Court Case

Although the Affordable Care Act has now survived multiple legal challenges heard by the Supreme Court, the 12-year-old law does not appear to be home free yet. A case currently pending before a Texas district court — which could make it up to the highest court in the land — threatens to dismantle the ACA’s mandate that group and individual health plans must fully cover preventive services such as birth control and vaccines.

If the lawsuit is successful in striking down or weakening one of the ACA’s more popular provisions, it would also raise the question of whether private health plans would stop covering certain preventive services with zero cost sharing. According to industry experts, the answer isn’t so simple.

As scrutiny on PBMs continues, various stakeholders are turning to the legal system to challenge the business practices of major firms.

Centene Corp. has been the target of the most litigation, having now reached settlements with nine state attorneys general over allegations that its PBM subsidiary Envolve overcharged those states’ Medicaid programs for prescription drugs, according to a filing with the Securities and Exchange Commission. The company has set aside $1.25 billion to fund those settlements and potential future lawsuits, and it is in the process of restructuring its PBM holdings.

Humana Inc. will spin off subsidiary Kindred at Home’s hospice and personal care divisions, with private equity fund Clayton, Dubilier & Rice taking majority ownership in exchange for $2.8 billion cash. Humana will retain a minority share in the new hospice company, which the deal values at $3.4 billion. David Causby, president and CEO of the divisions in question, will lead the new firm. “We are excited by the new strategic partnership structure with Humana and look forward to working closely with CD&R to pursue growth,” said Causby.

Former CMS Administrator Leslie Norwalk resigned from Centene Corp.’s board, citing “the governance process surrounding a recent important decision.” Norwalk in her resignation letter said that process “fell egregiously short of what I and a number of other Board members considered appropriate for making an informed decision.” Norwalk added that the board did not debate the move in question. Her resignation comes shortly after the death of longtime CEO Michael Neidorff, whom Sarah London replaced in March.

Medicare will cover monoclonal antibodies targeting amyloid for Alzheimer’s disease treatment that receive traditional FDA approval under coverage with evidence development (CED), according to an April 7 final National Coverage Determination (NCD). In addition, for drugs that have not shown a clinical benefit or that receive accelerated approval, Medicare will cover them in FDA- or National Institutes of Health-approved trials. CMS will cover the medication and any related services for Medicare beneficiaries participating in these trials. The move follows a proposed NCD released Jan.11, which received more than 10,000 stakeholder comments.

Horizon Blue Cross Blue Shield of New Jersey filed a lawsuit (No. 1:22-cv-10493) against Regeneron Pharmaceuticals Inc. regarding Eylea (aflibercept), a medication approved for certain retinal diseases, including wet (neovascular) age-related macular degeneration. The suit alleges that Regeneron transferred funds to the Chronic Disease Fund, which offset patient out-of-pocket costs for Eylea but not its competitors. The lawsuit argues that this is an illegal kickback under the Racketeer Influenced and Corrupt Organizations (RICO) Act.

Both UnitedHealth Group and Change Healthcare Inc. are making it increasingly clear that they aren’t giving up on their proposed $13 billion transaction despite federal regulators’ move to block the deal. However, one antitrust attorney is skeptical that the two companies will ever end up combining.

Bloomberg reported on April 1 that Change “is in advanced talks” to sell its payment integrity business — ClaimsXten — to private equity firm New Mountain Capital for more than $2 billion, citing “people with knowledge of the matter.” The news outlet noted that no deal had yet been struck, and that it is not clear whether the divestment would still proceed if UnitedHealth’s deal to buy Change unravels.

Former Centene Corp. CEO and Chairman Michael Neidorff died on April 7, just weeks after he ended his 26-year tenure at the helm of the nation’s largest Medicaid and individual market insurer. Neidorff stepped down from his role leading Centene on Feb. 24 for undisclosed medical reasons, and the insurer’s board appointed a prominent Neidorff deputy, former Optum executive Sarah London, as his successor on March 22. During his marathon tenure, Neidorff transformed Centene from a regional carrier into a publicly traded firm ranked No. 25 on 2021’s Fortune 500. Industry insiders also credit Neidorff with being the first executive to see both Medicaid managed care and the Affordable Care Act exchanges as lucrative businesses.

Anthem, Inc.’s pending contract to serve retired New York City workers and their dependents — which would have nearly doubled the insurer’s Medicare Advantage Employer Group Waiver Plan (EGWP) enrollment — is in peril. Just days before its planned start, the city’s comptroller refused to register the proposed contract and turned it back to Mayor Eric Adams (D) for a revised cost estimate, putting the already delayed transition to a retiree MA plan on hold.

“Due to the legal and budgetary uncertainties that remain while litigation over the City’s contract with Anthem Insurance Companies continues, the Comptroller’s office does not have sufficient information to register the proposed Medicare Advantage Plan contract at this time,” New York City Comptroller Brad Lander explained in a March 30 statement posted to the comptroller’s website. Subsequently, the city’s Office of Labor Relations posted that the transition to the NYC Medicare Advantage Plus Plan would not be implemented as of April 1 as planned and that all retirees “will remain in their current plans until further notice.”

Roughly a year after a highly critical report from an activist short seller cast a pall over Clover Health Investments Corp.’s debut as a publicly traded company, a federal judge has denied a motion to dismiss a key shareholder lawsuit that accuses the Medicare Advantage startup of hiding critical information from investors.

While the Feb. 28 ruling does not make any judgment about the merits of the allegations brought by shareholders Timothy Bond and Jean-Nicolas Tremblay, it is still noteworthy, one legal expert tells AIS Health, a division of MMIT.

“Often these cases are filed but then they’re disposed of early on,” says David Kaufman, an attorney with Laurus Law Group LLC. “This case was not disposed of, so getting beyond the motion to dismiss is pretty significant, and it’s going to require substantial litigation from this point forward before it reaches any kind of decision.”

Sutter Health, the nonprofit hospital system that dominates the Northern California market, recently won a class action lawsuit brought by individuals and small-group plan sponsors who accused the hospital system of anticompetitive practices, including price gouging. Experts tell AIS Health that the trial shows the difficulty of limiting hospitals’ price-setting power when they consolidate, and that robust antitrust enforcement — the kind that ended a proposed hospital system merger in Rhode Island — is critical to keep prices down.

In the lawsuit, according to a website maintained by the plaintiffs’ council, “plaintiffs claim that Sutter forced upon health plans certain pricing and contractual terms, and those practices and terms violated state and federal antitrust and unfair competition laws. Plaintiffs claim this caused the health plans to pay more than they otherwise would for Sutter’s hospital services, and that this resulted in higher insurance premiums for class members whether or not they used Sutter hospitals.”

Biden administration officials during the annual Healthcare Information and Management Systems Society (HIMSS) Conference said CMS intends to revamp its interoperability regulations. CMS Administrator Chiquita Brooks-LaSure said the Interoperability and Patient Access final rule issued in 2020 “did not quite hit the mark” because it didn’t require standardized application programming interfaces (APIs), FierceHealthcare reported. “Our interoperability rule wasn’t interoperable enough, and it led to many open questions about how data should be exchanged,” she added.

New research from the Kaiser Family Foundation (KFF) indicates that 36% of outpatient mental health and substance use disorder visits were delivered via telehealth in the six months ending in August 2021. Those visits spiked because of flexibilities and social distancing requirements implemented during the peak of the COVID-19 pandemic, KFF concluded.