Top of the Funnel: Macro + Earnings
Employment. Employment in health care increased 3.86% YoY versus 3.87% in September. Hospitals increased to 3.12% YoY versus 2.99% YoY in September. However, employment in nursing facilities continued to decelerate from 4.96% YoY in September to 4.87% YoY. The Ambulatory services sector also so a little bit of slowing from 4.03% to 3.95% YoY
Filed under our theme on the biotech meltdown, employment in research and development is about to enter negative territory at 0.17% YoY, having peaked in 2Q 2022.
CONGRESS.
OTC Birth Control PRGO (-). A group of 48 Senators have sent a letter to the White House asking it mandate insurance coverage for OTC birth control.
For the life of me I do not know how one processes a claim for a product in front of the pharmacy counter. If they are able to figure that out, I doubt it is a positive for access since the whole point of OTC – as opposed to prescribed medication – is to liberate it from the whole drug channel bureaucracy.
I would never discount the ability of a creative government lawyer to come up with a response. Just not sure it would work.
WHITE HOUSE.
Artificial Intelligence. The White House issued an 88 page Executive Order on the use and regulation of Artificial Intelligence. The EO included requirements that Health and Human Services issue guidance on a host of issues over the next year or so.
Within 90 days, HHS in combination with the Department of Defense and Veterans Affairs will establish a Task Force to develop a strategi plan for policies and regulatory action on the deployment of Artificial Intelligence and Machine Learning Technologies used in health care including research and discovery, drug and device safety, health care delivery and financing and public health.
The most immediate target appears to be payers which use a variety of automated tools to approve or deny a claim. Providers are increasingly using similar approaches, creating a war between machines.
A second target is what the White House calls health equity. The regulatory plans that spring from this Executive Order would, it appears, attempt to extend explicitly federal discrimination prohibitions to provider and payment algorithms. How this is implemented could be messy as we have little solid research on the problem.
Interesting frug development is less emphasized. The Food and Drug Administration has already been running their own regulatory development so the White House might be content to let that process proceed.
The big problem here is that the problem the White House is trying to address seems vague to non-existent. That is never a good thing in policy-making.
Medicare Rule-a-Rama.
Home Health. The rule finalizes a payment update of 0.80% for 2024. The final number is a reflection of a 3.00% payment update, a 2.89% reduction tied to the new grouper model (which itself is half of what is proposed due to a phase-in) and a 0.40% increase tied to fixed-dollar loss ratio.
The final increase is better than the 2.2% cut proposed in the summer but given the inflationary environment, a nearly existential headwind for the industry, outside of a payer mothership.
Physicians Fee Schedule. The final rule includes a statutorily required Medicare pay cut of 3.4% for physicians. I fully expect Congress to mitigate that payment reduction as part of year-end extender by 1.25%.
Outpatient Departments. Payment rates to Hospital Outpatient Departments and Ambulatory Surgery Centers will increase by 3.1%, an improvement of 0.30% over the proposed rule.
The OPPS/ASC rule also finalizes a new payment category for Intensive Outpatient Services for behavioral health patients.
OTHER STUFF.
Infant Mortality. The CDC reported a shocking increase in infant mortality of 3% between 2021 and 2022, prompting calls for expanding post-partum coverage in Medicaid. Most states are going or have gone that direction, but it is not clear if that will address the problem.
The CDC reported significant increase in child mortality among Native Americans which are covered by the Indian Health Service. Another curiosity is an increase in male infants from 5.85 to 6.06 per 1000 live births. The mortality rate for female infants remained stable during the same period.
Have a great weekend.
Emily Evans
Managing Director – Health Policy
Twitter
LinkedIn
