Top of the Funnel | Macro Data + Policy Position Monitor + Earnings Call Commentary
ANTM. The company now has a name change to accompany its shift from an insurance company to a "whole health company,” Elevance.
The company reported that they expect 35% of the pandemic-era incremental Medicaid enrollment to remain. About 45% will return to group commercial insurance and 20% will migrate to the ACA exchanges.
Given the employment and labor situation, the 45% they expect to enroll in commercial group is probably already there as illustrated by the favorable mix at reporting hospital companies. Medicaid is the payer of last resort, so states are still paying the PMPM even if their MCO is not paying the health care bills. A headwind to watch.
ISRG. We called this out last quarter. ISRG has gone from “we are watching supply chains” to things are “uncertain” to “risks to manufacturing operations and the ability to supply remain high.” They are clearly moving as fast as they can to rebuild supply chains, but it is going to take time.
They also cited softening demand from hospitals due to increased financial pressures. Not sure I buy that entirely. Significant reduction in trade-ins and pull forward of sales might be a bigger issue.
THC. One of THC’s most interesting disclosures was their reduced ER visits attributable to markets with significant pandemic non-pharmaceutical interventions like Michigan and California. That being the case, it means that the excess mortality we have seen could be the result of delayed care for things like mini strokes that are frequently followed by more catastrophic events. More evidence of a generational policy failure.
Updated and redesigned Policy Position Monitor can be found here.
CONGRESS
Medicare Advantage Regulatory Risk Rising. House and Senate Dems sent a letter to SecHHS Xavier Becerra requesting a rate cut for MA plans. The letter comes in response to MedPAC’s March 2022 report that suggests MA plans are being overpaid. The members would like Becerra to roll back the PY 2023 payment increase.
Letter writing is not legislating but it does point to a return of Democrats’ long standing skepticism about the program which had been on hiatus during the Obama-Trump years. As deficit politics returns to the capitol in 2023, MA could once again emerge as a useful budgetary offset.
Long COVID. Senators Ed Markey and Sheldon Whitehouse asked NIH what is taking so long to produce research on “Long COVID.” Congress has appropriated almost $2B to the effort and would like to see results. We have heard that, not withstanding press reports and retrospective health record-based studies, that there has been difficulty locating trial subjects.
We know that Lyme Disease, from which Sen. Markey suffered, can produce similar durable symptoms. As the threat of Long Covid has driven public health and personal responses during the Pandemic the Senators are trying to push things along.
The White House.
Inpatient Hospital Rule. The headline number for the payment update was a nice 3.4%. However, CMS made additional adjustments to DSH and outlier policies that reduce the overall impact. THC estimates the payment update at about 2.3%. HCA says below 2% to flat. The American Hospital Association and the Federation of American Hospitals are both arguing the net impact will be negative.
We have been warning that Medicare payment updates will not be sufficient to cover costs because the input prices are modeled on a lag and smoothed over four quarters. However, no one can poor mouth like a hospital. Hospitals also have a considerable number of levers to pull to keep payments above costs. Treat their hand wringing with a good bit of skepticism for now.
FDA Warning on NIPT. This week, following news reports on the accuracy of Non-invasive Prenatal Tests, the FDA issued a safety warning on their use. The FDA reminded consumers that the tests are LDTs and should be used in conjunction with genetic counseling and medical advice.
Nursing Home Ownership. HCA continues to examine ownership type in certain segments of health care. The Assistant Secretary for Planning and Evaluation released a report on change of ownership. The report concludes changes in ownership are fairly common. Less profitable and medium to large hospitals are most commonly sold.
Well, duh.
Other Stuff
Nordic Cohort Study. The long-awaited study of twenty-three million residents of the Nordic countries was published this week. The study concluded that both the first and second doses of mRNA vaccines were associated with higher risk of myocarditis and pericarditis. The risk is highest among young men ages 16-24 after the second dose. The authors suggest this risk be balanced against the risk of severe Covid-19 disease. Not something the U.S. has been good at these days.
Center for Forecast and Outbreak Analytics. An undeniable, non-partisan, multi-year failure of the Centers for Disease Control has been their inability to collect, report and analyze data in a timely manner. This new center within the CDC is designed to fix that.
Headed by Mark Lipsitch from Harvard, who has long been critical of risky virus research, the future of the center will be defined by its independence from the usual pandemic-industrial complex. If it fails to be independent, governors are likely to ignore their work or establish their own mechanisms for forecasting and responding, as New York City did several decades ago. If the center remains independent, it could be a valuable resource.
Events
Recent.
Macro Update | Employment, Inflation, Mortality & Insurance.
Calendar. The Hedgeye Health Policy is back. You can find 2021 here with searchable ticker list. You can find 2022 here.
Have a great weekend.
Emily Evans
Managing Director – Health Policy
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