That was a helluva week. Despite the chaos, a lot of work got done. Some of it good.
Chart of the Week: More women returned to the health care workforce in November. The gain of 42,000 is a positive but the YoY pace continues to argue for lower throughput, increasing acuity and a need to make the American health care system more efficient. In the meantime, that employment trend must be keeping things hopping at $AMN.
Medicaid Financial Accountability Rule will be official withdrawn by the Trump administration. This rule would have completely revealed as myth the claim that hospitals are paid less for Medicaid patients. Supplemental payments generated by qualified expenditures or tax contributions mean Medicaid payments can exceed Medicare rates. The rule would have upended the health care financing structures in a number of states but most notably Texas, Michigan and possibly, California. Instead the administration says they will rely on the new disclosure requirements in the year end spending cum COVID relief cum parting gifts bill (H.R. 133). Only $THC discloses value of supplemental payments. $HCA does it in more general terms. The new reporting requirements become effective October 1, 2021.
Hospital price transparency went into effect this week. To their credit, most major hospital systems are complying. However, the information, arranged by CPT code, is not particularly useful unless you know what you are looking at. However, it is going to be fun to compare hospitals in the same markets. A hydrating IV at Vanderbilt University Medical Center will cost you $644. You will save $48 if you can walk about 1/2 a mile north to $HCA's Tristar Centennial Hospital. The data will no doubt improve. There are too many alternative providers out there willing to demonstrate their value. (see e.g. $SGRY) The American Hospital Association has capitulated in its effort to stop the transparency train. Yesterday, they asked HHS to exercise "enforcement discretion" until the pandemic ends and allow hospitals time to comply.
The Congressional Review Act is back in play with the Democrat's triumph in Georgia on Tuesday. The CRA allows the Senate to halt and reverse rules of an outgoing administration within 60 legislative days of their publication in the Federal Register. Most regulatory innovation, like changes to the Inpatient Only List, are encased in larger payment rules and are not likely to be affected. Rules on Medicaid value-based purchasing of drugs and prior authorization were published at the end of December and could be subject to review. Of course, as is still the case, the Biden Administration could halt implementation of rules not yet effective on Jan. 21. These include the Most Favored Nation Drug rule and the Rebate Rule, as well as a rule requiring hospitals to pass on 340B discounts.
Tennessee was approved as the first state to use a block grant for Medicaid. There are sure to be lawsuits but the waiver approval means more cost control and probably more innovation on the social determinants front. As the block grant was negotiated between state and federal officials, it is unlikely to be reversed entirely. Heck, it might just work. Tennessee has a long history of innovation in the Medicaid program.
$LH has signed a contract with the CDC to provide genomic sequencing that will assist in tracking emerging variants of the SARS-CoV-2 virus. The amount of the contract was not disclosed, although it should appear in our database in a week or so. $ILMN is also getting in on the surveillance act. The announcements are important as they signify the start of what is going to be necessary ongoing investments in diagnostics that are likely to endure for years.
$JPM, $AMZN and $BRK decided the close down their effort to disrupt health care, to the surprise of no one who knows anything about health care. Haven always had an ill-defined mission and everyone, except apparently Jamie Dimon and Warren Buffett, has trust issues with AMZN. While we all wait for the next stock to sell-off because AMZN is doing something, something in health care, $WMT is sneaking up behind with more capacity and extended services.
Upcoming Events. JPM21 launches on Monday and for the first time in 39 years you can avoid the privledge of $2000/night hotel rooms.Here is what I have as the current schedule as we know it. Our best idea longs and shorts are color coded accordingly. We don't see $DVA, $ANTM, $UNH and a few others, which may be a function of more focus on Life Sciences given the current circumstances. We also wonder if a virtual event has resulted in fewer pre-announcements given the guys in legal don't need to worry about loose lips at cocktail parties this year. We will be looking for commentary on what the diagnostic companies are saying about their new found federally funded capacity. Also important will be the MCO's, $THC's and $CYH's view of delayed care and increased acuity.
January 27, 2021 @ 12:30PM ET Chris Jacobs of Juniper Research Group will join me to discuss the prospects for health care legislation in the 117th Congress.
Replays. Your holiday box set of studio events covering all the macro drivers of change that are going to be discussed a lot next week:
December 9, 2020: Covid, Technology & Trump: A Radically Altered U.S. Medical Economy
December 16, 2020: It's Ain't Over; It's Just Beginning: Subsector Change Post-COVID
December 30, 2020: Tom Tobin joined me to discuss what the microquads are saying about a new U.S. Medical Economy. Getting Down to the Nitty-Gritty: Ticker Level Impacts Post-COVID
Health Care Tweet of the Week. Hedgeye DOR Daryl Jones did battle with COVID-19 and returns next week to HQ victorious
Have a great weekend and let us know if you have any questions.
Emily Evans
Managing Director – Health Policy
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