Top of the Funnel | Macro + Company Reports
JOLTS. Hires improved, job openings declines slightly and there were even a few more quits and layoffs in November. The monthly BLS JOLTS report continues to bode well for health care. Job openings remain elevated, indicating demand remains robust.
Employment. Further pointing to robust demand, today’s health care employment print shows an acceleration in December to 3.63% YoY versus 3.44% YoY. Aggregate hours worked REALLY accelerated from 2.79% in October to 3.47% in November.
Of note, employment at dialysis centers increased slightly by 0.16% MoM to 129,200. That implies volumes at DVA will be about 7.3M in 4Q or about the same as 3Q. Labor costs are abating but, using the home health agency comp of $23, still high. The churn evident in dialysis center employment continues and suggests ongoing training expense will persist in 4Q.
Employment Chartbook here.
PFE. A political operation masquerading as a drug company, PFE told the press it was looking into options for development of early stage treatments for rate diseases and cancer. These include “externalizing” development through partnerships of forming a new company. The Inflation Reduction Act’s drug price provisions have certain exclusions for small and new companies and PFE appears to be responding to that.
PFE also claimed this week it was in talks to license a generic version of Paxlovid in China. We heard a similar story about their vaccine which has yet to materialize but perhaps this time will be different. China does represent a better market for Paxlovid as it is currently just indicated for the unvaccinated.
Most relevant is BofA's downgrade to neutral which is no surprise. The company has some reputational issues post-COVID that need to be acknowledged even if you agree with everything they have done and said since 2020.
UNH and ELV. CMS released new guidance in the wake of passage of the Omnibus for states on unwinding Medicaid enrollment. States can begin in February provided they have met certain readiness metrics.
We assume the companies will soften guidance at JPM especially in light of the hit their stocks have taken this week. States are going to push hard to complete redeterminations and disenrollment while there is increased FMAP available.
Expect disenrollment to hit 2Q and 3Q the hardest as the “no touch” redeterminations are accomplished. With an unemployment rate of 3.5% a lot – our estimate of 1/3 – of excess enrollment (20M people) already have insurance from another source and the MCOs are merely collecting the PMPM.
Note: the Medicaid system has NEVER tried to evaluate the eligibility of 90 million people in such a short time from (12-14mo) so be prepared for some surprises.
CONGRESS.
Medicare Advantage: The Bad News Gets Worse. Sen. Chuck Grassley, incoming ranking member of the Senate Budget Committee and senior member of the Finance and Judiciary Committees described Medicare Advantage plans as having a “bulls-eye on their back” in 2023. How comments were directed to improper payments especially as a result of upcoding.
We covered some of the major issues facing the MCOs in a December presentation. Replay here. You can add Grassley’s discontent to the list.
THE WHITE HOUSE.
Inter-professional Consultations in Medicaid. Since 2019, Medicare has reimbursed for consultations between specialists and primary care physicians – via telehealth or otherwise.
This week CMS announced that it would consider state Medicaid plan amendments that establish reimbursement policies for similar consultations. It is the sort of thing that would have been addressed a while ago but never late than never.
We have long believed the most effective deployment of telehealth is not going to be clinician to patient – although that is important – but clinician to clinician. Both Medicare and Medicaid create practice silos that are counter productive and this policy change is another step to breaking those barriers down.
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Emily Evans
Managing Director – Health Policy
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