Dollar General Pilots Mobile Clinics As It Targets A Bigger Presence In Healthcare

Dollar General Is Testing Mobile Healthcare Clinics in Its Parking Lots

Source: Fierce Healthcare, by Heather Landi

Dollar General is expanding into healthcare services in what could be a competitive shot across the bow for drugstores and other retailers.


The company is piloting mobile health clinics at three stores in Tennessee to provide customers with basic, preventive and urgent care services along with lab testing.


The discount retailer teamed up with DocGo, a provider of mobile health and transportation services, to provide the medical services, which are set up in large vans in store parking lots.

The two companies plan to evaluate customer response and determine the feasibility of expanding the mobile health clinic offering to additional stores, executives said in a press release. Customers can schedule appointments online or walk in without an appointment.

“We’re excited to pilot new mobile health clinics with services provided by DocGo On-Demand to provide services including annual physicals, acute illness, urgent care needs, vaccinations and lab testing,” said Albert Wu, M.D., Dollar General’s chief medical officer, in a statement. “These clinics demonstrate our ability and desire to work with our customers to bring affordable health and wellness closer to home while equally establishing Dollar General as a trusted partner where customers can access health services.”

Operated as part of Dollar General’s DG Wellbeing brand, on-site clinicians can perform physicals and routine checkups, vaccinations, lab testing, diagnostics like EKGs, wound care and urgent care services along with chronic condition management for patients with hypertension, diabetes, asthma and chronic obstructive pulmonary disease, according to the website.

The company signaled two years ago that it planned to expand access to healthcare products and services to establish itself as a health destination. The effort included an increased assortment of cough and cold, dental, nutritional, medical, health aids and feminine hygiene products across many Dollar General stores.

Dollar General said the clinics further complement its DG Wellbeing health initiative, which provides additional health and wellness product offerings to Dollar General stores. As of October 2022, the DG Wellbeing offering was available in more than 3,200 stores with plans to expand to 4,000 stores by the end of 2022.

Dollar General CEO Jeff Owen spoke about the company’s health and wellness strategy during a third-quarter earnings call in early December. The initial focus of the DG Wellbeing program is an expanded health offering that consists of approximately 30% more feet of selling space and up to 400 additional items as compared to our standard offering, he said.


Speaking about the mobile health clinics, Owen said the company plans to “test the offering in select stores over the next few months as we continue to work with customers on how to help bring affordable health and wellness closer to home, while further establishing Dollar General as a trusted health partner in the local community.”

Back in July, Dollar General announced it was creating a healthcare advisory panel composed of healthcare industry subject matter experts to serve as “thought partners and strategists” in helping Dollar General develop its strategy and best invest its resources in the health and wellness arena. A year prior, the company appointed Wu as its first chief medical officer. Patrick Carroll, M.D., chief medical officer at Hims & Hers, serves on that advisory panel along with Von Nguyen, M.D., clinical lead of public and population health at Google, and Yolanda Hill Wimberly, M.D., who is senior vice president and chief health equity officer at Grady Health Systems.

Dollar General operates 18,818 stores in 47 states. The company is expanding its presence in healthcare while other retailers like CVS, Walgreens and Walmart also plot out their own healthcare strategies.

Walmart operates 32 health centers in Florida, Arkansas, Illinois, Georgia and Texas. Grocery chain Kroger also runs more than 200 health clinics inside some locations offering diagnostic treatment, ongoing health management, wellness visits and preventive care.

While it does not have a background in healthcare like CVS and Walgreens, Dollar General serves broad areas of rural America and has leaned into this positioning. With 75% of the U.S. population living within approximately five miles of one of Dollar General’s stores, the company “recognizes the unique access it provides to rural communities often underserved by other retailers as well as the existing healthcare ecosystem,” executives said back in 2021.

“Looking ahead, our plans include further expansion of our health offering, with the goal of increasing access to basic healthcare products and ultimately services over time, particularly in rural America,” Owens said during the company’s second-quarter earnings call back in August.

For the mobile clinics, DocGo On-Demand works with Medicaid/TennCare, Medicare and select commercial insurance plans. A cash option is also available, according to the companies.

“We’re thrilled to expand our existing footprint in Nashville and reach new patients by partnering with a nationally-recognized company like Dollar General,” said Aaron Severs, chief product officer at DocGo, in a statement. “Improving healthcare accessibility and providing care to patients where and when they need it most is our primary goal, and we are confident that this partnership is another step forward in the right direction.”

Seven Burning Questions Related To Commercial Prices For Health Care Services

Health Affairs: Leading Publication Of Health Policy Research & Insight

Source: Health Affairs, by Michael E. Chernew and Victoria Berquist

Almost two decades ago, Gerard Anderson and colleagues published the seminal paper ‘It’s the Prices, Stupid’, identifying why health care spending in the US was so much higher than other developed countries.  Spoiler alert: it’s the prices. Twenty years on, this conclusion has continued to be affirmed over time and in greater detail.

Yet, the many differences between national health care systems make it difficult to conclude that transplanting other countries’ prices to the US would be ‘right’ for the US.  Nevertheless, the observation that prices are a significant determinant of high US health care spending motivates examination of American health care prices.

The price issue is most salient in the commercial sector, where prices set using market mechanisms are considerably higher than in the public sector. A Congressional Budget Office review suggests commercial prices for inpatient care are 182 percent of Medicare prices, commercial outpatient prices are 240 percent of Medicare prices, and commercial physician fees are 129 percent of Medicare fees. Price growth has also been rapid in the commercial sector, far beyond public sector growth and beyond what is likely attributable to increases in input costs or quality improvement.

The wide differential between commercial and Medicare prices has led some to claim that Medicare prices are too low, rather than commercial prices being too high.  On one hand, Medicare payments are higher than public payments in several other countries and often sit at about the 20th percentile of commercial prices, suggesting Medicare prices are not completely out of line with the market.  On the other hand, although evidence suggesting that lower public prices cause higher commercial ones is inconclusive at best, high commercial prices may improve access to care and quality for individuals insured through public programs.  If commercial hospital prices were set at Medicare levels, hospital revenue would drop about 35 percent, undoubtedly causing some institutions to reduce quality-enhancing activities and other institutions to close.  Moreover, price trajectories in Medicare are set to rise at a rate below inflation, potentially further reducing the adequacy of public fees over time.  Regardless of whether one thinks Medicare price are too low or not, however, it is clear that the core problem in public programs in the US is not that prices are too high, and thus we focus on commercial prices.

The reason for high commercial prices is clear: It’s the market power, stupid.  Well-functioning markets should not have the amount of price variation observed within and between commercial markets in the US, particularly when it comes to services with minimal quality differences. Studies of mergers, both within sectors (e.g. hospitals) and between sectors (e.g. hospitals acquiring physician practices) demonstrate the connection between market power and prices: consolidation leads to higher prices and little improvement in quality. Importantly, while market power is often treated as synonymous with market concentration, factors beyond concentration also generate market power. For example, providers in less concentrated markets may wield market power due to insensitivity of patients to the price of care and hesitancy of employers to steer patients to lower price/higher quality providers.

Widespread acknowledgement of market failures has created growing interest in examining how commercial health care prices are established in the US.  Much energy has been devoted to measuring prices, assessing the impact of consolidation, and proposing policy solutions, including price transparency, increased antitrust enforcement, and price caps. These issues continue to be important, but there are several under-explored burning questions in the price debate that we think deserve attention.  Here are our top seven:

1. Do Poorly Set Public Prices Distort Commercial Prices?

Our current systems for setting prices in public programs are flawed.  For example, Medicare pays different amounts for the same service delivered in different settings.  Providers are often paid more if they prescribe more expensive drugs.  Relative value units for physician services are often inaccurate.  If prices are set too high, or not adjusted when they should be, incentives are created to overuse care.  Underpricing, though less common, discourages service use.  While these issues clearly affect Medicare, understanding the extent to which they spillover to commercial prices is important.  Although there is some evidence that higher Medicare prices lead to higher commercial prices (the opposite of cost shifting), more evidence on the extent to which relative prices in the commercial sector follow relative prices in Medicare is needed.

2. How Should Services Be Defined?

Prices are integrally related to how we define services.  Many of our payment systems rely on very granular service definitions.  For example, there are now ten Current Procedural Terminology (CPT) codes for office visits, varying based on visit intensity and whether a patient is new or established.  Detailed service definitions can help ensure minimal variation in delivery costs within any given service category.  However, having many codes creates opportunities for providers to choose more lucrative codes.  The sheer number of codes and continual updating of code definitions generates administrative costs (including training and program integrity activities as well as the need to employ specialized coding staff) to ensure codes are used appropriately.  This is all exacerbated by the fact that not all payers use the same coding systems.

Broader service categories may be desirable, including those used in payment methodologies such as partial capitation.  However, broader payment systems may also encourage stinting and selection of patients with fewer health care needs, though evidence of these problems is scant.  Our sense is that our system has erred on the side of too many service codes and too little standardization, but more attention to this point is needed.

3. How Does Quality Respond To Changes In Pricing?

The relationship between price and quality is central to the policy debate. What will we give up if we adopt policies that lower prices? Some evidence suggests that more expensive providers offer better care, indicating higher prices may mean higher quality.  However, cross-national evidence suggests countries paying lower prices do not suffer significantly worse quality of care.  These cross-sectional examinations do not imply causality; yet, studies of the relationship between mergers and prices suggest antitrust activities may lower prices but not degrade quality, supporting the position that policies intended to lower heath care prices do not necessarily impact quality adversely.

Addressing this issue is challenging for several reasons. First, the relationship between price and quality may not be linear, and reductions in the price of high-priced providers may have a different effect than reductions in the price of low-price providers. Second, quality is multidimensional and different people may weigh different dimensions differently, making broad conclusions elusive.  Finding natural experiments that shed light on this issue is important, but so is conducting longer-run studies because quality impacts may play out over time.  Investigating how infrastructure investments, innovation, and specialty choice respond to financial rewards may provide useful long-run insights about how price changes affect health.

4. How Should We Price New Digital Services?

Health care in the US is experiencing a digital revolution. A wide array of new digital tools and services and new ways to digitally communicate have been recently introduced, including portal messages between patients and their care team, artificial intelligence-enabled algorithms to support diagnosis and treatment, remote patient monitoring, web-based care support tools, and digital therapeutics.  Questions of how these services should be paid for have not been resolved. Given the fee-for-service chassis of the US health system, the instinct is often to create codes for these services then assign prices, but that is problematic. For many interventions, there is limited evidence about their appropriate use.  Low unit costs and limited barriers to access for digital and virtual services are appealing but raise the potential for overuse.  Bundling digital tools into broader service packages might be valuable, but more work must be devoted to assessing how that might be accomplished.

Moreover, expansion of these services may have spillover effects on the availability of traditional services, requiring broader consideration of prices.  Understanding the impacts these tools have on the broader system is a first-order challenge that would benefit from the best available evidence.

5. How Much Spending Is Flowing Outside Of The Claims System?

Most pricing research is based on claims data, a valuable but flawed resource. Increasingly, funds are flowing from payers to providers outside of the claims system via infrastructure or other fixed payments, quality bonuses, or shared savings from alternative payment models.  These payments are often not a traditional ‘price’ as they do not change with service volume.  But their use may lead to underestimates of what is being paid to providers in the commercial sector, mask market power by distorting observed revenues per service delivered, and may complicate enforcement of price regulation.  Understanding how much revenue is flowing through non-claims channels, and how it is structured, may give a more complete picture of how markets are functioning and what is rewarded in health care.

6. Are Pay For Performance Systems Worth It?

Many payment systems (in commercial and public sectors) pay providers partly based on quality metrics. These systems strive to incentivize value, not volume, but are only justified if payments lead to better quality.  There is a growing body of evidence suggesting this is not the case.  Quality measures are often not closely enough tied to health outcomes to merit additional payments.  In addition, operating these models is expensive and may distract from other activities.  Understanding costs and benefits of pay for performance programs (whether stand-alone or part of an alternative payment model) is critical given the investment we have in them. Based on available evidence, we believe it would be reasonable to conclude that some of these systems should at least be scaled back, maybe even abandoned, until better, more targeted approaches to eliminating substandard care and improving quality can be designed.

7. To What Extent Do High Prices Reflect Higher Costs Of Production In The US, And Why?

Prices reflect, in part, the costs of production. Production costs in the US may be higher than in other countries for several reasons. First, health care prices likely reflect high labor costs in the US.  While these high labor costs in health care may reflect details of the American health care system, they may also reflect a broadly different structure of the labor market.  Reforming only the health care sector may not alter wage profiles more broadly, and efforts to lower incomes in the health care sector may, over time, create an imbalance between health care and other sectors.  Relatively little is known about these dynamics.

Second, while the US uses more of some technologies and less of others compared to other countries, in general, prices of technologies (including drugs and devices) are higher in the US compared to other nations. These technology prices may be associated with higher quality (or innovation), but more work is needed in that area.

Additionally, the complexity and fragmentation of the American health care system create higher administrative costs, driving higher prices.  While we know market power is an important determinant of higher prices in the US, further understanding of production costs of health care services in the US, and how and why these differ from other systems, would be valuable.


With health spending high and rising in the US, attention to health care prices – particularly in the commercial sector – will only continue to grow.  Policy solutions will involve tradeoffs between spending, access, and quality, so understanding the impacts of various policy options on these tradeoffs will be central to better decision-making.

What The Inflation Reduction Act’s Reforms To Medicare Part D Mean For Prescription Drug Prices

How Will the Prescription Drug Provisions in the Inflation Reduction Act  Affect Medicare Beneficiaries? | KFF

Source: Health Affairs, by Anna Kaltenboeck

Last year, President Joe Biden signed into law the Inflation Reduction Act (IRA), setting into motion a series of changes to the way that Medicare and its beneficiaries pay for prescription drugs. Much has been written about the act’s individual provisions, but little has been said about how they fit together as a whole. In fact, these seemingly standalone reforms act together to reshape access and affordability of branded prescription drugs under Medicare Part D, while also leaving the door open to further reforms.

At the center of this framework is a policy to limit beneficiary cost sharing to no more than $2,000 per year. This reform responds to the erosive effect that high prices of drugs set by manufacturers—known as list prices—have had on affordability even with insurance coverage. Because Medicare currently covers 80 percent of spending past a certain threshold, the cost-sharing cap is paired with three additional reforms to ensure that the program remains sustainable: a shift in the allocation of financial risk to manufacturers and industry under the Part D benefit structure, the creation of a program under which Medicare negotiates what it pays for certain drugs, and rebates to claw back spending attributable to drug price growth exceeding inflation. The act includes a fifth provision that caps growth in beneficiaries’ share of Part D premiums at 6 percent, to allow time for savings from these changes to go into effect without impacting premiums.

Cost Sharing’s Burden On Medicare Beneficiaries

The provision to cap beneficiary cost sharing at $2,000 per year, adjusted for inflation, responds to the fact that rising list prices have made drugs increasingly unaffordable to those filling prescriptions. Both the current and redesigned Part D benefit include a component of patient cost sharing, either as a copayment or co-insurance, which is based on list prices. This arrangement harnesses cost sensitivity to steer beneficiaries toward or away from certain drugs depending on their clinical benefits and costs. In many instances, however, patients may choose to discontinue treatment, skip doses, or not fill their prescriptions.

Medicare beneficiaries have been particularly exposed to unaffordable cost sharing because, unlike most commercial health plans, there is no annual limit to their spending on prescription drugs. The current design of Part D leaves them responsible for 5 percent of a drug’s list price even after they have exceeded their deductible and two initial coverage phases in which cost sharing is 25 percent. Most beneficiaries don’t spend enough to qualify for this phase of the benefit, known as the catastrophic phase; some are protected by income-based subsidies. However, those with high spending and without such subsidies can face serious financial consequences. In 2019, 1.5 million Part D beneficiaries qualified for the catastrophic phase of the benefit, with their cost sharing totaling $1.8 billion. Both the number of beneficiaries who enter the catastrophic phase and their cost-sharing burden continue to grow.

Understanding The Drivers Of High List Prices

Implemented as a standalone provision, the cap to beneficiary cost sharing would result in higher overall Medicare spending, both because cost-sensitive beneficiaries would fill more prescriptions and because Medicare covers 80 percent of spending in the catastrophic phase. This insulates plan sponsors and manufacturers from financial liability for high list prices. To prevent ballooning spending, the cost-sharing limit is accompanied by the three provisions mentioned in the introduction, which reform how drugs are paid for under Part D.

Understanding how and why these provisions work requires a sense of the dimensions of the US pharmaceutical market. Approximately 80 percent of prescriptions dispensed in the US are for generics. The remaining 20 percent are for branded drugs that account for 80 percent of spending. Closer examination reveals that, even among these drugs, spending is concentrated among a small number of high-price branded products. Despite accounting for fewer than 1 percent of prescriptions, drugs in the top decile by price account for 15 percent of prescription drug spending. Spending attributable to high-price branded drugs has largely offset Medicare savings from generic drugs.

It’s a mistake, however, to assume that high-price branded drugs are expensive for the same reason. In the case of drugs covered under Medicare Part D, both competition and its absence encourage high list prices. The paradox is rooted in how prescription drug benefits are designed and administered. Health plans that cover prescription drugs, including Part D, use formularies that determine which products are covered, how much beneficiaries pay for them, and whether they must try other drugs first. The manufacturers of drugs with close therapeutic substitutes compete to gain placement on such formularies by providing rebates to the plans and third parties administering the formularies, known as pharmacy benefits managers. To make headroom for greater net price concessions, drug manufacturers often raise list prices. Part D plan sponsors use rebates to keep premiums low but base cost sharing on list prices, driving up expenses for beneficiaries filling prescriptions.

Meanwhile, list prices are also high among branded drugs that are protected from competition, either because they have no therapeutic alternatives or because they are included in a protected class, a group of drugs that Part D plans must cover and includes treatments for cancer and HIV. Because coverage of such drugs is guaranteed in Part D, their manufacturers are free to act as monopolists, with little incentive to offer low list or net prices.

In other words, the drivers of high list prices among prescription drugs are two different, albeit related, issues—a failure to link competitive pressure to list prices on the one hand and an inability to exert purchasing power on the other. The IRA contends with these issues through two key reforms: re-aligning the financial interests of Part D plans and manufacturers to increase their sensitivity to high list prices, and aggregating purchasing power under Medicare to negotiate prices where the plan sponsors cannot.

Addressing High List Prices Driven By Competition

As currently designed, the Part D benefit allows both plan sponsors and manufacturers to benefit from high list prices by shifting financial liability to the Medicare program in the catastrophic phase. Plans are responsible for 75 percent of spending beyond the deductible, known as the Initial Coverage Limit (ICL). Spending above a further threshold enters the Coverage Gap Discount Program (CGDP), or “donut hole,” at which point drug manufacturers are obligated to cover 70 percent, while plans are liable for 5 percent. Once spending continues beyond a third threshold, into what is known as the catastrophic phase, Medicare assumes responsibility for 80 percent of spending, while plans assume 15 percent.

Medicare’s open-ended financial liability in the catastrophic phase has long been criticized for insulating plan sponsors and manufacturers from financial downsides of high spending, creating situations in which high prices may actually act as a reward when paired with high rebates. The IRA confronts this problem by shifting the financial risk in the catastrophic phase toward plan sponsors and manufacturers and eliminating the CGDP entirely. With the change in design, 65 percent of costs in the ICL will fall to plan sponsors and 10 percent to manufacturers. In the redesigned catastrophic phase, Medicare’s share of spending falls to 20 percent, with manufacturers being responsible for another 20 percent and health plans for the remaining 60 percent. Beneficiaries remain responsible for 25 percent of spending in the ICL but will owe nothing in the catastrophic phase due to the cap on cost sharing. Although the redesign comes at a price tag of $25 billion in federal spending, the changes in financial liability can be expected to soften the value of rebate dollars relative to list price reductions.

Addressing High List Prices Driven By Monopoly Power

The IRA also establishes a program under which Medicare will negotiate with manufacturers what it pays for certain branded drugs. Drugs that qualify for negotiation must have been on the market for at least 7 and 11 years, for small molecule and biologics, respectively. This policy responds to the fact that manufacturers have increasingly harnessed intellectual property and market exclusivity protections to protect their most lucrative drugs from generic or biosimilar competition for extended periods of time.

Each year, Medicare is directed to rank such products according to their gross spending in Medicare Parts B and D. A certain number of drugs from the top of the list will then be selected for negotiation, with the goal of arriving at a “maximum fair price” or MFP, which becomes Medicare’s reimbursement rate. Medicare cannot agree to an MFP that is higher than a statutorily defined ceiling: either a percentage of a drug’s cost to non-federal purchasers or the net price achieved by Part D plan sponsors, whichever is lower.

While both drugs with and without branded therapeutic alternatives can be selected, it is among those without close substitutes and with coverage guarantees that negotiation promises the greatest savings. The statutory price ceilings allow negotiations to arrive at prices that would otherwise be expected from generic or biosimilar competition, commensurate with the amount of time the drug has been on the market.

The Congressional Budget Office (CBO) estimates that negotiation will save $101 billion over the coming decade, which is largely due to the fact that Medicare will have leverage to match that of manufacturers. Unlike current circumstances, in which neither Medicare nor plan sponsors is able to decline coverage for certain drugs, the new law imposes restrictions that automatically go into effect should manufacturers attempt to evade negotiation once selected for it. Manufacturers that refuse to participate in the process or delay the negotiation of an MFP past its statutory deadline will be faced with a choice between accepting an excise tax on US sales, which escalates to an onerous 95 percent over time, or withdraw its products from coverage by federal programs.

Safeguarding List Price Reforms Through Inflation Rebates

Although Medicare negotiation and the redesign of Part D address high list prices, as explained above, they do not insulate the program from the well-documented manufacturer strategy of raising revenues by systematically raising list prices, a major contributor to the growth in Medicare spending on prescription drugs. Manufacturers set and raise list prices for the entire US market, not just Medicare, so inflationary pressures on list prices will continue despite reforms. Manufacturers that expect to be selected for negotiation may also raise their list prices in attempts to inflate the price benchmark used in negotiation.

The IRA accounts for this issue through a provision known as the “inflation rebate,” which claws back Medicare spending attributable to list price increases beyond the rate of inflation. The overall effect of the rebate is to make list prices increases less lucrative. The CBO estimates that the federal government will save more than $62 billion by 2031, both as a result of revenues from the rebates and reduced list price growth overall.

How The New Provisions Affect Premium Growth

Under the current design of Part D, premiums have remained relatively stable and below the CBO’s initial projections even as list prices and cost sharing have grown. The payment reforms of the IRA—Medicare negotiation, the redesign of Part D, and inflation rebates—ensure that limiting cost sharing will increase affordability of high-price drugs without ballooning spending in the program over time. However, they will affect the value and availability of rebates that have historically been used to keep Part D premiums low. The degree to which savings to the program coincide with changes to the flow of rebates will depend on how quickly market participants adapt to the IRA’s multiple different reforms. To ensure that Part D premium growth remains stable in the interim, the act constrains the beneficiary share of premiums to grow by no more than 6 percent through 2030, with Medicare covering shortfalls if plan sponsors’ costs grow faster.

The IRA In The Bigger Picture Of Drug Pricing Reforms

In responding to high list prices and growing unaffordability of prescription drugs, the IRA takes aim at several problems: a failure of competitive pressure to act on list prices, inadequate negotiating leverage among plan sponsors for drugs with coverage guarantees or no therapeutic alternatives, and open-ended exposure of Medicare and its beneficiaries to the consequences of high list prices. The reforms contend with readily observable pricing trends that have had deleterious financial consequences for beneficiaries and grew particularly concentrated among a subset of branded prescription drugs.

This confluence of factors created momentum for reforms that will reshape how Medicare pays for aging and branded products, while leaving the market for new products unaltered. The CBO estimates that the impact of the law on new drug development will be relatively small: two fewer drugs entering the market in the coming 10 years, and 13 in the subsequent two decades. Overall, the agency projects that approximately 1,300 new drugs will be approved over the next 30 years. In other words, the volume of new drug approvals will likely continue unabated, especially as manufacturers begin developing new products to replace declining revenues from older ones affected by the IRA.

Meanwhile prices of new drugs have been rising, and the CBO expects higher launch prices following the implementation of the IRA’s policies. Manufacturers will continue to set list prices, eventually allowing them to incorporate anticipated concessions for inflation rebates and negotiation, particularly for drugs with no close therapeutic substitutes.

These trends promise to shape future spending challenges not only for Medicare but also for other payers, including privately purchased or employer-sponsored health insurance. However, reforms in the IRA were not extended to the private market because it was passed through budget reconciliation, a special legislative procedure that allows lawmakers to avoid a Senate filibuster but comes with rules that limit the scope of reforms. Although the act will likely have spillover effects that affect the entire market, such as downward pressure on list prices, concerns about affordability of prescription drug coverage among the privately insured and uninsured will likely continue to grow. As the IRA begins to reshape how Medicare pays for drugs, it may yet prove to be just the first step in response to continued political pressure for reform.

Author’s Note

The author is an employee of ATI Advisory, which provides consulting services in the health sector and receives grant funding from foundations, including Arnold Ventures and West Health. She is also a former staffer to the Senate Committee on Finance and was previously the program director of the Drug Pricing Lab at Memorial Sloan Kettering Cancer Center, which received grant funding from Arnold Ventures.

The December Omnibus Bill’s Little Secret: It Was Also A Giant Health Bill

Opinion | Does America Have Too Much Debt? - The New York Times

Source: The New York Times, by Margot Sanger-Katz

The giant spending bill passed by Congress last month kept the government open. But it also quietly rewrote huge areas of health policy: Hundreds of pages of legislation were devoted to new health care programs.

The legislation included major policy areas that committees had been hammering away at all year behind the scenes — like a big package designed to improve the nation’s readiness for the next big pandemic. It also included items that Republicans had been championing during the election season — like an extension of telemedicine coverage in Medicare. And it included small policy measures that some legislators have wanted to pass for years, like requiring Medicare to cover compression garments for patients with lymphedema.

Though the bill was primarily designed to fund existing government programs, a lot of health policy hitched a ride.

Big, “must-pass” bills like the $1.7 trillion omnibus often attract unrelated policy measures that would be hard to pass alone. But the scope of the health care legislation in last month’s bill is unusual. At the end of 2022, congressional leaders decided to do something that staffers call “clearing the decks,” adding all the potentially bipartisan health policy legislation that was ready and written. There turned out to be a lot to clear.

The midterm election also played a role. Many lawmakers saw that the incoming Republican House majority would be far less likely to pass another big spending bill, and so the omnibus was widely viewed as a last legislative hurrah.

In fact, the new House leadership has pledged to avoid this sort of omnibus legislation in the future. House Speaker Kevin McCarthy has agreed to move smaller spending bills one at a time, and to allow lawmakers to propose amendments to each on the House floor. That process would make it much more difficult to combine future spending bills with unrelated policy measures, like a package in the bill that aims to modernize the country’s mental health system.

The coming change made the omnibus bill a critical opportunity to pass pieces of legislation that might have withered in the new Congress. Many of the health measures weren’t controversial enough to stop the omnibus from passing as one big bill. They might not have all succeeded on their own, however.

Several retiring senators were eager to use the bill to pass favored measures and cement their legacies. Among departing senior Republicans were Richard Burr of North Carolina, who was the ranking member of the Senate Health, Education, Labor and Pensions Committee; Roy Blunt of Missouri, a Republican who was ranking member on the Senate Appropriations health subcommittee; and Richard Shelby of Alabama, vice chairman of the Senate Appropriations Committee. Legacies were also meaningful for the retiring Democrat Patrick Leahy, who was the chairman of Appropriations, as well as Nancy Pelosi, who was giving up her position as the top House Democrat.

Mr. Burr had been working all year with his Democratic counterpart to develop a pandemic preparedness package known as the Prevent Pandemics Act. That legislation passed as part of the spending bill.

Mitch McConnell, the Senate minority leader, had signaled earlier in the year that he hoped for a relatively modest spending bill. But he did not stand in the way of the giant bill in the end.

“Probably a lot of the driver was, ‘Let’s resolve it and accept the reality of a lot of stagnation we’ll see in the next Congress,’” said Drew Keyes, a senior policy analyst at the Paragon Health Institute and a former staffer on the Republican Study Committee. He was critical of the size and scope of the bill, especially given the limited debate on many of its provisions. But he said he understood why it came together: “We saw a lot of pieces that felt like this is the last opportunity.”

Some convoluted budget math made it possible for lawmakers to pass expansions of Medicaid without appearing to cost much money, an opportunity that was likely to disappear over time. By scheduling an end date for an expensive pandemic policy, Congress could then use the projected savings to pay for expanded Medicaid benefits for children, postpartum mothers and residents of U.S. territories.

The bill requires states to keep children signed up for at least a year at a time, and extends funding for the Children’s Health Insurance Program. It also sets up a series of policies meant to discourage states from automatically dumping large numbers of adult enrollees after the end of an emergency policy that protected enrollments during the pandemic. The provisions reflected a longstanding interest by Ms. Pelosi in broadening health coverage through the Affordable Care Act and other means.

In addition to the expiring funding sources, there was a “time-limited coalition behind some of those policies,” said Matthew Fiedler, a senior fellow at the Brookings Institution, who was tracking the Medicaid provisions.

Crucially, most of the bill’s health measures had bipartisan support in Congress. Even though Democrats held majorities in both the House and Senate, the bill needed 10 Republican Senate votes to overcome a legislative filibuster. It got far more — the omnibus passed the Senate by a 68–29 margin. (In the House, where Republicans were less involved in negotiations over the bill since their votes were not needed, a greater share voted against it. The final vote was 225–201.)

The consequence of all this deck clearing is that it may be a quiet Congress for new health legislation. There are a few health funding programs that will need to be renewed, including funding for programs to combat opioid addiction and overdoses, and one to subsidize hospitals that treat uninsured patients.

But beyond those must-pass items (which may or may not pass in the end), don’t expect too much.

Democrats already achieved much of their health care agenda earlier in the year, when they passed legislation to allow Medicare to limit the prices of some prescription drugs, expanded subsidies for Americans who buy their own insurance, and added new health benefits for veterans.

Mr. McCarthy did have some plans for modest health care measures with a chance of becoming law, including extended Medicare coverage for telemedicine. But that passed in the omnibus, leaving him without a lot of concrete health policy goals beyond oversight into the performance of pandemic programs.

The remaining wish list for Democrats includes measures to broaden Medicare benefits and to expand abortion rights — things they could not pass even when they controlled the House. As part of concessions with right-wing lawmakers to secure the speakership, Mr. McCarthy has promised Republicans in the House will propose substantial spending cuts to balance the budget in a decade, a goal that would be impossible without cuts to some or all of the major health programs — Medicare, Medicaid and Obamacare. But those would never advance with Democrats controlling the Senate and White House.

That means the omnibus was an unexpectedly meaty health care bill. There may not be another one for a while.

Becerra Renews COVID-19 Public Health Emergency Another 90 Days, Possibly For Last Time

HHS renews COVID-19 public health emergency another 3 monthsSource: Fierce Healthcare, by Robert King

Department of Health and Human Services (HHS) Secretary Xavier Becerra renewed Wednesday the COVID-19 public health emergency (PHE) for another 90 days, extending with it key waivers and regulatory flexibilities.


The PHE—which has been in place since Jan. 31, 2020—will now run for another 90 days. Becerra has agreed, though, to give stakeholders a 60-day heads-up when the emergency will not be extended again.


Once the PHE ends, so do flexibilities and waivers that have been frozen in place for several years.

There has been clarity, however, on key parts of the PHE such as flexibilities to make it easier for providers to get reimbursed by Medicare for telehealth services. Congress passed a law late last year that extended through 2024 flexibilities such as waivers of originating site requirements.

The extension will give the Centers for Medicare & Medicaid Services time to determine what flexibilities should become permanent. The law also extended a waiver to keep in place hospital-at-home programs for another two years.


The end-of-year spending package gave key clarity on another part of the PHE: the end of the continuous coverage requirement for Medicaid.

At the start of the pandemic, the federal government boosted the matching rate for Medicaid payments to states, but only if the state would not drop anyone off Medicaid’s rolls for the duration of the PHE. The spending package, however, enabled states to start Medicaid eligibility redeterminations April 1.

The law phases out the 6.2% boost to Medicaid payments for the rest of the year.

It may also be the last time that the PHE gets renewed. A report in Politico earlier this week cited administration officials’ intent to possibly end the PHE this spring.

Key Trends For Payers And Providers In 2023

Healthcare stakeholders offer their 2023 predictions | Modern Healthcare

Source: Healthcare Dive, by Samantha Liss

Providers will be forced to navigate a challenging year as they try to rein in expense growth fueled by pandemic-driven labor shortages.

This year’s outlook for a large chunk of the healthcare sector remains negative as inflation and pricier labor create difficult operating conditions for nonprofit providers, Moody’s Investor Service said.

As a result, health systems and hospitals are likely to clash with insurers over desired rate increases to offset higher expenses and providers will look to increase their revenue as much as possible by bargaining for higher rates.

Even though insurers have fared better than their provider counterparts, companies are still expected to face some headwinds this year. Still, Fitch Ratings says the 2023 outlook for the insurance sector is neutral.

A recession could also take a bite out of enrollment at the same time the government is poised to roll back consumer protections that kept millions enrolled in government-sponsored plans during the COVID-19 pandemic.

Losing members could put downward pressure on both the top and bottom line for insurers, analysts said.

Providers likely to push for rate increases

How much will healthcare prices increase in 2023?

“That’s by far and away the number one thing that we all want to know about,” said Kevin Holloran, senior director of U.S. Public Finance at Fitch Ratings.

Providers feeling the pinch are going to fight for rate increases in contracts that come due this year, Holloran said, adding that the two sides are “wildly apart” so far, according to his discussions with providers.

This year will be contentious as providers may opt to play hardball in bargaining for better prices and may walk away during negotiations, leading to out-of-network periods for patients, he said.

“It’s going to be very bumpy, very contentious this year,” Holloran said, characterizing 2022 as a terrible year for most providers.

Unlike other industries, many healthcare providers were unable to raise rates as inflation soared to record highs. Providers are locked into multi-year payment deals with insurers, bolstering their desire for higher rates in coming years.

Labor pains continue

Labor shortages and pricey contract rates are continuing to strain providers, contributing in large part to mounting financial pressures.

High labor costs have made it harder for hospitals to post positive margins, Erik Swanson of hospital consultancy Kaufman Hall recently said in the firm’s latest flash report.

“The big push is to get the agency contract labor costs out,” said Suzie Desai, senior director at S&P Global Ratings.

Some of the nation’s most recognized health systems were dragged into the red last year, weighed down by increased labor costs, including Mass General BrighamCleveland Clinic and Intermountain Healthcare.

The shortage is driven in part by burned out nurses who have left the bedside for other positions — or the industry entirely. Providers have had to turn to staffing firms to help fill the gap, with agencies commanding high rates amid demand to fill openings.

Hospitals are not the only facilities short on workers. Effects of nursing home shortages are rippling throughout the sector. Patient hospital stays are unnecessarily longer as nursing homes struggle to take on more patients without more staff, serving as an added financial burden for hospitals.

Eyes on utilization and commercial enrollment as possible recession looms

Some eonomists are expecting a recession to squeeze the U.S. economy this year and potentially spur job losses.

As a result, insurers may see a dip in enrollment, leading patients to think twice about seeking out healthcare services.

Health insurance coverage in the U.S. is tightly linked to employment, so job losses could pose a financial headwind for insurers if they result in coverage losses.

Patients may be reluctant to spend money on copays and deductibles for healthcare services as the threat of a recession looms, especially as record-high inflation grabs a larger chunk of American paychecks.

“Healthcare dollars are getting squeezed out of peoples’ budgets,” Jefferies Analyst Brian Tanquilut said.

Consumer confidence will also influence healthcare utilization, he added.

At one of the largest hospital chains, HCA Healthcare, volumes for this year are expected to be lower than historical averages, Tanquilut said.

However, the so-called tridemic — RSV, the flu and COVID-19 — could inflate volumes, especially if outbreaks are more severe.

Medicaid enrollment expected to drop after pandemic protections end

Pandemic protections shielded millions from losing health insurance at the onset of the COVID-19 pandemic.

As a result, enrollment in Medicaid soared, increasing 27% to cover more than 90 million people, with states barred from removing people from the program due to the public health emergency.

Those pandemic protections are set to end in 2023, threatening to cut off access to care for millions. An estimated 5 million to 14 million are expected to lose coverage as states resume eligibility checks, according to the Kaiser Family Foundation.

For insurers like Centene and Molina, prior revenue gains, as a result of the pause on eligibility checks, are expected to deflate.

Analysts are keeping a close eye on how many members insurers will be able to convert from the Medicaid program to Affordable Care Act exchange plans.

Home health push continues

Health insurers continued to place bets on the home health sector, an area that will remain a key focus in 2023.

“The crux of health insurance is keeping costs down,” said Dean Ungar, an analyst at Moody’s Investors Service.

Home health aides have a unique advantage to temper costs by working in a member’s home, enabling them to ensure people are taking needed medications and checking on other factors that influence a person’s health.

“They can identify things that can prevent emergency room visits by just being proactive,” Ungar said.

Some of the largest payers placed big bets on home health in 2022.

UnitedHealth Group signed a $5.4 billion deal to acquire home health provider LHC Group. The transaction is expected to close early this year.

CVS signed an $8 billion deal to acquire home health provider Signify, beating out other potential acquirers, including Amazon.

These moves follow Humana’s bid for home health giant Kindred. Humana acquired the remaining stake of Kindred in 2021 for $5.7 billion.

Medicare Advantage expected to surpass enrollment milestone

Medicare Advantage enrollment is expected to reach a milestone this year, exceeding 50% of the total Medicare population in 2023.

This change impacts providers too, as reimbursements rates can vary.

Enrollment in MA plans has more than doubled since 2007, according to the Kaiser Family Foundation. Still, the program has faced continued criticism over financial incentives to make members appear sicker in order to increase monthly capitation rates.

“I think the reason this is important is because it’s really a restructuring of the Medicare program,” said Jeannie Fuglesten Biniek of Kaiser Family Foundation. “As Medicare Advantage Plans play a bigger role, we see that there’s just a lot more variation introduced into what it means to have Medicare coverage.”

HHS: Uninsured Rates Decline For Younger Americans From 2019 Through 2021

HHS: Uninsured rates decline for younger Americans

Source: Fierce Healthcare, by Robert King

More Americans in key demographics that have been historically uninsured saw coverage gains from 2019 through 2021, a new federal report finds.


The Department of Health and Human Services (HHS) released a report Friday detailing gains in coverage from 2019 through 2021. Officials attributed a decline in the uninsured rate from 11.1% in 2019 to 10.5% in 2021 due to expansions in Medicaid and other gains via the Affordable Care Act’s (ACA’s) marketplace.


“We know that access to quality, affordable healthcare is key to healthier lives, economic security, and peace of mind” said HHS Secretary Xavier Becerra in a statement. “As we move forward, [HHS] will continue to do everything we can to protect, expand and strengthen the programs that provide the quality, affordable healthcare Americans rely on and deserve.”

The report found that the decline in the uninsured rate in 2021 was the largest among people with household incomes between 100% and 250% of the federal poverty level. In 2021, the White House engaged in a special enrollment period as well as enhanced and expanded premium tax credits.

The enhanced credits were recently extended through 2025 as part of the Inflation Reduction Act passed last year.


Those credits helped lower the cost of insurance for low-income ACA consumers and are a key driver of record enrollment of 15.9 million people for the latest 2023 open enrollment.

There were also larger gains in coverage among demographic groups that had high uninsured rates historically.

For example, adults ages 19 to 34 and 35 to 49 uninsured rates both declined by one percentage point. Latino individuals also saw the uninsured rate decline by one percentage point.

The gains in coverage varied at times between states, with ones that expanded Medicaid under the ACA having the largest increases.


Maine saw the largest decline in its uninsured rate by 3.2 percentage points from 2019 through 2021. Idaho came in second with 2.1 percentage points during the same time period.

Researchers analyzed data from 2019 and the newly released 2021 American Community Survey, which surveys Americans on several topics including insurance coverage.

The report also investigated the reasons people go without health coverage.

“The most common barrier cited by people without insurance is cost, with more than 70% of uninsured people reporting that health coverage was unaffordable,” the report said.

It remains unclear what impact upcoming changes could leave on uninsured rates, especially among those who got coverage via Medicaid.

States have not dropped anyone off Medicaid since early 2020 in exchange for a boost to its federal matching rate payment for Medicaid. The continuous coverage requirement was supposed to run through the COVID-19 public health emergency, but Congress passed a law late last year that enabled states to start Medicaid eligibility redeterminations this April.

Will Your Smartphone Be the Next Doctor’s Office?

Will Your Smartphone Be the Next Doctor's Office? | Kaiser Health NewsSource: Kaiser Health News, by Hannah Norman

The same devices used to take selfies and type out tweets are being repurposed and commercialized for quick access to information needed for monitoring a patient’s health. A fingertip pressed against a phone’s camera lens can measure a heart rate. The microphone, kept by the bedside, can screen for sleep apnea. Even the speaker is being tapped, to monitor breathing using sonar technology.

In the best of this new world, the data is conveyed remotely to a medical professional for the convenience and comfort of the patient or, in some cases, to support a clinician without the need for costly hardware.

But using smartphones as diagnostic tools is a work in progress, experts say. Although doctors and their patients have found some real-world success in deploying the phone as a medical device, the overall potential remains unfulfilled and uncertain.

Smartphones come packed with sensors capable of monitoring a patient’s vital signs. They can help assess people for concussionswatch for atrial fibrillation, and conduct mental health wellness checks, to name the uses of a few nascent applications.

Companies and researchers eager to find medical applications for smartphone technology are tapping into modern phones’ built-in cameras and light sensors; microphones; accelerometers, which detect body movements; gyroscopes; and even speakers. The apps then use artificial intelligence software to analyze the collected sights and sounds to create an easy connection between patients and physicians. Earning potential and marketability are evidenced by the more than 350,000 digital health products available in app stores, according to a Grand View Research report.

“It’s very hard to put devices into the patient home or in the hospital, but everybody is just walking around with a cellphone that has a network connection,” said Dr. Andrew Gostine, CEO of the sensor network company Artisight. Most Americans own a smartphone, including more than 60% of people 65 and over, an increase from just 13% a decade ago, according the Pew Research Center. The covid-19 pandemic has also pushed people to become more comfortable with virtual care.

Some of these products have sought FDA clearance to be marketed as a medical device. That way, if patients must pay to use the software, health insurers are more likely to cover at least part of the cost. Other products are designated as exempt from this regulatory process, placed in the same clinical classification as a Band-Aid. But how the agency handles AI and machine learning-based medical devices is still being adjusted to reflect software’s adaptive nature.

Ensuring accuracy and clinical validation is crucial to securing buy-in from health care providers. And many tools still need fine-tuning, said Dr. Eugene Yang, a professor of medicine at the University of Washington. Currently, Yang is testing contactless measurement of blood pressure, heart rate, and oxygen saturation gleaned remotely via Zoom camera footage of a patient’s face.

Judging these new technologies is difficult because they rely on algorithms built by machine learning and artificial intelligence to collect data, rather than the physical tools typically used in hospitals. So researchers cannot “compare apples to apples” with medical industry standards, Yang said. Failure to build in such assurances undermines the technology’s ultimate goals of easing costs and access because a doctor still must verify results.

“False positives and false negatives lead to more testing and more cost to the health care system,” he said.

Big tech companies like Google have heavily invested in researching this kind of technology, catering to clinicians and in-home caregivers, as well as consumers. Currently, in the Google Fit app, users can check their heart rate by placing their finger on the rear-facing camera lens or track their breathing rate using the front-facing camera.

“If you took the sensor out of the phone and out of a clinical device, they are probably the same thing,” said Shwetak Patel, director of health technologies at Google and a professor of electrical and computer engineering at the University of Washington.

Google’s research uses machine learning and computer vision, a field within AI based on information from visual inputs like videos or images. So instead of using a blood pressure cuff, for example, the algorithm can interpret slight visual changes to the body that serve as proxies and biosignals for a patient’s blood pressure, Patel said.

Google is also investigating the effectiveness of the built-in microphone for detecting heartbeats and murmurs and using the camera to preserve eyesight by screening for diabetic eye disease, according to information the company published last year.

The tech giant recently purchased Sound Life Sciences, a Seattle startup with an FDA-cleared sonar technology app. It uses a smart device’s speaker to bounce inaudible pulses off a patient’s body to identify movement and monitor breathing., based in Israel, is another company using the smartphone camera to calculate vital signs. Its software looks at the region around the eyes, where the skin is a bit thinner, and analyzes the light reflecting off blood vessels back to the lens. The company is wrapping up a U.S. clinical trial and marketing its wellness app directly to insurers and other health companies, said company spokesperson Mona Popilian-Yona.

The applications even reach into disciplines such as optometry and mental health:

  • * With the microphone, Canary Speech uses the same underlying technology as Amazon’s Alexa to analyze patients’ voices for mental health conditions. The software can integrate with telemedicine appointments and allow clinicians to screen for anxiety and depression using a library of vocal biomarkers and predictive analytics, said Henry O’Connell, the company’s CEO.
  • * Australia-based ResApp Health got FDA clearance last year for its iPhone app that screens for moderate to severe obstructive sleep apnea by listening to breathing and snoring. SleepCheckRx, which will require a prescription, is minimally invasive compared with sleep studies currently used to diagnose sleep apnea. Those can cost thousands of dollars and require an array of tests.
  • * Brightlamp’s Reflex app is a clinical decision support tool for helping manage concussions and vision rehabilitation, among other things. Using an iPad’s or iPhone’s camera, the mobile app measures how a person’s pupils react to changes in light. Through machine learning analysis, the imagery gives practitioners data points for evaluating patients. Brightlamp sells directly to health care providers and is being used in more than 230 clinics. Clinicians pay a $400 standard annual fee per account, which is currently not covered by insurance. The Department of Defense has an ongoing clinical trial using Reflex.

In some cases, such as with the Reflex app, the data is processed directly on the phone — rather than in the cloud, Brightlamp CEO Kurtis Sluss said. By processing everything on the device, the app avoids running into privacy issues, as streaming data elsewhere requires patient consent.

But algorithms need to be trained and tested by collecting reams of data, and that is an ongoing process.

Researchers, for example, have found that some computer vision applications, like heart rate or blood pressure monitoring, can be less accurate for darker skin. Studies are underway to find better solutions.

Small algorithm glitches can also produce false alarms and frighten patients enough to keep widespread adoption out of reach. For example, Apple’s new car-crash detection feature, available on both the latest iPhone and Apple Watch, was set off when people were riding roller coasters and automatically dialed 911.

“We’re not there yet,” Yang said. “That’s the bottom line.”

Employer-Sponsored Coverage Flatlined Even As Unemployment Rate Shrunk: Study

Employer-sponsored health insurance flatlined during early COVID

Source: Fierce Healthcare, by Frank Diamond

While unemployment rates have declined since the early days of the pandemic, enrollment in employer-sponsored coverage has remained largely stagnant, a new study shows.


Why? Because the public health emergency made it easier for many people to enroll in Medicaid coverage or in plans on the Affordable Care Act’s exchanges. Preparing for those flexibilities to go away is critical, researchers wrote in a study published this week in Health Affairs.


Medicaid eligibility rules were relaxed during the pandemic to ensure coverage for as many individuals as possible. That’s going to change soon. The recently passed omnibus bill set a deadline of April 1 to begin the redetermination process.

“The loss of Medicaid through redetermination is a qualifying life event for a special enrollment period in either the ACA Marketplace or employer-sponsored coverage, and people losing coverage have a limited time in which to enroll in a new plan,” the study said. “Policymakers and employers should be prepared to help people who lose Medicaid eligibility identify and navigate enrollment in alternative sources of health insurance, including both Marketplace and employer-sponsored coverage.”

Researchers examined data extracted every one to two weeks by the Census Bureau’s Household Pulse Survey, which randomly selects participants from the Census Bureau’s Master Address File. The surveys collected data from 57,000 to 81,000 respondents per week, with response rates ranging from 5.3% to 7.5%. The survey period ran from Jan. 26, 2022, to Feb. 7, 2022.


Despite a rising employment rate during 2021, researchers said the rate of employer-sponsored insurance did not go up.

“Overall, employer-sponsored coverage has remained remarkably consistent throughout the pandemic,” the study states. “We found that enrollment in Medicaid and other public sources of coverage was responsible for the overall increases in coverage at a national level.”

Those other public sources of coverage included the ACA Marketplace plans, the Children’s Health Insurance Program and the Consolidated Omnibus Budget Reconciliation Act.

“We estimated that eight million people gained coverage during this period, primarily through sources other than employer-sponsored insurance,” the study states.


When asked by Fierce Healthcare if public spending on Medicaid will likely increase because of the role Medicaid played during the pandemic, the study’s corresponding author, M. Kate Bundorf, Ph.D., of Duke University, responded that “redetermination is likely to lead to fewer people enrolled in Medicaid since many people are likely no longer eligible, so public spending is not likely to increase due to the redetermination process.”

Bundorf said that one of the difficulties in mining the data involved trying to pin down exactly who were the Medicaid beneficiaries. “This is an issue with survey data,” Bundorf says. “People sometimes have a hard time answering questions about their insurance coverage correctly.”

No dramatic differences in enrollment across demographic groups occurred, according to the study. In states that had expanded Medicaid, coverage increases could be mostly seen in adults aged 27 to 50, and those increases were not driven by employer-sponsored coverage. Hispanics were the exception, where coverage increases were employer driven.

“In nonexpansion states, relatively few of the effects in subgroups were statistically significant, likely in part because of the relatively small size of the nonexpansion state population,” the study said. “Notable exceptions include statistically significant gains in any coverage among Black people, primarily in the form of employer-sponsored coverage. Among Hispanic people in nonexpansion states, in contrast, we found no evidence of an increase in any coverage but found that the stability in any coverage was the result of a shift away from employer-sponsored coverage that was offset by an increase in other sources of coverage.”

The researchers also looked ahead at how redetermination might play out. The study states that “many people currently enrolled in Medicaid, particularly in expansion states, might no longer qualify as a result of higher income from employment. Although some current Medicaid enrollees may have access to employer-sponsored coverage, it is unclear how many workers will have such access.”

Bundorf says that although there is a lot of work being done on the redetermination process, “I can’t point you to anything specific on state efforts to make people aware of their options.”

California Attorney General Sues Drugmakers Over Inflated Insulin Prices

California Attorney General Sues Drugmakers Over Inflated Insulin Prices |  California HealthlineSource: Kaiser Health News, by Angela Hart and Samantha Young

California Attorney General Rob Bonta on Thursday sued the six major companies that dominate the U.S. insulin market, ratcheting up the state’s assault on a profitable industry for artificially jacking up prices and making the indispensable drug less accessible for diabetes patients.

The 47-page civil complaint alleges three pharmaceutical companies that control the insulin market — Eli Lilly and Co., Sanofi, and Novo Nordisk — are violating California law by unfairly and illegally driving up the cost of the drug. It also targets three distribution middlemen known as pharmacy benefit managers: CVS Caremark, Express Scripts, and OptumRx.

“We’re going to level the playing field and make this life-saving drug more affordable for all who need it, by putting an end to Big Pharma’s big profit scheme,” Bonta said at a news conference after filing the lawsuit in a state court in Los Angeles. “These six companies are complicit in aggressively hiking the list price of insulin, at the expense of patients.”

In the lawsuit, Bonta argued that prices have skyrocketed and that some patients have been forced to ration their medicine or forgo buying insulin altogether. The attorney general said a vial of insulin, which diabetics rely on to control blood sugar, cost $25 a couple of decades ago but now costs about $300.

A 2021 U.S. Senate investigation found that the price of a long-acting insulin pen made by Novo Nordisk jumped 52% from 2014 to 2019 and that the price of a rapid-acting pen from Sanofi shot up about 70%. From 2013 to 2017, Eli Lilly had a 64% increase on a rapid-acting pen. The investigation implicated drug manufacturers and pharmacy benefit managers in the increases, saying they perpetuated artificially high insulin prices.

“California diabetics who require insulin to survive and who are exposed to insulin’s full price, such as uninsured consumers and consumers with high deductible insurance plans, pay thousands of dollars per year for insulin,” according to the complaint.

Eli Lilly spokesperson Daphne Dorsey said the company is “disappointed by the California attorney general’s false allegations,” arguing that the average monthly out-of-pocket cost of insulin has fallen 44% over the past five years, and the drug is available to anyone “for $35 or less.”

Mike DeAngelis, a spokesperson for CVS, said it would vigorously defend itself, saying that pharmaceutical companies alone set list prices. “Nothing in our agreements prevents drug manufacturers from lowering the prices of their insulin products, and we would welcome such action. Allegations that we play any role in determining the prices charged by manufacturers are false,” he said.

OptumRx, a division of UnitedHealthcare, said it welcomes the opportunity to show California “how we work every day to provide people with access to affordable drugs, including insulin.” And company spokesperson Isaac Sorensen said it has eliminated out-of-pocket costs for insulin.

Other companies targeted in the suit, and the trade associations that represent them, did not immediately respond to inquiries seeking comment, or declined to comment on the lawsuit. Instead, they either blamed one another for price increases or outlined their efforts to lower costs. Costs for consumers vary widely depending on insurance coverage and severity of illness.

California follows other states, including ArkansasKansas, and Illinois, in going after insulin companies and pharmaceutical middlemen, but Bonta said California is taking an aggressive approach by charging the companies with violating the state’s Unfair Competition Law, which could carry significant civil penalties and potentially lead to millions of dollars in restitution for Californians.

If the state prevails in court, the cost of insulin could be “massively decreased” because the companies would no longer be allowed to spike prices, Bonta said.

Bonta joins fellow Democratic leaders in targeting the pharmaceutical industry. Gov. Gavin Newsom has launched an ambitious plan to put the nation’s most populous state in the business of making its own brand of insulin as a way to bring down prices for roughly 3.2 million diabetic Californians who rely on the drug.

“Big Pharma continues to put profits over people — driving up drug prices and restricting access to this vital medicine,” Newsom spokesperson Brandon Richards told KHN. “That is why California is moving towards manufacturing our own affordable insulin.”

By launching an aggressive attack against the pharmaceutical industry, California is also wading into a popular political fight. Many Americans express outrage at drug costs while manufacturers blame pharmacy middlemen and health insurers. Meanwhile, the middlemen point the finger back at drugmakers.

Edwin Park, a California-based research professor with Georgetown University’s Center for Children and Families, said California’s push to enter the generic drug business, while also suing the pharmaceutical industry, could ultimately lead to lower patient costs at the pharmacy counter.

“It can put downward pressure on list prices,” Park said, referring to the sticker price of drugs. “And that can lead to lower out-of-pocket costs.”

There isn’t much transparency in how drug prices are set in the U.S. Manufacturers are predominantly to blame for high drug costs, because they set the list prices, Park said. A growing body of research also indicates that the pharmaceutical middlemen are a prime driver of high patient drug costs. To lower prices, it’s critical to target the entire supply chain, experts say.

“The list price has definitely gone up,” said Dr. Neeraj Sood, a professor of health policy, medicine, and business at the University of Southern California who has studied drivers of high insulin costs. “But over time a larger share of the money is going to the middlemen rather than the manufacturers.”

Last Updated 01/25/2023

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