Volume 31

#1 Policy Failures Have Allowed United Healthcare to Control Almost Everything

A recent American Prospect article highlighted the growing strength and size of UnitedHealth Group (UHG). UHG is now the fifth-largest public company in the United States. It has a staggering 50 million members under its insurance wing and had $28.4 billion in earnings last year, placing it firmly within the upper echelons of global corporations. UHG is not only a health management powerhouse, it has morphed into the nation's largest employer of physicians with 70,000 doctors across 2,200 locations. The article highlights all the ways UHG has vertically integrated and demonstrates how much influence the company has in healthcare.

So What’s the Big Deal? Everything. In the United States, UHG now owns almost all facets of the patient health journey, from banks (Optum Bank) to providers (through Optum). And while we often think of UHG as a health insurance company, they are not. It is becoming a massive private single-payer system that has leveraged its size, integrated business units, and leveraged the law to improve its bottom line. As I’ve written in MedPage Today “the cost of insurance -- despite these cost reduction assertions -- has not translated to improved outcomes or reduced costs.”

Your BIG Thoughts: As the title of the American Prospect article suggests, public policy allowed UHG to develop to this level. Should policymakers step in now and, if so, what can they do?

#2 PBM Scrutiny Increases

While the pharmaceutical industry has received its share of criticism from the public and lawmakers about drug pricing, a certain cog in the system has been getting more attention recently: pharmacy benefit managers (PBMs). By engaging in price negotiations with drug manufacturers and advising insurers on the inclusion of specific drugs within coverage, PBMs substantially influence the final cost of many medications. Maybe too much. It is alleged that PBMs retain a disproportionate share of negotiated discounts and potentially direct patients toward more expensive drugs to enhance their financial gains.

So What’s The Big Deal? For patients, the cost and availability of their drugs are being dictated by, and coming at the benefit, of their insurer. From a policy perspective, the convergence of insurers and PBMs also introduces a distortion to the medical loss ratio, potentially reaping higher profits for parent health insurance companies and evading Affordable Care Act requirements. Congress must step in to change these dynamics. As you will see in the next article, some insurers who don’t own their PBM are making big changes …

Your BIG Thoughts: Is Congress giving too much scrutiny to PBMs? Not enough? Are there any benefits to this model other than upping insurance provider profits?

#3 CVS Caremark Loses Contract with Blue Cross of California

In a significant strategic maneuver, Blue Shield of California (BSC) has introduced a plan to depart from its existing pharmacy benefit manager, CVS Health's Caremark. Under the new arrangement, Caremark will be displaced as the only PBM servicing BSC, becoming one of five companies the insurer partners with to provide prescription drugs to its beneficiaries. While Caremark will continue managing specialty drugs, Amazon and Mark Cuban’s Cost Plus Drugs, along with others, will handle many other drugs. Centene did the same by ditching Caremark a few months prior.

So What’s The Big Deal? In the immediate term, CVS stocks fell on the news, but the longer-term implications could shift the cost structures within the drug supply chain and affect what patients have to pay. With a large insurer like Blue Shield of California identifying other methods for controlling drug costs and negotiating pricing with manufacturers other than utilizing a single PBM, we may see drug prices decrease for Blue Shield beneficiaries. If Blue Shield is successful and other insurers do the same, we could see a check on how PBMs make a profit and how they control and negotiate drug prices.

Your BIG Thoughts: Will insurers change their practices before Congress has the chance to step in? In addition to potentially reducing lawmaker scrutiny, what are the benefits of Blue Shield of California’s move?

#4 Unsurprisingly, Ozempic Is More Expensive in the U.S. than Anywhere Else

A fresh analysis by the Peterson-KFF Health System Tracker showed a significant divergence in the cost of Ozempic by nation, a widely utilized weight loss medication. In the United States, the price tag for a month's supply stands at $936, dwarfing the figures observed in peer countries. Specifically, the U.S. cost is 5.5 times higher than Japan's and approximately ten times higher than the prices in France, Australia, and the United Kingdom.

So What’s The Big Deal? This analysis is a reminder of the challenges patients face in accessing essential medications, particularly for obesity, a significant U.S. health concern. (Americans are almost twice as likely as people in the peer nations studied to be obese.) The striking variation in cost exposes the complex interplay between pharmaceutical pricing, healthcare systems, and patient access – and the report warrants a comprehensive reflection on the factors that contribute to such disparities. The juxtaposition of medication cost and disease prevalence emphasizes the importance of addressing not only the affordability of pharmaceuticals but also the underlying health issues.

Your BIG Thoughts: We need a comprehensive healthcare approach that ensures equitable access to treatments like Ozempic and manages health concerns on a larger scale. What should that look like?

#5 UnitedHealthcare Vows to Reduce Prior Authorizations

Next month, United Healthcare will eliminate prior authorization for several radiology services, genetic tests, and other services. This move, which coincides with regulatory discussions about enhancing limitations on prior authorizations, reflects a broader trend among major health insurance players to curtail the practice. While prior authorization has faced criticism from both patients and medical professionals for its administrative complexities and potential to hinder essential care, insurers assert it prevents unwarranted healthcare utilization, therefore saving money.

So What’s The Big Deal? I’m skeptical this move will make a meaningful difference, and I think it’s a ploy to placate lawmakers, not change matters for doctors. Also, United Healthcare plans to introduce a “Gold Card” plan that would further reduce prior authorization needs for doctors who meet certain criteria. What will those criteria be? Will there be other administrative hurdles for physicians? In my opinion, unless policymakers step in, prior authorizations (or some other equally painful replacement to deter care) will remain.

Your BIG Thoughts: Play the contrarian to my skeptic: Will this move actually make a meaningful difference? How?

#6 Private Equity Healthcare Deals Drop

According to Pitchbook, private equity transactions in healthcare services fell in the second quarter of 2023 and are now at their lowest point since the second quarter of 2020. Approximately 164 deals were recorded or announced during the last quarter, a decline of 23.7 percent from the first three months of 2023. While the latest drop was somewhat unexpected, deals have been declining for six quarters in a row. Some good news: deal activity in the second quarter of 2023 was 12 percent higher than the average quarterly deal count observed in 2018 and 2019.

So What’s The Big Deal? Debt and interest rates. The dwindling number of deals is closely linked to increased leverage, with debt-laden firms grappling with escalating debt service costs and impending maturity wells in the context of rising interest rates. This phenomenon has impeded add-on acquisitions by private equity-backed healthcare entities, introducing a distinct dimension to the evolving landscape. With the closure of APP and the bankruptcy of Envision, highly leveraged deals (a specialty of PE firms in healthcare) have slowed.

Your BIG Thoughts: The Fed’s have signaled they will continue to raise interest rates to curb inflation. Should we expect to see a further decline in private equity funding?

#7 Secret Fees from Insurers Plague Doctors

Insurers increasingly demand physicians pay a portion, often up to 5 percent, of their fees as a condition for receiving electronic payments. Physicians have reported that even when they request payment by check, insurers ignore them. Medical professionals and healthcare institutions are starting to lodge very public protests.

So What’s The Big Deal? Numerous factors have contributed to doctors' deep-seated dissatisfaction with the insurance sector. Insurers have significantly reduced their reimbursement rates, leading to financial strain. Physicians have lost patients when they are excluded from insurance provider networks, dealt with higher administrative burdens related to pre-authorizations for an expanding array of medical procedures, and endured protracted battles against coverage denials.

Your BIG Thoughts: Why do insurers persist in this practice, and what should hospitals and practices do to fight back?

#8 More Than Four Million Lose Medicaid Coverage

The Centers for Medicare and Medicaid Services (CMS) is intensifying efforts to ensure states align with federal requirements to renew Medicaid coverage. The agency recently disclosed letters addressed to state Medicaid officials. Dispatched to all states and Washington, D.C., these letters underscore three pivotal concerns: the considerable number of individuals losing Medicaid coverage due to paperwork issues, extended wait times at call centers, and delayed processing of applications. More than four million people have already experienced a lapse in their Medicaid coverage.

So What’s The Big Deal? For individuals who lost healthcare insurance coverage abruptly, the cost could be significant. In fact, delaying their care could be life-threatening. For the broader healthcare economy, the revenue loss for physician practices and hospitals will hamper some financial gains made in the second quarter. As four million individuals grapple with disrupted Medicaid coverage, the spotlight is firmly on state and federal collaboration to streamline enrollment processes and bolster access to essential healthcare services.

Your BIG Thoughts: Until these letters, CMS has largely been silent on this issue. Is this new move a sign the agency is about to get more forceful, especially with states lagging in enrollment?

#9 Feds Say Medicaid Redistributions Violate the Law

The Biden administration is actively pursuing stricter measures against certain hospitals for reimbursing themselves for taxes that help fund coverage for low-income individuals, a practice the administration argues violates federal law. As outlined in the proposed enforcement plan, federal regulators express concern that these arrangements are strategically devised to redirect Medicaid funds from facilities that primarily serve underprivileged patients to those that offer fewer or even no Medicaid-covered services.

So What’s the Big Deal? The Biden administration's move highlights a commitment to ensuring equitable access to healthcare services. These hospitals’ practices actively widen disparities between those that have and those that have not. By scrutinizing these practices, the administration is taking a proactive stance to safeguard the intended purpose of Medicaid funds, which is to support low-income individuals in accessing necessary medical care.

Your BIG Thoughts: How can offending hospitals quickly pivot to do the right thing? What will be the impact on their systems?

#10 Kim Kardashian Pushes Elective MRI Scans

In a recent Instagram post, Kardashian promoted a comprehensive full-body, elective MRI scan that can cost thousands of dollars. Clinicians and health policy experts reacted, reigniting a debate that centers on the true value of these tests. It’s a worthy debate. We must consider if these tests contribute to patient well-being or just burden hospitals with superfluous false positives and needless subsequent procedures, particularly among affluent and predominantly healthy individuals.

So What’s The Big Deal? This story also highlights the problem of influencers and consumerism in U.S. healthcare. Kardashian’s post and the potential for “followers” to take her advice illustrates the intersection of celebrity endorsements and healthcare. As influencers like Kardashian engage, it will increase pressure on doctors to use these costly tests, which are unproven. Businesses that use influencers to push their products should have a responsibility to inform patients about the truth of claims and evidence of benefit.

Your BIG Thoughts: Is there a place for influencers in healthcare? How can we ensure they are giving responsible advice?

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Adam Brown