Top of the Funnel: Macro + Earnings
Venture View. On Thursday, Marcus Whitney, co-founder of Jumpstart Health Investors and General Partner at Jumpstart Nova, a seed fund supporting black entrepreneurs in health care, spent some time with me discussing the current state of affairs for venture investing. It was not all bad news. Listen/watch here.
DVA. The company reported an improvement in financial performance but we remain skeptical of its long term prospects as a stand-lone function. Like the home health industry, the dialysis industry is almost entirely dependent on Medicare, a fickle business partner to say the least. As the eligible population shifts to Medicare Advantage, the opportunities to divert patients to alternative treatment pathways grows, placing the company's 2% annual initiation growth on shaky ground. That said, DVA is a long, according to Tom Tobin's microquad screen.
Earnings Recap. On Wednesday Nov. 15th @ 10am we will recap earnings with all our takeaways on major trends, especially in the MCOs. Add to your Outlook Calendar.
CONGRESS
Senate. CVS (-) At long last, Senate Finance has spit out its hodge-podge of policies related to physicians pay, mental health and drug prices. The Better Mental Health Care, Lower Drug Prices and extenders Act passed 26-0 which bodes well for its chances in the full Senate. Greasing the skids is a budget neutral conclusion from the CBO.
You can get the section-by-section here but let me offer a few highlights:
- Quite a few provisions take aim at enhancing the availability of the mental health workforce including bonus payments, expansion of Clinical Social Worker’s treatment authority.
- Medicare Advantage plans would be required to update provider directories every 90 days. Patients that rely on out-of-date in-network information will be held harmless for out-of-network costs in the event a provider directory was not properly updated.
- The long awaited PBM provisions calls for cost-sharing in Part D to be based on net prices inclusive of manufacturer rebates.
- Retail pharmacies would be required to participate in the National Average Drug Acquisition Cost survey to better inform Medicaid reimbursement. Additionally, non-retail pharmacies like mail-order and specialty pharmacies would also be required to submit information.
- The bill would extend certain annually renewable provisions like the pause in implementing PAMA, mitigation of physician fee schedule update and more.
House.
Meanwhile those crazy kids on the House side are playing more partisan games by amending the Health and Human Services budget for stuff like reducing SecHHS’s salary to #1. Like anyone does that job for the salary.
The main area of partisan wrangling has been abortion language which Democrats have sought to strike from the underlying bill. They will get through it I am sure as the House Rules Committee is scheduled to take up the appropriations on Nov. 13th.
GLP-1 Coverage. LLY (+) gets approval for a with loos indication on its diabetes drug and quickly pivoted to lobbying for Medicare coverage. It appears to be working. We remain dubious about the outcome as the CBO remains unconvinced these drugs save money in the long run.
However, Sen. Bill Cassidy suggested Medicare coverage as part of a step program in a speech at the Milken Institute this week.
WHITE HOUSE.
ACA Open Enrollment. CNC (+), UNH (+) CMS reported that 1.6M people signed up for ACA plans in the federal healthcare.gov. Of that amount about 300k were new customers. The increase is supported by an expansion of subsidies available to a wide range of income levels. Helping too is the outreach in some states to Medicaid disenrolled.
Vaccine Hesitancy. PFE (-), MRK (-), SNY (-) The CDC reported that in the 2022-23 school year, about 3% of kindergartens requested an exemption from vaccine requirements. This level is an increase from 2.6% in the 2021-22 school year. These are not big numbers but we are watching the trend especially in the highly elective vaccines like RSV for pregnant women to see if there has not been a more secular shift in attitudes.
OTHER STUFF.
Country Roads, Take Me Home. Sen. Joe Manchin announced his retirement from the United States Senate in 2024. Manchin had become one of the most powerful people in Washington as a moderating force on his party’s narrow majority.
Sen. Manchin’s farewell op-ed is worth a read because it describes a core problem in federal politics – and increasingly state and local. Litmus test issues like abortion and gun control are such profitable franchises, there is no interest in developing consensus solutions, even as the electorate has reached some conclusions.
Election Results. Health Care policy organizations like Protect Our Care are promoting the idea that health care is a winning issue for Democrats in 2024. There is widespread support for drug price policies and related issues. However, it is not clear how far beyond drugs that support extends.
We are not yet convinced Tuesday’s election results represent some bell weather. Incumbent Gov. Andy Beshear is the popular son for former Gov. Steve Beshear, a political brand well known and liked throughout the state.
The abortion issue remains powerful (see above) and Republicans must come to terms with the electorate’s ambivalence is the most
Have a great weekend.
Emily Evans
Managing Director – Health Policy
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