Chart of the Week
Congress
Drug Prices. To the disappointment of some, President Joe Biden left drug price reform out of his infrastructure plan known as the American Families Plan. In hopes it can be worked into the negotiations, the House has brought forward H.R. 3, the Elijah Cummings Lower Drug Prices Now Act and Senator Ron Wyden of Oregon as pledged to write his version immediately. Both bills are likely to include some provisions that permit negotiation by Medicare or inflation caps on price increases – neither of which is likely to get past the Senate, especially if the White House isn’t putting their thumb on the scale.
Both bills are also likely to include a redesign of the Medicare Part D benefit for which there is broad agreement. Other areas of broad agreement are transparency and requirements for Pharmacy Benefit Managers. The drug industry supports both concepts which makes their inclusion a political win – lower out-of-pocket expenses without antagonizing the drug industry. (CVS, CI, UNH)
Hearings. There were two very informative hearings on the House side this week. The first, Charting the Path Forward for Telehealth helped identify areas of broad agreement as Congress considers extensions of the certain Medicare flexibilities beyond the Public Health Emergency. Here are my takeaways:
- Uniform agreement on use in mental health services to prevent crisis, higher costs. (HECC, UHS, ACHC)
- Members and witnesses were not fans of on-demand model; needs to be a therapeutic relationship or increases costs with duplicate visits (TDOC)
- Support to make permanent COVID flexibilities and extend payment parity by end of the year.
- Mixed feelings about audio-only but should be in MA risk assessment (SGFY)
- When paired with monitoring devices, ideal solution for chronic conditions.
- Probably will flourish under capitated models rather than FFS (JWS, DFHT)
- Need broadband access but more for providers than patients who can get there via smartphone (TLMD)
- Expect a bill to be filed that follows many of the contours of this MedPAC report.
The second hearing was The Long Haul: Forging a Path Through the Lingering Effects of COVID-19. This hearing was important mostly for the way in which the Energy and Commerce Subcommittee on Health and the Chairman of the full committee are elevating the issue. As witnesses like the NIH Director testified, there is still so much unknown about the lingering effects of COVID-19. Congress appropriated $1.75B in the year-end spending bill to study the matter and researchers are moving quickly constructing a “mega-cohort” to study.
My early take, subject to amendment, is the committee is trying to determine if there needs to be some enhanced federal support for long haulers, similar to that provided for Black Lung disease.
The White House
President Biden’s Joint Session Address. President Biden’s address to a joint session of Congress was the platform for unveiling Part II of his COVID recovery plan. Following up on the American Jobs Plan, the American Families Plan is directed largely at social safety-net programs. Applicable to health care are:
- Permanent extension of ACA insurance premium subsides for those making 400%+ of the Federal Poverty Threshold. The subsidies were extended for two years as part of the American Rescue Plan Act. It seems unlikely Congress is going to fully endorse a $200B benefit in such an unlimited manner so a compromise may be possible. The proposal, however, does nothing to address the fundamental problem of the ACA insurance provisions: the young pay disproportionately more so the old pay less. If the proposed provision passes in any form it means more customers for exchange plans but less raison d’être for PEOs that provide access to health insurance for small businesses.
- Extension of refundable Child Tax Credit of $3,000 through 2025 and make permanent the Child and Dependent Care Tax Credit for childcare expenses up to $4k for one child and $8k for two or more. While moderates and conservatives may bemoan the cost, the policy goes at least some distance toward addressing the fertility crisis in which America finds itself. Debt, GDP drag and inflation are all bad things but a population crisis is much worse.
Missing from the American Families Plan is an expansion of Medicare eligibility to 60 years of age and additions to the benefit design to include dental, hearing and vision. Sen. Bernie Sanders and progressives on the House side had pushed for it but Biden is too experienced a politician to let his agenda get dragged down by something that will be universally opposed by health care providers, fiscal conservatives and even a few moderates. Sen. Mike Crapo (ID), the ranking member of the Senate Finance Committee has already expressed his view that changes to Medicare should go through the committee process and not reconciliation.
Regulatory Agenda
Medicare Rule-A-Rama.
Inpatient Hospital Prospective Payment System Update. The FY2022 payment update was released this week. Major highlights:
- Payment rates should increase by about 2.8% which represents the annual market basket update of 2.5% less a productivity adjustment of (0.20%) plus a legislatively mandated increase of 0.50%.
- CMS is proposing to repeal submission of negotiated rates with MA plans on cost reports due to increased burden. It was also eliminate on tool for assessing price differentials between prices paid by traditional Medicare and MA.
- Consistent with the year end appropriations bills, CMS is proposing to add 1,000 new slots for Graduate Medical Education phased in beginning in 2023. These slots will be designated to traditionally underserved populations and areas.
The HHS Office of the Actuary released new projections for market basket updates and we still think they are undervaluing labor costs, particularly in those areas of health care that are not as popular with the workforce as others. Case in point: Inpatient Psychiatric hospitals.
ACA Exchange Plan Rule PY 2022. The Biden Administration released the final 2022 exchange rule. The most important change is further relaxation of Special Enrollment Period rules. One would allow individuals to switch plans if they lose access to premium tax credits. Another would give people who were “reasonably unaware” of a qualifying event an additional 60 days to select a plan after they discovered that they qualified.
Recall that the exchange plans got into trouble in part due to loose enrollment standard. With more experience that may not happen but it certainly will do nothing to keep premiums down.
Other Stuff
More Point of Care Testing. The FDA is proposing to update its EUA guidance to encourage a point of care test that can detect COVID and also sequence to determine variants. Another step forward for genetic testing as a routine clinical tool.
Pandemic Preparedness. Senate HELP Committee Chairwoman Patty Murray and Ranking Member Richard Burr announced a new initiative to examine pandemic preparedness. Key areas of focus include:
- Strategies for strengthening and modernizing federal public health and medical preparedness and response systems and programs, including infrastructure, to better support states, localities, and Tribes.
- Ensuring sufficient public health and medical capacity to continue providing critical services to at-risk populations. This includes applying lessons learned from COVID-19 to address health disparities in future public health preparedness and response efforts.
- Strengthening readiness within the medical countermeasure enterprise to ensure that countermeasures can be rapidly identified and advanced through clinical development and manufacturing and appropriately deployed and distributed when a new public health threat is identified.
- Modernizing the development of medical countermeasures to address public health threats.
- Improving and securing the supply chain for the U.S.’s critical medical supplies needed to swiftly address public health threats.
Hearings Next Week.
House Committee on Oversight and Reform: The Urgent Need to Reform the Organ Transplantation System to Secure More Organs for Waiting, Ailing, and Dying Patients
House Committee on Energy and Commerce, Subcommittee on Health: Negotiating a Better Deal: Legislation to Lower the Cost of Prescription Drugs
House Committee on Education and Labor: Lower Drug Costs Now: Expanding Access to Affordable Health Care
SPAC and S-1 Corner
One SPAC found a dance for the prom. BLUW is hooking up with Clarus Therapeutics. Still another $27B in search of...A few SPAC filed restatements in light of SEC guidance, including RAAC.
You can access the updated SPAC spreadsheet here.
If you are investing in SPACs but not super familiar with health care, hit and we can help.
Recent Events
UHS – Navigating a Spread Business in an Inflationary Environment. Keith McCullough invited me on his monthly speed dating event to discuss the implication of wage inflation on the weakest member of the hospital company trio, UHS.
Upcoming Events
On Wednesday, venture capitalist Marcus Whitney and I are going to discuss why Behavioral Health represents the first major battleground of disruption post-COVID. Please join us on Wednesday, May 5th at 12:30PM ET. (Add to calendar). CLICK HERE for event details (includes video and materials link)
Tweet of the Week
(and why you better know your health care.)
Have a great weekend.
Emily Evans
Managing Director – Health Policy
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