Daily Insurance Report - November 1, 2023

Your summary of the Voluntary and Healthcare Industry’s most relevant and breaking news; brought to you by the Voluntary Benefits Association®

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Hear from former IRS Deputy Associate Chief Counsel (Employee Benefits) and Special Counsel for the US Department of Treasury on not one but two Legislative Update sessions:

  1. Understanding the Dynamic Federal Employee Benefits Legislative Landscape

  2. Understanding the Dynamic Legislative LTC & “Junk Insurance” Landscape

Lastly, join us for a fast-paced presentation The Medicare Minefield & Medicare Decoded in which we’ll cover all the elementary components of Medicare Part A through Part D. We will also cover the nine most misunderstood facts of Medicare, and all the mistakes and pitfalls that most seniors and their caregivers are typically unaware of.

VBA Poll Question - Please share your insights

Do you believe that the healthcare benefits your company offers to employees are affordable and sustainable for your organization?

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Our last poll results are in!


of Daily Insurance Report readers who responded to our last poll stated that the cost of their health plan renewal will remained the same.

28% that responded said the cost of their health plan renewal will significantly increase, 14% said their cost will slightly increase, while only 9.23% said the cost of their health plan renewal will decreased.

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HHS Proposes Information Blocking Penalties For Health Systems

By Eric Wicklund - Federal officials are proposing penalties for healthcare organizations accused of information blocking. The Health and Human Services Department has released a proposed rule that would establish three specific “disincentives” for healthcare providers found by the HHS Office of the Inspector General (OIG) to have knowingly and unreasonably interfered with the access, exchange, or use of electronic health information except as required by law or covered by regulatory exception. Read Full Article…

VBA Article Summary

  1. Public Comment Period and Background: The Health and Human Services (HHS) department is seeking public feedback on a new rule aimed at preventing information blocking by health systems until January 2, 2024. This initiative builds on existing penalties for information blocking enforced by the Office of the Inspector General (OIG), which since June has included potential fines of up to $1 million per incident for health IT vendors, exchanges, and networks. HHS Secretary Xavier Becerra emphasizes the department's commitment to policies that promote the availability of electronic health information.

  2. Implications for Healthcare Providers: The rule introduces several disincentives for healthcare providers through various Medicare programs. Hospitals and clinicians could face significant repercussions, such as hospitals losing a portion of their annual market basket increase, clinicians receiving a zero in the Promoting Interoperability performance category of MIPS, and ACOs potentially being barred from participation in the Medicare Shared Savings Program for at least one year, affecting their operational and financial performance.

  3. Next Steps in the Rule's Implementation: The proposed rule will be published in the National Register on November 1, marking the beginning of a 60-day public commentary period. The ONC and CMS will further facilitate understanding by holding an information session in the coming weeks to provide more details on the proposed changes and how they aim to enhance the sharing of electronic health information within the healthcare sector.

Employers eye deductible-free plans

By Rylee Wilson - Employers are looking to deductible-free health plans as employees report increasing concerns about the cost of healthcare, according to Mercer's 2023-2024 "Inside Employees' Minds" survey. Read Full Article…

VBA Article Summary

  1. Healthcare Plan Trends: The latest survey indicates a shift in employer-sponsored healthcare plans, with 15% of organizations now offering no-cost health plans to some employees. Additionally, salary-based contributions are being implemented by 18% of organizations, reflecting a nuanced approach to healthcare benefits that takes into account the varying financial capabilities of employees.

  2. Deductible Policies and Popularity: Employers are increasingly offering health plans with low or no deductibles, with around 40% adopting such policies. The trend towards zero-deductible plans is underscored by UnitedHealthcare, whose COO, Dirk McMahon, noted on Oct. 30 that these plans are not only their fastest-growing commercial products but also result in approximately 50% less out-of-pocket spending for members and an 11% average savings in total care costs for employers.

  3. Healthcare Affordability Across Income Levels: Economic disparities in healthcare affordability were highlighted in the survey, with a stark contrast between income brackets. While 79% of workers earning between $60,000 and $100,000 reported being able to afford their family's healthcare needs without financial strain, this sentiment was shared by only 51% of those making under $30,000, shedding light on the challenges faced by lower-income employees.

Private insurer analysis uncovers geographic price variations

By Noah Tong - Patient office visit costs were lowest in counties in Florida and the central U.S., and prices were the highest in the upper Midwest and Southeast, according to health payer Humana’s negotiated rates for seven procedures. Read Full Article…

VBA Article Summary

  1. Regional Price Variability for Medical Procedures: The study published in JAMA Health Forum highlighted the disparities in medical procedure costs across different regions, with a particular focus on seven procedures including CT scans and emergency department visits. It utilized Humana's extensive national data, examining in-network provider rates by comparing 2019 fee-for-service claims. Notably, there were instances where adjacent counties showed significant price differences, with the average county-level price being $86. This suggests a complex regional landscape of healthcare pricing that could impact consumer costs and access to care.

  2. Correlation Between Cost and Quality: A key objective of the research is to investigate the long-term relationship between the cost of medical services and the quality of care provided. The study covered a range of procedures, from common ones like patient office visits and lipid panels to more complex ones like hip arthroplasty. The substantial price variation, with office visits costing between $69 to $114 and hip arthroplasty procedures ranging from $1,231 to $1,930, raises questions about how these costs correlate with the quality of services received by patients. This point of inquiry is critical for policymakers as they seek to balance healthcare spending with the delivery of high-quality medical services.

  3. Implications for Health Policy and Future Research: The JAMA Health Forum study sets the stage for future, more extensive research that could encompass additional insurers, procedures, and health policies. It underscores the need for policymakers to understand the factors driving price variations, such as market consolidation or anticompetitive practices, to ensure a competitive healthcare market. This is particularly salient in light of new regulations aimed at increasing price transparency, such as the Hospital Price Transparency and Transparency in Coverage rules. The expectation of new payer data being released monthly could enhance efforts towards greater transparency, but the study also acknowledged the limitations in data availability, with several counties, particularly in central and western states, lacking sufficient data for analysis.

Opinion: Obesity drugs might not be worth their high prices

By Leana S. Wen - The math seems simple enough: More than 40 percent of American adults have obesity, which increases their risk of expensive chronic illnesses such as diabetes and heart disease. The drug semaglutide, marketed under the name Ozempic for treating diabetes and Wegovy for treating obesity, reduces body weight. Semaglutide must, therefore, be cost-effective, because of all the medical costs saved from preventing later complications of obesity. Read Full Article…

VBA Article Summary

  1. Medical Effectiveness vs. Cost-Effectiveness of Semaglutide: Semaglutide, a GLP-1 agonist, has demonstrated significant medical effectiveness for weight loss in nondiabetic patients with obesity, with studies showing a substantial reduction in body weight compared to placebo groups. Despite its proven efficacy and relative safety, the Institute for Clinical and Economic Review (ICER) report challenges its cost-effectiveness, suggesting that the benefits do not justify the high price tag when used solely for obesity treatment without diabetes. ICER's findings hinge on a detailed analysis of the drug's long-term cost, weighed against the potential savings from avoiding obesity-related complications, primarily cardiovascular disease.

  2. The Pricing Dilemma of Semaglutide: The report states that for semaglutide to meet the cost-effectiveness threshold, it would need to be priced between $7,500 and $9,800 annually, which is a 44 to 57 percent reduction from its current cost. This conclusion is based on ICER's model, which incorporates the estimated reduction in cardiovascular risks and the required duration of treatment. However, even with weight loss achieved through semaglutide, many patients would still classify as obese, raising questions about the drug's long-term impact on cardiovascular health and its overall cost-benefit ratio.

  3. Implications for Policy and Future Pricing: The article touches on the broader implications of semaglutide's pricing and cost-effectiveness for policy decisions. As the Biden administration oversees federal healthcare programs like Medicare and Medicaid, the discussion extends to whether insurance should cover the expense of drugs like semaglutide for their social benefits—such as increased happiness and confidence—beyond their direct health outcomes. The ongoing debate also considers the potential future landscape changes that could result from new data, price negotiations, increased competition, or the introduction of new formulations, such as an oral version of semaglutide.

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New multispecialty advocacy group wants to protect independent practices from hospitals' buyouts

By Anastasia Gliadkovskaya - A new national, multispecialty advocacy organization representing independent practices launched last week. The American Independent Medical Practice Association (AIMPA) says it is the first advocacy organization of its kind focused on supporting private medicine across specialties. Read Full Article…

VBA Article Summary

  1. AIMPA Represents a Diverse Medical Community: The American Independent Medical Practice Association (AIMPA) is a collective of 5,000 physicians providing care to 10 million patients across the United States. This extensive network spans a wide array of medical specialties including cardiology, gastroenterology, medical oncology, and OB-GYN, among others. Despite its extensive specialty coverage, AIMPA has yet to incorporate a primary care physician into its ranks, though its executives are open to such an addition, highlighting their commitment to comprehensive healthcare representation.

  2. Advocacy for Independent Practices Amidst Industry Consolidation: AIMPA has been established in response to the healthcare sector’s trend toward consolidation, with data showing a decline in physicians working in private practices and an increase in those employed by hospitals. AIMPA’s leadership, including Paul Berggreen, M.D., is vocal about the disadvantages of large hospital chains acquiring physician practices, arguing that independent practices offer better care and cost-effectiveness. The organization consists of member entities from nearly 200 medical practices across 39 states and Washington, D.C., demonstrating a robust and wide-reaching influence. AIMPA's mission focuses on educating policymakers and pushing for legislation that supports the sustainability and competitive viability of the private healthcare model.

  3. Promoting Equitable Reimbursement and Expanding Access to Care: Dr. David Eagle of AIMPA emphasizes the critical role of independent practices in providing accessible, high-quality, and cost-effective healthcare, often serving underserved communities and accepting a wide range of insurance plans. AIMPA is actively challenging the reimbursement disparities that favor hospitals, advocating for policies like the Strengthening Medicare for Patients and Providers Act that would offer inflation adjustments to physicians similar to those hospitals receive. AIMPA strives for a level playing field in the healthcare industry, ensuring that independent practices can continue to serve as a vital alternative to hospital-based care systems.

Insurance Industry Stands To Benefit as Digitalization Progresses

By Gina Shaw - As digitalization is revolutionizing a host of industries, for the insurance industry it holds the promise of a new source of growth, new risk pools, and new efficiencies, according to Swiss Re. Read Full Article…

VBA Article Summary

  1. Impact on Economic Growth and Insurance Industry: The Swiss Re Institute's sigma report acknowledges a "productivity paradox" in economic productivity growth despite advancements in technology, including AI, with a modest average annual increase of 1.1 percent in OECD countries over the last 20 years. However, it projects that digitalization will significantly influence future economic growth, labor productivity, inflation, and especially the insurance industry, transforming risk assessment and mitigation through enhanced data granularity. The shift toward intangible assets, mostly uninsured, poses both a challenge and an opportunity for growth in the insurance sector.

  2. Emerging Risks and Opportunities: With digitalization comes a new landscape of risks, including business interruption and cyber vulnerabilities, as underscored by the report. The insurance sector is seen as crucial in developing protections against these risks, as evidenced by the surge in demand for cyber insurance, with premiums projected to grow significantly. However, the report also highlights concerns such as the liability of AI systems that lack explainability, necessitating new approaches to understand and manage such risks.

  3. Digitalization Index and Industry Transformation: The report introduces the Insurance Digitalization Index, measuring the progress of digitalization in the insurance industry across countries. Advanced countries like South Korea, Sweden, and Finland lead, with the U.S. also ranking high, whereas emerging markets show a rapid digital catch-up. The report suggests that even the most advanced nations have yet to fully exploit digital gains. For insurers, there's an emphasis on re-engineering workflows, enhancing data capabilities, and navigating regulatory landscapes to realize digitalization's full potential. Insurers are also seen as facilitators of wider digital progress, providing risk transfer solutions for the infrastructural underpinnings of a digital economy.

How employers can gain control of rising health plan expenses

By Matt Drakeley - Much of today’s economic news concerns the path of inflation and the actions to bring it back to the Federal Reserve’s target. While energy, food and other costs have received much attention, a usual star contributor to inflation has been less prominent – medical care. Over the last two decades, the cost of medical care services has increased 78% faster than the general rate of inflation, according to Consumer Price Index data from the Bureau of Labor Statistics. Read Full Article…

VBA Article Summary

  1. Impact of Medical Inflation on Employee Health Plans: Despite a period where general inflation outpaced medical care service inflation (3.0% vs. -0.8% for the 12-month period ended June 2023), employers are cautioned against complacency regarding medical costs. Contracts with healthcare providers typically have a three-year term, during which providers may not be able to adjust prices in response to rising costs. With the significant cost increases in labor, drugs, and supplies reported by sources like Kaufman Hall and the American Health Association, and the subsequent decline in hospital EBITA by up to 50%, there is an impending pressure to recoup losses as contracts renew. This pressure suggests medical care costs are poised to become a primary concern for employers again.

  2. Strategies for Cost Management in Health Plans: Employers are encouraged to proactively manage potential spikes in healthcare costs by exploring self-funding for health insurance plans. This approach allows employers to pay directly for care and administrative services through a third party, offering a tailored plan design that meets specific needs rather than settling for standard options from traditional insurers. To mitigate risks associated with self-funding, companies should consider purchasing medical stop-loss insurance, which provides coverage for individual and aggregate claims beyond a certain threshold. Additionally, by engaging a separate insurer for stop-loss coverage, employers can benefit from a secondary review of high-dollar claims, potentially leading to cost savings by identifying billing errors and discrepancies.

  3. Utilization of Captive Insurance for Medical Stop-Loss: The use of captives, where a company forms its own licensed insurance company, is presented as a second step for employers to protect against the volatility of insurance rates. Captives can provide significant tax benefits and allow companies to retain investment returns and underwriting profits that would typically go to an external insurer. This alternative risk financing method is not only for large corporations (as evidenced by the 90% of Fortune 500 companies with captives) but also accessible to smaller companies through group captives. Despite a relatively small portion of large companies currently including medical stop-loss in their captives, this trend may shift as the effects of inflation become more pronounced and the benefits of captive insurance become clearer in mitigating the financial impact.