Top 10 of 2015: #1 Supreme Court

#1 Supreme Court Saves Obamacare

What Happened?

A key provision of the Affordable Care Act (ACA), Obama’s landmark healthcare reform legislation, remained intact after a 6-3 Supreme Court decision. Many credit this decision to keeping healthcare reform from unraveling, which would have impacted millions of Americans who have enrolled through Health Exchanges since January 2014.

The Law

Since 2014, the Affordable Care Act requires all Americans to buy health insurance if they are ineligible for Government programs like Medicaid and Medicare. So anyone earning between 138-400% of the Federal Poverty level ($16,000 – $40,000 per year for an individual) could receive financial help (tax credits) to make the monthly costs of health insurance more affordable. However the law specficially states that financial help is available to people who enroll in “an Exchange established by the State”.

There is however an exemption to the mandate of buying insurance if the cost of the health plans are more than 8% of the buyers annual income.

The Case

The King v. Burwell case involved four people from Virginia who did not want buy health insurance. They believed it was unconstitutional to be compelled by the government to buy it. The plaintiffs wished to use the exemption stating that since Virginia was one of the 27 states that did not build their own Health Exchange, they were not eligible for financial help. Without that financial help all the plans available to them would be more than 8% of their income meaning they would not have to buy insurance.

You see, not every state decided to create their own Health Exchanges. In fact, there were 13 State that built their own Exchanges, 4 that were supported by the Federal government, 7 that entered into partnerships with the Federal government, and 27 states that were fully Federally facilitated exchanges. Virginia was one of those Federally facilitated exchanges.

The Outcome

The Supreme Court found that even though the letter of the law states financial help is only available to states that created their own Health Exchanges, the spirit of the law intended for all Americans to receive financial help even in instances where the Federal Government created the Health Exchange.

With financial help, the plaintiffs could buy plans less than 8% of their annual income, which meant they had to buy a health plan or face financial penalties.

What Does It Mean?

Many think this decision was truly the savior of the Affordable Care Act. 75% of the 12 million Americans who purchased healthcare through these Health Exchanges received financial help. If the decision went the other way, millions of Americans would have owed much more money per month for their health plan and would have most likely dropped coverage and remained uninsured.

More details on the court case – http://www.supremecourt.gov/opinions/14pdf/14-114_qol1.pdf

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Top 10 of 2015: #2 ICD-10

#2: United States Adopts ICD-10 (finally)

The U.S. healthcare industry caught up to 27 other countries by implementing the ICD-10 coding system on October 1, 2015. ICD-10 stands for the International Statistical Classification of Diseases and Related Health Problems – 10th Revision. It is coding used by doctors, hospitals, and health plans to document diseases, diagnoses, and symptoms. There are now more than 70,000 different codes to choose from, an increase of the 14,400 found in ICD-9. More codes mean better documentation of diseases, which can equate to better healthcare.

The federal government delayed the implementation three times before worried about the healthcare industry’s ability to implement successfully. However, this time around many healthcare companies shared positive results after the switch. This has been a long time coming. For example: United Kingdom adopted ICD-10 in 1995, Canada in 2000, China in 2002, and France in 2005.

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Top 10 of 2015: #3 Drug Prices

#3: Drug Prices Soar – Bigger than Turing

Martin Shkreli, founder and chief executive of Turing Pharmaceuticals, made headlines when he tried to justify raising the price of the drug, Daraprim, from $13.50 to $750 a tablet in 2015.

This was not the only example of exponential rate hikes in the pharmaceutical industry. For example, a course of treatment with a drug from Gilead Sciences called Sovaldi now costs $84,000. The high costs of drugs has caused double digit pharmacy cost trends nationwide. Even generic drugs are seeing higher than expected increases in price causing congressional investigations. Pharmaceutical companies contend that drugs are more costly to make compared to last year. However, some industry experts are not convinced and believe mergers and acquisitions are to blame.

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Top 10 of 2015: #4 Mergers

#4: Year of the Mergers

The healthcare sector had the largest share of mergers and acquisitions in 2015 totaling $724 billion, beating out Technology ($713 billion) and Real Estate ($458 billion).

Aetna + Humana: Aetna will acquire Humana for $37 billion.

Aetna
- $58.0 billion in Total Revenue
- $4.0 billion in Operating Income
- 5 million medical members
- 48,000 employees

Humana
- $48.5 billion in Total Revenue
- $2.3 billion in Operating Income
- 8 million medical members
- 52,000 employees

Anthem + Cigna: Anthem, Inc. agreed to acquire Cigna for $54 billion.

Anthem
- Largest for-profit managed health care company in the BlueCross BlueShield Association
- $73.8 billion in Total Revenue
- $4.3 billion in Operating Income
- 5 million medical members
- +37,000 employees

Cigna
- $34.9 billion in Total Revenue
- $3.3 billion in Operating Income
- 4 million medical members
- 35,800 employees

Walgreens + Rite Aid: Walgreens will acquire Rite Aid for $17.4 billion.

Walgreens
- Largest drug retail chain in the United States with operating 8,200 stores in all 50 states
- $103 billion in Total Revenue
- $4.6 billion in Operating Income
- 370,000 employees

Rite Aid
- Third largest drug store chain in the United States operating more than 4,500 stores
- 6 billion in Total Revenue
- $186 million in Operating Income
- 89,000 employees

Pfizer + Allergan: Pfizer proposed a $160 billion merger with Allergan.

After completed this will be the largest merger in healthcare ever and create the world’s biggest pharmaceutical group.

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Top 10 of 2015: #5 UnitedHealthcare

#5: UnitedHealthcare Threatens Obamacare

: A logo sign outside of the headquarters of UnitedHealthcare in Minnetonka, Minnesota on October 25, 2015. Photo by Kristoffer Tripplaar

The largest health insurance company in the country warned regulators and stockholders that they may withdraw from the Health Insurance Marketplaces in 2017. This is a move that could force more than 500,000 people to search for a new plan.

Hemsley, UnitedHealthcare’s chief executive, cited lower than expected enrollments and higher than expected healthcare usage as the main culprits. Despite racking up $4.6 billion in profits through the first 9 months of 2015, losses from Obamacare will worsen UHC 2016 outlook. Hemsley was quoted as saying, “In retrospect, we should have stayed out longer. It will take more than a season or two for this market to develop.” Some speculate that this move is largely political and serves as a warning to regulators like Senator Rubio to stop removing funding from these programs. The Health Insurance Marketplaces require private insurers to participate in order to make them work. With UnitedHealthcare threatening leave, it remains to be seen if the key part of Obama’s Affordable Care Act can stay afloat.

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Top 10 of 2015: #6 Theranos

#6: The Rise and Fall of Theranos

Theranos is the health technology start-up that made news in 2015 for being both famous and infamous. Its founder, Elizabeth Holmes, is a bright, 31 year old self-made billionaire that dropped out of Stanford University to start this company at the ripe age of 19. As described in multiple articles she transformed her fear of needles into a medical laboratory service company that is now valued at $9 billion. Her company has developed away to use small drops of blood to administer the same tests done today that use much large amounts using large needles and vials. In recent months her company has come under scrutiny for the accuracy of the blood test results. Wall Street Journal has written in detail about these accusations in multiple articles, however Holmes stands behind her company and its products. In fact, Brooke Buchanan, VP of Communications at Theranos Inc., responded to the WSJ accusations in a recent letter to the editor.

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Top 10 of 2015: #7 Cyber Attacks

#7: Year of the Cyber Attacks

What was once a problem for retailers like Target, Neiman Marcus, and Home Depot became a top priority for the Healthcare industry in 2015. Accenture warned that cyber-attacks will cost the Healthcare industry $305 billion over the next 5 years. The FBI warned of the industry’s susceptibility to attacks back in 2014 stating that cyber criminals earn 10x more for stolen health insurance credentials compared to credit card information. In fact, the Department of Health and Human Services released a report outlining how hackers accessed more than 100 million health records in 2015 alone.

Some of those attacks include:

January 2015 –Premera Blue Cross impacting 11 million records
February 2015 – Anthem, Inc. impacting 78.8 million records
May 2015 – UCLA Healthcare impacting 4.5 million records
May 2015 – Medical Informatics Engineering impacting 3.9 million records
August 2015 – Excellus BlueCross BlueShield impacted 10 million records

A 2015 KPMG Healthcare Cybersecurity survey of 223 Health IT executives found that 13% were targeted by external hacker attempts about once a day and 12% saw two or more attacks per week. Lastly, 16% of healthcare organizations said they cannot detect in real-time when their systems are compromised.

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Top 10 of 2015: #8 Epic

#8: Epic Systems Corporation Grows!

Epic is a privately held healthcare software company that specializes in hosting and connecting electronic health records (EHR). By digitizing health records, Epic unleashes the ability for healthcare systems to improve quality, significantly reduce fraud, waste, and abuse transforming the practice of medicine.

Epic’s total gross revenue was projected to be $1.8 billion in 2014. Their services and software consistently receives high marks and positive reviews from KLAS. Additionally, Epic touts that fact that 72% of Stage 7 U.S. Hospitals and 85% of Stage 7 Clinics use Epic services. The stage 7 distinction is only bestowed upon environments where paper charts are no longer used to deliver patient care. Their Glassdoor review shows positive feedback scoring 3.7 out of 5 with 83% approval for Judith Faulkner, the Founder and CEO.

Here are some of reasons they are one of the top 10 healthcare story this year:

With 355 clients they have transfered more than 15.3 Million Patient Records.
Walgreens selected them as their EHR vendor for the 400 in-store healthcare clinics in October 2015
The Mayo Clinic drop Cerner and GE Healthcare contracts and selected Epic as an EHR vendor in January 2015.
Epic entered into a $1.2 billion implementation of their software with Partners HealthCare based in Boston.
In another deal where Epic beat out Cerner’s platform, Erlanger Health System signed on with Epic for a contract nearing $100 million.
Epic Systems accounts for nearly 186,000 (30% market share) of the meaningful use attestations submitted to the Center of Medicare & Medicaid for EHR incentive payments.

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Top 10 of 2015: #9 CO-OPs

#9: CO-OPs – Half empty or Half Full?

In 2013, the Briefing Room reported on the potential pitfalls of launching Consumer Operated and Oriented Plans (CO-OPs) in every state. In less than two years, the warnings are now coming to fruition. 12 out of the 23 CO-OPs have closed their doors and will not exist in 2016 leaving over 740,000 consumers looking for a new health plan.

Initially, Co-Ops were allotted $6 billion in federal funding. Funding quickly fell to roughly $2 billion leaving only 23 CO-OPs to actually formed. The ones that have failed highlight a multitude of reasons:

Reduced federal funding
High administrative startup costs
Average rates for CO-OP Health Plans were lower than those of other Health Plans in more than half the rating areas (THIS ISNT CLEAR)
Poor Federal/State oversight, and lastly
Board members ill-equipped to have fiduciary responsibility for a health insurance company.

Many believe irrational pricing led to the downfall of these CO-OPs. In fact, the United States Government Accountability Office issued a report in April 2015 showing how the average pricing for CO-OP health plans were lower compared to the other health plans they competed against.

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#10: Obamacare Grows!

2015 marked the second year of the Affordable Care Act, President Obama’s landmark legislation created to help decrease the rate of uninsured.

50 Health Insurance Marketplaces launched nationwide and here are the 2015 results:

More than 5 million new Americans enrolled joining the 8 million that enrolled in 2014 (65% growth).

85% of those that enrolled in 2014 renewed their coverage.

Healthcare.gov and other state enrollment sites saw more than 52 million visitors and answered more than 21 million phone calls.

84% of those enrolled received financial help that lowered the monthly price of each health plan to an average of $101/month

55% of those receiving financial help paid less than $100/month

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