Cigna Humana Merger Talks Cancelled

Cigna and Humana, two major players in the health insurance industry, were in talks for a massive merger that would have created a $140 billion company. However, the negotiations ended prematurely due to a disagreement over the price. Despite both companies recognizing the strategic value of merging and anticipating regulatory approval, they couldn't bridge the gap on the valuation.

The proposed merger faced challenges as Cigna's stock price dropped during the discussions, making it harder to agree on a price that satisfied both parties. Investors also seemed skeptical about the potential value of the merged entity, given the market's response and the decline in share prices for both companies.

After ending talks with Humana, Cigna announced plans to increase its stock buybacks by $10 billion, totaling $11.3 billion, believing that their shares were undervalued. Additionally, Cigna intends to pursue strategic acquisitions and divestitures aligned with its goals, including the potential divestment of its Medicare Advantage business.

Although the discussions between Cigna and Humana have ended for now, there's a history of intermittent talks between the two companies, indicating that Cigna still sees potential in a merger with Humana.


CVS Jumping on Cost Plus Drug Model

CVS Health, America's largest pharmacy chain, is revamping its pricing strategy for drugs by transitioning to a cost-plus model in the first half of 2024. Under this plan, CVS's 9,500 retail pharmacies will be reimbursed based on the actual cost of drugs plus a limited markup and service fee. This change aims to bring more transparency to drug pricing, responding to criticisms about complexity and lack of transparency in the current system.

The move, termed CostVantage, will initially impact consumers paying cash for prescriptions using drug discount cards, eventually extending to contracts with pharmacy benefit managers (PBMs) and government-backed coverage plans like Medicare. This shift intends to eliminate discrepancies where patients found cheaper drug prices by paying cash instead of using insurance coverage.

The company's rebranding its health-care services segment as CVS Healthspire, consolidating various entities to deliver integrated patient care and pharmacy benefits. CVS outlined strategies, including TrueCost, offering transparent pricing and administrative fee visibility to improve customer service and financial performance.

Although the change isn't expected to increase pharmacy profits, it aims to stabilize earnings. CVS forecasts total revenues of at least $366 billion and operating income of at least $15 billion for 2024, showcasing their commitment to becoming a vertically integrated healthcare company.

The shift toward transparent drug pricing seeks to lower the total cost of care, improve health outcomes, and fulfill commitments to customers, consumers, and shareholders, according to CVS's President and CEO, Karen S. Lynch.


2024 Healthcare Trends

In 2024, employers face escalating healthcare costs amidst soaring inflation rates and ongoing uncertainties due to the upcoming U.S. election. Projections by Mercer indicate a 5.4% increase in healthcare benefit costs, surpassing the typical annual increase range of 3-4%. Contributing factors include record inflation, provider shortages, and delayed care during the pandemic, leading to a notable surge in expenses.

Business Group on Health highlights trends shaping the healthcare landscape for the year ahead. Rising costs, driven by serious chronic conditions and expensive treatments like gene therapies, are a significant concern. High demand for diabetes and obesity management drugs will further strain employers' expenses.

Mental health services remain a priority, with 70% of employers emphasizing mental healthcare access. Escalating depression rates underscore the increasing need for treatment and diagnosis, especially among youth, substance use disorders, and suicide prevention.

Emphasizing preventive care is crucial to counter rising expenses, particularly regarding cancer screenings to reduce late-stage diagnoses. Despite federal efforts, drug price transparency remains a focal point for employers and policymakers, demanding clearer information from PBMs and drug manufacturers.

Anticipating potential policy shifts post-election, employers brace for changes in drug pricing, transgender care, and ERISA regulations. This uncertainty prompts employers to seek more from their healthcare partners, expecting solutions to manage escalating costs without compromising quality care. Partnerships will likely evolve, focusing on proven value and efficiency to navigate the challenging healthcare landscape.


Congress Tackles “Corporate Greed” in Healthcare

The White House and bipartisan legislators are taking steps to address the influence of corporate interests in healthcare. The White House is leading efforts aimed at combating anticompetitive behaviors, increasing transparency, and addressing drug pricing concerns through a joint Request for Information involving the Department of Justice (DOJ), Federal Trade Commission (FTC), and Department of Health and Human Services (HHS).

The administration is concerned about the financialization of healthcare, where corporate owners, like private equity firms, prioritize profits over patients' health and safety, potentially raising costs for patients and taxpayers. Simultaneously, the Senate Budget Committee is investigating how private equity ownership of healthcare providers may be contributing to declining care. Senators Grassley (R-Iowa) and Whitehouse (D-Rhode Island) are probing the impact of private equity acquisitions on hospitals, including reports of service cuts and staff reductions to minimize costs and maximize investor gains.

The federal government's approach involves a comprehensive inquiry into corporate influence in healthcare. They seek public input on private equity's expanding control over healthcare and plan to appoint new leadership roles, such as a chief competition officer at HHS and counsels for healthcare at the DOJ's Antitrust Division and the FTC. Their focus also extends to anti-competitive practices like corporate roll-ups, where numerous smaller acquisitions collectively impact market control, often escaping antitrust review due to their size. Agencies plan to enhance data sharing to identify potentially anticompetitive transactions, intensifying scrutiny on such practices moving forward.

Source: Fierce Healthcare

Executive Order on AI and How it Impacts Healthcare

President Biden recently signed an Executive Order (EO) aiming to govern the development and utilization of Artificial Intelligence (AI) in healthcare. It acknowledges the rapid advancement of AI and its potential to transform healthcare delivery and innovation but raises concerns about reliability, bias, and privacy risks.

The EO sets a framework for managing AI risks, directing federal action to regulate health AI systems and foster AI innovation across sectors, including healthcare. While it aims to address issues like corporate profiteering and privacy concerns, it's criticized for lacking specific binding requirements or details necessary to instill trust in AI use for healthcare delivery and administration.

Eight guiding principles and priorities outlined in the EO apply to healthcare, emphasizing safety, responsible innovation, equity, privacy, and federal government oversight of AI. The Department of Health and Human Services (HHS) is tasked with various actions, including establishing an AI Task Force and developing a strategic plan for responsible AI deployment in healthcare.

The plan focuses on multiple areas, such as monitoring AI-enabled technologies' safety, addressing bias, incorporating privacy and security standards, and promoting workplace efficiency. However, the timeline for the strategic plan's development leaves healthcare organizations and technology companies dealing with AI uncertain in the short term.

Additionally, the EO directs HHS to establish an AI Safety Program by October 2024 to identify clinical errors resulting from AI in healthcare settings and develop strategies for quality, non-discrimination, and drug development.

While the EO provides funding opportunities and emphasizes priorities, it's limited in its ability to enforce requirements on the private sector. Changes in health data privacy or further regulation may require additional actions beyond the EO's scope, such as Congress passing legislation.

It is anticipated significant federal agency actions will take place as they implement the EO, particularly focusing on milestones like the AI Safety Program and strategic plan development within HHS. These initiatives will shape AI regulation in healthcare, determining priorities and approaches to balancing innovation and risk mitigation.

Source: California Health Care Foundation

How One Hospital’s Benefits Help Employees with Medical Costs

Richard DeFord, an experienced healthcare professional at Fitzgibbon Hospital, faced a financial challenge when his son's dental emergency incurred significant costs. Despite financial stability, affording three dental implants was a concern. However, DeFord found a solution through Paytient, a fintech platform offered as an employee benefit by Fitzgibbon Hospital.

Paytient provides a dedicated credit card to cover healthcare expenses, offering an interest-free payment plan for up to 12 months. Employees pay a determined amount directly from their paycheck or through their Health Savings Account (HSA) or flexible savings account. DeFord utilized Paytient to cover a portion of the implant costs, relieving immediate financial strain.

For DeFord, Paytient served beyond the emergency, facilitating planned medical expenses, prescriptions, and even veterinary bills. The platform's convenience, interest-free payment options, and ease of use became invaluable amidst rising healthcare and living costs.

Angy Littrell, Fitzgibbon Hospital's CEO, recognized the significance of helping employees manage unexpected medical expenses, fostering a partnership with Paytient over five years ago. Littrell emphasized that easing employees' financial burdens leads to better engagement and overall well-being, crucial in a hospital setting. Alleviating financial stress allows employees to focus on work, improving attendance, mental health, and patient interactions, ultimately shaping a positive workplace culture.

Source: Employee Benefit News

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