With 15 days before voters decide the composition of the 119th U.S. Congress and the next White House occupant, the immediate future for U.S. healthcare is both predictable and problematic:
It’s predictable that…
1-States will be the epicenter for healthcare legislation and regulation; federal initiatives will be substantially fewer. At a federal level, new initiatives will be limited: continued attention to hospital and insurer consolidation, drug prices and the role of PBMs, Medicare Advantage business practices and a short-term fix to physician payments are likely but little more. The Affordable Care Act will be modified slightly to address marketplace coverage and subsidies and CMSs Center for Medicare and Medicaid Innovation (CMMI) will test new alternative payment models even as doubt about their value mounts. But “BIG FEDERAL LAWS” impacting the U.S. health system are unlikely.
But in states, activity will explode: for example…
- In this cycle, 10 states will decide their abortion policies joining 17 others that have already enacted new policies.
- 3 will vote on marijuana legalization joining 24 states that have passed laws.
- 24 states have already passed Prescription Drug Pricing legislation and 4 are considering commissions to set limits.
- 40 have expanded their Medicaid programs
- 35 states and Washington, D.C., operate CON programs; in 12 states, CONs have been repealed.
- 14 have legislation governing mental health access.
- 5 have passed or are developing commissions to control health costs.
- And so on.
Given partisan dysfunction in Congress and the surprising lack of attention to healthcare in Campaign 2024 (other than abortion coverage), the center of attention in 2025-2026 will be states. In addition to the list above, attention in states will address protections for artificial intelligence utilization, access to and pricing for weight loss medications, tax exemptions for not-for-profit health systems, telehealth access, conditions for private equity ownership in health services, constraints on contract pharmacies, implementation of site neutral payments, new 340B accountability requirements and much more. In many of these efforts, state legislatures and/or Governors will go beyond federal guidance setting the stage for court challenges, and the flavor of these efforts will align with a state’s partisan majorities: as of September 30th, 2024, Republicans controlled 54.85% of all state legislative seats nationally, while Democrats held 44.19%. Republicans held a majority in 56 chambers, and Democrats held the majority in 41 chambers. In 2024, 27 states are led by GOP governors and 23 by Dems and 11 face voters November 5. And going into the election, 22 states are considered red, 21 are considered blue and 7 are tagged as purple.
The U.S. Constitution affirms Federalism as the structure for U.S. governance: it pledges the pursuit of “life, liberty and the pursuit of happiness” as its purpose but leaves the lion’s share of responsibilities to states to figure out how. Healthcare may be federalism’s greatest test.
2-Large employers will take direct action to control their health costs. Per the Kaiser Family Foundation’s most recent employer survey, employer health costs are expected to increase 7% this year for the second year in a row. Willis Towers Watson, predicts a 6.4% increase this year on the heels of a 6% bump last year. The Business Group on Health, which represents large self-insured employers, forecasts an 8% increase in 2025 following a 7% increase last year. All well-above inflation, ages and consumer prices this year.
Employers know they pay 254% of Medicare rates (RAND) and they’re frustrated. They believe their concerns about costs, affordability and spending are not taken seriously by hospitals, physicians, insurers and drug companies. They see lackluster results from federal price transparency mandates and believe the CMS’ value agenda anchored by accountable care organizations are not achieving needed results. Small-and-midsize employers are dropping benefits altogether if they think they can. For large employers, it’s a different story. Keeping health benefits is necessary to attract and keep talent, but costs are increasingly prohibitive against macro-pressures of workforce availability, cybersecurity threats, heightened supply-chain and logistics regulatory scrutiny and shareholder activism.
Maintaining employee health benefits while absorbing hyper-inflationary drug prices, insurance premiums and hospital services is their challenge. The old playbook—cost sharing with employees, narrow networks of providers, onsite/near site primary care clinics et al—is not working to keep up with the industry’s propensity to drive higher prices through consolidation.
In 2025, they will carefully test a new playbook while mindful of inherent risks. They will use reference pricing, narrow specialty specific networks, technology-enabled self-care and employee gainsharing to address health costs head on while adjusting employee wages. Federal and state advocacy about Medicare and Medicaid funding, insurer and hospital consolidation and drug pricing will intensify. And some big names in corporate America will step into a national debate about healthcare affordability and accountability.
Employers are fed up with the status quo. They don’t buy the blame game between hospitals, insurers and drug companies. And they don’t think their voice has been heard.
3-Private equity and strategic investors will capitalize on healthcare market conditions. The plans set forth by the two major party candidates feature populist themes including protections for women’s health and abortion services, maintenance/expansion of the Affordable Care Act and prescription drug price controls. But the substance of their plans focus on consumer prices and inflation: each promises new spending likely to add to the national deficit:
- Per the Non-Partisan Committee for a Responsible Federal Budget, over the next 10 years, the Trump plan would add $7.5 trillion to the deficit; the Harris plan would add $3.5 trillion.
- Per the Wharton School at the University of Pennsylvania, Harris’ proposals would add $1.2 trillion to the national deficits over 10 years and Trump’s proposals would add $5.8 trillion over the same period
Per the Congressional Budget Office, federal budget deficit for FY2024 which ended September 30 will be $1.8 trillion– $139 billion more than FT 2023. Revenues increased by an estimated $479 billion (or 11 percent). Revenues in all major categories, but notably individual income taxes, were greater than they were in fiscal year 2023. Outlays rose by an estimated $617 billion (or 10 percent). The largest increase in outlays was for education ($308 billion). Net outlays for interest on the public debt rose by $240 billion to total $950 billion.
The federal government spent $6.75 trillion in 2024, a 10% increase from the prior year. Spending on Social Security (22% of total spending) and healthcare programs (28.5% of total spending) also increased substantially. The U.S. debt as of Friday was $37.77 trillion, or $106 thousand per citizen.
The non-partisan Congressional Budget Office (CBO) reports that federal debt held by the public averaged 48.3 % of GDP for the half century ending in 2023– far above its historic average. It projects next year’s national debt will hit 100% for the first time since the US military build-up in the second world war. And it forecast the debt reaching 122.4% in 2034 potentially pushing interest payments from 13% of total spending this year to 20% or more.
Adding debt is increasingly cumbersome for national lawmakers despite campaign promises, and healthcare is rivaled by education, climate and national defense in seeking funding through taxes and appropriations. Thus, opportunities for private investors in healthcare will increase dramatically in 2025 and 2026. After all, it’s a growth industry ripe for fresh solutions that improve affordability and cost reduction at scale.
Combined, these three predictions foretell a U.S. healthcare system that faces a significant pressure to demonstrate value. They require every healthcare organization to assess long-term strategies in the likely context of reduced funding, increased regulation and heightened attention to prices and affordability. This is problematic for insiders accustomed to incrementalism that’s protected them from unwelcome changes for 3 decades.
Announcements last week by Walgreens and CVS about changes to their strategies going forward reflect the industry’s new normal: change is constant, success if not. In 2025, regardless of the election outcome, healthcare will be a major focus for lawmakers, regulators, employers and consumers.
Paul
Resources
2024 State Legislation to Lower Prescription Drug Costs – NASHP
Health Costs, Coverage and Delivery State Legislation
Health-Insurance Costs Are Taking Biggest Jumps in Years – WSJ
2024 Employer Health Benefits Survey | KFF
Melanie Evans Wall Street Journal
Brighton Health Plan Solutions via PRNewswire, August 2024 https://brightonhps.com/wp-content/uploads/2024/08/What-Employers-Want-from-Direct-Provider-Health-Plan-Contracts.pdf
Is Your Portfolio Company Ready to Run through the Finish Line? | Bain & Company
The Rise of Health Care Consolidation and What to Do About It | Health Affairs
Quotables
Re: hospital incentives for physicians: “Many of physicians’ daily decisions — such as their selection of drugs, devices, and technologies, and the amount of time they utilize resources such as operating rooms and hospital beds — have a significant financial impact on hospitals. By providing physicians with the appropriate incentives, hospitals and health systems can enlist them in the effort to manage costs while simultaneously maintaining or improving patient outcomes.
The reality, however, is only a small percentage of health systems do so today. To help the others who haven’t yet taken this path, we present guiding principles in this article for designing incentives. It is based on our experience over the last decade working and speaking with dozens of health systems to help them improve their financial, clinical and operational performance and the research of one of us (Susanna) on the design of incentive and performance management systems.”
Physicians Can Help Cut Costs. They Just Need the Right Incentives.
Re: M&A environment: “While dealmaking will undoubtedly get a boost in the coming months as central bankers continue to ease interest rates, selling companies will remain challenging for several reasons. Number one is the massive overhang of unexited companies. It almost guarantees that the market will be flooded with assets when dealmaking picks up, making it increasingly difficult to stand out from the crowd.
Second is the fact that the finish line has moved for so many companies amid rapidly shifting market conditions. Artificial intelligence was hardly a factor for most industries when all those companies were purchased four years ago. Add-on strategies dependent on easy financing often don’t pencil out in a world marked by still-elevated financing costs. Growth has slowed in some sectors, supply chains have been rewired post pandemic, and the threat of recession continues to hover in the background.”
Is Your Portfolio Company Ready to Run through the Finish Line? | Bain & Company
Re: consumerization in healthcare: “At-home diagnostics and generative AI provide an opportunity for doctors and patients to collaborate more effectively. These tools allow patients to stay up to date on preventive care, better manage chronic conditions and reduce unnecessary office visits. And done in coordination with a personal physician, they will make healthcare delivery more efficient and effective.
The consumer era in medicine has arrived. Just as Amazon revolutionized shopping with speed and convenience, patients increasingly desire the same from medical care. Looking ahead, the combination of engaged clinicians, empowered patients and advanced technology will be far more powerful than any one of these alone. The consumerism train has left the station, and the future of healthcare is onboard.”
The Consumer Revolution in Medicine Is (Finally) Here. What Comes Next? (forbes.com) Robert Pearl, M.D.
Re: U.S. obesity drug market: “The National Health and Nutrition Examination Survey (NHANES) reported that 42.5% of US adults aged 20 years and older are obese and another 31.31% are overweight. In 2021, national spending for semaglutide totaled $10.7 billion and increased 300% between 2020 and 2022, according to the CDC. Moreover, 53.8% of patients taking a glucagon-like peptide-1 (GLP-1) have a history of type 2 diabetes, although indications have been expanded beyond the disease.
Current guidelines by the American Gastroenterological Association (AGA) recommends pharmacological therapy in addition to lifestyle interventions, including long-term medication management with semaglutide, liraglutide, phentermine-topiramate, naltrexone-bupropion, phentermine, and diethylpropion. Additionally, the American Diabetes Association (ADA) recommends that people with diabetes who are overweight or obese use a GLP-1 or dual glucose-dependent insulinotropic polypeptide (GIP)/GLP-1 agonist, due to additional weight-independent benefits.”
Anderson E, Fitch A, McVeigh M. “Pound for pound” assessment of anti-obesity medications, coverage policies, and financial considerations. Presented at: AMCP Nexus 2024; October 14-17, 2024; Las Vegas, NV
Financial Considerations, Policies for Ant obesity Medication Coverage (ajmc.com)
Re: Walgreens store closures: “The customer has evolved. Demographics and preferences have shifted, and we need to reposition and operate our stores accordingly,”
Tim Wentworth, CEO. www.walgreens.com
Re: cancer care effectiveness, market forecast: “Cancer is one of the leading causes of death globally and accounts for about one-sixth of all deaths. The economic price of cancer is massive—estimated to cost the global economy over $25 trillion over the coming decades. While mortality rates from cancer have declined due to advances in screening and treatment and lower rates of smoking, the number of new cancer cases has remained steady; there has also been a recent, puzzling rise in cancer rates among younger populations…
Market size: We estimate the global market size in oncology healthtech to be about $250 billion. The cancer screening category accounts for the largest market opportunity in our view, with a current market size estimated at $100 billion globally and over $40 billion in the US alone.3 We also expect tens of billions of dollars in additional market opportunity in cancer diagnostics to be unlocked from new advancements in liquid biopsies and imaging tests. Other large markets in oncology include tissue biopsy and pathology, diagnostic equipment, and medical image analysis—all categories we estimate with global market sizes exceeding $10 billion. Assuming a conservative compound annual growth rate of 4% and a current market size of $250 billion, we expect the oncology healthtech market to expand to over $400 billion within the next decade, providing ample opportunity for startups to take share—or find successful exit outcomes—even in a market largely dominated by incumbents.”
2024_Oncology_Healthtech_VC_Market_Snapshot.pdf (pitchbook.com)
Re: home visit upcoding by insurers: “Annual wellness visits aren’t the only type of visit where clinicians enter diagnoses into patients’ records — they just happen to be a convenient time to do so. There’s also a cottage industry of consultants and coding specialists who collect diagnoses during assessments they perform in patients’ homes, typically on behalf of Medicare Advantage insurers.
Many primary care doctors say while this process is flawed, it’s the main way to get more money so they can provide good preventive care. UnitedHealth also isn’t the only company that prioritizes patients’ medical codes. Humana, CVS Health’s Aetna, Blue Cross Blue Shield insurers, and even hospital systems that participate in Medicare “accountable care” programs use technology and various vendors to maximize Medicare Advantage patients’ conditions.
Those organizations, some contend, are simply responding to the incentives and systems created by Congress and the Centers for Medicare and Medicaid Services, the federal agency that regulates all Medicare programs.
UnitedHealth gave doctors bonuses, praise for Medicare Advantage visits (statnews.com)
Re: capitation as means to affordability: “Capitation turns healthcare into a multi-round game, where long-term cooperation becomes essential. Under a capitated model, insurers and providers share the financial risk and benefits of patient outcomes. Rather than focusing on short-term profits, both sides are encouraged to keep patients healthy, prevent chronic diseases from worsening and reduce costly life-threatening complications like heart attacks, strokes and kidney failures. Just as in the multi-round game theory example, the more both sides cooperate, the better the outcomes for everyone—especially patients.
Capitation aligns the incentives of all players in the healthcare system by rewarding prevention and proactive care, rather than encouraging costly interventions, as is typical of FFS. Over time, capitation builds trust, with both payers and providers benefiting financially as patients stay healthier and require fewer treatments.”
The Impending Crisis in Healthcare Affordability
Re: household savings: “The persistent strength of consumer spending has been a hallmark of the post-pandemic economic recovery seen in the United States. Since the second quarter of 2020—the trough of the last recession—real personal consumption expenditure has gone up by 24.4%, while GDP has grown by 20.4%.2 While a healthy labor market with strong wage growth has aided consumers, it’s not the only factor that has buoyed consumer spending. Pandemic stimulus payments—also known as “economic impact payments”—which led to an accumulation of excess savings during the COVID-19 pandemic, also supported growth. But now, these savings have been exhausted, according to the economists at the Federal Reserve Bank of San Francisco.”
A key source of consumers’ excess savings were economic impact payments. More than 476 million of such payments—totaling more than US$800 billion—were distributed as financial relief under three separate programs in 2020 and 2021 (figure 1).8 These payments were mostly focused on low- and middle-income families and reached nearly 85% of all US households.9 However, households didn’t spend all the money they received from these payments—they also saved some of it. This, in turn, led to a rapid rise in “excess savings.”
According to a study by economists at the Federal Reserve Bank of San Francisco, excess savings can be defined as “the difference between actual savings and the pre-recession trend—relative to previous recessions.” So, how have those excess savings fared? According to the same study, economists estimate that excess savings peaked at US$2.1 trillion in August 2021 before declining. By March 2024, excess savings had turned negative, and as of June, the negative drawdown stood at US$372 billion.”
Diminishing savings are not major risks for consumers | Deloitte Insights
Courts
SCOTUS decision consequential to preventive health services: “As the US Supreme Court begins its 2024–25 term, the possibility looms that it might put yet another consequential case on its docket concerning the future of the Affordable Care Act (ACA). This time, the case concerns one of the law’s most popular provisions—its preventive services mandate…
In the balance is access to preventive care for more than 150 million Americans…On September 19, the federal government filed its petition for certiorari (seeking judicial review of a lower court’s decision) with the Supreme Court of the United States in Braidwood v. Becerra, asking it to uphold the authority of the US Preventive Services Task Force (Task Force) in determining insurance coverage requirements for preventive services under the ACA…
The Braidwood plaintiffs oppose health insurance that covers certain preventive services contrary to their religious beliefs, claiming such services encourage sexual behaviors and drug use. Their principal legal claim challenges the ACA’s delegation of coverage decisions to advisory bodies as unconstitutional, arguing it infringes on their religious exercise.
The specific legal question at the heart of the case is whether the Task Force’s role is constitutional.
The US Supreme Court And The Uncertain Future Of Preventive Care Health Affairs October 18, 2024 https://www.healthaffairs.org/content/forefront/us-supreme-court-and-uncertain-future-preventive-care?utm_campaign=forefront
Employers
Survey: Direct Contracting: Per a survey of 150 benefits leaders (88% of whom were self-funded or considering self-funding in the future) from Brighton Health Plan Solutions
on their appetite for direct provider arrangements.
- 75% of employers surveyed are engaged in direct contracts as part of their health benefits strategy.
- 41% of those not currently in direct contracts are likely to consider them by 2025.
- Employers anticipate health savings between 6% to 20% with direct contracting compared to traditional health insurance plans.
- 49% and 47% of respondents, respectively, said they considered improved benefits and cost control
Brighton Health Plan Solutions via PRNewswire, August 2024 https://brightonhps.com/wp-content/uploads/2024/08/What-Employers-Want-from-Direct-Provider-Health-Plan-Contracts.pdf
Hospitals
Moody’s: Margins in NFP Hospitals: Per Tuesday’s Moody’s report: Labor costs are stabilizing for many hospitals and health systems across the country, although ongoing staff shortages and wage inflation are expected to keep causing friction in 2025. The rate of wage increases is slowing, but it is still growing from a higher base compared with the years before the COVID-19 pandemic, according to the report. Median operating margins at nonprofit hospitals dropped from 8.5% in 2019 to 5.3% in 2023 and are forecast to be 6% in 2024 and keep improving in 2025. The Moody’s report also found the Northwest region of the U.S. has been more heavily affected by labor market dynamics.
Hospital margins may see modest improvement in 2025: Moody’s October 18, 2024https://www.modernhealthcare.com/finance/moodys-hospital-margins-staffing-2025?utm_source=modern-healthcare-
WedMD Choice Awards: Last Wednesday, WebMD released its 2025 Choice Awards, WebMD recognizing 164 health systems, including 24 that patients and physicians preferred 2-to-1 over competitors. Criteria include revenue or discharge volume as well as consumer preference. The 24 include 13 academic medical centers; 4 cancer specialty hospitals and 1 safety net provider. All are located in major markets:
WebMD www.webmd.com
Executive Compensation: Per Sullivan Cotter’s 2024 Health Care Management and Executive Compensation Survey includes data from nearly 3,300 organizations on more than 45,000 incumbents. median base salaries for system-level executives grew by 5.2%. Annual incentive payouts were higher based on improved performance and resulted in median total cash compensation increases of 8.3%.
Highlights: Median Annual Increases (2024 vs 2023):
| System-Level
Base Salary |
System-Level
TCC |
Subsidiary Hospital Base Salary | Subsidiary Hospital
TCC |
|
| Executives | 5.2 | 8.3 | 3.5 | 7.4 |
| Management | 4.2 | 3.9 | 3.6 | 5.3 |
Sullivan Cotter www.sullivancotter.com
Related: Compensation: Male-Female distinction: Female CEOs and CFOs at Standard & Poor’s 500 companies will outearn their male counterparts this year, “bagging at least 5% more in median compensation compared with top male executives,” the latest Conference Board report cited by CFO Dive (Oct. 14, Tyson) projects. At the same time, women lag far behind men in rising to the top posts, filling just 7.9% of CEO jobs among S&P firms. The Conference Board report was co-written by FW Cook and ESGAUGE.
Female CFOs, CEOs at big companies outearn male counterparts CFO Dive October 15, 2024 https://www.cfodive.com/news/female-cfos-ceos-at-big-companies-outearn-male-counterparts/729790/
Insurers
Blue Cross Blue Shield antitrust settlement reached: Last Monday, the Blue Cross Blue Shield Association (BCBSA) reached a $2.8 billion class action settlement on behalf of 33 of its member companies closing litigation that began in 2012. Pending court approval, the plaintiff providers, along with an estimated 6M claimants, are set to receive about $2B of monetary relief for damages incurred from July 2008 to October 2024. It also requires changes to BCBSA’s business practices ending exclusivity agreements between Blues plans’ service areas redesign of its BlueCard program.
According to the American Medical Association, one insurer controls at least 50% of the market in almost half of all metropolitan statistical areas (MSAs), and a BCBS insurer holds the largest market share in 82% of MSAs.
Blue Cross Blue Shield settles US health provider class action for $2.8 billion | Reuters
UnitedHealth: 3Q earnings reports: UnitedHealth (NYSE:UNH) reported better-than-expected financials for Q3 2024 on Tuesday. However, shares of the managed care giant traded lower in the premarket as cost concerns in its insurance unit unnerved Wall Street. UNH closed at $569.61/share Friday and its market cap fell to $525.99 billion.
UnitedHealth https://www.msn.com/en-us/money/markets?id=a24xlh&tab=TopGainers&ocid=MC12DT
. Study: Vertical Integration and Care Experiences Among Medicare Advantage Beneficiaries: “In this cross-sectional study of 857,695 survey respondents, enrollment in integrated MA plans was associated with meaningfully higher ratings of only 2 (customer service and health plan) of 9 care experience measures compared with nonintegrated MA plans. Enrollment in legacy-integrated MA plans was associated with higher ratings of all 9 care experience measures compared with enrollment in non–legacy-integrated and nonintegrated MA plans.
Vertical Integration and Care Experiences Among Medicare Advantage Beneficiaries JAMA Network October 17, 2024 https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2824979?
Study: Medicare Advantage Contract Terminations:
- Following a Medicare Advantage (MA) contract termination, 20.1% of enrollees switched to traditional Medicare (TM), including 32.7% of dual-eligible beneficiaries and 16.4% of non–dual-eligible beneficiaries.
- In non-terminated contracts, the concurrent switch rate was 6.2% for all, 10.4% for dual-eligible beneficiaries and 5.1% for non–dual-eligible enrollees.
- The highest switch rates to TM were among Black enrollees (32.3%) and those with prior use of hospital (31.3%), nursing home (41.4%), or home health care (28.3%).
- Beneficiaries who stayed in MA selected higher-rated star plans (mean post-termination contract star rating of 3.8 stars compared with 3.3 stars in the terminated year), but did not pay more in monthly premiums with 66.5% paying the same or lower premiums.
JAMA Network, Contract Termination and Insurance Enrollment Among Medicare Advantage Beneficiaries, August 2024
Senate Investigation: Prior authorization in post-acute care: On May 17, 2023, the U.S. Senate Permanent Subcommittee on Investigations launched an inquiry into the three largest Medicare Advantage companies — UnitedHealthcare, Humana, and CVS Health — seeking information and data regarding how the companies decide to approve or deny prior authorization requests and the technologies they use in the process. The subcommittee sought data about prior authorization requests and denials between 2019 and 2022. Highlights:
- In 2022, Medicare Advantage insurers overall received more than 46 million prior authorization requests and either fully or partially denied about 7.4% of them. In 2022, less than 10% of denied requests were appealed.
- From 2019 and 2022, UnitedHealthcare, Humana, and CVS Health each denied prior authorization requests for post-acute care at far higher rates than they did for other types of care. In 2022, UnitedHealthcare and CVS denied prior authorization requests for post-acute care at rates about three times higher than their overall denial rates for prior authorization requests. Humana’s prior authorization denial rate for post-acute care was over 16 times higher than its normal rate of denials.
- UnitedHealthcare’s prior authorization denial rate for post-acute care increased from 10.9% in 2020, to 16.3% in 2021, to 22.7% in 2022. According to the report, the company was implementing multiple initiatives to automate the process, including through a platform called naviHealth, which is owned by Optum. In 2024, the company rebrandednaviHealth to Home & Community Care.
- CVS Health’s prior authorization denial rate for post-acute care was stable from 2019 to 2022, but the number of post-acute care service requests that required prior authorization increased by 57.5%.
- Humana’s denial rate for long-term acute care increased by 54% between 2020 and 2022.
- The Better Medicare Alliance, a pro-MA advocacy group, response: “Prior authorization works to ensure care is safe, evidence-based, and cost-effective for Medicare Advantage beneficiaries. This report paints a misleading picture of how the program operates. At the same time, we should always be working to ensure it is as responsive as possible to the needs of seniors. That is why we support ongoing efforts to improve prior authorization.”
Refusal of Recovery: How Insurers Have Denied Patients Access to Post-Acute Care U.S. Senate Permanent Subcommittee on Investigations October 17, 2024 https://www.hsgac.senate.gov/wp-content/uploads/2024.10.17-PSI-Majority-Staff-Report-on-Medicare-Advantage.pdf
Medicare Advantage enrollment: The 2025 MA enrollment period began last Tuesday and runs thru December 7. In 2024, more than 16 million enrollees this year are in plans with no deductible for any drug. But in 2025, more than 45% of these members will be subject to a deductible for at least some drugs Some insurers are also cutting back on allowances for dental, hearing and vision benefits.
CMS www.cms.gov
Prior authorization oversight: “Last month, California passed a bill ensuring that doctors, not artificial intelligence (AI), have the final say on patients’ treatments and services. The bill, SB1120 , allows insurance companies to use AI to review doctors’ recommendations for medical procedures only if those prior approval requests are overseen and reviewed by trained medical professionals.
As AI is rapidly proliferating in healthcare, California and Oklahoma are among the first states that have passed legislation governing the use of AI in prior authorization decisions. Other states are also working on legislation to regulate how AI is used by health insurance companies. I believe we urgently need strict, enforceable legislation in all 50 states, and perhaps at the federal level.”
Doctors, Not AI, Should Authorize Treatments October 18, 2024 https://www.medpagetoday.com/opinion/second-opinions
United MA prior Authorization policy change: “As of September 1, UnitedHealth’ Medicare Advantage members who need PT, OT, or ST in a physician’s office or an outpatient hospital clinic will need to get approval from UnitedHealthcare. Getting PT, OT, and ST in your home is cheaper than getting them in an outpatient clinic, but that’s not necessarily feasible for everyone. This will create headaches not just for UnitedHealthcare MA enrollees, but also the therapists.”
UnitedHealthcare’s new prior authorizations
Cigna-Humana combination talk resumes: Cigna Group has revived efforts to combine with its smaller rival Humana Inc. after merger talks fell apart late last year. Cigna is looking to close the sale of its Medicare Advantage business in the coming weeks before committing to any other transactions, one of the people said.
Humana rose 0.3% to $267.14 a share in New York trading Friday, giving the company a market value of about $32 billion. Cigna fell 4.9% to $336, for a market value of $94 billion
Cigna resumes merger discussions with Humana Michelle F. Davis and John Tozzi, Bloomberg
Physicians
Academic Medicine Study: pre-clinical training: NYU compared student performance based on a 3-year medical school training vs. 4-year medical school training programs. Results:
“Accelerated 3YMD students were approximately 5 months older at admission and had higher multiple mini-interview scores than 4YMD students. Overall, accelerated 3YMD students performed similarly to 4YMD students during medical school and internship. Significant differences included higher performance by 3YMD students on pre-clerkship exams and lower performance on Steps 1 and 2 (average: 5.6 and 8.3 fewer points, respectively) and the physical examination portion of the NYUGSOM Comprehensive Clinical Skills Exam. Internship data indicated comparable team assessments across all residencies, statistically significant higher performance on Step 3 when compared to all 4YMD interns, and, in internal medicine, comparable clinical reasoning between 3YMD and all 4YMD interns. When comparing 3YMD interns to all 4YMD interns in the internal medicine residency program, 3YMD interns had a statistically significantly higher performance on milestones.”
Students in the accelerated program also had comparable clinical reasoning outcomes among the internal medicine interns. The authors also noted there was no statistically significant difference in the rate of becoming chief residents between the two programs.”
Outcomes of Accelerated 3-Year MD Graduates at NYU Grossman School of Medicine During Medical School and Early Residency Academic Medicine October 15, 2024 ():10.1097/ACM.0000000000005896, https://journals.lww.com/academicmedicine/abstract/9900/outcomes_of_accelerated_3_year_md_graduates_at_nyu.982.aspx
Polling
Pew: Americans’ Views of 2024 Election News: Per the Pew survey of adults conducted September 16-22, 2024: Highlights:
- 73% say they have seen inaccurate news about the 2024 election (37% very often, 36% somewhat often)
- 52% say it is difficult to determine what is true and what is not
- 28% say that it is difficult for them to find reliable information about the presidential election.
- Republicans (including independents who lean toward the GOP) are much more likely than Democrats and Democratic leaners to say they have seen inaccurate coverage and that they are having a hard time sorting out the truth. And Republicans are lesslikely than Democrats to say it is easy for them to find reliable information about the election (29% vs. 52%, respectively).
- 58% of Americans say they have heard people they know share information about the election that they think is inaccurate at least somewhat often.
- 69% say they are following news about the candidates for the 2024 presidential election very (28%) or fairly (40%) closely. This is up from 58% in April and 65% in July, mirroring a pattern also seen in 2020 in which attention increases closer to Election Day.
Americans’ Views of 2024 Election News | Pew Research Center
Retail health
HBR: Retail clinics failure: “It was only a year ago that retail health clinics in the United States — the kinds run by CVS Health, Walmart, and Walgreens — were all the rage. Additional investments in and expansion of clinics nationally, supported by assumptions about what consumers would want in terms of primary care in the near future that fit what retail clinics purported to offer, filtered into an enthusiasm for the future of this model of care delivery. At its zenith in early 2024, there were 1,800 of these clinics nationally.
Since then, the situation has changed dramatically. Recent announcements by CVS Health, Walmart, and Walgreens that they were collectively shuttering a couple hundred retail health clinics nationwide, with Walmart getting out of the business entirely, has raised questions about the fiscal viability and mass appeal of this brand of primary care delivery.
Here’s what has gone wrong with retail health care, and what retailers wishing to regroup and recommit to the primary care space must do.
- Make primary care a core business.
- Expand into rural and suburban communities.
- Move into complex care with higher margins.
- Partner with other providers.
There may be a place for retail chains in the delivery of primary care. But it will require retailers to make some bold moves. Whether they have the stomach for doing all this remains to be seen.”
Why Retail Clinics Failed Harvard Business Review October 10, 2024 https://hbr.org/2024/10/why-retail-health-clinics-failed?
Retail drugstore closures: “CVS is closing 900 stores. Rite-Aid is closing 500. Walgreens announced Tuesday it plans to close 1,200 stores, meaning 1 in 7 will disappear. CVS, the largest US chain, closed 244 stores between 2018 and 2020. In 2021, it announced plans to close an additional 900 stores. Earlier this month, CVS said it planned to cut about 2,900 jobs corporate jobs. And Rite Aid filed for bankruptcy last year, closing up to 500 stores.
Roughly one out of every eight pharmacies closed between 2009 and 2015, which disproportionately affected independent pharmacies and low-income neighborhoods, according to a study published in the Journal of the American Medical Association.
The study found that pharmacies at greatest risk for closures are those with a large customer base on public insurance, which have lower reimbursement rates than private plans, as well as independent pharmacies. “
Why your drug store is closing CNN October 16, 2024 https://www.cnn.com/2024/10/16/business/walgreens-cvs-store-closures
Walgreens store closures: Last week, Walgreens announced it will close 1,200 underperforming retail stores in the US over the next three years. The company reported a $3 billion loss in its 4Q fiscal 2024 results. After writing down the value of VillageMD by $12.4B, Walgreens posted an operating loss of $14.1B in FY2024, up over 100% from FY2023. Although company sales rose 6.2% year-over-year, US retail sales fell 4.6% in the same period. CEO Tim Wentworth said that about one quarter of its 8,700 US-based stores were underperforming
Note: Per Business Insider, at least 13 retail brands have said they’re closing US stores in 2024, totaling up to 2,045 locations. Family Dollar is the largest chain on the list, planning to close at least 600 stores this year. True Value announced closures last week, other companies, such as Walmart and TJX, are closing a few stores while opening many more.
US chains closing stores; Walgreens Is Closing 1,200 Stores – Business Insider
WSJ: CVS replaces CEO: “CVS Health replaced its top executive as it warned that its coming earnings will once again fall short of Wall Street expectations, sending shares of the company down about 5% Friday.
David Joyner is taking over as the new chief executive of the struggling healthcare giant, succeeding Karen Lynch…Joyner has been president of CVS Caremark, the company’s pharmacy-benefit manager, as well as an executive vice president of CVS.
Roger Farah, chairman of CVS’s board of directors, will also become executive chair.
CVS is making the changes after repeatedly cutting its forecasts for this year’s financial performance, moves that led to a 19% decline in its share price this year as of Thursday’s close, a push for changes by a major hedge fund and a board review of strategy that included the option of breaking up the company.”
CVS Names David Joyner as New Chief Executive WSJ October 18, 2024 https://www.wsj.com/health/healthcare/cvs-names-david-joyner-as-new-chief-executive-
