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What We’re Reading: Medicare Pay Cuts; Health Insurers Covet Sicker Patients; Misbranded Weight Loss Drug Sales

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Part of the recent Medicare reimbursement cuts could be addressed in a spending package next month; Medicaid/Medicare dual eligibles are expected to generate big profits for health insurers; FDA sent warning letters to online vendors selling unapproved and misbranded versions of semaglutide and tirzepatide.

Physicians Lobby Congress on Medicare Pay Cuts

Representative Larry Bucshon (R, Indiana) told upset doctors that there is a “good chance” at least part of the recent Medicare reimbursement cuts could be addressed in a spending package expected to pass next month, according to Roll Call. The cuts were required by a 2015 federal law that says payments must not increase spending by more than $20 million a year; this law requires budget neutrality, meaning that any increases to one group of physicians typically results in decreases to others. Since 2020, Congress has been stepping in annually to avert some of the cuts, but lawmakers have not yet acted on the issue this year because of a series of stopgap spending bills. As a result, the cuts took effect on January 1. Some lawmakers, like Bucshon, are hopeful about reverting the cuts in the next fiscal 2024 funding law as the current stopgap funding law will expire in 2 parts, with funding for some agencies expiring on March 1 and others expiring on March 8.

Health Insurers Are Suddenly Coveting Sicker Patients

People eligible for both Medicaid and Medicare are expected to generate billions of dollars in profit in the coming years for health insurers despite being a group that typically racks up expensive health care bills, according to Axios. A recent McKinsey report found that earnings before interest, taxes, deprecation, and amortization from covering this population will see a growth rate of greater than 10% between 2022 and 2027. Also, profits will grow from $7 billion in 2022 to $12 billion in 2027. Axios reported that this is part of a major shift in how insurers make their money, with profits increasingly coming from their provision of government plans like Medicaid managed care and Medicare Advantage. Consequently, McKinsey reported that the profitability of insurance plans’ government segment is expected to be 65% higher than the commercial segment by 2027.

FDA Warns Online Vendors Selling Misbranded Diabetes, Weight Loss Drugs

The FDA announced Tuesday that it sent warning letters to 2 online vendors for selling unapproved and misbranded versions of semaglutide and tirzepatide, the active ingredients in the weight loss drugs Ozempic and Mounjaro, respectively, according to Reuters. The letters were issued to Synthetix, which sells drugs on Helix Chemical Supply, and US Chem Labs after the FDA conducted a review of their respective websites in October. The FDA reported that it found evidence that the companies’ websites offer the products for sale in the US with claims including weight loss and reduced risk of stroke and heart attack. The companies are required to notify the FDA within 15 business days of receiving the letter of the specific steps taken to address any violations.

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