January 18, 2024

Happy Thursday! Today's newsletter is 1,025 words or a 4-minute read.

1 big thing: Employers in the dark

Illustration: Annelise Capossela/Axios

Employers are facing stronger legal requirements to ensure they aren't wasting their workers' money on overpriced health insurance, at the growing risk of financial consequences.

  • But employers say secrecy around negotiated health care prices too often prevents them from accessing data that would help them figure out if they're getting a good deal, Tina writes.

Why it matters: Federal rules push employers to serve as responsible stewards — or "fiduciaries" — of their workers' premium dollars.

  • Employers — even the really large ones with sophisticated HR teams — don't always have a good sense of the inner workings of their benefits despite the massive amounts of money they shell out for them.
  • "The core challenge for employers is that they don't have visibility into this information and the vendors that they have relied on to procure health care on their behalf, they don't share it," Elizabeth Mitchell, CEO of the Purchaser Business Group on Health, told Axios.

Driving the news: As of Dec. 31, employers had to attest — at the risk of fines — that their agreements with their third-party administrators, pharmacy benefit managers and other benefit providers contained no "gag clauses" that would block them from data they needed to ensure they were paying fair prices for care.

  • Employer groups tell Axios that requirement has been difficult, if not impossible, to meet in many cases because the administrators of their plans often aren't forthcoming or cooperative.
  • In some cases, employers have identified gag clauses but struggled to get their third-party administrator to remove them, said Chris Deacon, founder of VerSan Consulting, who focuses on policy related to employer health benefits.

The other side: Insurer lobby AHIP didn't immediately provide comment, and it's previously declined to weigh in on employer complaints that they're struggling to get essential data.

What we're watching: Following a playbook used to challenge companies' management of their 401(k) plans, law firms are reportedly lining up potential class action suits against companies over their handling of their health plans, Politico reported recently.

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2. Prior authorization fix hailed as first step

Illustration: Allie Carl/Axios

New federal rules requiring health insurers to streamline requests to cover treatments are being hailed as a good first step toward addressing a problem that's increasingly aggravated patients and doctors.

  • But it may not be Washington's last word on so-called prior authorization, as lawmakers look to jumpstart legislation that would further limit the practice, Maya writes.

The big picture: Health insurers will have to provide coverage decisions on urgent treatment requests within 72 hours for patients in Medicare Advantage, Medicaid or Affordable Care Act plans under federal rules finalized Wednesday. The deadline is seven days for non-urgent requests.

  • Insurers' requirements for their sign-off on some physician-ordered care is a major tension point with providers.
  • The new protocols largely take effect in 2026. Insurers will also have to publicize prior authorization denial rates and provide more specific justifications for denials.

Yes, but: The new rules don't apply to employer-sponsored insurance plans that cover over 150 million people. Some health care groups still want regulators to adopt faster review standards for prior authorization requests and extend new requirements to drugs, which were largely exempted.

What's next: A bipartisan group of eight lawmakers who brokered prior authorization legislation that passed the House in 2022 on Wednesday said Congress should take up their bill "to cement these gains."

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3. VC firm finds its hospital

Illustration: Gabriella Turrisi/Axios

Venture capital firm General Catalyst on Wednesday announced it will buy Ohio health system Summa Health, Axios' Erin Brodwin reports.

  • It ends months of speculation about the company's plan to become the first VC to run a health system.

Why it matters: If successful, the deal could show how to better integrate digital tech into hospitals' workflow and position General Catalyst as the industry's most formidable developer and seller of health care technology.

What's happening: Summa — a nonprofit integrated delivery system that spans emergency, acute, critical, outpatient and home care services — will be converted to a for-profit and become a wholly owned subsidiary of General Catalyst known as HATCo, pending regulatory approval.

  • Summa CEO Cliff Deveny told Axios the system's annual revenues are roughly $2 billion.
  • "Our benefit is we don't have a wide-ranging region, we've got a very tight group of people that we can get our hands around and actually show the models can work," Deveny says.

Zoom in: HATCo CEO Marc Harrison said the new company won't follow the playbook of private equity-owned hospitals, which have been criticized as negatively impacting patients and staff.

  • "I want to be very clear: We do not anticipate reductions in force or job loss," he said.

Reality check: Transforming a nonprofit institution, with its more lax annual financial reporting requirements, into a for-profit entity with quarterly requirements will prove a steep challenge.

  • The federal tax code also tends to favor nonprofit status, with many government subsidies and programs excluding for-profit entities.

More here

4. 1 big number: Unhealthier lives

The average proportion of life spent in good health declined from 85.8% to 83.6% in the past three decades — a finding with major health and societal implications.

Zoom in: That estimate, which comes from the Institute for Health Metrics and Evaluation's Global Burden of Disease study in the Wall Street Journal, reflects a good news-bad news situation.

  • Medical advances mean some diseases are no longer death sentences for some patients. But there are also rising rates of addiction, obesity and other conditions, and worsening health levies an emotional and financial toll.

What they're saying: "The period of life spent not healthy is getting larger and larger and the implications of that are enormous," John Rowe, a Columbia University professor of health policy and aging, told the WSJ.

5. Catch up quick

🏥 A new Bloomberg Philanthropies initiative aims to place high school students in health care jobs after graduation. (New York Times)

🔎 The GAO will investigate FDA's oversight of medical device recalls following reports the agency failed to issue warnings about breathing machines. (ProPublica)

🔬 Chinese researchers mapped the virus that causes COVID-19 in late December 2019, at least two weeks before Beijing released the information, congressional investigators found. (Wall Street Journal)

🏛️ The Supreme Court's conservative supermajority signaled its willingness to roll back federal agencies' regulatory power. (CNN)

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