Chart of the Week
Reconciliation. Vote-a-Rama begins today in the Senate. For the uninitiated, Vote-A-Rama is like speed dating for legislators as hundreds of amendments are considered, few are approved. The main bill being amended is the Senate Democrats “manager’s amendment.”
The manager’s amendment includes everything the House approved: additional money for sequencing, testing, vaccine administration and development; subsidization of COBRA premiums for the unemployed; and mandates to cover COVID vaccines and testing.
Additionally, Senate Democrats added to the House version an amendment to for $8.5B in provider relief for rural hospitals.
Interesting amendments that could be added during Vote-A-Rama include:
- Tying a return to in-person schooling to federal aid dollars (AMN)
- Provider relief of about $35 billion (HCA, THC, CYH)
- Extension of sequester relief (AMED, LHCG, HUM, CLOV)
- Increasing COBRA premium subsidization from 85% to 100%
Bound to be a long couple of days on Capitol Hill and we will see what comes out the other end of the sausage maker.
Rules Action.
Direct Contracting. The new administration put the Medicare Advantage Geo Model on hold this week. This move is in part a reflection of the fact that the model was introduced late in the Trump administration, which means new appointees need some time to familiarize themselves with the program and make a number of decisions.
More concerning is that the delay may indicate a hesitancy to adopt models that encourage the proliferation of MA enrollment. Elizabeth Fowler, before she was appointed to run the Innovation Center at CMS, wrote [the Geo model] represents the most significant change to Medicare in decades; it incorporates many attributes that build on lessons learned from payment and delivery system reform. While there is much to commend in the approach and the potential for expanded benefits and reduced spending, important questions remain to be answered by new leadership in the Biden administration.
Given how COVID-19 revealed the fragility of the primary care FFS model, it seems reasonable to expect the original Direct Contracting Model that encouraged participation by non-traditional risk-bearing entities will survive the transfer of power. This model, in which JWS/Cano, OSH and purportedly, CLOV (we have yet to get clarity there) are involved, rolls out in April.
Other Stuff.
- The nomination of Xavier Becerra heads to the Senate floor. Becerra promises to be the HHS Secretary you would expect. The priorities in the near future include managing COVID waivers and the end of the Public Health Emergency; the ACA, including Medicaid enrollment and, at some point drug prices.
- In January, employment of women in the health care workforce took a hit on a seasonally and non-seasonally adjusted basis. These shortages, especially in low wage/low skill areas of health care, are going to be prolonged by enhanced unemployment and relief payments currently pending via the COVID relief/stimulus package.
- As has been well documented, the employment situation in health care is exacerbating a reduction in throughput at hospitals and physicians’ offices. Some of the gap has been filled via telemedicine but not all. The shortfall is inviting a debate on how much telemedicine is appropriate for different populations and specialties. Tom Tobin is taking on this debate in the context of AMWL. Most recent note here. (Also TDOC)
- Continuing the theme of “things not getting done,” the GAO issued a report on the building backlog at the FDA of foreign inspections. The Biden administration and various relief/stimulus bills have all placed a priority on onshoring or near shoring of the pharmaceutical supply chain. Proper international inspections have been a concern before COVID but may accelerate the policy direction. The GAO's report follows the Biden administration's push to enhance domestic production through the DPA and other mechanisms. Good report from CRS here.
- Public health messaging, an utter mess if ever there was one, took another hit this week as the CDC’s proposed guidelines post-vaccination behavior were put on ice, suggesting intra-administration disagreement. The strife is created by a traditional public health message that views normal activity as a proper sequela to immunization and a new approach that frets the non-immunized may wish to mix a little to freely with their fellow humans. Texas, Mississippi and as of this morning, Connecticut have all moved on, issuing orders to end capacity limitations and in some cases, mask mandates.
Replays
Last week, we went through all the issues Managed Cares faces post-COVID. "Managing Managed Care Post-COVID: It Won't Be Easy." CLICK HERE for event replays (includes video/audio replays and materials link)
Upcoming Events.
The ever witty observer of all things venture and health care, Matthew Holt and I will be reviewing SPAC-madness and what we expect in the next few months. Please join us at 2pm on March 10. Add to your Outlook calendar. Full invite here.
SPAC and S-1 Corner.
Filed S-1s This Week
10X Capital Investment Acquisition Corp. III (Canter - $350M) Consumer facing health care, among other things.
Atlas Crest Investment Corp. III (Cantor - $660M) Health care generally
Atlas Crest Investment Corp. IV (Cantor - $400M) Health care generally
Corner Growth Acquisition Corp. 2 (Cantor - $175M) Technology but with a health care pedigree (ONEM)
Corner Growth Acquisition Corp 3 (Cantor - $450M) Technology with a health care pedigree (ONEM)
Diversey, Holdings, LTD. (Citi - $100M) Sanitation, infection control and cleaning solutions. UK based.
Dragoneer Growth Opportunities Corp. III (Citi - $400M) Health care IT
Ikena Oncology (Jefferies) targeted oncology company focused on developing novel cancer therapies targeting key signaling pathways that drive the formation and spread of cancer
Research Alliance Corp II (Jefferies - $130M) Health care, especially biotech
Nurix Therapeutics, Inc. (JPM - $167M ) Biopharmaceutical company focused on the discovery, development and commercialization of small molecule therapies designed to modulate cellular protein levels as a novel treatment approach for cancer and other challenging diseases.
Rocket Global Acquisition Corp. (Landberg - $100M) General but with biotech pedigree.
TCG Growth Opportunities Fund (GS - $250M) Consumer-oriented health & wellness, among other things.
Alignment Healthcare, Inc. (GS - ALHC) Medicare Advantage plans
S-I Notice of Effectiveness
AppHarvest – High tech agriculture (APPH) Effective 3/4/21
Oscar Health – Individual and Small Group Market health plans (OSCR) Effective 3/2
Initial Business Combinations in Process
ARYA Sciences Acquisition Corp III – ARYA - Nautilus Biotechnology ($900)
Alpha Healthcare Acquisition Corp - AHAC – Humacyte
Big Rock Partners Acquisition Corp – BRPA NeuroRX
Our Take = NeuroRX is developing a drug regime for the treatment of bipolar disorder and Acute Suicidal Ideation/Behavior. Reported this week preliminary results from their Phase 2b/3 trial of ZYESAMI™ (aviptadil, previously RLF-100) performed in collaboration with Relief Therapeutics Holdings, AG (SIX:RLF; OTCQB:RLFTF) in patients with respiratory failure due to Critical COVID-19. The study showed that patients who were treated with the maximal standard of care plus ZYESAMI were discharged sooner from the hospital compared to those treated with placebo plus maximal standard of care (SOC)
Deerfield Healthcare Technology Acquisition – DFHT -CareMax/IMC Medical
Our Take = Caremax’s TAM is the Medicare Advantage market like $CLOV, $OSH and they appear to be establishing themselves as a risk bearing entity in partnership with health plans and providers. IMC Health is a primary care practice, that paired with CareMax’s risk-bearing solutions might make a good combination. We will reiterate, the MA market is getting highly penetrated, especially in urban areas and the competition for patients will be fierce. Both companies are based in Florida.
Falcon Capital Acquisition – FCAC Sharecare ($3.8B)
Our Take = We have been familiar with Sharecare for years and remain a little dubious. Sure, employers are getting more involved in managing their health care spend. Yes, digital therapeutics are a thing. Yet, we remain skeptical. Perhaps a deep dive into the proxy statement will help. Yesterday, Sharecare completed its umpteenth acquisition, doc.ai, an enterprise artificial intelligence platform.
Fortress Value Acquisition Corp. – FAII ATI Physical Therapy ($2.5B) Link to press release.
Our Take = The company operates 900 physical therapy clinics in 25 states focused on MSK treatment. Their client base includes employers, sports teams and individuals. Policy is pushing MSK procedures out of the hospital setting and away from captive sports medicine departments.
GigCapital2– GIX Uphealth/Cloudbreak Health
Our Take = Uphealth is a digital platform designed to manage chronic and complex care, medications and behavioral health. Cloudbreak provides a telehealth solution that includes quarantined inpatients. One of Cloudbreak’s most interesting features is its multilingual capabilities which should be accretive for providers in communities with non-English speaking patients. Not sure Uphealth offers enough to get behavior to change or encourage adoption.
GX Acquisition Corp – GXGXU Celularity ($1.7B)
Our Take = We love anything that pushes cell-level therapies and diagnostics forward. The company has several cell therapies in clinical and pre-clinical development that deploy allogeneic placenta derived cells.
Hudson Executive Investment Corp – HECCU Talkspace ($1.4B)
Our Take = Behavioral health via telemedicine will prove to be one of those COVID-19 trends that endures. It solves several problems for the incumbent system: availability of providers, cost and productivity. Behavioral/mental health services largely exist outside the health insurance system which eliminates a lot of regulatory risk
JAWS Acquisition Corp – JWS Cano Health
Our Take = Cano represents what we believe will be the most formidable Direct Contracting model in Medicare. Cano is participating in the implementation stage of the first two Direct Contracting Models. The primary care focus gives maximum insight into patient condition, needs and behaviors that can be influenced to avoid high cost care. One caveat since we still bear the scars of PhyCor: physicians drive patient flow and if you don’t keep them happy, they go elsewhere. New: Analyst Day presentation available here.
Leisure Acquisition Corp – LACQU Ensysce Biosciences ($207M)
Longview Acquisition Corp – BLFY Butterfly Network
Our Take = Butterfly makes portable ultrasound devices for the human and animal health markets. Portable means greater efficiency which is going to continue to be important as the health care delivery system works through the backlog of cases created by COVID. The Teleguidance system could prove to be valuable in areas with limited access to advanced technology. New: Corporate presentation available here.
VG Acquisition Corp. – $VGAC 23andMe
Our Take = 23andMe plans on a future in drug development using their extensive library of genetic data. It seems like a reasonable plan, but privacy concerns are likely to be a feature of this company’s regulatory environment for some time to come.
If you are investing in SPACs but not super familiar with health care, hit and we can help.
Tweet of the Week
Have a great weekend.
Emily Evans
Managing Director – Health Policy
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