The senator's speech defended the nominee's track record on the ACA and abortion, rejecting claims that confirming him could endanger healthcare-related legal precedent.
With a highly anticipated speech on the Senate floor Friday afternoon, Sen. Susan Collins, R-Maine, announced that she will vote in favor of Judge Brett Kavanaugh's nomination to the U.S. Supreme Court, virtually guaranteeing that a contentious vetting process will end with Kavanaugh's confirmation.
Due to a lack of corroborating evidence, the allegations of sexual misconduct brought against Kavanaugh did not overcome the presumption of innocence, Collins said, scolding her fellow senators for allowing the process to devolve into a partisan fight.
Collins defended the nominee's record on a number of topics, specifically rejecting claims that confirming Kavanaugh could spell trouble for the Obama administration's signature healthcare law and decades of legal precedent on abortion rights.
"One concern that I frequently heard was that the judge would be likely to eliminate the Affordable Care Act's vital protections for people with preexisting conditions. I disagree with this contention," Collins said. "In a dissent in Seven-Sky v. Holder, Judge Kavanaugh rejected a challenge to the ACA on narrow procedural grounds, preserving the law in full. Many experts have said that his dissent informed Justice Roberts' opinion upholding the ACA at the Supreme Court."
Roberts' opinion upheld the ACA as constitutionally authorized by congressional power to tax. In light of the ACA's individual mandate being zeroed out, a Texas-led coalition of conservative states has claimed that dropping the tax penalty to $0 renders the entire law unconstitutional, so they have asked a federal judge to impose an injunction. The judge, who reportedly seemed sympathetic to the plaintiffs' argument, could rule on the request any day now, setting off a chain of appeals that could land before the Supreme Court.
Collins argued that Kavanaugh would be disinclined to overturn the ACA in its entirety because his approach to severability is narrow.
"When a part of a statute is challenged on constitutional grounds, he has argued for severing the invalid clause as surgically as possible, while allowing the overall law to remain intact," Collins said, citing Kavanaugh's dissent last January in PHH Corp. v. Consumer Financial Protection Bureau.
"Given the current challenges to the ACA, proponents—including myself—of protections for people with preexisting conditions should want a justice who would take just this kind of approach," she added.
Shortly after Collins delivered her speech, Sen. Joe Manchin, D-West Virginia, released a statement signaling he would vote in favor of Kavanaugh's confirmation.
"With respect to any cases that may come before him impacting the 800,000 West Virginians with pre-existing conditions, Judge Kavanaugh assured me personally that he would consider the human impacts and approach any decision with surgical precision to avoid unintended consequences," Manchin said in the statement.
Abortion Rights
On the campaign trail, then-candidate Donald Trump promised to pick Supreme Court nominees who would overturn Roe v. Wade, the 1973 decision affirming a woman's constitutional right to an abortion prior to a fetus achieving viability.
Collins said Friday, however, that this pledge has been part of the Republican platform in every presidential campaign since at least 1980 and that Kavanaugh views abiding by legal precedent as constitutionally required, "except in the most extraordinary of circumstances."
"In short," Collins said, "his views on honoring precedent would preclude attempts to do by stealth that which one has committed not to do overtly."
Sen. Mazie Hirono, D-Hawaii, said Sunday that the threat to Roe may not come head-on. States are passing a variety of laws to limit abortion rights, and those are the legal disputes that could effectively "nullify" Roe without overturning it, she said, as The Hill reported.
Senators voted 50-48 on Saturday in favor of Kavanaugh's confirmation, and Kavanaugh was sworn in on Sunday. His first day on the bench is Tuesday.
Editor's note: This story was updated Monday, October 8, with additional information, including statements from Manchin and Hirono.
The growth contributed to the unemployment rate falling to 3.7% last month.
The U.S. healthcare sector added about 26,000 jobs last month, including 12,000 associated with hospitals, according to monthly Bureau of Labor Statistics datareleased Friday.
The growth contributed to the unemployment rate falling from 3.9% in August to 3.7% in September. That's the lowest unemployment rate since 1969, according to historical BLS data.
Although the report indicated that the economy added 134,000 jobs last month across all sectors, that figure fell well below expectations, falling to the slowest pace in a year, as CNBC reported. But the dampened data could be attributed in part to Hurricane Florence, as Center on Budget and Policy Priorities senior fellow Jared Bernstein wrote in a blog post Friday.
"The decline in unemployment is 'real,' meaning it occurred through fewer unemployed persons as opposed to people leaving the labor market," Bernstein added.
Healthcare employment has increased by more than 300,000 jobs over the year.
The system agreed to invest $250 million and keep certain services active over the coming decade at the hospital in Vero Beach, Florida.
Indian River Medical Center, a 332-bed county-owned hospital based in Vero Beach, Florida, will become part of the Cleveland Clinic health system under the terms of agreements expected to be formally signed this week.
The organizations announced Wednesday that IRMC's board of directors and the trustees of the county's hospital district had voted in favor of agreements that would result in the hospital joining the Ohio-based system, which has been pushing deeper into the Florida market recently.
"Indian River Medical Center is an anchor institution and a true community asset," Wael Barsoum, MD, president and CEO of Cleveland Clinic Florida, said in a statement. "We look forward to working closely with the leaders, physicians and staff to build on their great foundation of care and to strengthen support for indigent care."
The news comes about seven months after the organizations' announcement last February of a nonbinding letter of intent to partner.
Under the terms of the deal, Cleveland Clinic committed to invest a minimum of $250 million in IRMC over the coming decade, assume $102 million in liabilities, and keep all 1,700 of the hospital's employees at their current compensation, as Colleen Wixon reported for Treasure Coast Newspapers.
The deal includes guarantees that Cleveland Clinic will maintain several key services lines, including maternity care, pediatrics, gynecology, behavioral and mental health, cardiovascular care, cancer care, and gastroenterology, for at least 10 years, according to announcement.
Indian River Medical Center (courtesy photo)
The hospital district will continue to support indigent care at IRMC, but that will be phased out over three years following closing. Cleveland Clinic's policy on charity care will take effect immediately, then it will assume full responsibility for indigent care after the three years have passed.
IRMC Board Chair Dr. Wayne Hockmeyer said the deal is great news for the community.
"People across the country and across the world know that Cleveland Clinic stands for world class healthcare, and they will be partnering with the exceptional staff, physicians and nurses at IRMC to provide that level of care right here in Vero Beach for years to come."
The IRMC deal in Vero Beach comes as Cleveland Clinic announced a deal to take over Martin Health, based about an hour's drive south in Stuart, Florida. That deal calls for Cleveland Clinic to invest $500 million for three hospitals with a total of 521 beds, as Treasure Coast Newspapers reported.
Cleveland Clinic Florida's main campus is in Weston, and it has already expanded into Coral Springs and Wellington.
Five health system leaders, including Capasso, have been indicted over their handling of a prior interim CEO's dismissal. But that had nothing to do with her resignation, a spokesperson said.
The top executive for Broward Health, based in Fort Lauderdale, Florida, tendered her resignation suddenly on Wednesday.
The health system's initial announcement gave no reason for President and CEO Beverly Capasso's departure, but a system spokesperson told HealthLeaders that Capasso had cited personal and education aspirations as motivating her decision.
"I am ready to move on to the next chapters of my life," Capasso said, according to the spokesperson. "I am completing my doctorate of nursing and looking forward to spending more time with my family."
Capasso and four other Broward Health leaders—General Counsel Lynn Barrett, board Chairman Rocky Rodriguez, and board members Christopher Ure and Linda Robison—face misdemeanor charges for allegedly mishandling the dismissal of former interim CEO Pauline Grant in 2016 in violation of Florida's Sunshine Law, which requires public entities to conduct their business publicly. Capasso was a board member when Grant was fired over kickback allegations in late 2016, as the Sun Sentinel reported. All have pleaded not guilty.
Capasso's resignation is unrelated, however, to the pending criminal case, the Broward Health spokesperson said.
The date on which Capasso's resignation will be effective has not yet been set, but the system plans to begin a search to replace her.* Capasso will assist during the transition, according to a statement that lauded the hiring of multiple executive posts, about $30 million in expense reductions, and more than $117 million in capital improvement projects on Capasso's watch.
"We can all be proud of the progress made over the last two years, and I am confident that the achievements will continue," Capasso in the statement. "It was my great honor to serve and lead a remarkable team of caring health professionals."
Capasso, who had just been granted her post permanently in February after serving on an interim basis since May 2017, was the organization's fourth CEO in less than three years, as South Florida Business Journal's Brian Bandell reported. The system's leadership has been in turmoil since CEO Dr. Nabil El Sanadi killed himself in January 2016.
Members of the Broward Health board, which is appointed by Florida Gov. Rick Scott, told the Sun Sentinel's David Fleshler that they believe internal turmoil among the leadership team likely led to Capasso's departure.
"I was extremely disappointed to hear the news that Ms. Capasso found the situation untenable," Ure told the Sentinel. "I had tremendous confidence Ms. Capasso would bring stability to the organization. Ms. Capasso brought in a highly competent team who should be given every opportunity to stabilize Broward Health."
*Editor's note: A previous version of this story said Broward Health "will immediately begin a nationwide search to replace her," based on information provided in a press release. Since the board has not yet voted on the matter, that phrase has been updated to say the system "plans to begin a search to replace her," based on information provided Thursday by a Broward Health spokesperson.
Achieving the improvements in cost and quality expected by the two mission-minded nonprofits will be no easy task. The detailed work that begins now will determine whether they succeed or fail.
The planned merger between Baylor Scott & White Health and Memorial Hermann Health System announced this week is unlikely to face a challenge by state or federal antitrust regulators. But that doesn't mean the Texas nonprofits are guaranteed to succeed in their stated objectives.
There's enough geographic separation between the two major markets in which these two organizations currently operate, Dallas and Houston, to sidestep concerns that the combination could harm competition, as executives involved in the deal and outside consultants alike told HealthLeaders. That view was endorsed Tuesday in a bulletin by S&P Global Ratings.
"The two systems have no market overlap, which we believe limits the chance of regulatory intervention in the merger process," the bulletin stated.
But the two mission-minded organizations have set much loftier goals, including cost and quality improvements that have proven notoriously difficult for mergers and acquisitions among other healthcare providers.
Baylor Scott & White CEO Jim Hinton, who will lead the post-merger organization, said Monday that the objectives include demonstrating change leadership for the industry and improving the convenience and affordability of high-quality healthcare for Texans. Memorial Hermann President and CEO Chuck Stokes similarly said goals include making healthcare more consumer-centric, better managing population health, and bending "the unsustainable healthcare cost curve in the state." The S&P bulletin, too, cited potential "operational and clinical efficiencies" among the merger's likely benefits.
History has shown, however, that the cost savings brought by mergers and acquisitions often fall short of what was promised. And some industry watchers worry the added negotiating power that comes with scale could ultimately make U.S. healthcare more expensive.
Lawrence J. Zielinski, MBA, executive in residence for healthcare administration at the University at Buffalo School of Management, likened the proposed merger between the Texas nonprofits to a pending merger between Philadelphia-area nonprofits Jefferson Health and Einstein Healthcare Network and also to the Cigna–Express Scripts deal.
"Will these new oligopolies really integrate care, improve quality, and reduce cost?" Zielinski wrote on LinkedIn. "History of these mega-mergers indicates the opposite—size creates more market leverage."
Inputs Determine Outputs
Rod Hochman, MD, president and CEO of Providence St. Joseph Health, based in Renton, Washington, told HealthLeaders earlier this year that it's difficult to generalize about whether a given deal will ultimately save patients money or improve the quality of their care. The conclusions reached by research papers on the topic depend on how the data is formatted and which organizations are included, he said.
"There are examples of those who have done it well and those who haven't," Hochman said. "Like all things in healthcare, whether the mergers work as their architects describe their benefits is dependent on whom you talk to."
The key to success is settling on a specific game plan to turn scale into cost savings and efficiency gains, he said.
That analysis aligns with the conclusions of a report produced last year by the Deloitte Center for Health Solutions in collaboration with the Healthcare Financial Management Association (HFMA), which analyzed post-M&A performance of more than 750 hospital mergers or acquisitions between 2008 and 2014. The report found that acquired hospitals typically experienced a slump in operating margins, revenue, and expenses for two years after a transaction. But there was significant variation.
"With proper integration planning and execution, some hospitals did experience higher operating margins following acquisition," the report states. "Among a sample of transactions with better outcomes, executives reported spending more time on integration planning and execution than those from transactions that did not meet cost and quality goals."
Strong Starting Point
It's worth noting that Baylor Scott & White and Memorial Hermann are coming into their planned merger from positions of relative strength. The former had an operating margin of 5.1% during the first nine months of fiscal year 2017 that grew to 6.9% during the first nine months of fiscal year 2018. The latter remains profitable.
This financial position could render them better prepared to take full advantage of the opportunities this merger offers. Those opportunities could include more ambulatory surgical center and micro hospital projects, especially since the organizations already work with the same joint venture partners in these areas, as Transwestern National Director Eric Johnson told Bisnow Houston's Tierra Smith.
What's more, the nonprofit health systems have support from at least some community stakeholders.
Elena M. Marks, JD, MPH, president and CEO of the Houston-based nonprofit Episcopal Health Foundation, which works on health and wellness initiatives across 57 counties in Texas, said she has had positive experiences working with Baylor Scott & White and Memorial Hermann separately, so she looks forward to the potential community benefits of their collaborative efforts as well.
"My hope is that it's more than just a revenue ploy and that the enhanced clout will actually give them the incentive and the cushion to do more work in a value-based framework, where the value is health outcomes, not just medical procedures," Marks told HealthLeaders. "So it could go either way, I guess is what I'm saying."
Marks said she hopes the merger will be the starting point for systemwide population health projects that move farther upstream to solve nonclinical problems, such as transportation or nutritional concerns, for the communities being served by these already-large nonprofits.
"I think there are opportunities for it to be wildly successful in terms of cost and quality for the community," she said, "and we'll just have to wait and see."
While some see a possible 'behemoth to rival HCA,' the prospective CEO of the combined nonprofit organization downplays the competitive edge and says he plans to play nice with payers.
Two of the largest nonprofit health systems in Texas announced Monday that they have signed a letter of intent to merge their operations into a single entity as soon as next year.
The planned combination of Dallas-based Baylor Scott & White Health with Houston-based Memorial Hermann Health System would form a 68-hospital system, making it the largest in Texas and among the largest nationwide, with annual revenue in excess of $14 billion.
Although each of the nonprofit systems dominates its metro market, the Nashville-based for-profit hospital chain HCA Healthcare has been gaining ground on Memorial Herman, buying a total of six Houston-area hospitals since last year. The nonprofits' proposed tie-up shouldn't be seen, however, as an effort to keep HCA or any other hospital chain at bay, said Baylor Scott & White CEO Jim Hinton, who will be CEO of the proposed combined entity.
"I can't recall a single time that using this opportunity as a means to target a competitor has ever come up. I think this has strictly been about how can we deepen the quality of service to our existing communities and bring some new capabilities to play," Hinton told HealthLeaders. "The word 'domination' isn't in the vocabulary."
Memorial Hermann CEO Chuck Stokes, who will retain his title post-merger, similarly said the proposed arrangement is about doing what's best for patients.
"This is about two really forward-thinking organizations coming together to try to make sure we improve accessibility, affordability, and services to the people that we serve. … That's what we're going to stay focused on, and that's what our governance is expecting us to do," Stokes told HealthLeaders.
Even so, some outside observers described the merger in terms of a competitive strategy that could benefit the organizations by establishing their regional dominance with a combined network in two major markets.
"This will allow one organization to impact healthcare for a large proportion of patients in metropolitan areas that have a combined population of more than 16 million people," said Tyler Dinwiddie, a senior analyst with Decision Resources Group who covers Texas markets. "The merger will also create a state-based healthcare behemoth to rival HCA—which continues to operate hospitals in each of Texas' five largest markets."
Playing Nice With Payers
The desire to gain a stronger hand in contract negotiations is commonly cited as a factor driving many hospital mergers and acquisitions. In the case of Baylor Scott & White's planned union with Memorial Hermann, the combined network power could translate to more leverage with major insurers, and that could have a lasting impact on the integrated delivery network's relationship with payers down the road, Dinwiddie said.
"I also think that with insurance reimbursements declining, and with the continued movement toward risk-based value-based care arrangements, economies of scale and integration are increasingly more important," Dinwiddie added. "The two organizations will have an opportunity to combine certain capabilities and assist each other by disseminating care protocols or expertise across the network."
Hinton brushed aside any suggestion that this merger was motivated by a desire to out-negotiate payers. He preferred instead to describe insurers as partners in the shared task of creating a value-based care delivery system.
"I think we're actually natural allies," Hinton said.
Review Could Be Easy
Despite its size and potential impact, the merger seems unlikely to trigger antitrust regulatory action by the Texas Attorney General's Office or Federal Trade Commission, according to the organizations' leaders and industry watchers alike.
"We're not in overlapping markets. There is no overlap. We're in contiguous markets," said Deborah Cannon, chair of the Memorial Hermann board of directors. "Typically, when FTC gets concerned, it's when there's a lot of overlap."
Dinwiddie and his colleague Sarah E. Wilson, principal analyst of market access insights at Decision Resources Group, agreed. They likened the newly announced merger plans to others recently executed, such as Dignity Health's merger with Catholic Health Initiatives or the combination of Advocate Health Care and Aurora Health Care.
Nevertheless, Cannon and Stokes acknowledged that they cannot predict what steps the authorities may take.
EMR And Other Hurdles
Although the two mission-minded nonprofits may speak the same language in terms of their objectives, their electronic medical record (EMR) systems will require some translation.
Baylor Scott & White uses Epic systems, while Memorial Hermann's EMRs come from Cerner. That could make data-sharing—a critical component of any value-based initiative—difficult for the combined entity. But the hurdle is surmountable, Hinton said.
"We don't think it's a huge obstacle, and we'll make a decision about moving to a single EMR down the road, if and when that becomes a priority," he said.
In announcing their letter of intent, the two organizations said they will station executive and support staff in four cities: Dallas, Houston, Austin, and Temple. But there's no word yet on which would be named headquarters for the 68-hospital system with nearly 14,000 physicians, and two health plans.
Now begins the due diligence process. The goal is to finalize the merger by the beginning of the new fiscal yearon July 1 next year, as The Dallas Morning News reported.
"We're a long way away from the finish line, and maybe some of these issues will rise up and be more significant," Hinton told HealthLeaders. "But today [the focus is] really a strong commitment to complete those steps, to improve healthcare for Texans."
Editor's note: This story has been updated throughout with additional information.
A judge rejected the former employees' claims that the 'church plans' ERISA exemption violates the Establishment Clause.
OSF Healthcare System, a Catholic-affiliated nonprofit based in Illinois, secured a legal victory Friday in federal court, where several former employees had accused the system of relying inappropriately on the so-called "church plans" exemption to the Employee Retirement Income Security Act (ERISA).
The plaintiffs, who sought class action certification on behalf of 16,000 employees, had accused the system of violating ERISA's requirements by underfunding two health plans in which the former employees are vested. They had also argued that the existence of government-recognized church plan exemptions violate the First Amendment's Establishment Clause.
But their claims were roundly rejected by U.S. District Judge Staci M. Yandle, who ruled Friday both that the exemption is congruent with the Constitution and that it does, in fact, apply to OSF's plans. Yandle granted summary judgment to the system and dismissed the case with prejudice.
The complaint against OSF came among a slew of similar cases filed in 2016, as multiple appellate courts ruled that religiously affiliated hospital systems were ineligible for a church plan ERISA exemption. Other prominent systems, such as Mercy Health, SSM Health Care, Bon Secours Health System, and others, faced lawsuits of their own, as Bloomberg reported at the time.
Last year, however, the Supreme Court ruled 8-0 that Advocate Health Care, Saint Peter's Healthcare System, and Dignity Health enjoyed ERISA exemptions, affirming the longstanding interpretations of federal executive agencies. (Justice Neil Gorsuch did not participate, as he had not yet been seated on the court when the case was argued.)
Columbia Law School professor Ronald Mann, JD, writing for SCOTUSblog last year, reasoned that the decision carries big implications for the employees of religious healthcare organizations, the organizations themselves, and American society at large.
"On the one hand, exempting those plans from ERISA exposes the hospitals' employees to the catastrophe of making career-long contributions to a pension plan that is insolvent by the time they retire—a catastrophe from which ERISA has protected almost all of us for nearly half a century," Mann wrote. "On the other hand, because compliance is expensive, extending those rules to church-affiliated hospitals would raise the costs of health care at a time when the need for cost containment in the health-care industry could hardly be more pressing."
Justice Sonia Sotomayor concurred with the unanimous decision in the Advocate Health Care case, but she wrote separately to note her reservations. Church-affiliated healthcare organizations operate for-profit subsidiaries, earn billions in annual revenue, and compete directly with secular companies to which ERISA fully applies, Sotomayor noted.
"Any decision interpreting the provisions governing which employers are subject to ERISA is ultimately a decision about which employees receive this assurance," she wrote. "Today, by holding that ERISA's exemption for 'church plan[s]' ... covers plans neither established nor maintained by a church, the Court holds that scores of employees—who work for organizations that look and operate much like secular businesses—potentially might be denied ERISA's protections."
Yandle cited the Advocate Health Care case in her decision.
Clarification: An earlier version of this story referred to Justice Neil Gorsuch "sitting out" of the Advocate Health Care case. It is more precise to say he did not participate in any part of the proceeding because he had not yet joined the court when the case was argued. The story has been updated.
The premium for a benchmark ACA plan on the federal exchange is projected to drop 2% nationally next year, bucking a trend of year-over-year increases for the first time in the ACA era.
Health and Human Services Secretary Alex Azar fawned over President Donald Trump's healthcare policy leadership during a speech Thursday to the Nashville Health Council, arguing that the current administration deserves credit for cleaning up the Affordable Care Act's aftermath.
"It turns out, when you have a president who's willing to take decisive action, who understands business, who's willing to work with the private sector, you can find a way to help American patients, even within a failed system like the ACA," Azar said in his prepared remarks.
As evidence of the Trump administration's progress, Azar announced that the premium for a benchmark ACA plan on the federal exchange is projected to drop 2% nationally next year, bucking a trend of year-over-year increases for the first time in the ACA era.
When asked for documentation of the analysis supporting Azar's announcement, an HHS spokesperson directed HealthLeaders to the preliminary rate filings available online and said final information will be announced by the Centers for Medicare & Medicaid Services "in the coming weeks."
There's a simple reason why we're seeing premiums stabilize as we head into 2019, said Larry Levitt, senior vice president for health reform at the Kaiser Family Foundation (KFF). Insurers raised their rates more than necessary for 2018 in response to market uncertainty caused by regulatory actions taken by the Trump administration, he said.
Analysis by KFF found that benchmark ACA premiums, excluding tax credits, rose 32% on average last year for a 40-year-old beneficiary.
"Insurers in the exchange are quite profitable right now because they overshot so much in their premium increases for this year," Levitt, a former health policy advisor to President Bill Clinton, wrote in a series of tweets Thursday.
An HHS official said Friday that the facts refute Levitt's claims. The official referred back to several lines from Azar's speech in Nashville to argue the Trump administration has made lemonade of the less-than-ideal circumstances created by Congress and the prior administration:
On cost-sharing reductions: The administration halted cost-sharing reduction (CSR) payments last October, contending that Congress had failed to appropriatefunds for the payments. Azar called this move "bold action to fix a lawless situation." Critics have cited the halted CSR payments among the administration's efforts to undermine the ACA. Levitt said the decision was "ironically" among the most stabilizing actions Trump's team has taken.
On risk-adjustment rules: Critics objected when the Trump administration froze risk-adjustment payments on a Saturday in July in response to a federal court ruling from months earlier. The payments were unfrozen less than three weeks later—"it was President Trump who issued an emergency regulation to fill the void," Azar said Thursday.
On repeal-and-replace: There's only so much the executive branch can do without action by lawmakers, Azar added: "The ACA is not 'fixed' or even 'fixable' without Congress’s repealing and replacing it."
Azar used his speech to liken the ACA to the concept of "Medicare for All," which some liberal policymakers have proffered as a solution to the nation's healthcare woes. He trashed them both.
"Advocates of Medicare for All are looking backward—not just by repeating the flaws of the Affordable Care Act," he said, "but also by trying to impose a payment system designed in the 1960s on all of American healthcare."
The arrangement aims to advance, and is contingent upon, regulatory review of the CVS-Aetna merger.
When the clock strikes midnight on New Year's Eve, ownership of Aetna's standalone Medicare Part D prescription drug plans will transfer to WellCare Health Plans under the terms of an agreement disclosed Thursday morning to federal regulators.
Aetna is shedding its Part D business in pursuit of a megamerger with CVS Health, so the closing of Aetna's newly announced deal with WellCare is subject to the closing of Aetna's long-planned deal with CVS and all the regulatory approvals and customary closing conditions that come with it, the companies said in filings to the Securities and Exchange Commission.
Although a similar merger between insurer Cigna and pharmacy benefit manager Express Scripts secured a sign-off earlier this month from Department of Justice antitrust regulators, the CVS-Aetna deal is still awaiting DOJ approval. Some industry stakeholders—including the American Medical Association, California's insurance commissioner, and New York State's financial services superintendent—have objected to the CVS-Aetna deal, citing concerns it could reduce competition among Part D plans.
"Economic studies have shown that increased market concentration and reduced competition for Part D plans will likely result in higher premiums," Maria T. Vullo, superintendent of the New York State Department of Financial Services, wrote in a letter this month to the Connecticut Insurance Department.
"Research also indicates that Medicare enrollees tend to stick with their original plan of choice, even when there are relatively large premiums increases," Vullo continued. "Armed with this consumer behavior knowledge and its large market share, post-merger CVS-Aetna would not have much incentive to lower insurance premiums or drug prices, or to pass on its PBM rebates to consumers."
For its part, CVS has held that its Aetna acquisition would not harm competition. Rather than leading to further concentration in the market, it would make the healthcare system more efficient, a CVS spokesperson told HealthLeaders last month.
In addition to DOJ review, the companies continue to work with a number of state authorities who must sign off on the deal.
Aetna, CVS, and WellCare listed several noteworthy facts in their SEC filings Thursday:
There were about 2.2 million members on Aetna's Part D plans as of June 30.
Aetna will continue providing administrative services for the Part D business through 2019, a full year after WellCare takes them over. Accordingly, Aetna will retain the financial risk.
WellCare plans to pay an undisclosed amount of cash for the deal. CVS and Aetna said the purchase price is "not material" to Aetna's business.
WellCare expects $0 in revenue from Aetna's Part D plans until 2020.
CVS and Aetna each said they believe the divestiture to WellCare to be "a significant step toward completing the DOJ's review" of the CVS-Aetna deal.
CVS said it expects the merger with Aetna to close early in the fourth quarter this year. Aetna said its expectations on the timing of the closing "remain unchanged."
This news comes after WellCare completed a $2.5 billion acquisition of Meridian Health, a PBM, earlier this month.
The justices agreed to review a Circuit Court ruling that HHS had violated the Medicare Act in its reimbursement calculation for disproportionate share hospitals.
The U.S. Supreme Court agreed Thursday to review a case with major consequences for hospitals that serve high numbers of low-income patients.
The justices granted a request from Health and Human Services to revisit a lower court's decision that had invalidated a piece of the government's Medicare reimbursement calculations for disproportionate share hospital (DSH) payments.
Only nine hospitals, led by Allina Health Services, are party to the case. But their claims total $48.5 million in additional reimbursement for a single year. Since hundreds of similarly situated hospitals have filed dozens of follow-on lawsuits making similar claims, the total amount implicated in this dispute is $3-4 billion for fiscal years 2005 through 2013, HHS said in court filings.
By taking up the case, the Supreme Court agreed to review a ruling issued last year by the D.C. Circuit Court, which declared HHS in violation of the Medicare Act for changing the reimbursement formula without going through a public notice-and-comment rulemaking process for fiscal year 2012.
That decision, which overruled a District Court judgment in favor of HHS, was written by Judge Brett Kavanaugh, who is now President Donald Trump's nominee to replace recently retired Justice Anthony Kennedy on the Supreme Court.
"Unlike the [Administrative Procedure Act], the text of the Medicare Act does not exempt interpretive rules from notice-and-comment rulemaking. On the contrary, the text expressly requires notice-and-comment rulemaking," Kavanaugh wrote, knocking down a series of arguments HHS had raised.
This position is not universally agreed upon, however, as even Kavanaugh acknowledged.
"We recognize that we are breaking with several other courts of appeals by holding the Medicare Act does not incorporate all of the APA's exceptions to the notice-and-comment requirement. … But we respectfully disagree with those opinions," he wrote.
This disagreement among the circuit courts was one reason HHS cited in its request for the Supreme Court to review the case. But there were also suggestions that the eight sitting justices could shy away from reviewing this case at this time if they would expect a 4–4 tie.
"If the justices saw themselves as likely to be evenly divided on the merits in Allina, they could well decide to leave the issue for another day," A.E. Dick Howard, a professor at the University of Virginia School of Law, told Bloomberg Law in August.
There were concerns, also, that Kavanaugh's pending nomination could factor into the justices' decision, since he is likely to recuse himself from the case, if confirmed.
The court's order states that the justices will review one very specific question: "Whether 42 U. S. C. §1395hh(a)(2) or §1395hh(a)(4) required the Department of Health and Human Services to conduct notice-and-comment rulemaking before providing the challenged instructions to a Medicare Administrator Contractor making initial determinations of payments due under Medicare."
