Category Archives: Price Transparency

Has U.S. Healthcare reached its Tipping Point?

Posted on by • Posted in Affordability, Cost Management, Dept of Justice (DOJ), Disruption, Disruptive Technology, Federal Trade Commission, Federal Trade Commission (FTC), Health Insurance Industry, Health Policy, Health System, Healthcare Industry, Healthcare Reform, High Drug Prices, Inflation, Innovation, Innovative Care Models, Integrated Delivery System, Meaningful, Price Transparency, Private Equity, Tipping Point, Transformation, Transformational Change • Leave a comment
Has U.S. Healthcare reached its Tipping Point?

Last week was significant for healthcare:

  • Tuesday, the, FTC, and DOJ announced creation of a task force focused on tackling “unfair and illegal pricing” in healthcare. The same day, HHS joined FTC and DOJ regulators in launching an investigation with the DOJ and FTC probing private equity’ investments in healthcare expressing concern these deals may generate profits for corporate investors at the expense of patients’ health, workers’ safety and affordable care.
  • Thursday’s State of the Union address by President Biden (SOTU) and the Republican response by Alabama Senator Katey Britt put the spotlight on women’s reproductive health, drug prices and healthcare affordability.
  • Friday, the Senate passed a $468 billion spending bill (75-22) that had passed in the House Wednesday (339-85) averting a government shutdown. The bill postpones an $8 billion reduction in Medicaid disproportionate share hospital payments for a year, allocates $4.27 billion to federally qualified health centers through the end of the year and rolls back a significant portion of a Medicare physician pay cut that kicked in on Jan. 1. Next, Congress must pass appropriations for HHS and other agencies before the March 22 shutdown.
  • And all week, the cyberattack on Optum’s Change Healthcare discovered February 21 hovered as hospitals, clinics, pharmacies and others scrambled to manage gaps in transaction processing. Notably, the American Hospital Association and others have amplified criticism of UnitedHealth Group’s handling of the disruption, having, bought Change for $13 billion in October, 2022 after a lengthy Department of Justice anti-trust review. This week, UHG indicates partial service of CH support will be restored. Stay tuned.

Just another week for healthcare: Congressional infighting about healthcare spending. Regulator announcements of new rules to stimulate competition and protect consumers in the healthcare market.  Lobbying by leading trade groups to protect funding and disable threats from rivals. And so on.

At the macro level, it’s understandable: healthcare is an attractive market, especially in its services sectors. Since the pandemic, prices for services (i.e. physicians, hospitals et al) have steadily increased and remain elevated despite the pressures of transparency mandates and insurer pushback. By contrast, prices for most products (drugs, disposables, technologies et al) have followed the broader market pricing trends where prices for some escalated fast and then dipped.

While some branded prescription medicines are exceptions, it is health services that have driven the majority of health cost inflation since the pandemic.

UnitedHealth Group’s financial success is illustrative: 

it’s big, high profile and vertically integrated across all major services sectors. In its year end 2023 financial report (January 12, 2024) it reported revenues of $371.6 Billion (up 15% Year-Over-Year), earnings from operations up 14%, cash flows from operations of $29.1 Billion (1.3x Net Income), medical care ratio at 83.2% up from 82% last year, net earnings of $23.86/share and adjusted net earnings of $25.12/share and guidance its 2024 revenues of $400-403 billion. They buy products using their scale and scope leverage to  pay less for services they don’t own less and products needed to support them. It’s a big business in a buyer’s market and that’s unsettling to many.

Big business is not new to healthcare:

it’s been dominant in every sector but of late more a focus of unflattering regulator and media attention. Coupled with growing public discontent about the system’s effectiveness and affordability, it seems it’s near a tipping point.

David Johnson, one of the most thoughtful analysts of the health industry, reminded his readers last week that the current state of affairs in U.S. healthcare is not new citing the January 1970 Fortune cover story “Our Ailing Medical System”

 “American medicine, the pride of the nation for many years, stands now on the brink of chaos. To be sure, our medical practitioners have their great moments of drama and triumph. But much of U.S. medical care, particularly the everyday business of preventing and treating routine illnesses, is inferior in quality, wastefully dispensed, and inequitably financed…

Whether poor or not, most Americans are badly served by the obsolete, overstrained medical system that has grown up around them helter-skelter. … The time has come for radical change.”

Johnson added: “The healthcare industry, however, cannot fight gravity forever. Consumerism, technological advances and pro-market regulatory reforms are so powerful and coming so fast that status-quo healthcare cannot forestall their ascendance. Properly harnessed, these disruptive forces have the collective power necessary for U.S. healthcare to finally achieve the 1970 Fortune magazine goal of delivering “good care to every American with little increase in cost.”

He’s right.

I believe the U.S. health system as we know it has reached its tipping point. The big-name organizations in every sector see it and have nominal contingency plans in place; the smaller players are buying time until the shoe drops. But I am worried.

I am worried the system’s future is in the hands of hyper-partisanship by both parties seeking political advantage in election cycles over meaningful creation of a health system that functions for the greater good.

I am worried that the industry’s aversion to price transparency, meaningful discussion about affordability and consistency in defining quality, safety and value will precipitate short-term gamesmanship for reputational advantage and nullify systemness and interoperability requisite to its transformation.

I am worried that understandably frustrated employers will drop employee health benefits to force the system to needed accountability.

I am worried that the growing armies of under-served and dissatisfied populations will revolt.

I am worried that its workforce is ill-prepared for a future that’s technology-enabled and consumer centric.

I am worried that the industry’s most prominent trade groups are concentrating more on “warfare” against their rivals and less about the long-term future of the system.

I am worried that transformational change is all talk.

It’s time to start an adult conversation about the future of the system. The starting point: acknowledging that it’s not about bad people; it’s about systemic flaws in its design and functioning. Fixing it requires balancing lag indicators about its use, costs and demand with assumptions about innovations that hold promise to shift its trajectory long-term. It requires employers to actively participate: in 2009-2010, Big Business mistakenly chose to sit out deliberations about the Affordable Care Act. And it requires independent, visionary facilitation free from bias and input beyond the DC talking heads that have dominated reform thought leadership for 6 decades.

Or, collectively, we can watch events like last week’s roll by and witness the emergence of a large public utility serving most and a smaller private option for those that afford it. Or something worse.

P.S. Today, thousands will make the pilgrimage to Orlando for HIMSS24 kicking off with a keynote by Robert Garrett, CEO of Hackensack Meridian Health tomorrow about ‘transformational change’ and closing Friday with a keynote by Nick Saban, legendary Alabama football coach on leadership. In between, the meeting’s 24 premier supporters and hundreds of exhibitors will push their latest solutions to prospects and customers keenly aware healthcare’s future is not a repeat of its past primarily due to technology. Information-driven healthcare is dependent on technologies that enable cost-effective, customized evidence-based care that’s readily accessible to individuals where and when they want it and with whom.

And many will be anticipating HCA Mission Health’s (Asheville NC) Plan of Action response due to CMS this Wednesday addressing deficiencies in 6 areas including CMS Deficiency 482.12 “which ensures that hospitals have a responsible governing body overseeing critical aspects of patient care and medical staff appointments.” Interest is high outside the region as the nation’s largest investor-owned system was put in “immediate jeopardy” of losing its Medicare participation status last year at Mission. FYI: HCA reported operating income of $7.7 billion (11.8% operating margin) on revenues of $65 billion in 2023.

What a Biden-Trump Re-Match means for Healthcare Politics: How the Campaigns will Position their Differences to Voters

Posted on by • Posted in 2024 Election Issues, ACA, Access & Quality of Healthcare, Access to IVF Treatments, Affordability, Antitrust, Competition, Federal Trade Commission, Federal Trade Commission (FTC), Health Insurance Coverage Adequacy, Health Policy, High Drug Prices, Market Consolidation, Market Power, Medicaid, Medicare, Monopoly Behavior, Out of Pocket Expenses, Price Transparency, Public Health • Leave a comment
What a Biden-Trump Re-Match means for Healthcare Politics: How the Campaigns will Position their Differences to Voters

With the South Carolina Republican primary results in over the weekend, it seems a Biden-Trump re-match is inevitable. Given the legacies associated with Presidencies of the two and the healthcare platforms espoused by their political parties, the landscape for healthcare politics seems clear:

Healthcare IssueBiden PolicyTrump Policy
Access to Abortion‘It’s a basic right for women protected by the Federal Government’‘It’s up to the states and should be safe and rare. A 16-week ban should be the national standard.’
Ageism‘President Biden is alert and capable. It’s a non-issue.’‘President Biden is senile and unlikely to finish a second term is elected. President Trump is active and prepared.’
Access to IVF Treatments‘It’s a basic right and should be universally accessible in every state and protected’‘It’s a complex issue that should be considered in every state.’
Affordability‘The system is unaffordable because it’s dominated by profit-focused corporations. It needs increased regulation including price controls.’‘The system is unaffordable to some because it’s overly regulated and lacks competition and price transparency.’
Access to Health Insurance Coverage‘It’s necessary for access to needed services & should be universally accessible and affordable.’‘It’s a personal choice. Government should play a limited role.’
Public health‘Underfunded and increasingly important.’‘Fragmented and suboptimal. States should take the lead.’
Drug prices‘Drug companies take advantage of the system to keep prices high. Price controls are necessary to lower costs.’‘Drug prices are too high. Allowing importation and increased price transparency are keys to reducing costs.’
Medicare‘It’s foundational to seniors’ wellbeing & should be protected. But demand is growing requiring modernization (aka the value agenda) and additional revenues (taxes + appropriations).’‘It’s foundational to senior health & in need of modernization thru privatization. Waste and fraud are problematic to its future.’
Medicaid‘Medicaid Managed Care is its future with increased enrollment and standardization of eligibility & benefits across states.’‘Medicaid is a state program allowing modernization & innovation. The federal role should be subordinate to the states.’
Competition‘The federal government (FTC, DOJ) should enhance protections against vertical and horizontal consolidation that reduce choices and increase prices in every sector of healthcare.’‘Current anti-trust and consumer protections are adequate to address consolidation in healthcare.’
Price Transparency‘Necessary and essential to protect consumers. Needs expansion.’‘Necessary to drive competition in markets. Needs more attention.’
The Affordable Care Act‘A necessary foundation for health system modernization that appropriately balances public and private responsibilities. Fix and Repair’‘An unnecessary government takeover of the health system that’s harmful and wasteful. Repeal and Replace.’
Role of federal government‘The federal government should enable equitable access and affordability. The private sector is focused more on profit than the public good.’‘Market forces will drive better value. States should play a bigger role’

My take:

Polls indicate Campaign 2024 will be decided based on economic conditions in the fall 2024 as voters zero in on their choice. Per KFF’s latest poll, 74% of adults say an unexpected healthcare bill is their number-one financial concern—above their fears about food, energy and housing. So, if you’re handicapping healthcare in Campaign 2024, bet on its emergence as an economic issue, especially in the swing states (Michigan, Florida, North Carolina, Georgia and Arizona) where there are sharp health policy differences and the healthcare systems in these states are dominated by consolidated hospitals and national insurers.

  • Three issues will be the primary focus of both campaigns: women’s health and access to abortion, affordability and competition. On women’s health, there are sharp differences; on affordability and competition, the distinctions between the campaigns will be less clear to voters. Both will opine support for policy changes without offering details on what, when and how.
  • The Affordable Care Act will surface in rhetoric contrasting a ‘government run system’ to a ‘market driven system.’ In reality, both campaigns will favor changes to the ACA rather than repeal.
  • Both campaigns will voice support for state leadership in resolving abortion, drug pricing and consolidation. State cost containment laws and actions taken by state attorneys general to limit hospital consolidation and private equity ownership will get support from both campaigns.
  • Neither campaign will propose transformative policy changes: they’re too risky. integrating health & social services, capping total spending, reforms of drug patient laws, restricting tax exemptions for ‘not for profit’ hospitals, federalizing Medicaid, and others will not be on the table. There’s safety in promoting populist themes (price transparency, competition) and steering away from anything more.

As the primary season wears on (in Michigan tomorrow and 23 others on/before March 5), how the health system is positioned in the court of public opinion will come into focus.

Abortion rights will garner votes; affordability, price transparency, Medicare solvency and system consolidation will emerge as wedge issues alongside.

PS: Re: federal budgeting for key healthcare agencies, two deadlines are eminent: March 1 for funding for the FDA and the VA and March 8 for HHS funding.

The Four Conflicts that Hospitals must Resolve in 2024

Posted on by • Posted in Board, Board Accountability, Board Competency, Challenge, Executive Compensation, Financial Stewardship, Financial Transparency, Financial Viability, Financially Distressed, Health Insurance Industry, Health Policy, Health System, High Drug Prices, Hospital, Hospital Industry, Lobbyist, Medicaid Disproportionate Share Reimbursement (DSH), Medicare Site Neutral Payment, Pharmaceutical Industry, Pharmacy Benefits Management, Price Transparency, Regulation, Tax Exempt Status • Leave a comment
The Four Conflicts that Hospitals must Resolve in 2024

If you’re a U.S. health industry watcher, it would appear the $4.5 trillion system is under fire at every corner.

Pressures to lower costs, increase accessibility and affordability to all populations, disclose prices and demonstrate value are hitting every sector. Complicating matters, state and federal legislators are challenging ‘business as usual’ seeking ways to spend tax dollars more wisely with surprisingly strong bipartisan support on many issues. No sector faces these challenges more intensely than hospitals.

In 2022 (the latest year for NHE data from CMS), hospitals accounted for 30.4% of total spending ($1.35 trillion. While total healthcare spending increased 4.1% that year, hospital spending was up 2.2%–less than physician services (+2.7%), prescription drugs (+8.4%), private insurance (+5.9%) and the overall inflation rate (+6.5%) and only slightly less than the overall economy (GDP +1.9%). Operating margins were negative (-.3%) because operating costs increased more than revenues (+7.7% vs. 6.5%) creating deficits for most. Hardest hit: the safety net, rural hospitals and those that operate in markets with challenging economic conditions.

In 2023, the hospital outlook improved. Pre-Covid utilization levels were restored. Workforce tensions eased somewhat. And many not-for-profits and investor-owned operators who had invested their cash flows in equities saw their non-operating income hit record levels as the S&P 500 gained 26.29% for the year.

In 2024, the S&P is up 5.15% YTD but most hospital operators are uncertain about the future, even some that appear to have weathered the pandemic storm better than others. A sense of frustration and despair is felt widely across the sector, especially in critical access, rural, safety net, public and small community hospitals where long-term survival is in question. 

The cynicism felt by hospitals is rooted in four conflicts in which many believe hospitals are losing ground:

Hospitals vs. Insurers:

Insurers believe hospitals are inefficient and wasteful, and their business models afford them the role of deciding how much they’ll pay hospitals and when based on data they keep private. They change their rules annually to meet their financial needs. Longer-term contracts are out of the question. They have the upper hand on hospitals.

Hospitals take financial risks for facilities, technologies, workforce and therapies necessary to care. Their direct costs are driven by inflationary pressures in their wage and supply chains outside their control and indirect costs from regulatory compliance and administrative overhead, Demand is soaring. Hospital balance sheets are eroding while insurers are doubling down on hospital reimbursement cuts to offset shortfalls they anticipate from Medicare Advantage. Their finances and long-term sustainability are primarily controlled by insurers. They have minimal latitude to modify workforces, technology and clinical practices annually in response to insurer requirements.

Hospitals vs. the Drug Procurement Establishment: 

Drug manufacturers enjoy patent protections and regulatory apparatus that discourage competition and enable near-total price elasticity. They operate thru a labyrinth of manufacturers, wholesalers, distributors and dispensers in which their therapies gain market access through monopolies created to fend-off competition. They protect themselves in the U.S. market through well-funded advocacy and tight relationships with middlemen (GPOs, PBMs) and it’s understandable: the global market for prescription drugs is worth $1.6 trillion, the US represents 27% but only 4% of the world population.

And ownership of the 3 major PBMs that control 80% of drug benefits by insurers assures the drug establishment will be protected.

Prescription drugs are the third biggest expense in hospitals after payroll and med/surg supplies. They’re a major source of unexpected out-of-pocket cost to patients and unanticipated costs to hospitals, especially cancer therapies. And hospitals (other than academic hospitals that do applied research) are relegated to customers though every patient uses their products.

Prescription drug cost escalation is a threat to the solvency and affordability of hospital care in every community.

Hospitals vs. the FTC, DOJ and State Officials: 

Hospital consolidation has been a staple in hospital sustainability and growth strategies. It’s a major focus of regulator attention. Horizontal consolidation has enabled hospitals to share operating costs thru shared services and concentrate clinical programs for better outcomes. Vertical consolidation has enabled hospitals to diversify as a hedge against declining inpatient demand: today, 200+ sponsor health insurance plans, 60% employ physicians directly and the majority offer long-term, senior care and/or post-acute services. But regulators like the FTC think hospital consolidation has been harmful to consumers and third-party data has shown promised cost-savings to consumers are not realized.

Federal regulators are also scrutinizing the tax exemptions afforded not-for-profit hospitals, their investment strategies, the roles of private equity in hospital prices and quality and executive compensation among other concerns. And in many states, elected officials are building their statewide campaigns around reining in “out of control” hospitals and so on.

Bottom line: Hospitals are prime targets for regulators.

Hospitals vs. Congress: 

Influential members in key House and Senate Committees are now investigating regulatory changes that could protect rural and safety net hospitals while cutting payments to the rest. In key Committees (Senate HELP and Finance, House Energy and Commerce, Budget), hospitals are a target. Example: The Lower Cost, More Transparency Act passed in the the House December 11, 2023. It includes price transparency requirements for hospitals and PBMs, site-neutral payments, additional funding for rural and community health among more. The American Hospital Association objected noting “The AHA supports the elimination of the Medicaid disproportionate share hospital (DSH) reductions for two years. However, hospitals and health systems strongly oppose efforts to include permanent site-neutral payment cuts in this bill. In addition, the AHA has concerns about the added regulatory burdens on hospitals and health systems from the sections to codify the Hospital Price Transparency Rule and to establish unique identifiers for off-campus hospital outpatient departments (HOPDs).” Nonetheless, hospitals appear to be fighting an uphill battle in Congress.

Hospitals have other problems:

Threats from retail health mega-companies are disruptive. The public’s trust in hospitals has been fractured. Lenders are becoming more cautious in their term sheets.  And the hospital workforce—especially its doctors and nurses—is disgruntled. But the four conflicts above seem most important to the future for hospitals.

However, conflict resolution on these is problematic because opinions about hospitals inside and outside the sector are strongly held and remedy proposals vary widely across hospital tribes—not-for profits, investor-owned, public, safety nets, rural, specialty and others.

Nonetheless, conflict resolution on these issues must be pursued if hospitals are to be effective, affordable and accessible contributors and/or hubs for community health systems in the future. The risks of inaction for society, the communities served and the 5.48 million (NAICS Bureau of Labor 622) employed in the sector cannot be overstated. The likelihood they can be resolved without the addition of new voices and fresh solutions is unlikely.

PS: In the sections that follow, citations illustrate the gist of today’s major message: hospitals are under attack—some deserved, some not. It’s a tough business climate for all of them requiring fresh ideas from a broad set of stakeholders.

PS If you’ve been following the travails of Mission Hospital, Asheville NC—its sale to HCA Healthcare in 2019 under a cloud of suspicion and now its “immediate jeopardy” warning from CMS alleging safety and quality concerns—accountability falls squarely on its Board of Directors. I read the asset purchase agreement between HCA and Mission: it sets forth the principles of operating post-acquisition but does not specify measurable ways patient safety, outcomes, staffing levels and program quality will be defined. It does not appear HCA is in violation with the terms of the APA, but irreparable damage has been done and the community has lost confidence in the new Mission to operate in its best interest. Sadly, evidence shows the process was flawed, disclosures by key parties were incomplete and the hospital’s Board is sworn to secrecy preventing a full investigation.

The lessons are 2 for every hospital:

Boards must be prepared vis a vis education, objective data and independent counsel to carry out their fiduciary responsibility to their communities and key stakeholders. And the business of running hospitals is complex, easily prone to over-simplification and misinformation but highly important and visible in communities where they operate.

Business relationships, price transparency, board performance, executive compensation et al can no longer to treated as private arrangements.

Two Lawsuits. Two Issues. One Clear Message.

Posted on by • Posted in Business Practices, Community Benefit, Competition, Health System, Hospital, Hospital Industry, Lawsuit, Market Consolidation, Market Power, Pharmacy Benefits Management, Price Transparency, Profit Motive, Public Good, Public Trust, Self Insured Employer Liability, Self Insured Employers • Leave a comment
Two Lawsuits. Two Issues. One Clear Message.

Last Monday, two lawsuits were filed that strike at a fundamental challenge facing the U.S. health system:

In the District Court of NJ, a class action lawsuit (ANN LEWANDOWSKI v THE PENSION & BENEFITS COMMITTEE OF JOHNSON AND JOHNSON) was filed against J&J alleging the company had mismanaged health benefits in violation of the Employee Retirement Income Security Act (“ERISA”). As noted in the 74-page filing “This case principally involves mismanagement of prescription-drug benefits. “Over the past several years, defendants breached their fiduciary duties and mismanaged Johnson and Johnson’s prescription-drug benefits program, costing their ERISA plans and their employees millions of dollars in the form of higher payments for prescription drugs, higher premiums, higher deductibles, higher coinsurance, higher copays, and lower wages or limited wage growth… Defendants’ mismanagement is most evident in (but not limited to) the prices it agreed to pay one of its vendors—its Pharmacy Benefits Manager (“PBM”)—for many generic drugs that are widely available at drastically lower prices.”

The issue is this: what liability risk does a self-insured employer have in providing health benefits to their employees?

Is the structure of the plan, the selection of providers and vendors, and costs and prices experienced by employees subject to litigation? What’s the role of the employer in protecting employees against unnecessary costs?

On the same day, in the District Court of Eastern Wisconsin, an 85-page class action lawsuit was filed against Advocate-Aurora Health (AAH) claiming it “uses its market power to raise prices, limit competition and harm consumers in Wisconsin:

  • Forces commercial health plans to include all its “overpriced facilities” in-network even when they would prefer to include only some facilities.
  • Goes to “extreme efforts to drive out innovative insurance products that save commercial health plans and their members money.”
  • Suppresses competition through “secret and restrictive contract terms that have been the subject of bipartisan criticism.”
  • Acquires new facilities, which then allows it to raise prices due to reduced competition

… without intervention, the health system will continue to use “anticompetitive contracting and negotiating tactics to raise prices on Wisconsin commercial health plans and their members and use those funds for aggressive acquisitions and executive compensation.”

The issue is this: is a health system’s liable when its consolidation activities result in higher prices for services provided communities and employers in communities where they operate?

Is there a direct causal relationship between a system’s consolidation activities and their prices, and how should alleged harm be measured and remedied?

Two complicated issues for two reputable mega-players in the U.S. health system. Both lawsuits were brought as class actions which guarantees widespread media attention and a protracted legal process. And each contributes directly to the gradual erosion of public trust in the health system since the plaintiffs essentially claim the business practices of J&J and Advocate-Aurora willfully harm the individuals they pledge to serve.

In the November 2023 Keckley Poll, I asked the sample of 817 U.S. adults to assess the health system overall. The results were clear:

  • 69% think the system is fundamentally flawed and in need of major change vs. 7% who think otherwise.
  • 60% believe it puts its profits above patient care vs. 13% who disagree.
  • 74% think price controls are needed vs. 7% who disagree.
  • 83% believe having health insurance that’s ‘affordable and comprehensive’ is essential to financial security vs 3% who disagree.
  • 52% feel confident in their ability to navigate the U.S. system “when I have a problem” vs. 32% who have mixed feelings and 16% who aren’t.
  • And 76% think politicians avoid dealing with healthcare issues because they’re complex and politically risky vs/ 6% who think they tackle them head-on.

The poll also asked their level of trust and confidence in five major institutions “to develop a plan for the U.S. health system that maximizes what it has done well and corrects its major flaws.”

Clearly, trust and confidence in the health system is low, and expectations about solutions fall primarily on hospitals and doctors. Lawsuits like these widen suspicion that the industry’s dominated first and foremost by Big Businesses focused on their own profitability before all else. And they pose particular problems for sectors in healthcare dominated by not-for-profit and public ownership i.e. hospitals, home care, public health agencies and others.

My take

These lawsuits address two distinct issues: the roles of employers in designing their health benefits for employees including the use of PBMs, and the justification for consolidation of hospital and ancillary services in markets. 

But each lawsuit s predicated on a legal theory that prices set by organizations are geared more to corporate profits than public good and justifiable costs.

Pricing is the Achilles of the health system. Pushback against price transparency by some, however justified, has amplified exposure to litigation risk like these two  and contributed to the public’s loss of trust in the system.

It is unlikely greater price transparency and business practice disclosures by J&J and Advocate-Aurora could have avoided these lawsuits, but it’s clearly a message that needs consideration in every organization.

Healthcare organizations and their trade groups can no longer defend against lack of transparency by defaulting to the complexity of our supply chains and payment systems. They’re excuses. The realities of generative AI and interoperability assure information driven healthcare that’s publicly accessible and inclusive of prices, costs, outcomes and business practices. In the process, the public’s interest will heighten and lawsuits will increase.

P.S. Nashville is known as a hot spot for healthcare innovation including transparency solutions. Check out this meeting February 29: https://www.eventbrite.com/e/leaping-into-the-future-of-healthcare-2024-insights-tickets-809310819447

Resources

Lawsuit 119120873885 (documentcloud.org)

Microsoft Word – Aurora Class Action Complaint (FINAL filed Feb. 5 2024) (aboutblaw.com) February 5, 2024

3 huge healthcare battles being fought in 2024

Posted on by • Posted in Abortion, Abortion Rights, Affordability, Artificial Intelligence Generative, Big Pharma, Food and Drug Administration (FDA), High Drug Prices, High Premiums, High Prices, Market Outlook, Market Trends, Mifepristone, Modern Medicine, Pharmaceutical Industry, Physician Patient Relationship, Physician Practice Acquisition, Price Transparency, Private Equity, Roe v. Wade, Supreme Court • Leave a comment

https://www.linkedin.com/pulse/3-huge-healthcare-battles-being-fought-2024-robert-pearl-m-d–aguvc/?trackingId=z4TxTDG7TKq%2BJqfF6Tieug%3D%3D

Three critical healthcare struggles will define the year to come with cutthroat competition and intense disputes being played out in public:

1. A Nation Divided Over Abortion Rights

2. The Generative AI Revolution In Medicine

3. The Tug-Of-War Over Healthcare Pricing American healthcare, much like any battlefield, is fraught with conflict and turmoil. As we navigate 2024, the wars ahead seem destined to intensify before any semblance of peace can be attained. Let me know your thoughts once you read mine.

Modern medicine, for most of its history, has operated within a collegial environment—an industry of civility where physicians, hospitals, pharmaceutical companies and others stayed in their lanes and out of each other’s business.

It used to be that clinicians made patient-centric decisions, drugmakers and hospitals calculated care/treatment costs and added a modest profit, while insurers set rates based on those figures. Businesses and the government, hoping to save a little money, negotiated coverage rates but not at the expense of a favored doctor or hospital. Disputes, if any, were resolved quietly and behind the scenes.

Times have changed as healthcare has taken a 180-degree turn. This year will be characterized by cutthroat competition and intense disputes played out in public. And as the once harmonious world of healthcare braces for battle, three critical struggles take centerstage. Each one promises controversy and profound implications for the future of medicine:

1. A Nation Divided Over Abortion Rights

For nearly 50 years, from the landmark Roe v. Wade decision in 1973 to its overruling by the 2022 Dobbs case, abortion decisions were the province of women and their doctors. This dynamic has changed in nearly half the states.

This spring, the Supreme Court is set to hear another pivotal case, this one on mifepristone, an important drug for medical abortions. The ruling, expected in June, will significantly impact women’s rights and federal regulatory bodies like the FDA.

Traditionally, abortions were surgical procedures. Today, over half of all terminations are medically induced, primarily using a two-drug combination, including mifepristone. Since its approval in 2000, mifepristone has been prescribed to over 5 million women, and it boasts an excellent safety record. But anti-abortion groups, now challenging this method, have proposed stringent legal restrictions: reducing the administration window from 10 to seven weeks post-conception, banning distribution of the drug by mail, and mandating three in-person doctor visits, a burdensome requirement for many. While physicians could still prescribe misoprostol, the second drug in the regimen, its effectiveness alone pales in comparison to the two-drug combo.

Should the Supreme Court overrule and overturn the FDA’s clinical expertise on these matters, abortion activists fear the floodgates will open, inviting new challenges against other established medications like birth control.

In response, several states have fortified abortion rights through ballot initiatives, a trend expected to gain momentum in the November elections. This legislative action underscores a significant public-opinion divide from the Supreme Court’s stance. In fact, a survey published in Nature Human Behavior reveals that 60% of Americans support legal abortion.

Path to resolution: Uncertain. Traditionally, SCOTUS rulings have mirrored public opinion on key social issues, but its deviation on abortion rights has failed to shift public sentiment, setting the stage for an even fiercer clash in years to come. A Supreme Court ruling that renders abortion unconstitutional would contradict the principles outlined in the Dobbs decision, but not all states will enact protective measures. As a result, America’s divide on abortion rights is poised to deepen.

2. The Generative AI Revolution In Medicine

A year after ChatGPT’s release, an arms race in generative AI is reshaping industries from finance to healthcare. Organizations are investing billions to get a technological leg up on the competition, but this budding revolution has sparked widespread concern.

In Hollywood, screenwriters recently emerged victorious from a 150-day strike, partially focused on the threat of AI as a replacement for human workers. In the media realm, prominent organizations like The New York Times, along with a bevy of celebs and influencers, have initiated copyright infringement lawsuits against OpenAI, the developer of ChatGPT.

The healthcare sector faces its own unique battles. Insurers are leveraging AI to speed up and intensify claim denials, prompting providers to counter with AI-assisted appeals.

But beyond corporate skirmishes, the most profound conflict involves the doctor-patient relationship. Physicians, already vexed by patients who self-diagnose with “Dr. Google,” find themselves unsure whether generative AI will be friend or foe. Unlike traditional search engines, GenAI doesn’t just spit out information. It provides nuanced medical insights based on extensive, up-to-date research. Studies suggest that AI can already diagnose and recommend treatments with remarkable accuracy and empathy, surpassing human doctors in ever-more ways.

Path to resolution: Unfolding. While doctors are already taking advantage of AI’s administrative benefits (billing, notetaking and data entry), they’re apprehensive that ChatGPT will lead to errors if used for patient care. In this case, time will heal most concerns and eliminate most fears. Five years from now, with ChatGPT predicted to be 30 times more powerful, generative AI systems will become integral to medical care. Advanced tools, interfacing with wearables and electronic health records, will aid in disease management, diagnosis and chronic-condition monitoring, enhancing clinical outcomes and overall health.

3. The Tug-Of-War Over Healthcare Pricing

From routine doctor visits to complex hospital stays and drug prescriptions, every aspect of U.S. healthcare is getting more expensive. That’s not news to most Americans, half of whom say it is very or somewhat difficult to afford healthcare costs.

But people may be surprised to learn how the pricing wars will play out this year—and how the winners will affect the overall cost of healthcare.

Throughout U.S. healthcare, nurses are striking as doctors are unionizing. After a year of soaring inflation, healthcare supply-chain costs and wage expectations are through the roof. A notable example emerged in California, where a proposed $25 hourly minimum wage for healthcare workers was later retracted by Governor Newsom amid budget constraints.

Financial pressures are increasing. In response, thousands of doctors have sold their medical practices to private equity firms. This trend will continue in 2024 and likely drive up prices, as much as 30% higher for many specialties.

Meanwhile, drug spending will soar in 2024 as weight-loss drugs (costing roughly $12,000 a year) become increasingly available. A groundbreaking sickle cell disease treatment, which uses the controversial CRISPR technology, is projected to cost nearly $3 million upon release.

To help tame runaway prices, the Centers for Medicare & Medicaid Services will reduce out-of-pocket costs for dozens of Part B medications “by $1 to as much as $2,786 per average dose,” according to White House officials. However, the move, one of many price-busting measures under the Inflation Reduction Act, has ignited a series of legal challenges from the pharmaceutical industry.

Big Pharma seeks to delay or overturn legislation that would allow CMS to negotiate prices for 10 of the most expensive outpatient drugs starting in 2026.

Path to resolution: Up to voters. With national healthcare spending expected to leap from $4 trillion to $7 trillion by 2031, the pricing debate will only intensify. The upcoming election will be pivotal in steering the financial strategy for healthcare. A Republican surge could mean tighter controls on Medicare and Medicaid and relaxed insurance regulations, whereas a Democratic sweep could lead to increased taxes, especially on the wealthy. A divided government, however, would stall significant reforms, exacerbating the crisis of unaffordability into 2025.

Is Peace Possible?

American healthcare, much like any battlefield, is fraught with conflict and turmoil. As we navigate 2024, the wars ahead seem destined to intensify before any semblance of peace can be attained.

Yet, amidst the strife, hope glimmers: The rise of ChatGPT and other generative AI technologies holds promise for revolutionizing patient empowerment and systemic efficiency, making healthcare more accessible while mitigating the burden of chronic diseases. The debate over abortion rights, while deeply polarizing, might eventually find resolution in a legislative middle ground that echoes Roe’s protections with some restrictions on how late in pregnancy procedures can be performed.

Unfortunately, some problems need to get worse before they can get better. I predict the affordability of healthcare will be one of them this year. My New Year’s request is not to shoot the messenger.

Cigna’s Express Scripts adopts cost-plus pricing model

Posted on by • Posted in Health Policy, Healthcare Reform, High Deductible Health Plans, High Drug Prices, Out of Pocket Expenses, Pharmaceutical Industry, Pharmacy Benefits Management, Price Transparency, Retail Pharmacy • Leave a comment

https://mailchi.mp/169732fa4667/the-weekly-gist-november-17-2023?e=d1e747d2d8

This week, Express Scripts, the nation’s second-largest pharmacy benefit manager (PBM), which is owned by health insurer Cigna, announced a new pricing model.

It is giving employers and health plans the option to pay pharmacies up to 15 percent over acquisition costs, plus a dispensing fee, for covered drugs. This payment structure was popularized by the Mark Cuban Cost Plus Drugs Company, founded by the billionaire businessman in reaction to the opaque pricing and complicated discounts and rebates common among PBMs.

While Cigna is not promising that this new pricing model will result in lower prices, it says it will improve transparency and should benefit retail pharmacies, who will split the markup with Express Scripts.

Cigna projects that only some employers will lower their healthcare spending through the cost-plus model, and that patient cost-sharing should be similar under both approaches. 

The Gist: Between disruptive competitors like Cuban’s venture and increasing scrutiny from Congress, PBMs are facing new pressures to improve transparency and account for their role in rising drug costs. 

This move by Cigna is an attempt to address at least one of those concerns, possibly intended to preempt regulatory and legislative action. 

After years of complaints surrounding their business practices, it appears that the Congressional tide may be turning toward PBM industry reform. However, patients—who by and large are unaware of what PBMs are or do—won’t be satisfied till they see their out-of-pocket prescription drug costs go down. 

Next up on this front: seeing which provisions targeting PBMs, many which have bipartisan support, make it into the Senate’s broad healthcare legislation planned for the end of this year, and in what form that bill ultimately passes. 

As HLTH 2023 Convenes, Three Themes speak Volumes about Where U.S, Healthcare is Headed

Posted on by • Posted in Access to Capital, Health Policy, Health System, Hospital, Hospital Industry, Inflation, Price Transparency, Private Equity, Public Opinion, Public Perception, Systemness, Value-Based Healthcare • Leave a comment
As HLTH 2023 Convenes, Three Themes speak Volumes about Where U.S, Healthcare is Headed

In Las Vegas this week, 10,000 healthcare entrepreneurs, investors, purchasers and industry onlookers are gathered to celebrate the business of U.S. healthcare. It follows the inaugural Nashville Healthcare Sessions last month that drew a crowd to Music City touting “the premier healthcare conference set in the most relevant, exciting, and welcoming city in the south.“

Besides their locations and exceptional marketing, three notable themes are prominent that speak volumes about where this industry is:

1- The focus is systemness—integrated, connected, data-driven and scalable. Traditional divides that separate health and social services, hospitals and insurers, biotherapeutics and companion diagnostics are obsolete and access to private capital and swift execution vitals. And embedded in systemness is an expanded role of human resources that create workforces that are right-sized, diverse, AI-enabled and productive.
2-Technologies focused on end user value are gaining traction. Solutions that enable better, quicker, more accurate and affordable transactions with consumers are prominent. While traditional providers—hospitals, physicians, long-term care providers and public health programs– see HIT and AI investments as ways to make their work more efficient and satisfying, disruptors are focused on the untapped consumer market that’s dissatisfied with the status quo.
3-Access to smart capital is key. The venture capital and private equity markets in healthcare services are weathering corrections that have deflated returns and forced many to pullback or exit. The possibility of regulatory reforms involving greater transparency, carried interest restrictions and minimum hold periods means stronger funds with experienced operating partners and stable LP funding will be advantaged. In Vegas, they’ll be working the hallways to find tuck-ins for their platform bets and courting not-for-profit hospitals needing non-operating income to fund their growth and diversification efforts.

Those attending recognize the U.S. health industry faces unprecedented challenges:

  • Growing employer activism against lack of price transparency and inexplicably high unit costs for hospital care, prescription drugs, insurer overhead and mal-effect of consolidation in each sector.
  • Medical inflation that’s persistent but disproportionately absorbed by fewer and fewer employers and individuals who lack bargaining power.
  • Value-based purchasing activities that have failed to achieve desired cost containment goals.
  • Public dissatisfaction with the “system” and growing receptivity to alternatives.
  • Growing hostility in media coverage about hospitals, especially large not-for-profit hospitals, deemed to be profitable and wasteful.
  • Increased tension between providers (hospitals, medical groups) and insurers.
  • Increased regulation in states and court rulings that change (or have the potential to alter) how care is defined, provided, funded and legally authorized.

HLTH and Session attendees recognize the uncertainties of the political, economic and global markets in which healthcare operates. Israel will be front of mind to all as the fast-paced HLTH proceedings continue this week. 

The root causes of the system’s poor performance are understood and considered: they’re daunting. But that does not impede the willingness of private investors to make bets presuming the future of the U.S. healthcare is not a repeat of its past.

Contrary to pop culture, what happens in Vegas this week will not stay in Vegas: that’s the point. The health system is not working well. While some HLTH and Sessions attendees are no doubt focused on incremental innovations to improve the performance of their legacy organizations, others are looking beyond. And, if industries akin to healthcare like financial services and higher education are instructive, the latter are better prepared to respond than the former.

PS: Nearly 50 years to the day after the Yom Kippur War in 1973, Israel was again taken by surprise by a sudden attack. Unlike the series of clashes with Palestinian forces in Gaza over the past few years, this appears to be a full-scale conflict mounted by Hamas and its allies including Iran. 

Thousands are dead, more are injured and the health systems in both will be overwhelmed by the need. Health systems matter!

The Medicare Drug Pricing Program will Attract Uncomfortable Attention to the Rest of the Industry

Posted on by • Posted in Center for Medicare and Medicaid Services (CMS), Health Policy, High Deductible Health Plans, High Drug Prices, Lawsuit, Medicare, Medicare Drug Price Negotiation, Out of Pocket Expenses, Pharmaceutical Industry, Price Transparency, Supreme Court • Leave a comment
The Medicare Drug Pricing Program will Attract Uncomfortable Attention to the Rest of the Industry

Last Tuesday, the Center for Medicare and Medicaid Services (CMS) announced the first 10 medicines that will be subject to price negotiations with Medicare starting in 2026 per authorization in the Inflation Reduction Act (2022). It’s a big deal but far from a done deal.

Here are the 10:

  • Eliquis, for preventing strokes and blood clots, from Bristol Myers Squibb and Pfizer
  • Jardiance, for Type 2 diabetes and heart failure, from Boehringer Ingelheim and Eli Lilly
  • Xarelto, for preventing strokes and blood clots, from Johnson & Johnson
  • Januvia, for Type 2 diabetes, from Merck
  • Farxiga, for chronic kidney disease, from AstraZeneca
  • Entresto, for heart failure, from Novartis
  • Enbrel, for arthritis and other autoimmune conditions, from Amgen
  • Imbruvica, for blood cancers, from AbbVie and Johnson & Johnson
  • Stelara, for Crohn’s disease, from Johnson & Johnson
  • Fiasp and NovoLog insulin products, for diabetes, from Novo Nordisk

Notably, they include products from 10 of the biggest drug manufacturers that operate in the U.S. including 4 headquartered here (Johnson and Johnson, Merck, Lilly, Amgen) and the list covers a wide range of medical conditions that benefit from daily medications.

But only one cancer medicine was included (Johnson & Johnson and AbbVie’s Imbruvica for lymphoma) leaving cancer drugs alongside therapeutics for weight loss, Crohn’s and others to prepare for listing in 2027 or later.  

And CMS included long-acting insulins in the inaugural list naming six products manufactured by the Danish pharmaceutical giant Novo Nordisk while leaving the competing products made by J&J and others off. So, there were surprises.

To date, 8 lawsuits have been filed against the U.S. Department of Health and Human Services by drug manufacturers and the likelihood litigation will end up in the Supreme Court is high.

These cases are being brought because drug manufacturers believe government-imposed price controls are illegal. The arguments will be closely watched because they hit at a more fundamental question:

what’s the role of the federal government in making healthcare in the U.S. more affordable to more people? 

Every major sector in healthcare– hospitals, health insurers, medical device manufacturers, physician organizations, information technology companies, consultancies, advisors et al may be impacted as the $4.6 trillion industry is scrutinized more closely . All depend on its regulatory complexity to keep prices high, outsiders out and growth predictable. The pharmaceutical industry just happens to be its most visible.

The Pharmaceutical Industry

The facts are these:

  • 66% of American’s take one or more prescriptions: There were 4.73 billion prescriptions dispensed in the U.S. in 2022
  • Americans spent $633.5 billion on their medicines in 2022 and will spend $605-$635 billion in 2025.
  • This year (2023), the U.S. pharmaceutical market will account for 43.7% of the global pharmaceutical market and more than 70% of the industry’s profits.
  • 41% of Americans say they have a fair amount or a great deal of trust in pharmaceutical companies to look out for their best interests and 83% favor allowing Medicare to negotiate pricing directly with drug manufacturers (the same as Veteran’s Health does).
  • There were 1,106 COVID-19 vaccines and drugs in development as of March 18, 2023.
  • The U.S. industry employs 811,000 directly and 3.2 million indirectly including the 325,000 pharmacists who earn an average of $129,000/year and 447,000 pharm techs who earn $38,000.
  • And, in the U.S., drug companies spent $100 billion last year for R&D.

It’s a big, high-profile industry that claims 7 of the Top 10 highest paid CEOs in healthcare in its ranks, a persistent presence in social media and paid advertising for its brands and inexplicably strong influence in politics and physician treatment decisions.

The industry is not well liked by consumers, regulators and trading partners but uses every legal lever including patents, couponing, PBM distortion, pay-to-delay tactics, biosimilar roadblocks et al to protect its shareholders’ interests. And it has been effective for its members and advisors.

My take:

It’s easy to pile-on to criticism of the industry’s opaque pricing, lack of operational transparency, inadequate capture of drug efficacy and effectiveness data and impotent punishment against its bad actors and their enablers. 

It’s clear U.S. pharma consumers fund the majority of the global industry’s profits while the rest of the world benefits.

And it’s obvious U.S. consumers think it appropriate for the federal government to step in. The tricky part is not just government-imposed price controls for a handful of drugs; it’s how far the federal government should play in other sectors prone to neglect of affordability and equitable access.

There will be lessons learned as this Inflation Reduction Act program is enacted alongside others in the bill– insulin price caps at $35/month per covered prescription, access to adult vaccines without cost-sharing, a yearly cap ($2,000 in 2025) on out-of-pocket prescription drug costs in Medicare and expansion of the low-income subsidy program under Medicare Part D to 150% of the federal poverty level starting in 2024. And since implementation of these price caps isn’t until 2026, plenty of time for all parties to negotiate, spin and adapt.

But the bigger impact of this program will be in other sectors where pricing is opaque, the public’s suspicious and valid and reliable data is readily available to challenge widely-accepted but flawed assertions about quality, value, access and outcomes. It’s highly likely hospitals will be next.

Stay tuned.

Healthcare System in Campaign 2024: Out of Sight, Out of Mind?

Posted on by • Posted in 2024 Election Issues, Abortion, ACA, Access & Quality of Healthcare, Affordability, Election, Health Policy, Healthcare Reform, Healthcare Spending, Medicaid, Medicaid Expansion, Price Transparency • Leave a comment
Healthcare System in Campaign 2024: Out of Sight, Out of Mind?

The GOP Presidential debate marked the unofficial start of the 2024 Presidential campaign. With the exception of continued funding for Ukraine, style points won over issue distinctions as each of the 8 White House aspirants sought to make the cut to the next debate September 27 at the Reagan Library in Simi Valley, CA.

For the candidates in Milwaukee, it’s about “Stayin’ Alive” per the BeeGee’s hit song: that means avoiding self-inflicted harm while privately raising money to keep their campaigns afloat. And, based on Debate One, with the exception of abortion, that means they’ll not face questions about their positions on the litany of issues that dominate healthcare these days i.e., drug prices, hospital consolidation, price transparency, workforce burnout and many others. In Milwaukee, healthcare was essentially ‘out of sight our of mind’ to the moderators and debaters despite being 18% of the U.S. economy and its biggest employer.

For now, each will enlist ghostwriters to produce position papers for their websites, and, on occasion, reporters will press for specifics to test their grasp on a topic but that’s about it. Based on last Wednesday’s 2-hour event, it’s unlikely general media outlets like Fox News (which also hosts Debate Two) will explore healthcare issues except for abortion.

That means healthcare will be subordinated to the economy, inflation, immigration and crime—the top issues to GOP voters—for most of the Presidential primary season.  

Next November, voters will also elect 34 US Senators, 435 members of the House of Representatives, 11 Governors and their representatives in 85 state legislative bodies. This will be the first election cycle after reapportionment of votes in the United States Electoral College following the 2020 United States census. Swing states (WI, MI, PA, NV, AZ, GA, FL, OH, CO, VA) will again be keys to the Presidential results since demographics and population shifts have increased the concentrations of each party’s core voters in so-called Blue States and Red States:

  • The Democratic voter core is diverse, educated and culturally liberal with its strongest appeal to African-Americans, Latinos, women, educated professionals and urban voters. Blue States are predominantly in the Northeast, Upper Midwest and West Coast regions.
  • The Republican voter core consists of rural white voters, evangelicals, the elderly, and non-college educated adults. Red States are predominantly in the South and Southwest.

The increased concentrations of Blue or Red voters in certain states and regions has contributed to political polarization in the U.S. electorate and presents an unusual challenge to healthcare. Per Gallup: “Political polarization since 2003 has increased most significantly on issues related to federal government power, global warming and the environment, education, abortion, foreign trade, immigration, gun laws, the government’s role in providing healthcare, and income tax fairness. Increased polarization has been less evident on certain moral issues and satisfaction with the state of race relations.” 

Thus, healthcare issues are increasingly subject to hyper partisanship and often misinformation.

Given the limited knowledge voters have on most health issues and growing prevalence of social media fueled misinformation, political polarization creates echo chambers in healthcare—one that thinks the system works for those who can afford it and another that thinks that’s wrong.

It’s dicey for politicians: it’s political malpractice to offer specific solutions on anything, especially healthcare. It’s safer to attack its biggest vulnerabilities—affordability and equitable access—even though they mean something different in every echo chamber.

My take:

Barring a second Covid pandemic or global conflict with Russia/China, it’s unlikely healthcare issues will be prominent in Campaign 2024 at the national level except for abortion.  At least through the May primary season, here’s the political landscape for healthcare:

Affordability and inequitable access will be the focus of candidate rhetoric at the national level: Trust and confidence in the U.S. health system has eroded. That’s fertile political turf for critics.

In Congress, the fiercest defenders of the status quo have joined efforts to impose restrictions on consolidation and price transparency for hospitals and price controls for prescription drugs. There’s Bipartisan acknowledgement that inequities in accessing care are significant and increasing, especially in minority and low income populations. They differ over the remedy. Employers expect their health costs to increase at least 8% next year and blame hospitals and drug companies for price gauging and want Congress to do more. 85% of Democrats think “the government should insure everyone” vs. 33% of Republican voters which calcifies inaction in a divided Congress though. Opposition to the Affordable Care Act (2010) has softened and Medicaid expansion has passed in 40 Blue and Red states.

In the 2024 election cycle, remedies for increased access and more affordability will pit Republicans calling for more competition, consumerism and transparency and Democrats calling for more government funding, regulation and fairness. 

But more important, voter and employer frustration with partisan bickering sans solutions will set the stage for the vigorous debate about a single payer system in 2026 and after,

State elections will give more attention to healthcare issues than the Presidential race: That’s because Governors and state legislators set direction on issues like abortion rights, drug price controls, Medicaid funding, scope of practice allowances and others.

Increasingly, state Attorney’s General and Treasurers are weighing in on consolidation and spending. States referee workforce issues like nurse staffing requirements and others. And ballot referenda on healthcare issues trail only public education as a focus of grassroots voter activity.  At the top of that list is abortion rights:

In 25 states and DC, there are no restrictions on access; in 14 states, abortion is banned and in 11 abortions—both procedures and medication—are legal, but with gestational limits from 6 weeks (GA), to between 12 and 22 weeks (AZ, UT, NE, KS, IA, IN, OH, NC, SC, FL). It’s an issue that divides legislators and increasingly delineates Blue and Red states and in many states remains unsettled.

Other healthcare issues, like ageism, will surface in Campaign 2024 in the context of other topics: Finally, healthcare will factor into other issues: Example: The leading Presidential candidates are seniors: President Biden was the oldest person to assume the office at age 78 and would be would be 86 at the end of his second term. Former President Trump was 70 when elected in 2016 and would be 81 if elected when his second term ends.

The majority of Americans are concerned about the impact of age on fitness to serve among aspirants for high office: cognitive impairment, dementia, physical limitations et al. will be necessary talking points in campaigns and media coverage. Similarly, cybersecurity looms as a focus where healthcare’s data-rich dependence is directly impacted. Growing concern about climate and the food supply, sourcing of raw good and materials from China used in drug manufacturing and many other headlines will infer healthcare context.

Summary:  

Healthcare will be on the ballot in 2024 and might very well make the difference in who wins and loses in many state and local elections.

It will make a difference in the Presidential campaign as part of the economy and a major focus of government spending. Beyond abortion, the lack of attention to other aspects of the health system in the Milwaukee debate last week should in no way be interpreted as a pass for healthcare insiders. 

Voters are restless and healthcare is contributing. Healthcare is far from  ‘out of sight, out of mind’ in Campaign 2024.

Blue Shield of California ends exclusive PBM contract with CVS

Posted on by • Posted in Amazon, Amazon Pharmacy, Disruption, Health Insurance Industry, High Drug Prices, Payer Contracting, Pharmacy Benefits Management, Price Transparency • Leave a comment

https://mailchi.mp/d29febe6ab3c/the-weekly-gist-august-25-2023?e=d1e747d2d8

Blue Shield of California announced a plan to diversify its pharmacy benefit management (PBM) contracts in a bid to improve transparency and reduce costs. 

Instead of relying on Woonsocket, RI-based CVS Health’s Caremark as its sole PBM, the health plan and its 4.8M members will be served by five companies, including Amazon Pharmacy for at-home deliveries, Mark Cuban Cost Plus Drugs Company (MCCPDC) for a transparent pricing model, and Prime Therapeutics for negotiations with pharmaceutical companies.

Caremark will remain responsible for Blue Shield’s specialty pharmacy needs, which CVS noted in an investor filing represents over 50 percent of nationwide pharmacy benefit spending.

Blue Shield intends to implement this new system by 2025, and is targeting savings of $500M annually, which translates to 10 to 15 percent of its current spending. 

The Gist: Whether Blue Shield saves money with this initiative depends on the whether the benefit of competition in its PBM contracts outweighs the costs of more complex coordination between vendors. 

Keeping half of its business tied up with CVS through specialty pharmacy will further limit the potential impact. Nonetheless, it’s noteworthy that pharmacy disruptors like Amazon and MCCPDC have found a major health plan willing to work with them. 

Consumers, employers, payers without PBMs, and members of Congress are increasingly dissatisfied with the current pharmacy benefit market structure, and Blue Shield’s move could serve as a catalyst for future shakeups.