COVID vaccine coverage questions abound for health insurers

 First, they’re not free. That’s the point that Amesh Adalja, M.D., a senior scholar at the Johns Hopkins Center for Health Security, wants to emphasize.

He’s responding to the Biden administration’s decision to have the federal government stop providing (and paying for) COVID-19 vaccines and tests and shifting that responsibility over to health insurance plans. Many experts and policymakers worry the move will prove to be a financial burden to health insurers, providers and patients.

After all, nothing beats free.

“But they’re not getting the vaccines and tests for free,” Adalja told Fierce Healthcare. “It’s coming out of your taxes.”

Unlike many experts, Adalja doesn’t believe health plans will face any undue financial burden once they have to start administering COVID-19 vaccines and providing tests; insurers routinely cover other vaccines, and he doesn’t see any reason why such routine coverage should be any different for COVID-19.

“It’s not as if this is unprecedented,” he said.

Perhaps, but health insurers aren’t the only stakeholders involved. The role pharmaceutical companies will play in pricing COVID-19 vaccines cannot be understated, according to Ceci Connolly, president and CEO of the Alliance of Community Health Plans, which represents not-for-profit health insurance companies.

“We’ve seen what happens when there are no protections in place to prevent price-gouging by Big Pharma,” Connolly told Fierce Healthcare. “When labs had free rein to bill consumers and payers for COVID-19 testing, they hiked prices to outrageous rates.”

Connolly alludes to a report issued in July 2021 by America’s Health Insurance Plans, which represents commercial health insurance plans. It showed that many out-of-network providers charged at least 50% more for COVID-19 tests than the average rate at the start of the pandemic.  

“And with the drug industry’s track record of arbitrarily raising prices, there’s reason to believe we will see the cost of vaccines and treatments skyrocket,” Connolly said.

She points out that health plans are already locked into contracts with drugmakers. They won’t be able to negotiate the prices for COVID-19 vaccines and therapeutics separately.

“And with rates already set for 2023, it will be difficult for plans to adjust appropriately to any price hikes,” said Connolly. “It’s imperative that price protections are put in place so that patients across the country don’t lose access to affordable, lifesaving vaccines and treatments.”

Brian Newell, the deputy vice president of public affairs at the Pharmaceutical Research and Manufacturers of America (PhRMA), the association representing drug manufacturers, says that he can’t comment on specific products. “But it’s disappointing to see insurers making excuses to potentially stymie access to treatments and vaccines for COVID-19,” Newell tells Fierce Healthcare. “These biomedical breakthroughs are saving lives and saving costs throughout the healthcare system, including keeping more people out of the hospital. All of us—including the insurance industry—need to work together to make sure these lifesaving products are available to all Americans who need them.”

Peter Kongstvedt, M.D., is a nationally recognized authority on the healthcare industry and a senior health policy faculty member in the Department of Health Administration and Policy at George Mason University.

He told Fierce Healthcare that current federal regulations culled together in the early days of the pandemic will need to be changed in order for health plans to avoid possible price gouging that consumers and plans have been protected from up until now.

“There are companies that you could go to for COVID testing and that wouldn’t cost you anything, but their posted internet price would be $500 or something totally unreasonable like that.”

The regulation allowing consumers to go out of network for testing needs to change, said Kongstvedt.

“If it doesn’t change than health plans are going to be getting these bills for COVID testing from companies that are just outrageous. But if the government eliminates that requirement and tells health plans, ‘Yes, you have to cover testing, but you can do it on an in-network basis’, then the plan can negotiate a reasonable price for itself," he said.

Regarding COVID-19 vaccines, Kongstvedt points out that there are a lot of data out there concerning uptake. “Once the plan actuaries know what the pricing is going to be, they’ll be able to build that into the rates. They’ll know what it’s going to cost them overall in total.”

Which is not good news for consumers. In this, Kongstvedt echoes Adalja in saying, “Nothing’s for free.”

For his part, Adalja says that the political divisions that infused much of the debate over how the U.S. handled the pandemic will play a role in this transition as well. For a lot of people, their political identity influences their behavior.

Adalja believes that vaccine uptake might have been better if commercial health plans had been in charge of the vaccination process from the beginning, thereby preventing it from becoming a political issue.

“The lack of uptake may have been accelerated by people refusing to take the vaccine because it was seen as a government project and some people don’t like the government telling them what to do,” said Adalja. “The government doesn’t tell people to get the shingles vaccine and yet people line up to get the shingles vaccine every time there’s a shortage.”

He also noted that Gardasil 9, the HPV vaccine, costs about $250, “and you don’t see people protesting that.”

Adalja believes that in the end, health plans and patients will pay as much for COVID-19 vaccines as they do for vaccines for influenza. Medicare will pay 95% of the average wholesale price for an influenza vaccination, which for this flu season ranges anywhere from about $11 to about $72, depending on the manufacturer, according to the Centers for Medicare & Medicaid Services.

The two main manufacturers of COVID-19 vaccines—Pfizer and Moderna—won’t want to price them so high that people won’t take them. “They have to justify their prices to their shareholders,” Adalja said, and many health plans have to answer to shareholders as well.

“Both groups are going to want to maximize their returns,” said Adalja.

https://www.fiercehealthcare.com/payers/covid-vaccine-coverage-questions-abound-health-insurers

Envision sues UnitedHealthcare over allegedly denied ER claims

 Envision Healthcare, a national physician staffing firm, said it is suing UnitedHealthcare, one of the nation’s largest insurers, for denying payment for emergency services the medical group provided. 

Envision CEO Jim Rechtin alleges UnitedHealthcare routinely denied claims for commercial members who were among the sickest and sought care at an emergency room. Rechtin called UnitedHealth’s alleged practice “cold, callous and inhumane,” according to a statement released Friday announcing a lawsuit was filed in a Tennessee federal court. 

UnitedHealthcare denied payment for a 31-year-old man’s emergency appendectomy and care for a baby with unexplained episodes of choking, vomiting and turning blue, Envision alleges. 

A spokesperson from UnitedHealthcare said the company is still reviewing the filing.

Last year, UnitedHealthcare cut Envision’s 25,000 clinicians from its network. The insurer said the staffing firm wanted to be paid twice the median rate of other anesthesiologists and more than triple the median rate of other ER physicians, according to Healthcare Dive’s earlier reporting.

Prior to being pushed out of the network, Envision alleges UnitedHealthcare denied 18% of all the commercial claims it submitted. The number of denied claims increased to 48% just months before Envision was out-of-network. 

For the sickest patients, or those with the highest-acuity, United denied 60% of commercial claims, Envision alleges, according to the statement.

Another physician staffing firm is also suing United over denied payment for emergency services. 

In July, TeamHealth filed suit alleging the insurer wrongly denied and underpaid for services its emergency physicians provided to patients in Nevada.

The lawsuit alleges that UnitedHealthcare did not pay the Nevada physicians after treating an infant with a traumatic brain injury and a child with a ruptured appendix. 

The lawsuits come amid a changing regulatory environment for payment disputes between payers and providers.

A federal law took effect earlier this year that protects patients from being on the hook for surprise medical bills. 

Patients can find themselves unknowingly treated by an out-of-network physician even at an in-network facility. When this happens, insurers typically pay a portion of the out-of-network bill, leaving patients to pay the balance, which can be costly. The federal law bars patients from having to pay these bills in most instances. 

A prior study from researchers at Yale University has shown that staffing firms use out-of-network billing as a strategy to ultimately increase payments.

https://www.healthcaredive.com/news/envision-sues-united-healthcare-emergency-room/631517/

Adams shows up at NYCHA complex to drink water and show it’s ‘safe’

 Mayor Eric Adams chugged down a glass of drinking water inside an East Village public housing complex Saturday in a bid to end concern that it was contaminated with arsenic.

“We’re just here to make sure people know I’m drinking it,” said Adams after he and city Health Commissioner Ashwin Vasan both drank a glass of water inside an apartment at the Jacob Riis Houses.

“The water is safe to drink,” he declared.

An Illinois-based laboratory, Environmental Monitoring, and Technologies, initially said it detected the dangerous heavy metal in drinking water at the housing complex, setting off over a week of panic.

But the lab has since retracted its test results and admitted to being the ones that introduced the toxic compound in the samples, officials said.

Adams later said in a statement that the city believes separate tests of the complex’s water that came back positive for the bacteria that causes Legionnaires Disease are also “inaccurate.”

He also said the city is open to taking legal action against the lab.

“The city intends to pursue all available legal options on behalf of the residents of Riis Houses and will look for how we can reimburse residents for costs incurred over the last week,” he said.

https://nypost.com/2022/09/10/mayor-adams-shows-nycha-complex-water-is-safe-to-drink/

Simone Gold of America's Frontline Doctors Released From Prison Early

 Simone Gold, MD, JD, founder of the anti-COVID vaccine organization America's Frontline Doctors (AFLD), was released from a Miami federal prison Friday, 2 weeks before the end of her 60-day sentence for misdemeanor trespassing in the U.S. Capitol during the Jan. 6 insurrection.

As she walked out of prison, a video posted on her Twitter account showed her smiling and making a heart with her hands. "I'm back," she said defiantly. Another video showed her doing push-ups on the sidewalk outside the prison doors.

A spokesperson for Federal Bureau of Prisons confirmed in an email to MedPage Today that Gold had been released, although the bureau website indicated her release was not scheduled until Sunday, Sept. 11. The spokesperson did not explain why Gold was released early, saying that conditions of confinement, transfers, or release plans are not discussed "for privacy, safety, and security reasons."

During the Jan. 6 riot, Gold was videotaped in National Statuary Hall decrying government-mandated lockdowns as she advocated people to avoid the COVID-19 vaccine.

In sentencing her in June, Washington D.C. District Court Judge Christopher Cooper emphasized that her statements about COVID vaccines and unproven medications were not the reason for imposing her incarceration -- nor was she being punished for exercising her right to free speech -- but her trespassing into a federal building was.

She pleaded guilty to one count, entering and remaining in a restricted building, which was one of five counts charged against her in connection with the Jan. 6 event, including disorderly conduct.

During her 6 weeks in prison since late July, Gold, or her representatives, posted online and on Twitter that she had been placed in solitary confinement for 8 days for refusing the COVID vaccine, which she has long maintained is an ineffective "fraud." It was unclear whether she had access to a mobile device or a computer herself, although prison policy forbids cell phones.

Since the early days of the pandemic, Gold has suggested in numerous statements or tweets advocating hydroxychloroquine and ivermectin as treatments for COVID-19, and after the release of the vaccine, has suggested the shot may be harmful and an "experimental biological agent whose harms are well documented," despite scientific evidence to the contrary showing it has avoided hundreds of thousands of deaths and hospitalizations.

Gold, who according to her America's Frontline Doctors Facebook page, lost her job as an emergency room physician at a California hospital early during the pandemic for prescribing an unnamed medication to a Kaiser patient in the Los Angeles area, moved to Naples, Florida, earlier this year. She set up an online telehealth clinic called GoldCare. The Florida Board of Medicine approved her application for a medical license.

In its FAQ, the AFLD website answered a question about whether ivermectin or hydroxychloroquine was available with this response: "Clinicians practice medicine based on your unique needs, including writing any prescription that's in your best interest. And we will help you find 'freedom pharmacies' that honor these prescriptions, but we'll never receive incentives for any referrals."

During her incarceration, the Medical Board of California automatically put her California license on inactive status. That license expires on Nov. 30, and it's unclear whether she intends to renew it since she now lives in Florida. It's also unclear whether the California licensing agency will reactivate it in light of legislation authorizing disciplinary actions against physicians who spread false or misleading information which now awaits Gov. Gavin Newsom's (D) signature.

Upon her release, Gold will undergo 1 year of supervised release. She was also ordered to pay a $9,500 fine and $500 restitution to the U.S. Capitol architect to compensate for damage done to the building during the insurrection.

https://www.medpagetoday.com/special-reports/exclusives/100624

Post-mortem on the Failed Nektar-BMS Partnership at ESMO

 The European Society for Medical Oncology (ESMO) conference is serving as a post-mortem on the trials that sunk the multi-billion-dollar partnership between Bristol-Myers Squibb and Nektar Therapeutics.

Investigators will present the data from the failed Phase I/II PIVOT-02 study in metastatic melanoma, which showed Nektar’s bempegaldesleukin (bempeg) appeared to make BMS’s Opdivo (nivolumab) less effective in patients with metastatic melanoma. The data also raised safety concerns.

In 2018, BMS paid Nektar close to $2 billion in cash and promised additional milestone payments that could have made the deal worth $3.6 billion. Instead, the partnership collapsed earlier this year after a Phase III trial missed all three primary endpoints.

In early March, an independent data monitoring committee said the combination failed to meet the primary endpoints of objective response rate (ORR), progression-free survival and overall survival (OS), as evaluated using the Blinded Independent Central Review.

The data disclosed at ESMO showed the overall response to the combination to be 27.7% compared with 36% for Opdivo used alone. The median progression-free rate was 4.17 months for the combination and 4.99 months for the control arm. The median ORR was slightly better with the combination at 29.67 months compared with 28.88 months for Opdivo used alone. However, researchers concluded that the combination provided no additional efficacy.

BMS and Nektar shuttered the program in March. Nektar subsequently cut 70 percent of its workforce and jettisoned the collaboration. In April the companies shut down another development program in bladder cancer and renal cell carcinoma (RCC).

Data from the Phase III PIVOT-9 study of 623 patients with RCC showed the combination of bempeg and Opdivo failed to improve outcomes versus the investigator’s choice of TKI. Primary endpoints for the trial were ORR and OS. At the median duration follow-up of 15.5 months, the ORR for those receiving the combination was 23.0% compared with 30.6% for the control TKI arm. Median OS was 29 months for the Bempeg-Opdivo combination and was not reached for the TKI group. 

https://www.biospace.com/article/a-post-mortem-on-the-failed-nektar-bms-partnership-at-esmo/

Relay: ESMO Update on RLY-4008 to Transform Treatment Options for Cholangiocarcinoma

 88% overall response rate (15 out of 17) from interim data of pan-FGFR treatment (FGFRi)-naïve FGFR2-fusion cholangiocarcinoma (CCA) patients treated at the pivotal dose

Enrollment for the pivotal cohort anticipated to be completed in the second half of 2023

Relay Therapeutics to host a conference call on Monday, September 12, at 8:00 am E.T.

Relay Therapeutics will host a conference call and live webcast on September 12, 2022 at 8:00 am E.T. Registration and dial-in for the conference call may be accessed through Relay Therapeutics’ website under Events in the News & Events section through the following link: https://ir.relaytx.com/news-events/events-presentations. An archived replay of the webcast will be available following the event.

https://www.marketscreener.com/quote/stock/RELAY-THERAPEUTICS-INC-109761182/news/Late-Breaking-Data-Presented-at-ESMO-Congress-2022-Demonstrate-Potential-of-RLY-4008-to-Transform-Tr-41747608/

Equities Start Month in Deeply Undervalued Territory After Latest Pullback

 Stocks started September trading closer to their decade lows after falling deeper into undervalued territory at the end of August.

Equities are now trading 15% below our fair value estimate, an even greater discount than the 11% they were at to the end of July. Prices initially rose after better-than-expected news around second-quarter earnings but ended the month in retreat following a hawkish speech on inflation from Federal Reserve Chairman Jerome Powell at the Jackson Hole Economic Symposium.

Four Key Takeaways for the Stock Market Today

1. Equities are trading at a 15% discount to our fair value estimate following the latest pullback in prices.
2. Stocks are pricing in the federal-funds rate to be higher for longer following Powell's comments.
3. Liquidity could become more constrained as the Fed’s balance-sheet roll-off is set to double to $95 billion.
4. Our updated economic outlook for 2023: We expect sluggish economic growth and low inflation to provide the Fed with enough room to begin loosening monetary policy.

U.S. Stock Market at 15% Discount to Fair Value

Equity markets started August on a positive tone as earnings were better than feared. Yet, even more importantly, while management teams were cautious regarding their outlooks for the second half, they did not throw in the towel and make large-scale cuts to guidance. This was enough to send stocks higher until the market ran out of steam by the middle of the month. Stocks then gave back much of their earlier gains, which accelerated following Powell's remarks.

Typically, most commentary from Fed officials focuses on the balance that the central bank tries to strike between its dual mandate of maintaining price stability and maximizing job growth. However, Powell was surprisingly blunt in commentary that was singularly focused on reducing inflation.

He noted that tightening monetary policy will damp economic activity and hamper the job market. Within his speech several comments stood out. To combat inflation, “it is likely to require a sustained period of below-trend growth” and that in prior bouts of high inflation, “a lengthy period of very restrictive monetary policy was ultimately needed to stem the high inflation.’’

That caused markets to begin pricing in a heightened probability that the federal-funds rate will remain higher for longer than expected, which would result in weaker economic and earnings growth.

Following this pullback, according to a composite of the approximately 700 stocks we cover that trade in the United States, we see the market trading at a 15% discount to our fair value estimate. While this doesn’t bring the market all the way back toward its decade lows, it remains at a discount that the market has rarely traded at for very long over the past decade.

Morningstar’s chief U.S. economist recently published an updated economic outlook. We slightly reduced our forecast for real gross domestic product growth to 1.8% in 2022. Considering real GDP growth was negative in the first and second quarters, this projection assumes it will average an almost 3% annualized run rate over the second half of the year. For 2023, we expect that the impact of the Fed’s monetary tightening will take hold and that real GDP growth will slow to 1.2%.

We maintained our projection that inflation has already peaked and will moderate over the second half of 2022. As the economy slows in 2023 and supply constraints evaporate, we forecast inflation will drop to 2.1% next year. As such, the combination of weaker economic growth and low inflation will provide the Fed the room it will need to begin easing monetary policy in 2023.

Stocks Fall Into Undervalued Territory

Growth stocks suffered the worst losses during August, dropping 5.74%, whereas value and core/blend stocks fell just 2.54% and 2.84%, respectively. By market capitalization, large-cap stocks fell the most at 4.09%, with mid- and small-cap stocks down 3.05% and 3.25%, respectively.

According to our valuations, both the growth and value Morningstar Categories are more attractive on a relative value basis than core. By market cap, deep value can be found in the small-cap space, especially in the value and growth categories.

Cyclicals, Economically Sensitive Sectors Most Undervalued

With investors concerned that rates will stay higher for longer and the economy looking weak next year, growth stocks pulled back the most over the past few weeks. However, in many cases, we think the market is being overly pessimistic and extrapolating short-term weakness too far into the future. Those sectors that are the most economically sensitive have some of the most attractive valuations. The communications sector, which is skewed by Meta Platforms (META) and Alphabet (GOOGL), is by far the most undervalued.  

Defensive sectors have held their value better to the downside, but we think investors are paying too high a price for many of these stocks. In particular, the utilities sector has risen 5.12% this year, resulting in the sector trading at a 9% premium above our fair value. While we expect inflation to moderate, this is the sector that would be hit the hardest if inflation were to remain hotter for longer. 

Energy was the most undervalued sector coming into 2022 and has moved higher. In the year to date, the Morningstar US Energy Index has risen 48.22%. Although oil prices have gone up, we have held our midcycle oil price forecast steady at $55.00 per barrel for West Texas Intermediate crude. According to our valuations, we think the energy sector is trading at a 5% premium over a composite of our fair value estimates.

Stocks With Wide Economic Moats Deeply Undervalued

Companies that have wide Morningstar Economic Moat Ratings are those that we forecast will be able to generate returns on invested capital well in excess of their weighted average cost of capital for at least the next 20 years. To keep rivals from eating into those returns, these companies must have durable, long-term competitive advantages that can withstand the stress of competition. According to our valuations, the market is undervaluing these advantages, and we see a significant amount of value for long-term investors in wide-moat stocks.

Wide-Moat Stocks With the Largest Price Drops in August

As we have seen in other pullbacks this year, wide-moat stocks have fallen more than the broader market. In August, the wide-moat stocks that sold off the most were mainly large-cap growth companies, which had fallen out of favor.

In August, Morningstar’s Wide Moat Composite Index dropped 5.00% versus the Morningstar US Market Index, which fell 3.83%. As a result, wide-moat stocks have become even more undervalued compared with the rest of the market. The wide-moat stocks with the greatest price drops are listed below.

The Four Headwinds Begin to Abate

In our outlook for 2022 we noted that coming into the year the market was overvalued and there were four main headwinds the market will have to contend with: slowing rate of economic growth, tightening monetary policy, rising interest rates, and inflation running hot.

With less than four months left in the year, we think the headwinds that were a cause of concern for us are beginning to abate:

1. Economic growth: Average real GDP forecast is 1.8% for 2022, which means we need to see an average annualized growth rate of 3% for the remainder of this year.
2. Tightening monetary policy: We expect the Fed will stop raising interest rates by the end of the year.
3. Rising interest rates: We think most of the interest-rate increases in the long end of the curve have already occurred.
4. Inflation: We see inflation as having already peaked, and it will moderate for the rest of 2022.

Over the next few months, volatility will remain high. The markets will be closely watching economic and inflationary metrics. Any sign of further economic weakening and/or that inflation will remain hotter for longer would likely put renewed downward pressure on stocks, whereas signs that economic activity is picking up and inflation is cooling will propel markets higher.

We continue to view the broad U.S. equity market as materially undervalued but fully expect that even at the current level of undervaluation, long-term investors should brace themselves and expect volatility to continue over the next several months.

Risks to Market Outlook

While the headwinds may be starting to abate, we are keeping an eye on other emerging risks. For example, the appreciation of the U.S dollar compared with other currencies will be a drag on on third-quarter earnings growth for companies with a high percentage of international sales. 

While appreciation of the dollar will result in lower short-term earnings growth, that in of itself typically won’t have a meaningful effect on long-term intrinsic valuation. However, the key for investors will be to discern which of those companies will not see a material effect on their moats from the rising dollar, and which will see a decrease in their underlying business fundamentals.

The outlook for Europe appears particularly daunting, as surging energy prices are likely to wreak havoc across the region. 

As the conflict in Ukraine drags into its seventh month, price increases, particularly for natural gas, are expected to have an outsize negative impact on industrial production, especially in Germany. It will also disproportionately affect lower-income consumers, who have less of an ability to absorb higher heating costs.

https://www.morningstar.com/articles/1113153/equities-start-month-in-deeply-undervalued-territory-after-latest-pullbackhttps://www.morningstar.com/articles/1113153/equities-start-month-in-deeply-undervalued-territory-after-latest-pullback