Health Plan Weekly

As plan beneficiaries and lawyers gain access to newly released price transparency data, health plans and plan sponsors must take proactive steps to limit their legal risk of violating health plan fiduciary standards under the Employee Retirement Income Security Act (ERISA), according to experts from the law firm Faegre Drinker. Experienced plaintiffs' attorneys are actively looking for cases that could establish a cottage legal industry around ERISA plan fiduciary suits, the experts say. 

“There is an ever-increasing likelihood that some action or omission by health plan fiduciaries will be scrutinized either by the Department of Labor, or in a class action lawsuit brought by plaintiffs lawyers representing plan participants,” said Kendra Roberson, partner at Faegre Drinker, during a Jan. 25 presentation on ERISA health plan fiduciary legal risk. “These lawsuits would be similar to those that have been brought against retirement plan fiduciaries challenging 401(k) and 403(b) plan fees and costs.” 

Black Medicaid enrollees were more likely to be hospitalized for preventable reasons than white enrollees, regardless of whether they were enrolled in the Supplemental Security Income (SSI) program, according to an Urban Institute study.

Using data from CMS, the analysis studied preventable hospitalization rates across 21 states and among Medicaid enrollees ages 19 to 64 for the three most common types of preventable conditions: asthma/chronic obstructive pulmonary disease (COPD), diabetes, and heart failure. For all three conditions, preventable hospitalization rates were significantly higher for people enrolled in Medicaid through the SSI program — meaning they have a qualifying disability — compared with those who enrolled through other pathways.

CMS on Feb. 1 sent initial price offers to the manufacturers of the 10 medications that were selected for the Medicare drug price negotiation program, which goes into effect in 2026. The agency announced the 10 medications in August 2023 and said they accounted for about 20% of total Part D gross covered prescription drug costs from June 1, 2022, to May 31, 2023. The drug companies have 30 days to respond by either accepting the offer or providing a counteroffer. The negotiation period ends on Aug. 1. The drug price negotiation program was implemented as part of the Inflation Reduction Act.  

In 2023, 79 health care companies filed for Chapter 11 bankruptcy, according to Gibbins Advisors, a health care restructuring advisory firm. That was up from 46 filings in 2022 and the highest number of Chapter 11 filings in the past five years; the next-highest was 51 in 2019. Gibbins noted that most of the filings involved pharmaceutical and senior care companies. The firm added that 12 hospitals filed for Chapter 11 bankruptcy in 2023, which compares to 11 total between 2020 and 2022. Gibbins analyzes bankruptcies for debtors with at least $10 million in liabilities.  

Although a recent Humana Inc. regulatory filing had already prepared the market for a lackluster fourth-quarter earnings report, Wall Street analysts appeared to be shellshocked on Jan. 25, when the Medicare Advantage-focused insurer detailed just how much of a financial hit it expects to take from an unanticipated care utilization surge. 

“Worst case scenario plays out,” Justin Lake of Wolfe Research wrote in a note to investors published shortly after Humana released its financial results — which included a newly revised 2024 adjusted earnings per share (EPS) outlook of “approximately $16.” 

A rule recently finalized by CMS may address widespread problems with Medicaid prior authorization identified in an HHS Office of Inspector General (OIG) report, industry experts say. However, they suggest that to truly solve the problem of improper coverage denials, states and Congress must limit managed care organizations’ leeway in such matters. 

The CMS Interoperability and Prior Authorization Final Rule, released on Jan. 17 and scheduled for publication in the Feb. 8 Federal Register, should help providers and patients better understand why a given request was rejected, experts tell AIS Health, a division of MMIT. The rule requires MCOs to share precise, specific reasons for denials and make those decisions faster. Most provisions in the final rule also apply to Medicare Advantage organizations, state Medicaid and Children’s Health Insurance Program fee-for-service programs, and Affordable Care Act plans sold on the federally facilitated exchanges. Additionally, the regulation includes interoperability and data transparency provisions.