INSURANCE 

Medicare Disadvantage?

Some Medicare Advantage health plans have wrongfully denied or delayed prior authorizations and payment requests, according to a new report from the Office of the Inspector General. Are these MA plans genuinely “great” if they only burden patients and providers?

Some Background
The $412 billion MA market is booming. MA plans saw an 8.8% increase in enrollment this year, totaling 28.5 million MA beneficiaries. These plans are growing around 10% per year and the Congressional Budget Office projects the share of MA enrollees will surpass that of Original Medicare beneficiaries by 2030.

MA is attractive to both payers and patients: insurers make a lot of money per patient (over $1,000/patient/month), and beneficiaries get extra health benefits not covered by Original Medicare, like vision, hearing and dental health.

The Deets
Here’s what the new investigation of the 15 of the largest MA organizations found:

• 13% of denied prior authorizations would have been approved under traditional Medicare.
• 18% of denied payment requests would have been approved under traditional Medicare.

Health plans rejected prior authorizations for either not being “medically necessary” or not having sufficient evidence to support a test or treatment. Health plans denied payment requests because of human or system errors (the story of U.S. healthcare)

Profits have likely risen from denying prior authorizations while problems have increased for providers and patients.

My Thoughts
Prior authorizations suck. No one likes them except for insurance companies.

These above findings show that prior authorizations delay timely access to care, force patients to pay out-of-pocket for denied coverage and add an unnecessary burden to providers’ already busy workflow. The doctor is meant to practice medicine—not deal with the bureaucracy of insurance companies.

I can’t emphasize this enough—providers should not have to deal with the prior authorization system, especially when it’s not necessarily another provider doing the denying. In one of his satirical videos, Dr. Glaucomfleken describes the prior authorization process for someone not in healthcare:

Doctor: “Well, [the insurance company] wants to make sure I’m ordering something the patient actually needs.”

Non-doctor: “Oh, so you’re talking to another doctor that has your level of expertise?”

Doctor: “No… usually the person didn’t go to medical school.”

Non-doctor: “So they can say the patient CAN’T get a treatment that you, their doctor, recommends?”

Doctor: “yeah…”

Non-doctor: “So these insurance companies are practicing medicine without a medical license.”

Essentially. 

While one of the “pros” of prior authorizations is that they “support” value-based care efforts, I’m sure most providers will say the cons outweigh the pros. So, get rid of this system or rebuild it from the ground up?

Overall, the above findings make me skeptical of MA companies’ tactics. Are they indeed here to provide advantages to their beneficiaries or make as much profit as possible, given the lucrative reimbursement model?

PHARMA

The Next Frontier of Weight Loss

Eli Lilly’s diabetes drug, tirzepatide, led to a max 22.5% weight loss—or 52 pounds—in adults with obesity or overweight.

Some have described tirzepatide’s effects as the “equivalent of inventing nuclear fusion.” Bold statement. But I agree nonetheless that these clinical trial results are a BFD for public health.

The Deets
Tirzepatide is a GLP-1 receptor agonist mixed with a GIP receptor agonist. Together, these drugs work to reduce appetite, slow down food release from the stomach, increase insulin response and inhibit glucagon.

In Lilly’s phase 3 study, 2,539 participants were randomly assigned to a placebo group and tirzepatide group (low-dose, medium-dose, high-dose). After 72 weeks, participants’ bodyweight decrease on average by 16% in the low-dose group, 21% in the medium-dose group and 23% in the high-dose group. Those in the placebo group only lost 2% of their bodyweight.

One analyst predicts the drug will bring Lilly $4B in revenue at peak sales. The only comparable drug is Nova’s semaglutide—a GLP-1 analogue—which showed significant weight loss compared to placebo in a recent clinical trial. It seems that Lilly’s drug is more efficacious, but it doesn’t matter—both drugs are better than anything else on the market.

The Deets
“Diet and exercise.”

That’s the classic response to someone saying they need to lose weight. Newsflash, it ain’t that easy. And if it were easy to lose weight, then 1.5B adults wouldn’t be overweight and 400M adults wouldn’t be obese.

While diet and exercise are effective in losing weight in the short term, it’s significantly harder to maintain the weight loss in the long term. Your body works against you by increasing hormones that promote weight gain in response to a caloric deficit (e.g., dieting). These hormones remain elevated past 12 months post-weight loss. Imagine fighting your body for over a year just to prevent weight gain.

Simply put, there is a strong physiologic component resisting sustained weight loss in patients who are overweight or obese. Therefore, any subsequent weight gain, preceded by weight loss, isn’t simply because someone returned to prior habits.

The above is why medications such as tirzepatide and semaglutide will be game-changers for promoting and sustaining weight loss.

I imagine a future in which tirzepatide and semaglutide will be as common as anti-hypertensive medications. The issue, of course, will be whether insurance companies decide to cover it and for which populations. The drug will likely be priced at around $5,500 per year. It seems like a cost-effective medication if the drug can prevent the expensive, omnipresent obesity-related comorbidities such as hypertension, dyslipidemia and type 2 diabetes.

BUSINESS

Strike

Around 5K Stanford nurses went on strike last week. The ask? Better pay and better staffing. The strike highlights a trend of unionized nurses fighting for better working conditions.

The Deets
Unionized Stanford nurses have three asks:

1. Provide real solutions for staffing.
2. Offer competitive wages and benefits.
3. Work to address the exodus of nurses from the injury.

Stanford nurses and administrators will inevitably reach a compromise, but whether they’ll be satisfied with it remains unclear. Hospital administrators have since said they’ll withdraw health care benefits from striking nurses on May 1.

This strike is far from extraordinary in today’s healthcare climate. Thousands of nurses at Catholic Health’s Mercy Hospital in Buffalo, Tenet Health in Massachusetts and Kaiser Permanente in SoCal have all gone on strike, or threatened to go on strike. But their labor unions and hospital executives have all reached a contractual agreement for better pay and working conditions.

My Thoughts on the Strike and  Labor Union
The pandemic has hit nurses hard. They’re mentally and physically exhausted, underpaid and about to leave the industry entirely. I’m not only talking about nurses working in hospitals, but in nursing homes as well. While nurse employment in outpatient centers, physician offices, hospitals and home healthcare are trending towards pre-pandemic levels, that of nursing homes is trending away.

Nursing unions have proven to be effective at representing nurses’ needs, which has allowed for better patient care. Professor Adam Dean at GWU and his colleagues published new pandemic data showing that unionized nursing homes had an 11% lower resident mortality and a 7% lower worker infection rate than non-unionized nursing homes.

Main point: nursing unions work to benefit not only nurses but patients as well.

This brings me to my next point: The problems plaguing the nursing workforce must be addressed to prevent increased patient morbidity and mortality. Nurses are the primary touchpoints in patient care, and any issues they face trickle upstream to doctors and hospital administrators and downstream to patients.

Hospitals and other institutions have tried to address nurses’ needs, given revenue and labor cost constraints. It’s not easy for hospitals, but it hasn’t been easy for the nurses working within those hospitals either. Contracting with travel nurse agencies, or even creating in-house travel nursing agencies, have been hospitals’ solutions so far. But, I’d think that the travel-nurse solution will only get hospitals so far with current inflation rates and hospitals’ thin operating margins. It’s unsustainable.

My Thoughts
More and more nurses nationwide will strike for improved working conditions, including increased benefits, wages and staffing. A unionized workforce will help. Hospitals need to stay ahead.

OUTSIDE THE HUDDLE

• KFF released a very cool interactive overview of Medicare spending in the U.S. (an amount that totaled $769 billion in 2020). The US population is aging, as am I, so this number is only going up.
• The AHA says expenses at hospitals are not sustainable, citing a huge increase in labor costs and specifically the 39% of labor expenses that travel nurses account for (up from just 4.7% before the pandemic). As the effects of Covid-19 on day-to-day hospital operations continue to decrease (hopefully), it will be interesting to see how this number changes.
• At least one doctor is pushing back against “No Surprises Act” stating that the law prevents physicians from being “paid the reasonable value of the physician’s services.” It’s unlikely this lawsuit alone will lead to major changes, and most major organizations like the AMA still support the act. I covered the law here.
• The FDA proposed a ban on menthol cigarette sales, which would be expected to primarily benefit black smokers who disproportionately smoke menthol cigarettes (which are more appealing and addictive). Canada instituted a similar ban in 2018 and found it to be quite effective. Critics say it will promote criminal activity, though some of them (like Rev. Al Sharpton) seem to have ties to cigarette companies.
• Teladoc Health stock dropped over 40% this past week, after their massive $18.5 billion acquisition of Livongo was met with equally massive Q1 losses ($6.6 billion) this year. Might be a good time to buy in? Stay tuned for Blake’s Hospitalogy analysis on Tuesday. *This is not financial advice