WTW, emphasizes the need for awareness of the wide range of FSA-eligible products, such as over-the-counter medications and everyday items like Band-Aids and contact lens solution. As the end of the year approaches, HR should prompt employees to review their FSA balances and make informed decisions on their healthcare spending.

Global Atlantic, John Hancock Strike Biggest LTCI Reinsurance Deal Ever

By Allison Bell - Global Atlantic has agreed to take responsibility for a block of John Hancock long-term care insurance policies backed by $4.4 billion in reserves through a reinsurance agreement. Read Full Article…

VBA Article Summary

1. Significant LTCI Reinsurance Deal Announced by Manulife: Manulife Financial, the Toronto-based parent company of John Hancock, recently announced a landmark long-term care insurance (LTCI) reinsurance agreement with Global Atlantic, described as the largest of its kind. Mark Costantini, Manulife's Global Head of In-Force Management, indicated during a conference call that this deal is part of a broader strategy to engage in more significant LTCI reinsurance transactions. This move is seen as a potential catalyst for rejuvenating the LTCI market, with Manulife CEO Roy Gori highlighting its importance in establishing an active LTCI reinsurance market.

2. LTCI Market Trends and the Role of Reinsurance: The LTCI market experienced a boom in the 1980s and 1990s but faced challenges due to underpricing and regulatory changes. Many insurers, including John Hancock, exited the individual LTCI market. However, there are recent signs of revival, with companies like National Guardian Life, Mutual of Omaha, and New York Life continuing to offer LTCI policies. Reinsurance deals, though previously rare, are gaining attention as a method for insurers to manage LTCI risks, as evidenced by CNO Financial's deal with Wilton Re and Continental General's acquisitions.

3. Future Prospects and Strategic Shifts in LTCI: The Global Atlantic-Manulife deal reflects a strategic shift in the LTCI market. Companies are looking to dispose of legacy businesses and focus on more profitable ventures, while also exploring reinsurance as a way to mitigate risks associated with LTCI policies. This trend is expected to influence the market dynamics, potentially leading to more active trading of LTCI policies and encouraging insurers to offer new and innovative LTCI products. The deal sets a precedent and framework for future transactions in the LTCI reinsurance space.

WTW: Global insurers brace for healthcare cost hikes over next several years

By Paige Minemyer - More than half of global health insurers are expecting significant increases in healthcare costs over the next several years, according to a new report. Read Full Article…

VBA Article Summary

1. Rising Global Medical Costs: A survey by WTW involving 266 insurers across 66 countries reveals a trend of increasing medical costs. In 2023, global medical costs surged by 10.7%, a significant jump from the 7.4% increase in 2022. Insurers are anticipating an average cost trend of 9.9% for the next year, with notable regional variations. The Middle East and Africa, for instance, are expected to see a rise from 11.3% in 2023 to 12.1% in 2024.

2. Multiple Factors Driving Cost Increases: The report identifies several factors contributing to the escalating costs. Ongoing global inflation is a major challenge, though it showed signs of moderation over the year. The impact of COVID-19 persists, with delayed elective procedures and preventive surgeries now resuming, leading to normalized utilization levels. This delay has resulted in later diagnoses, potentially increasing future costs. Additionally, over 59% of insurers cited the overuse of care as a key cost driver, alongside poor health behaviors and a lack of preventive care as identified by nearly half of the insurers.

3. Insurers' Response and Future Outlook: To combat rising costs, about 54% of the insurers have added well-being benefits in 2023, and 41% have introduced telehealth benefits. Alan Silver from WTW highlights the complex situation, referring to it as a "perfect storm" due to the combined effects of the economy, post-pandemic challenges, and new market innovations. Despite regional variations in the impact of prescription drug costs, the trend remains a global concern, indicating a need for continued adaptation and strategic planning by insurers worldwide.

Maker of Wegovy, Ozempic showers money on U.S. obesity doctors

By Chad Terhune and Robin Respaut - Dr. Lee Kaplan took the stage with an urgent message, telling fellow physicians they have a powerful weapon to fight the American obesity crisis: their prescription pads. Read Full Article…

VBA Article Summary

1. Shift to Medication-Based Obesity Treatment: Dr. Lee Kaplan, a leading U.S. obesity specialist, advocates for using a new generation of weight-loss medicines, such as Wegovy by Novo Nordisk, to treat obesity. He emphasizes treating obesity with the same intensity as chronic diseases like high blood pressure or diabetes, suggesting lifelong prescriptions. This approach aligns with Novo Nordisk’s financial goals as they transition to become a major player in the weight-loss industry, targeting a vast market of overweight individuals, particularly in the United States.

2. Financial Ties and Influence in the Medical Community: The article reveals significant financial relationships between Novo Nordisk and U.S. doctors, including Dr. Kaplan, who received $1.4 million from Novo for consulting and travel from 2013 to 2022. Novo Nordisk has invested heavily in promoting its obesity drugs, Wegovy and Saxenda, to U.S. physicians, spending at least $25.8 million over the past decade. These payments are part of a broader strategy to popularize Wegovy as one of history's most prescribed drugs and to convince insurers to cover its cost.

3. Debate Over Prescription Practices and Drug Costs: The wide prescription of drugs like Wegovy is controversial. Some healthcare professionals question the wisdom of broadly dispensing these medications, especially to overweight individuals without other weight-related conditions. Concerns include serious side effects, high treatment costs, and the need for more research. Critics argue that the promotion of these drugs by paid experts might prioritize corporate profits over patient well-being, contributing to higher healthcare costs without guaranteed long-term benefits.

CVS’ drug price revamp may not help consumers much

By Tami Luhby - CVS Pharmacy is promising to make its drug pricing system simpler and more transparent. But that may not translate into lower costs or more clarity for consumers. Read Full Article…

VBA Article Summary

1. Introduction of CVS CostVantage Model: CVS announced the new CVS CostVantage model, aiming to revamp payment methods for prescription medications in its pharmacies. This model will calculate payments using a formula that includes the cost of the drug, a set markup, and a fee reflecting the value of pharmacy services. The move is a response to the public demand for lower drug prices and increasing pressure on pharmaceutical supply chain players to reduce costs.

2. Impact on Consumers and Market Dynamics: The CVS CostVantage model will not directly change prices for consumers at the pharmacy counter. The arrangement primarily involves CVS Pharmacy, pharmacy benefit managers (PBMs), and payors like insurers and employers. The company, which operates CVS Caremark, the largest PBM in the U.S., states that the new model will bring more transparency and sustainability to its pharmacy chain. Consumers' out-of-pocket costs will still be determined by their drug coverage benefits, and the new model will begin in 2025 with commercial payors.

3. Critique and Comparison to Competitors: Critics and experts are skeptical about the potential benefits of CVS CostVantage to consumers, questioning whether it will genuinely reduce drug costs or is merely a strategic response to market pressure and competition. The model is compared to Mark Cuban's Cost Plus Drug Company, which offers a more direct and transparent pricing structure for generic drugs. Experts suggest that CVS's new model may not significantly lower costs and could be seen as an attempt to maintain market position rather than a genuine effort to reduce drug prices.

Walgreens Cut to Junk By Moody’s on Healthcare Strategy Push

By Allison Nicole Smith and Olivia Raimonde - Walgreens Boots Alliance Inc. had its senior unsecured credit rating cut to junk by Moody’s Investors Service, with the credit grader citing the drugstore chain’s high debt relative to earnings and risks associated with its push to offer more healthcare services. Read Full Article…

VBA Article Summary

1. Moody's Downgrades Walgreens: Moody's Investors Service downgraded Walgreens' credit rating to Ba2, indicating a shift to high-yield status. This decision was based on the company's significant financial leverage, weak interest coverage, and strained free cash flow, expected to persist for the next 12-18 months. The downgrade led to a 2.9% drop in Walgreens shares, ultimately closing down 0.7%. Despite this, Walgreens has maintained the lowest investment-grade rank with S&P Global Ratings and is not rated by Fitch Ratings.

2. Walgreens' Strategic Shift and Financial Challenges: The downgrade occurs amidst Walgreens' strategic pivot from drugstore operations to patient care, a move that has exposed weaknesses in its business model. The company plans to close 450 stores and reduce its workforce by 10% to focus more on patient care. Despite efforts to reduce its debt, including a $1 billion cost-cutting program and reducing capital expenditures, Walgreens' debt is expected to peak at around 6 times its earnings before interest, taxes, depreciation, and amortization by the end of the 2024 fiscal year. The company has also accumulated $7.4 billion in liabilities related to opioid claims and settlements.

3. Industry-Wide Trends and CVS Health Corp Comparison: This financial situation at Walgreens is reflective of broader industry trends, as companies like CVS Health Corp also face operational pressures due to shifts towards more healthcare services. CVS has warned investors of conservative expectations for 2024 due to rising costs in pharmacy and insurance businesses, and has also initiated a restructuring plan to streamline operations, including the elimination of 5,000 non-customer facing positions. This industry shift is leading to significant changes in business models and financial strategies for major healthcare and pharmaceutical companies.

Dodging the Medicare enrollment deadline can be costly

By Susan Jaffe - Angela M. Du Bois, a retired software tester in Durham, North Carolina, wasn’t looking to replace her UnitedHealthcare Medicare Advantage plan. She wasn’t concerned as the Dec. 7 deadline approached for choosing another of the privately run health insurance alternatives to original Medicare. Read Full Article…

VBA Article Summary

1. Insurance Challenges and Decisions: The article highlights the experiences of individuals facing the challenge of their doctors and hospitals not accepting their insurance plans in the upcoming year. One notable case is that of Du Bois, who decided to stick with her long-time doctor by switching to a new plan, even though many people tend to ignore open enrollment advertisements. This scenario underlines the complexity and emotional impact of navigating health insurance choices, particularly for seniors.

2. Assistance and Savings through SHIPs: The article discusses the role of State Health Insurance Assistance Programs (SHIPs), federally funded initiatives that offer unbiased help during open enrollment. These programs have been instrumental in aiding seniors to find suitable plans, as illustrated by the cases in different states where beneficiaries saved significant amounts by changing their Medicare Advantage or drug plans. The story of Du Bois, who saved over $14,000 annually with the help of Senior PharmAssist, a Durham nonprofit, exemplifies the benefits of such assistance.

3. Challenges of Plan Renewal and Options for Change: The article outlines the difficulties beneficiaries face with automatic plan renewals, including increased premiums, changes in provider networks, or altered drug coverage. It also explains the limited options for changing plans after the open enrollment period, highlighting government initiatives like Medicare Savings Programs for low-income beneficiaries and the possibility of switching to a top-rated Medicare Advantage plan. The piece emphasizes the importance of proactive education to prevent unwelcome surprises and ensure access to preferred healthcare services.

Roz Brewer Was Paid $71 Million Over the 30 Months She Ran Walgreens: Exclusive

By Dawn Kopecki and Lynnley Browning - When Walgreens abruptly ousted then-CEO Rosalind "Roz" Brewer a little over three months ago, she walked away with a golden parachute that allowed her to keep tens of millions in compensation for just 2½ years of work running the troubled pharmacy giant. Read Full Article…

VBA Article Summary

1. Compensation and Tenure of Rosalind Brewer at Walgreens: Rosalind Brewer, during her nearly 30-month tenure as CEO of Walgreens, received substantial compensation, amounting to roughly $71 million, which equates to almost $2.4 million per month. This compensation included stock options, whose value decreased during her tenure. Despite her high pay, Walgreens' stock performance was poor, falling by 57% during her time as CEO.

2. Circumstances of Brewer's Departure: Brewer's removal was unexpected, especially since she was a respected executive from Starbucks. However, new documents reveal that her departure, although officially stated as a mutual agreement, was treated as a “termination without cause.” This suggests that her departure might not have been entirely voluntary. There were concerns about her performance at Walgreens, particularly in navigating the challenges of a large retail conglomerate.

3. Challenges Faced and Brewer's Legacy: Under Brewer's leadership, Walgreens faced multiple challenges, including declining sales, high labor costs, staff shortages, and the financial impact of opioid settlements. Her compensation ratio was notably high compared to the median employee pay at Walgreens, raising questions about the effectiveness and appropriateness of her leadership in a challenging economic and business environment.