Chart of the Week.
Congress
Congress went home this week to tell their constituents all about the Infrastructure Bill and no doubt will be fielding questions about the Build Back Better Reconciliation Bill. Other than that, little action on the Hill
The White House
Public Health Emergency. Never underestimate the federal government’s ability to prolong a crisis, but the Public Health Emergency declared by the Trump administration will come to an end, at some point. The group most interested in having clarity on that date are state Medicaid Directors. This week they wrote to HHS and made a few requests. These are:
- Assurances the Public Health Emergency will not end before July 1, 2022, the date most state fiscal years begin.
- End to Continuous Enrollment coincident with end to PHE
- Extension of time to renew normal operations (i.e. redeterminations) from 60 days to 90 days
Separately, the Medicaid Directors have asked that the 6.2% bump in matching federal funds be extended one year after the end of the Public Health Emergency.
The State Medicaid Directors are trying to protect their budget but also working to ensure they can process redeterminations, which can take up to 18 months to finalize, for the enormous number of people that have accumulated on the rolls the last 18 months.
In late October, the American Telemedicine Association had made a similar request of SecHHS Xavier Beccera, although group has less sway among lawmakers and bureaucrats.
For the purposes of modeling ANTM, CNC, MOH, the PHE is not likely to end before July 1, 2022 and could extend as late as October 1, 2022, the start of the federal fiscal year. Redeterminations can only be made to the extent the capacity exists to send notifications, provide time for a response and handle appeals that are likely to occur. Normal operations are not likely to resume until July 1, 2023 or later.
As a reminder, telehealth and other service flexibilities are tied to the Public Health Emergency’s duration. The longer the PHE, lasts the more deregulated the health care system becomes.
Vaccine Mandate. A group of ten, mostly rural, states are suing the Biden administration over vaccine mandates for health care workers. As it’s the case with state action related to the new Department of Labor rules, these states are governed by Republicans and Democrats.
Like the states suing over DOL rules, this group is also concerned about labor shortages which have reach dire levels in many rural and ex urban communities.
Medicare Rule-A-Rama.
Finalized.
Medicare Coverage of Innovative Technology (MCIT) and Definition of "Reasonable and Necessary" (CMS-3372) Final Rule.
The administration formerly withdrew thus rule today, citing potential patient harm and promising to come up with an alternative, which seems unlikely in the near term. Around town there are whispers that the FDA is a little too willing to grant breakthrough status that could trigger the new Medicare coverage pathway, hence CMS’s concern.
Pending.
HHS Notice of Benefit and Payment Parameters for 2023 (CMS-9911)
The latest exchange rule should be as aggressive as the administration thinks it can get away with
Other Rules.
Other Stuff
CPI is not one of those data points on which we in health care hang. CPI-M and the subseries associated with medical care items and services do not measure the cost of care but rather the cost-sharing consumers bear. Specifically, deductibles, co-insurance and co-pays, as applicable. For the most part, the CPI-M represents commercial, and to a lesser extent, Medicare insured health care.
As a result, CPI for Medical Services tends to reflect trends in insurance coverage, like the proliferation of high deductible plans, and in overall cost of services. Cost-sharing is generally 20% of the price negotiated between an individual’s insurer and the health service provider.
In October, CPI for Inpatient Hospital Services reaccelerated YoY to 4.56% after taking a breather in September. That acceleration is about 25% more than October 2019, the last year the health system approached normal operations.
Could CPI be accelerating on delayed care? On increased acuity – the tale PPI’s disease series seems to tell? Too early to tell but not to be ignored.
Chart book for inflation series is here.
Job openings in health care reaccelerated in September, bringing total help wanted to 1.7M. More worrisome is Quits accelerated to 6.7% MoM. As employment was up in October, Job Opening in the next print should moderate again. Unfortunately, health care providers appear to be in a pickle. Wages are increasing to attract workers, which works for a month or so, then quits accelerate, then wages rise. Wash, rinse, repeat.
Chartbook for employment series is here.
Policy-related Earnings Commentary.
OSH – The big news out of earnings commentary was disclosure of a DOJ inquiry regarding use of “third party marketing organizations.” As the call made clear later, this inquiry is likely a reference to digital marketing through Facebook and other social media platforms. CMS has a long list of rules on use of third-party marketing and the DOJ would be interested if any of them were violated. For the stock, the concern is probably not the DOJ itself but what practices must be curtailed considering any action and whether those practices are a significant contributor of growth (which appear to be the case).
Further the DOJ may be interested in the third-party marketing groups, not OSH. With crackdowns on social media, it would not be a surprise.
Cano – Cano may be the SPAC that break the Chamath spell. The company reported a nice quarter and more, important, was able to articulate a vision that adequately defends their decision to deploy an asset heavy model. They downplayed the Direct Contract Model, insisting they were payer agnostic.
CLOV – MLR was reduced slightly but the company is still losing money and keeps changing its story. They now intend to rely on claims alignment for new DC beneficiaries and not marketing for voluntary participants. They called the PDR a “timing” issue, which, given as many times as they have had to draw for capital requirements, does not seem likely.
SPAC and S-1 Corner
IPOs
Tenon Medical, Inc. “developed a proprietary, U.S. Food and Drug Administration (“FDA”) cleared surgical implant system, which is designed to optimize sacroiliac joint (“SI-Joint”) fixation / fusion surgery and corresponding outcomes.
SPACs. Access updated spreadsheet here. Nothing new but I will issue my regular reminder that the health care industry has a large and growing list of complex problems and SPACs may provide a ready source of capital to help address them,
Hedgeye Health Policy Publication/Event Calendar. Click here for searchable calendar.
Have a great weekend.
Emily Evans
Managing Director – Health Policy
