Gene Therapy Economics, Work-Life Balance, Claim Denials, and more: Issue 65

Multi-Million Dollar Gene Therapy Treatments: I had lunch with a couple coworkers and a representative from a large stop-loss carrier this week and we got on the topic of gene therapies. My coworker brought up how a group they manage had a gene therapy claim hit right before they took over the plan and the economics of the claim are wild.

A dependent child on the plan received a ~$5M gene therapy treatment and the question of how you pay for this is fascinating. We tend to think of large claims as being $50,000, $100,000, or upwards of $1,000,000, and usually paid out over a course of treatment, in some cases years.

But $5M, and delivered once... How do you insure for that?

If they add a few dollars per employee per month to rates, that could mean a significant drop in business for them due to competition. And remember, these aren't on-going treatments; they're typically one-and-done. So raising rates at the next renewal doesn't make a ton of sense as the risk is no longer there for that member.

It's a tricky discussion and one that calls for creative strategies. Keep an eye on this space for more developments in the future

For more discussion of this topic, check out this recent Self-Funded with Spencer episode on the economics of cell and gene therapies by ??Spencer Smith, CSFS? .

Work-Life Balance, Doctor Edition: This WSJ article on how younger doctors are pushing back against the lack of work-life balance in the medical field went viral recently, and for good reason.

Older generations of doctors are frustrated with what they think of as a lack of dedication and commitment by the younger generation, which plays into people's priors about generational differences but there are important caveats (as always).

In my family's case, my dad was a surgeon, worked 6 days a week and was highly dedicated. And he, like many doctors, had untreated depression and ultimately took his life when I was 10. Not much balance.

Every older doctor in the article is noted to have sold their practice, which likely means they sold to a hospital group or private equity, while most young doctors now are employed, rather than self-employed. This 2023 article notes that between 2012 and 2022, physicians under 45 who were self employed fell by 13 points from 44% to 31%.

This thread on r/medicine has a lot more input from young physicians and is something we need to note for how it affects the overall healthcare industry.

The evolving efforts to deny pre-authorizations, as reported by ProPublica: EviCore is a company hired by most of the large insurers to screen prior authorization requests and increase the probability of a denial. This ProPublica article dives into this company and what it does, and the findings are pretty infuriating.

In one example, a prior authorization review company settled a $13M lawsuit due to it using techniques to avoid approving coverage requests. An example of one was how it set it's fax machine to receive only 5 to 10 pages. Company reps would deny any prior auth that came in longer than that, citing "inadequate documentation".

It, like many companies in healthcare, makes money on a risk model or contract. This model provides an incentive for EviCore to cut costs by giving it a share of the savings it generates. While this makes sense in some cases, this can lead to brazen attempts to increase denials to generate additional revenue.

My friend Russell Pekala from Yuzu Health says this is a huge concern of his around accountability in healthcare. By partnering with a vendor for these reviews, the carrier or TPA can be removed from the decision and skirt accountability for making a really serious decision for patients. This can be another good reason to consider moving to a self-funded health plan so you can gain control and accountability for these claims decisions.

??Labor & Employment Updates

Note: These updates are courtesy of the Acrisure Compliance team and they're available to chat with employers about these matters and more... I'm setting up a call with them and a multi-state employer later this week to answer some questions. Let me know if this is of interest to you!

The Data Made Me Do It: New DOL Guidance Warns Employers to Address Artificial Intelligence (AI) Risks in the Workplace (US): “In the rapidly developing world of AI, federal regulators are again signaling that businesses and HR managers cannot depend on a “data made me do it” defense to employment decisions made with the help of AI systems. Expanding on guidance it released in May, the US Department of Labor (DOL) issued new guidance on October 16th reminding employers they cannot hide behind an algorithm when an AI-generated employment decision runs afoul of federal law.” Full Article

DOL Releases Tool to Provide Ideas for Disability Accommodations “The U.S. Department of Labor has released a new tool – the Situations and Solutions Finder – that provides more than 700 accommodation ideas for workers with disabilities and their employers. The tool allows employers to enter a keyword and/or select from Disabilities, Limitations, and/or Occupations drop-down lists to search the database, which is drawn from examples of workplace accommodations that have been shared with the Job Accommodation Network, which is part of the US DOL’s Office of Disability Employment Policy.” Full Article

Employee Not Protected by Post-Termination FMLA Certification “Employers are sometimes frustrated by the expansive scope of protections for employees under the Family and Medical Leave Act, but a recent case makes the point that an employee is not protected until they establish that they have a serious health condition.” Full Article

Alleged Discrimination Against Tobacco Users in Wellness Programs “There has been a rise in lawsuits alleging discrimination against tobacco users in wellness programs. This law bulletin seeks to summarize and analyze the major arguments of those lawsuits in order to provide information to plan sponsors seeking to re-examine their wellness programs to avoid becoming a defendant in a similar lawsuit.” Full Article

Bosses, Don’t Roll the Dice with Your Employees. You Could be Personally Liable. “While some federal employment protection statutes, like Title VII and the Americans with Disabilities Act, do not allow for individual liability, others do. The Fair Labor Standards Act, the Family and Medical Leave Act, Section 1981 of the Civil Rights Act of 1991, and numerous state anti-discrimination laws all allow for recovery of damages from supervisors, managers, and business owners.” Full Article

New York: Lassie Looking Peaked? NYC "Pawrents" May Soon be Entitled to Paid Leave for Pet Care “In recognition of the important role that pets play in people’s lives, on October 23, 2024, the New York City Council introduced a bill (Int. 1089- 2024) that would amend the New York City Earned Safe and Sick Time Act to provide pet-owning employees the ability to use their paid sick leave to care for their animals.” Full Article

California: CA Attempts to Restrict Mandatory Captive Audience Meetings “Gov. Newsom has signed SB 399 into law, which restricts the ability of employers to hold mandatory “captive audience meetings” with their employees. The new legislation, also known as “California Worker Freedom from Employer Intimidation Act,” takes effect Jan. 1, 2025.” Full Article

That's it for this week's Competitive Advantages! Reach out to me with with any questions or grab time on my calendar here.