Top of the Funnel | Macro Data + Earnings Call Commentary
UNH. They made a lot of money and increased guidance modestly. The call was the usual word salad of value-based care, synergies and integrated approach but a few highlights from the policy perspective:
First, Medicare growth was driven by dual eligible and other complex patients. This population can be enrolled year-round, which is a positive. Keep in mind, that duals are some of most difficult patients to care for in some part due to the shared accountability between Medicare and Medicaid. The shift of attention to this population supports what we have been saying for a year. The low-lying fruit of Medicare enrollment has been picked and now it is a knife fight for each additional member.
Second, the company says they see no signs of deferred care. They also say they say doctors’ visits accelerate through the quarter, something that might normally suggest delays in care, if only modestly. I have trouble squaring the circle of “no deferred care” with reports from hospitals about how busy they are.
Third, they expect modest attrition from Medicaid once PHE ends (my estimate is 3Q right now). Note they indicated that utilization from Medicaid patients has been low. During the PHE, Medicaid did not issue re-determinations, so members accrued, while states paid the PMPM to UNH and other MCOs. However, many of those enrolled have other insurance and Medicaid is just a secondary payer. The modest attrition, then, may have a disproportionate impact on margin. Probably won’t know until fall.
Lastly, they skated deftly by a question from Nephron Research on approach to local markets. Local density has long been a question for me. Generally, in health care you are not successful without it. UNH is huge but their national approach often means they are a mile-wide and an inch deep. Not that it matters but I found it interesting how they did not answer that question.
PPI. I published an updated inflation chartbook last week with some observations here.
The White House.
SNF PPS. CMS released the payment update for skilled nursing facilities which amounts to a $320m payment reduction. The agency blunted the impact of budget neutral and forecast error adjustments, but a reduction is nonetheless proposed.
Not what the sector, or PE and REIT owners want to hear, but institutional nursing care might be terminal. UNH dedicated a portion of their value-based discussion on reducing SNF days. Higher labor costs persist and the White House’s regulatory agenda on staffing poses a near existential threat.
PHE. As expected, SecHHS Xavier Becerra, extended the Public Health Emergency another 90-days – until mid-July. Medicaid officials seem to think it will not be the last extension as there is still a good bit of work to do on the logistics and mechanics of re-determinations.
As a reminder, Secretary Becerra has pledged to give states a 60-day heads up on ending the PHE, at which point they can begin to notify those no longer eligible for Medicaid. Between now and then, we should also see more PHE-era waivers revoked or adopted permanently as the law allows to prepare to a move to normal operations.
The area of focus as the PHE burns off is inpatient Psych/SUD like ACHC. These facilities have been large beneficiaries of lax Medicaid policies and there won't be much in the area of replacement coverage as enrollment returns to normal.
Other Stuff
PFE. Yesterday, the company submitted Phase 2/3 data on a third COVID-19 booster for children 5-11 with the stated intention of requesting an Emergency Use Authorization. This application should bring a few fireworks as there is substantial dissent in the scientific community over the cost-benefit analysis of third shot for the young.
Mask Mandates. The CDC extended the mask mandate for interstate commerce carriers. They had been pressured to lift it from the airline industry whose employees have been in the difficult position of enforcing a highly controversial public health intervention.
Airlines, also, have been wrestling with infectious disease for years and contend they know what to do. No matter, the CDC left the much-hated requirement in place for another two weeks.
Events
Upcoming
Macro Update: Employment, Inflation, Mortality & Insurance. Wednesday, April 20 @10am ET. (Add to Outlook Calendar)
Recent.
Shuffling Off the Mortal Coil: Death in the Age of Pandemic
End of the COVID-19 Gravy Train? Relief Funds, End of PFE + Timing
Calendar. You can find 2021 here with searchable ticker list. You can find 2022 here.
Have a great weekend.
Emily Evans
Managing Director – Health Policy
