Lawyers target high health plan costs

Presented by PhRMA: Delivered daily by 10 a.m., Pulse examines the latest news in health care politics and policy.

Dec 21, 2023 View in browser   By Ben Leonard and Chelsea Cirruzzo Presented by PROGRAMMING NOTE: We’ll be off next week for the holidays but back to our normal schedule on Tuesday, Jan. 2. With Lauren Gardner and Kelly Hooper   A message from PhRMA: Middlemen like PBMs are charging fees tied to the price of medicines, which means they make more money when the price of a medicine goes up. This business model allows PBM profits to soar and can lead to higher costs for patients. It’s time to lower costs by holding middlemen accountable.   Driving The Day Some law firms are running ads targeting employees at major companies that might have failed to seek out the most effective health plans for their workers. | Justin Sullivan/Getty Images LAWSUITS LOOM — Paying a lot for health insurance? You could have a claim. That’s what law firms are telling workers for major companies like Target and Lockheed Martin in new advertisements on LinkedIn and other popular sites, Kelly reports. The law firms plan class-action suits against large U.S. companies, which could accuse them of failing to comply with a 2021 law requiring them to find cost-effective health plans that meet their employees’ needs. Background: Many large employers have long outsourced the management of their health benefits programs to consulting firms and exercised little oversight into how those third parties secure their health plans. In amending the Employee Retirement Income Security Act three years ago, Congress pinned more responsibility on them to ensure they’re spending their employees’ money in a cost-effective way. Lawsuits aren’t what Rep. Virginia Foxx (R-N.C.) envisioned when she co-sponsored the provision in the 2021 law. Her intent, she said, was to give companies new tools to seek better insurance deals, not to sic the plaintiff’s bar on them. “Many, many people are frustrated by some practices in the industry that are resulting in paying higher health care costs,” said Jerry Schlichter, managing partner of Schlichter Bogard, a St. Louis-based firm that’s posted ads. Schlichter said his firm is in the early stages of expanding its investigation into health plans, and it’s too soon to know whether “this is going to be the beginning of some kind of broad-based litigation.” Fairmark Law, another law firm that targets corporate wrongdoing, posted an ad on a website called Top Class Actions aimed at current or former Lockheed Martin employees, asking: “Are Lockheed Martin health benefits too expensive?” Target didn’t respond to a request for comment. A Lockheed Martin spokesperson said it continually reviews its benefit plans “to ensure we are providing comprehensive and competitive benefit programs.” Why it matters: If the law firms’ efforts succeed, industry experts say it could revolutionize how companies administer health benefits and potentially leave employers on the hook for tens of millions of dollars. “They’re not, by and large, doing what they should be doing now, which is engaging in a really thorough, prudent purchasing process for their health benefits,” said Chris Deacon, founder of VerSan Consulting, who focuses on policy related to employer health benefits. WELCOME TO THURSDAY PULSE. Send us your holiday pet photos for a chance to be featured in Pulse. Reach us at bleonard@politico.com or ccirruzzo@politico.com with pics or news. Follow along @_BenLeonard_ and @ChelseaCirruzzo. TODAY ON OUR PULSE CHECK PODCAST, host Kelly Hooper talks with POLITICO health reporter Chelsea Cirruzzo, who explains how HHS is using artificial intelligence in its agencies, becoming one of the top federal agencies using the technology.   A message from PhRMA:   Listen to today’s Pulse Check podcast Obamacare Obamacare is seeing a healthy uptick in the number of people enrolling for 2024. | Joe Raedle/Getty Images | Getty OBAMACARE RECORDS — More than 19 million people are set to participate in an Obamacare plan next year, blowing past 2023’s record 16.3 million enrollment, POLITICO’s Robert King reports. The data: The Biden administration announced Wednesday that, as of Dec. 15, more than 15.3 million people have signed up for a plan under the Affordable Care Act through the HealthCare.gov website. HHS estimates another roughly 4 million have enrolled through state-run marketplaces as of Dec. 9. Open enrollment runs through HealthCare.gov goes through Jan. 15. Also in insurance: Although Medicaid prescription drug use has fallen in recent years, spending has grown, according to research from KFF. Medicaid enrollment set records amid continuous coverage requirements during the pandemic, but the total volume of prescriptions has remained below 2017 levels since then. The number of prescriptions per enrollee dropped from 11.4 in fiscal 2017 to 9.4 in fiscal 2022, the research found. During that time, net spending on prescription drugs ballooned from about $30 billion to close to $44 billion, likely due to more spending on brand-name drugs, KFF said. “As new, costly drugs continue to emerge, including a new group of highly effective weight-loss agents, both states and the federal government will continue to contend with the budgetary impact of these drugs,” KFF wrote. Congress BURGESS PREDICTS DOC PAY FIX — Rep. Michael Burgess (R-Texas), the senior-most doctor on Capitol Hill, thinks Congress can get a deal done on doctor pay, he recently told Ben. In the latest round of battle this year, physicians face a 3.4 percent cut in reimbursements, but Burgess — who isn’t seeking reelection after 11 terms — predicted Congress will offer a fix. “There’s always something that’s accomplished at the end of the year. Now it’s between the middle of January and the first of February. … It won’t be satisfactory to the practicing physicians, but it won’t be a death blow to them either,” Burgess said. Burgess, a co-chair of the GOP Doctors Caucus, floated Reps. Larry Bucshon (R-Ind.) and John Joyce (R-Pa.) as potential replacements, with fellow co-chair Brad Wenstrup (R-Ohio) also not seeking reelection. Wenstrup previously told Pulse that Rep. Mariannette Miller-Meeks (R-Iowa) is also an option. The third co-chair, Rep. Greg Murphy (R-N.C.), will remain. “Whether they decide to have two or three co-chairs is going to be their decision,” Burgess said. Ben also asked Burgess about Trump’s recent push to repeal Obamacare, the future of provider issues and more. Pro subscribers can read the full Q&A. DRUG DEVELOPMENT CBO CALLS FOR NEW RESEARCH — The Congressional Budget Office on Wednesday called for more drug development research related to policies that could impact development of new treatments. The move comes after the House Budget Committee’s Health Care Task Force, led by Burgess and committee Chair Jodey Arrington (R-Texas), pushed for such a call. Burgess has suggested that the CBO’s analysis of the Inflation Reduction Act’s drug-pricing negotiation provisions didn’t adequately capture the law’s potential to reduce new treatments. In a blog post, the CBO said it could benefit from new research on how changes in drugmakers' expected profits could impact drug development and changes in the number of new drugs could impact health outcomes. It’s also interested in research on how policies like price negotiation and accelerated approval could influence drugmakers’ thinking on what conditions to target. “The agency has received feedback from Congressional staff and from academic and industry experts and has made changes to improve its model,” the agency said in a blog post. Eye on the FDA FDA TURNS DOWN COUGH DRUG — The FDA has rejected Merck’s bid to sell a drug to treat unexplained chronic cough, determining that current data around the pill doesn’t support its effectiveness, Lauren reports. The company, which disclosed the agency’s decision Wednesday, said it’s exploring next steps based on the regulator’s feedback. The FDA’s decision comes a month after independent agency advisers overwhelmingly agreed that gefapixant didn’t meaningfully improve patients’ chronic cough, a condition with no approved treatment on the market.   A message from PhRMA: Middlemen like PBMs are charging fees tied to the price of medicines, which means they make more money when the price of a medicine goes up. This business model allows PBM profits to soar and can lead to higher costs for patients. It’s time to lower costs by holding middlemen accountable.   Hospitals NEW FACILITY FEE FINDINGS — Facility fees at hospitals for colonoscopies were substantially higher than those at ambulatory surgery centers in the same county and with the same insurer, new research published in JAMA Health Forum found. The research examined fees charged by four major insurers for colonoscopies in all 50 states and Washington. It found that facility fees were about 55 percent higher at hospitals than at surgery centers when controlling for insurer, location and fee type. The findings come amid a major battle in Congress over policies that aim to pay providers equally for services regardless of where they’re provided. The researchers said the findings buttress the argument for so-called site-neutral payment policies for services “largely homogeneous and shoppable,” which they said could generate savings. Broad support for site-neutral policies has emerged in both House and Senate packages aiming to rein in pharmacy benefit managers, though the chambers have different approaches. Names in the News McKenzie Wilson is joining HHS as a national press secretary, focusing on public health. She was previously at Building Back Together and Sen. Patty Murray’s (D-Wash.) office. WHAT WE'RE READING STAT reports on the SEC hitting a former pain relief firm CEO with $41 million fraud charges. Healthcare Dive reports on a study on the Medicare Shared Savings Program being tied to net losses in Medicare.   Follow us on Twitter Dan Goldberg @dancgoldberg Chelsea Cirruzzo @chelseacirruzzo Katherine Ellen Foley @katherineefoley Lauren Gardner @Gardner_LM Kelly Hooper @kelhoops Robert King @rking_19 Ben Leonard @_BenLeonard_ David Lim @davidalim Megan Messerly @meganmesserly Alice Miranda Ollstein @aliceollstein Carmen Paun @carmenpaun Daniel Payne @_daniel_payne Ruth Reader @RuthReader Erin Schumaker @erinlschumaker Megan R. Wilson @misswilson   Follow us

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