Court Cases

Clover Health Investments Corp. said on April 4 that a federal district court preliminarily approved its settlement agreement to resolve multiple shareholder-filed lawsuits against the Medicare Advantage startup. Clover had faced several class-action lawsuits that accused it of concealing material information from investors — including an active Dept. of Justice investigation — when it went public in 2021. That litigation stemmed from a highly critical report from an activist short-selling firm. In April 2023, Clover agreed to pay $22 million to pay one of the consolidated shareholder lawsuits against it. The more recent settlement agreement — which was first disclosed last June and received preliminary court approval on March 5 — would resolve the remaining shareholder-led civil cases filed against Clover in Delaware, New York, and Tennessee courts. While this settlement does not involve any monetary payment, it will require Clover to “implement a suite of corporate governance enhancements.”

While CMS has thus far declined to take action on companies using copayment accumulators, the agency is moving forward to prohibit the use of a similar type of program, it revealed in the final 2025 Notice of Benefit and Payment Parameters (NBPP). Still, the rule — at least at this point — applies only to certain plan sponsors, and it is unclear how manufacturer patient assistance ultimately will be treated.

Several years ago, health plans and PBMs began implementing copay accumulators to counter manufacturer copay assistance programs. A next-generation version of these tools known as copay maximizers soon followed.

Before these tools, manufacturer assistance would count toward beneficiaries’ annual out-of-pocket expenses. When those out-of-pocket maximums were reached, health plans would cover the remainder of members’ costs for the year.

When then-President Barack Obama signed the Affordable Care Act (ACA) into law on March 23, 2010, he established the 351(k) biosimilar pathway via the Biologics Price Competition and Innovation Act (BPCIA), which amended the Public Health Service (PHS) Act. Since then, the FDA has approved almost 50 biosimilars, with nearly one fifth of those gaining interchangeable status. That distinction, however, has been increasingly under fire, most recently in President Biden’s fiscal year (FY) 2025 budget, which proposes eliminating the interchangeability designation entirely. That could help boost uptake of biosimilars, resulting in prescription drug savings, say some industry experts.

In contrast to the EU, whose European Medicines Agency (EMA) and the Heads of Medicines Agencies (HMA) clarified in September 2022 that all biosimilars approved in the EU are interchangeable, the FDA has created two levels of biosimilars: biosimilars and interchangeable biosimilars.

Prescription drug affordability boards (PDABs) have been rising in popularity as a way for states to tamp down on soaring drug prices. But a recent lawsuit filed by one drugmaker and public remarks from the industry’s main trade group make it clear that the pharma sector sees such boards — and the price caps some are authorized to set — as a major threat.

In a suit filed on March 22, Amgen Inc. takes aim at Colorado’s Prescription Drug Affordability Review Board, which is the closest to becoming the first state board to set an upper payment limit (UPL) on a drug. The state in late February initiated formal rulemaking to set a UPL for Enbrel (etanercept), Amgen’s rheumatoid arthritis treatment, after determining it was unaffordable.

Litigation against health plans over alleged mental health parity violations has proliferated in recent years, with judges notably ruling in favor of UnitedHealth Group and against Elevance Health, Inc. Things may get even more complicated with the Biden administration likely to propose more mental health parity regulation this year, according to attorneys from Manatt, Phelps & Phillips, LLP.

Mental health parity rules, which rely on statutes including the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) and the Consolidated Appropriations Act, 2021, require health plans to cover behavioral health and substance use disorder (SUD) treatment at the same level as medical/surgical benefits.

A new report by Brookings Institution researchers concludes that the No Surprises Act, the 2020 law that banned surprise medical billing, may cause prices — and consequently premiums — to increase, even though policymakers hoped the law would slow or reverse price growth. The report also concludes that a small group of providers, particularly physician staffing groups owned by private equity entities, are responsible for most of the price increases.

This unintended consequence raises the stakes of ongoing litigation between the Texas Medical Association (TMA) and the Biden administration. Those lawsuits challenge regulations governing the NSA-created, HHS-backed arbitration process, called Independent Dispute Resolution (IDR), which resolves balance billing disputes between payers and providers when patients unintentionally receive out-of-network care. The TMA and other provider groups have successfully sued multiple times to block IDR rulemaking that many experts believe would have kept price growth in check.

Prescription drug affordability boards (PDABs) have been rising in popularity as a way for states to tamp down on soaring drug prices. But a recent lawsuit filed by one drugmaker and public remarks from the industry’s main trade group make it clear that the pharma sector sees such boards — and the price caps some are authorized to set — as a major threat.

In a suit filed on March 22, Amgen Inc. takes aim at Colorado’s Prescription Drug Affordability Review Board, which is the closest to becoming the first state board to set an upper payment limit (UPL) on a drug. The state in late February initiated formal rulemaking to set a UPL for Enbrel (etanercept), Amgen’s rheumatoid arthritis treatment, after determining it was unaffordable.

As Medicare Advantage organizations continue to face intense scrutiny — from the government’s latest probe into UnitedHealthcare to the Medicare Payment Advisory Commission calling attention to the cost of higher coding in MA — a new report underscores the power of whistleblower lawsuits in enforcing program requirements. Recent False Claims Act (FCA) settlements with the Dept. of Justice reflect a continued focus on MA insurers submitting inaccurate diagnosis information for the purposes of inflating reimbursement, and while the DOJ isn't involved in proposed class action lawsuits accusing major insurers of using artificial intelligence to wrongfully deny claims, such litigation “bears continued watching as it progresses.”

President Joe Biden’s fiscal year 2025 budget proposal included a familiar item from the previous year: a proposal to establish new medical loss ratio (MLR) requirements for supplemental benefits in Medicare Advantage. Without an estimated economic impact or additional detail, that proposal was included as a line item in the 188-page document released by the White House Office of Management and Budget. According to a March 11 fact sheet on the budget, the administration also aims to build on recent efforts to improve prescription drug affordability by accelerating the pace of Medicare drug price negotiations, expanding the Inflation Reduction Act’s inflation rebates and $2,000 out-of-pocket cap beyond Medicare and into the commercial market, and extending the IRA-established $35 cost-sharing limit for Medicare-covered insulin to the commercial sector. Further, the budget seeks to strengthen Medicare by “modestly increasing” the Medicare tax rate on incomes above $400,000, and it “directs an amount equivalent to the savings from the proposed Medicare drug reforms” into the Medicare Hospital Insurance trust fund.

UnitedHealth Group could face significant financial and legal consequences amid the ongoing cyberattack on its Change Healthcare subsidiary. A federal regulator is investigating the diversified health care giant for possible HIPAA violations; patients and providers have filed lawsuits; and the firm was forced to suspend prior authorization in many cases, which may hurt the bottom line of its UnitedHealthcare insurance arm, according to Wall Street analysts.

In addition to these immediate problems, Change Healthcare may lose the leading position it holds in its areas of operation. Some providers and insurers have already begun to switch to other revenue cycle management platforms and claims clearinghouses, one expert tells AIS Health, a division of MMIT.