HSA Assets on the Rise For Midyear 2023

By Amanda Umpierrez - Thanks to positive stock market gains, health savings account (HSA) assets saw strong growth during the first half of 2023. HSA assets increased to $116 billion in almost 36 million accounts by the midyear point of 2023, a year-over-year increase of 17% for assets and 6% for accounts, according to a report by HSA data consultant Devenir. Read Full Article…

VBA Article Summary

1. Significant Growth in HSA Investment Assets: Devenir’s mid-2023 survey highlighted a substantial growth in Health Savings Accounts (HSAs) investment assets. In the first half of the year, these assets experienced a 20% growth, reaching a total of $40 billion by June, marking a 30% increase since 2022. The average balance for these investment accounts was reported to be $18,362, which is 7.3 times larger than the average balance of non-investment holder’s accounts.

2. Changes in Average Balances and M&A Activities: The survey noted that HSAs opened in the first half of 2023 had an average midyear balance of $1,143, which is lower compared to $1,464 during the same period in 2022. Devenir attributed this decline to a decrease in mergers and acquisitions (M&A) activities, which in previous years had inflated the average balance of new accounts due to the reporting of account transfers and M&As as new accounts.

3. Increased Contributions and Future Projections: Account holders increased their contributions by 11% in the first six months of 2023, totaling $29 billion. Employees contributed 57% of all HSA dollars with an average contribution of $1,327, whereas employers contributed 31% with an average of $726. Individual account holders not associated with employers contributed the remaining 11%, averaging $1,957. With HSA providers forecasting a 15% industry asset growth (up from 13% in 2022) and a 23% growth in their businesses (up from 17% in 2022), the HSA market is expected to surpass 40 million accounts with over $150 billion in assets by the end of 2025, as per Devenir’s projections.

Legislative lowdown: EEOC releases Strategic Enforcement Plan, partners with DOL

By Courtney Vinopal - The Equal Employment Opportunity Commission (EEOC) recently shared its priorities for the next fiscal years, targeting businesses’ use of AI and machine learning for employment decisions, as well as protecting a wider group of vulnerable workers from discrimination. Here’s what HR pros should know about the EEOC’s focus for the coming years, as well as a new partnership between the agency and the Department of Labor. Read Full Article…

VBA Article Summary

1. Enhanced Enforcement Priorities for 2024-2028: On September 21, the EEOC finalized its Strategic Enforcement Plan (SEP) for fiscal years 2024 to 2028, establishing specific enforcement-related goals distinct from the agency’s long-term objectives outlined in August. The SEP identified six enforcement priorities: removal of recruitment and hiring barriers, with particular attention to AI and machine learning; protection for vulnerable workers from employment discrimination, covering employees with intellectual and developmental disabilities, those with arrest or conviction records, and LGBTQI+ individuals; addressing emerging issues like protections for pregnant workers and long Covid-19 sufferers; promoting equal pay; preserving legal system access; and preventing systemic harassment.

2. Strategic Partnership with Department of Labor: The EEOC has partnered with the Department of Labor’s Wage and Hour Division (WHD) to fortify the enforcement of federal laws and regulations. Announced on September 14, this collaboration will facilitate information sharing, joint investigations, and outreach between the two agencies. The partnership is expected to streamline enforcement, especially in areas of common interest, like employment discrimination, unlawful compensation practices, and mandatory break times for nursing mothers. This cooperative initiative signals a more robust and comprehensive approach to investigations and enforcement actions in the employment sphere.

3. Implications for Employers: The newly released SEP provides crucial insights into the EEOC's future interactions and litigation approaches with employers. Claims falling under any of the identified priority categories are likely to undergo more rigorous scrutiny by EEOC investigators and litigators. Employers need to navigate cautiously through the refined enforcement landscape, with awareness that their data might be shared between the EEOC and WHD, resulting in enforcement actions from either or both agencies. The integration of efforts between the two agencies underlines a commitment to more effective and thorough enforcement, necessitating that employers stay vigilant and compliant with all relevant laws and regulations to avoid potential legal ramifications.

CVS hit with lawsuit from independent pharmacy over fees

By Rebecca Pifer - PBMs — the drug middlemen that negotiate rebates and fees with drugmakers, create formularies and reimburse pharmacies for prescriptions — have drawn increasing scrutiny from regulators and legislators over their role in rising drug costs. Read Full Article…

VBA Article Summary

1. Allegations Against CVS: Osterhaus Pharmacy in Maquoketa, Iowa has filed a lawsuit against CVS in a Washington district court, accusing the company of violating federal antitrust laws and state contract statutes through its pharmacy benefit manager’s (PBM) application of performance adjustment fees in Medicare Part D. The suit alleges that the direct remuneration fees used by CVS Caremark allow the PBM to retroactively adjust reimbursements to pharmacies based on arbitrarily applied quality performance criteria. According to the complaint, these criteria are either nonsensical, applied at CVS Caremark's complete discretion, or beyond pharmacy control, putting independent pharmacies at a disadvantage.

2. Implications for Independent Pharmacies: The lawsuit highlights ongoing tensions between independent pharmacies and PBMs, with the former accusing the latter of imposing exorbitant and unfair fees, and offering lower reimbursements compared to in-house pharmacies. Independent pharmacies claim to face financial pressures leading to closures across the country, especially in rural areas, due to these practices. The lawsuit brought by Osterhaus Pharmacy seeks class-action status to represent other independents that have entered into alleged one-sided contracts with CVS.

3. CVS’s Response and Ongoing Investigations: CVS has denied the allegations brought forth in the lawsuit, stating the claims are without merit and vowing to vigorously defend itself. This legal challenge adds to CVS's ongoing pharmacy-related concerns, including recent pharmacists' walkouts over working conditions in various locations. Concurrently, federal agencies, including the Federal Trade Commission, are investigating PBMs and their practices, while bipartisan legislation aimed at increasing transparency in PBM arrangements is slated for Congressional voting later this year. The outcome of these investigations and legislation could significantly impact PBMs and their relationships with pharmacies.

Vertical Integration Doesn’t Work in Healthcare: Time to Move On

By Jeff Goldsmith - The concept of vertical integration has recently resurfaced in healthcare both as a solution to maturing demand for healthcare organizations’ traditional products and as a vehicle for ambitious outsiders to “disrupt” care delivery. Vertical integration is a strategy which emerged in US in the 19th Century industrial economy. It relied upon achieving economies of scale and co-ordination through managing the industrial value chain. We are now in a post-industrial age, where economies of scale are in scarce supply. Health enterprises that are pursuing vertical integration need to change course. If you look and feel like Sears or General Motors, you may well end up like them. This essay outlines reasons for believing that vertical integration is a strategic dead end and what actions healthcare leaders need to take. Read Full Article…

VBA Article Summary

1. Origin and Evolution of Vertical Integration: Vertical integration originated during the US Industrial Revolution as identified by Alfred DuPont Chandler, Jr. This strategy involved companies acquiring firms supplying raw materials, intermediate products, or distribution services, allowing them to control the entire value chain and eliminate middlemen profits. The most notable example was the River Rouge Ford Plant in Detroit, where the majority of a car's components were produced in-house, demonstrating a significant application of vertical integration.

2. Application in Healthcare: Vertical integration was later explored in healthcare, initially gaining traction in the 1970s with the endorsement of Kaiser Permanente, a prominent vertically integrated healthcare entity. However, the approach didn't yield the expected efficiency gains in the healthcare sector. Despite extensive adoption and experimentation, vertically integrated healthcare systems neither guaranteed reduced costs nor improved quality of services. Factors such as professional judgment, personalized care, and the complexity and variability in service delivery challenged the effective application of vertical integration in healthcare.

3. Challenges and Reassessment Needed: The strategy's effectiveness has been questioned due to its inability to adapt to the unique demands and structure of healthcare's value chain. Healthcare's predominantly people-centered costs, variability at service points, and the significant personal risks involved for consumers make it distinctly different from manufacturing or retail, reducing the efficacy of vertical integration. With no substantial evidence supporting cost or efficiency improvements through vertical integration in healthcare, it's crucial for industry players to reassess and adjust their strategies, considering divesting from non-core services and re-evaluating their approach to vertical integration.

Researchers: Hospitals’ Commercial Prices Typically Double Those of Their MA Prices

By Mark Hagland - A team of researchers, looking at hospital pricing using posted prices, in the wake of the transparency rules that have been implemented for hospitals, has come to conclude that hospital organizations’ rates negotiated with commercial health insurers are typically double those of the rates provided to health plans through their Medicare Advantage (MA) contracts with those health plans. Read Full Article…

VBA Article Summary

1. Significant Pricing Disparities: The authors of the article, affiliated with Johns Hopkins University, emphasize substantial discrepancies between the prices of Commercial Plans and Medicare Advantage (MA) Plans. Insurers tend to negotiate hospital prices for commercial plans that are approximately two to three times higher than those of MA plans, even for identical services provided within the same hospital. The noted price differences are not uniform across different services but show a marked variation ranging from a ratio of 1.8 for surgery and medicine services, escalating to 2.2 for lab tests and emergency department visits, and peaking at 2.4 for imaging services.

2. Underlying Reasons for Price Gaps: Several pivotal reasons are identified by the researchers for the pronounced price gap. First, MA plans possess an inherent bargaining leverage owing to the set out-of-network prices at Medicare fee-for-service rates, thereby influencing hospitals to adhere closely to these rates. In addition, the competition faced by MA plans from traditional Medicare, coupled with the need for competitive premiums, play a pivotal role in keeping the prices in check. The article also suggests that hospitals might be considering insurers' total business volume, accommodating lower rates for MA plans while compensating with higher rates for commercial plans. Furthermore, the risk dynamics differ between the two types of plans, with insurers bearing more risk for MA plans. This risk structure is instrumental in insurers accepting higher prices for commercial plans to maintain competitiveness in the lucrative MA market.

3. Implications and Future Considerations: The researchers conclude that these noteworthy pricing disparities have critical implications for various stakeholders including employees, employers, researchers, and policy-makers, particularly due to the financial burden ultimately shouldered by employees and their dependents. The study illuminates the impact of market incentives on pricing strategies, highlighting the necessity for further research to dissect the relative contributions of the identified factors influencing the price differences. Recognizing that insurers respond divergently to various incentives in different markets, the researchers advocate for future policy and practical initiatives to be devised with a focus on altering these incentives, thereby potentially facilitating the reduction of prices in commercial plans.

FDA updates Ozempic label to acknowledge some users’ reports of blocked intestines

By Katherine Dillinger - The US Food and Drug Administration has updated the label of the diabetes drug Ozempic to acknowledge reports of blocked intestines in some people using the medication. Ozempic and its sister drug, Wegovy, which is approved for weight loss, have recently soared in popularity. Read Full Article…

VBA Article Summary

1. Surge in Popularity: Ozempic and Wegovy, manufactured by Novo Nordisk, have gained significant popularity due to their effectiveness in weight loss and diabetes management. These drugs belong to the GLP-1 agonists class, utilizing semaglutide to mimic hormones that slow food passage through the stomach, helping users feel satiated for longer periods.

2. Safety and Side Effects: Despite their efficacy, there have been voluntary reports of severe gastrointestinal events such as ileus (intestinal blockage) and gastroparesis (stomach paralysis) in users of both drugs. The connection between these side effects and the drugs isn’t conclusively established due to the uncertainty in report frequencies and causal relationships. Novo Nordisk asserts that the majority of gastrointestinal side effects are mild to moderate and transient, with gastrointestinal events being known side effects of GLP-1 agonists.

3. Legal Challenges and Company Response: A user from Louisiana has filed a lawsuit against Novo Nordisk and Eli Lilly, alleging that Ozempic and Mounjaro caused her severe gastrointestinal events leading to serious injuries. In response to these claims, Novo Nordisk maintains that patient safety is paramount and that they closely collaborate with the FDA to monitor their drugs' safety profiles continuously. The company expresses strong confidence in the safety and efficacy of their products when used according to approved indications and labeling.

Virgin Pulse, HealthComp to merge in $3B deal aimed at improving employer health

By Paige Minemyer - Virgin Pulse and benefits administrator HealthComp are set to merge in a $3 billion deal that aims to drive lower costs and improve outcomes for employers. The deal was first reported in The Wall Street Journal. Virgin Pulse is backed by Marlin Equity Partners and HealthComp is backed by New Mountain Capital, according to the report. Read Full Article…

VBA Article Summary

1. New Ownership Structure & Backing: New Mountain will acquire majority ownership in the newly combined entity, with Marlin holding a minority stake. The deal receives substantial financial support from Blackstone and Morgan Health, JPMorgan Chase's healthcare division. This robust backing signals strong confidence in the prospective value and success of the joint company.

2. Strategic Synergy & Target Market: The amalgamation of Virgin Pulse and HealthComp will establish a technology-driven platform designed for innovation in benefit structures, using AI to monitor and enhance outcomes, according to a joint announcement. CEO of Morgan Health, Dan Mendelson, affirmed in an interview that the merged company aligns seamlessly with Morgan Health’s objectives, emphasizing its appeal for investment due to its focus on the midsize employer segment. This strategic move allows the company to offer an engaging wellness option at the front end (via Virgin Pulse) and traditional insurance products at the back end (through HealthComp), providing a comprehensive package for mid-sized employers and serving over 20 million members and 1,000 self-insured employers.

3. Leadership and Future Expectations: Virgin Pulse CEO, Chris Michalak, is slated to head the integrated company. With the deal anticipated to conclude in Q4 of 2023, the venture represents Morgan Health's sixth investment aimed at enhancing value and quality in employer-sponsored healthcare. The combination of Virgin Pulse’s wellness solutions and HealthComp’s benefits administration services presents an enticing and meaningful choice for employers, offering control over outcomes, affordability, and equity in healthcare, enhancing the portfolio's attractiveness and diversity.

What is ‘wellbeing washing’ (and how can it be avoided at work)?

By Emily Whitton - As the topic of mental health becomes more widely recognised, many workplaces are practising initiatives to support their employee’s wellbeing… or so we might think. On the surface, it would seem that workplaces are keen to promote their mental health resources, whether that’s employing mental health first aiders, offering employee assistance programmes, or implementing a strict ‘logging off’ policy. But the real question is, are employees truly seeing these benefits, or are they falling victim to ‘wellbeing washing’? Read Full Article…

VBA Article Summary

1. Understanding Wellbeing Washing:

   Defining the Issue: Wellbeing washing occurs when companies publicly advertise their mental health initiatives without offering genuine internal support to employees. This deceptive practice not only erodes trust but also negatively impacts employee morale and productivity.

   Common Indicators: Symptoms of wellbeing washing include applauding overworked employees, participating in mental health days without providing daily support, and introducing superficial perks that do not address core employee wellbeing needs.

2. The Consequences of Wellbeing Washing:

   Reputation Damage: Companies practicing wellbeing washing risk damaging their credibility among both employees and the public. With platforms like Glassdoor, employees can share their experiences, exposing companies that fail to support their staff’s mental health genuinely.
   Increased Employee Burnout and Turnover: The lack of authentic support results in overworked and stressed employees, leading to burnout and increased turnover rates. Employees who do not feel supported are likely to seek employment elsewhere, where their mental health is valued and prioritized.

3. Implementing Authentic Wellbeing Initiatives:

   Effective Communication: Employers must establish clear communication channels to inform employees about available mental health resources and support. Transparent and open dialogue about mental health should be encouraged to foster a supportive workplace environment.

   Listening and Adapting: Companies should actively seek and respond to employee feedback regarding their mental health initiatives. This responsive approach ensures that the provided support meets the actual needs of the employees, fostering a genuinely healthy and supportive workplace.
   Investing in Employee Wellbeing: Implementing effective wellness programs, making small yet impactful changes, and investing in employee development are crucial for creating an environment where employee mental health is truly valued and supported. Offering tangible benefits and support, employers can enhance workplace wellbeing and employee satisfaction authentically and effectively.

Clients hesitant to self-fund? Take it down a level

By Drew Burns - As health care costs continue their steady climb upward (currently expected to balloon 7% in 2024, according to a new report by PwC), employers are increasingly considering the switch from fully insured to self-funded plans. It’s an effective strategy for companies looking to manage costs, have more insight into their expenses and offer more affordable plans that make sense for their workforce. Read Full Article…

VBA Article Summary

1. Mitigated Risks with Level Funding:

   Gradual Transition: For employers contemplating a transition from fully insured to self-funded plans, level funding serves as a prudent intermediary step. This middle ground approach aids employers in gradually adapting to self-funding mechanisms without taking on excessive financial risks initially.

   Budgeting Consistency: Level-funded plans introduce a degree of financial predictability into the health funding landscape for employers. By necessitating fixed monthly payments covering estimated claims, administration costs, and stop-loss insurance premiums, these plans facilitate stable budgeting akin to fully insured plans.

   Financial Safety Nets: Employers embarking on level-funded plans enjoy safeguards in the form of stop-loss insurance. In the event of claims exceeding the anticipated amount, stop-loss provisions activate, covering the additional costs and thereby providing financial security to the employer.

2. Enhanced Control and Transparency:

   Customization Freedom: Employers deploying self-funded or level-funded plans acquire greater flexibility in tailoring benefits and selecting vendors, reflecting the unique needs and preferences of their workforce. This degree of customization is often not feasible under fully insured arrangements.

   Transparent Financials: Given that employers directly handle claims payments under these funding models, there's an inherent transparency in financial transactions. Such transparency is invaluable for employers and benefits consultants aiming to efficiently manage and mitigate risks associated with health claims.

   Informed Decision-Making: With access to detailed claims data, employers can make data-driven decisions regarding their health plans, which is a benefit not typically available in fully insured plans.

3. Potential Savings and Value Retention:

   Savings Realization: In self-funded and level-funded plans, employers stand to reap significant savings, particularly in years witnessing lower-than-expected claims. The structure of these plans allows employers to directly benefit from and reinvest these savings, fostering financial health and stability for the firm.

   Rebate Mechanism: Level funding incorporates provisions for rebates or refunds for employers in cases where total claims are below projections. This feature, absent in fully insured plans, enhances the value proposition of level-funded arrangements for employers.

   Exemption from State Mandates: Self-funding empowers employers to sidestep state mandates and premium taxes, translating into further savings and financial efficiency for businesses navigating the complex terrain of healthcare funding.