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A growing number of hospitals are suing CVS Health for allegedly withholding funds from the 340B Drug Pricing Program that should have gone to hospitals, in today's bite-sized hospital and health industry news from California, New Jersey, Oregon, and Rhode Island.
- California/Oregon: Centene is planning to exit its commercial group markets in California and Oregon next year. Currently, the company offers commercial insurance under the Health Net brand in the two states. "Health Net has made the decision to exit the traditional commercial group business in California and Oregon in order to focus on government-sponsored healthcare," a company spokesperson said. Centene's Affordable Care Act insurance exchanges, Medicaid, and Medicare lines of business will not be affected by the decision. Although it's not known how many people will be impacted by the change, Modern Healthcare noted that Centene has almost 500,000 enrollees in its commercial plans, which represent less than 2% of its 25.9 million members. Over the last year, Centene has focused on restructuring its operations due to declining enrollment and upcoming federal funding cuts. Aside from exiting commercial plans in these two states, Centene also recently reported that it plans to exit the Medicare Advantage market in three states and cut plans that represent a third of its overall private Medicare membership. (Tepper, Modern Healthcare, 9/3)
- New Jersey: Johnson & Johnson (J&J) is in talks to sell its orthopedics business DuPey Synthes to private equity firm Apollo Global Management. However, people familiar with the matter said that the talks may not lead to a transaction, or another potential buyer could appear. J&J originally acquired Synthes in 2012 for $21 billion and combined it with its DePuy unit to create the "most innovative and comprehensive" orthopedics business, according to then-CEO Bill Weldon. Although the unit has been integral to J&J's medical device business, growth has slowed in recent years, leading the company to explore ways to separate the unit into a standalone business. "It's a steady grower, but not outperforming," said J&J CFO Joseph Wolk. According to the Wall Street Journal, the potential sale of DuPey Synthes is part of J&J's broader efforts to shift to higher-growth areas. In 2023, the company split off its consumer health division Kenvue, which is known for brands like Tylenol and Band-Aid. (Thomas/Janin, Wall Street Journal, 9/12)
- Rhode Island: Since May, five hospital systems have separately sued CVS Health for allegedly withholding 340B funds that should have gone to the hospitals. Under the 340B program, hospitals that disproportionately treat low-income patients can receive discounts on the list price of outpatient medications. However, hospitals have alleged that CVS' third-party administration WellPartner falsified reimbursement rate data to reduce 340B payments over several years. According to Modern Healthcare, more hospitals are expected to file their own lawsuits against CVS over 340B payments as state and federal policymakers try to understand the impact of vertically integrated companies on healthcare costs and quality. (Kacik, Modern Healthcare, 9/9)
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