Chart of the Week
Congress.
Budget Hearings. Secretary Xavier Becerra was on Capitol Hill to discuss his 2022 budget request. Some of the more relevant highlights:
- He hinted that HHS was looking to rein in short term plans and other non-ACA qualified health insurance. New rules may or may not include changes to rules that expanded use of Health Reimbursement Accounts as well.
- Becerra offered reassurance that HHS would be looking for ways to extend telehealth flexibilities beyond the public health emergency. He also stressed the need to ensure accountability and counter fraud waste and abuse. On the latter point, one of the likely guardrails may be to limit use of telehealth to an “established patient” and require in person consultations periodically. The worrisome policy trend developing around AMZN, GDRX and others is the use of telemedicine for prescriptions. Convenient but not necessarily great health care. Behavioral Health is, for now, excused from this policy worry.
- The original rules require Provider Relief Funds to be used by June 30. Hospitals, particularly the non-profits, nursing facilities and others are pressuring Congress and HHS to extend the deadline until at least the end of the year. These monies, of course, can be used to offset COVID-19 related labor shortages and higher wage expense, problems that promise to stick around for a while. Becerra offered some assurance of greater flexibility but no specifics.
- Approval of BIIB's Aduhelm came up but members, even given all the controversy, were more concerned about access than the approval process. The danger of questioning the FDA’s action is to invite the attention of the political forces, like patients and their advocates. Instead, expect Members to focus on price, leadership at the FDA but not the drug itself. Our note this week is here.
- Republicans brought up Medicare solvency but the SecHHS mostly sidestepped the issue.
S. 1260 United States Innovation and Competition Act. On a refreshing bipartisan basis the Senate passed a bill that encourages research and innovation. It also sketches out security procedures to limit theft of intellectual property. Next up is the House which sources say will not be easy street but Pelosi is rumored to support the bill.
Hearings.
Senate Committee on Finance Mental Health Care in America: Addressing Root Causes and Identifying Policy Solutions Tuesday, June 15th, 2021 at 10:00 A.M.
House Committee on Energy and Commerce, Subcommittee on Health Booster Shot: Enhancing Public Health through Vaccine Legislation Tuesday June 15th, 2021 at 10:30 A.M.
House Committee on Education and Labor Examining the Policies and Priorities of the U.S. Department of Health and Human Services Wednesday, June 16th, 2021 at 9:00 A.M.
Senate Committee on Health, Education, Labor and Pensions COVID-19 Response and Recovery: Supporting the Needs of Students in Higher Education & Lessons on Safely Returning to Campus on Safely Returning to Campus Thursday, June 17, 2021 at 10:00 A.M.
The White House.
Supply Chain Security. The White House issued its 100-day review of the U.S. critical industry supply chain. As far as health care is concerned the report focused primarily on pharmaceuticals and especially the U.S. dependency on China for APIs. The authors have three recommendations:
- Boost local production and fostering international cooperation
- Building emergency capacity
- Increase information available to the Food and Drug Administration to improve its surveillance and shortage prevention.
Unlike many industries, the administration has a number of options to increase U.S. production of APIs. For example, add-on payments and enhanced reimbursement to providers would be one possibility. In other words, a few more cents for U.S. manufactured Advil administered at U.S. hospitals could impact the supply dynamics if properly enforced.
Regulatory Agenda.
Medicare Rule-A-Rama. The second tranche of Medicare payment rules are pending at the White House’s Office of Management and Budget. These are:
Physicians Fee Schedule for 2022 and “other revisions to Medicare Part B”
CY 2022 Home Health annual payment update
CY 2022 ESRD annual payment update
CY 2022 Hospital Outpatient annual payment update
As well as:
Patient Protection and Affordable Care Act; Updating Payment Parameters and Improving Health Insurance Markets for 2022 and Beyond Proposed Rule (CMS-9906)
Add to that:
Requirements Related to Surprise Billing; Part I (CMS-9909).
This rule on Surprise billing will be an Interim Final Rule, meaning it goes into effect in 30 days without a comment period. At least for this “Part I” the industry’s input is not welcomed.
Labor Emergency Temporary Standard. The ebbing influence of labor’s COVID-related positions has been evident for weeks. The DoL's Emergency Temporary Standard makes that point again. Despite aggressive lobbying by a number of unions including food workers, transportation and teachers, the Emergency Temporary Standard will apply only to health care workers. States can set their own standards and given the geographical differences emerging in testing, it is pretty clear they will.
Prescription Drug Plan Reporting. The Department of Labor is planning to issue a request for information to help it develop reporting requirements for prescription drug plans. This reporting is required by the 2020 year-end spending bill and will include information on the plan, cost of brand prescription drugs, premium expense, among other things.
Other Stuff.
JOLTS. After coming off its all-time highs in April, Job openings ticked up again in May to 1.3 million jobs. Anecdotes persist and job boards confirm that getting people back to the health care workforce is proving tricky. The enhanced unemployment benefit is too facile an excuse. Certainly, it has affected the low wage and less desirable job spots but postings at high paying hospital system suggest more is at work here.
Quits, which also ticked up last month, forces one to consider that with employers willing to grant new flexibilities, perhaps a good health care wage is not the only consideration.
Testing. The Department of Labor’s decision to limit a new COVID-19 related Emergency Temporary Standard to health care workers probably came as a surprise to DGX and LH which had been working closely with the administration on “reopening” strategies.
The backup plan, no doubt, includes asking states to implement standards for the workplace that include testing. Already, geographical differences have developed with California and New York out testing their southern counterparts of Florida and Texas.
Also, the American Federation of Teachers has included regular testing as part of their return to work safely demand. Given the huge sums of money made available for this purpose we should see testing focused on this area beginning in late August.
Medical Cost Trend. PwC issued its annual estimate of the medical cost trend of 6.5%. That is down slightly from 2021 but still about 100 bp above pre-pandemic levels.
SPAC and S-1 Corner.
Interesting S-1s:
Acumen (BofA) “A clinical-stage biopharmaceutical company developing a novel disease-modifying approach to target what we believe to be a key underlying cause of Alzheimer’s disease, or AD. Alzheimer’s disease is a progressive neurodegenerative disease of the brain that leads to loss of memory and cognitive functions and ultimately results in death.” Alzheimer’s…Everyone is doing it.
Ocean Biomedical. (Berenberg) “Seeks to bridge the “bench-to-bedside” gap between medical research discoveries and patient solutions. We do this by leveraging our strong relationships with research universities and medical centers to license their inventions and technologies with the goal of developing them into products that address diseases with significant unmet medical needs.” Cue the replication crisis folks!
More than a few SPACs working through updating 10Qs for new warrant guidance. A few still cleared De-Spacing or are about to.
You can access the updated SPAC spreadsheet here.
If you are investing in SPACs but not super familiar with health care, hit and we can help.
Recent Events.
The Health Care Gang. I had the pleasure this week of joining Matthew Holt, Ian Morrison, Mike McGee and Kim Bellard on the weekly THCG podcast. With such a smart group it wasn’t difficult to find great things to talk about including CLOV, ONEM’s acquisition of Iora and whether this time is different. Give it a listen here: https://open.spotify.com/episode/3E04noIV7YNOkNI0xDHLiL
Tweet of the Week
Have a great weekend.
Emily Evans
Managing Director – Health Policy
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