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How Will Election Results Affect the Healthcare Agenda?

On Saturday, November 7, four days following Election Day, the presidential race was called with Joe Biden becoming the 46th president of the U.S. The ‘blue wave’ of Democrats taking more seats in Congress did not happen, which will likely limit President-Elect Joe Biden from taking bold action on his key healthcare policies.

Below are a few thoughts on how the Biden presidency may affect healthcare policy for at least the next election cycle.

General Overview

With Georgia’s senate runoff on January 5, President Biden will most likely be contending with a divided Congress or a laser-thin majority for Senate Democrats. Biden would likely need to rely on the regulatory system to drive a bulk of his aggressive healthcare agenda. The Supreme Court could play a large role in Biden’s ability to put his agenda into practice. In addition to the Supreme Court’s new 6-3 conservative majority, there are far more conservative appeals court judges now than during Obama’s administration.

The COVID-19 pandemic and the eventual ruling by the Supreme Court on the Affordable Care Act will be on top of the immediate healthcare agenda. The federal government may take a more active role in responding to the pandemic and rely less on states to manage it.

COVID-19

Though lawmakers failed to pass another major stimulus package after months of negotiations before the election, talks are likely to resume. Biden will attempt to de-politicize the Centers for Disease Control, which was the world’s leading public health institution. Additionally, Biden could work to reconstruct international cooperation on fighting pandemics, something that has been missing since COVID-19 began. Providing consistent and evidence-based guidance to states and the public on how to mitigate the COVID-19 epidemic will also be extremely important.

Affordable Care Act (ACA)

The Supreme Court (SCOTUS) heard oral arguments yesterday, November 10, on California v. Texas. The decision may not come until next June, but the case will determine the fate of the Affordable Care Act. There are so many legal tentacles to this case that it will be difficult to predict the final outcome. Yet, despite SCOTUS’ conservative leanings, many are led to believe it will be unlikely the country’s highest court will strike down the ACA in its entirety. There are at least two key issues relating to any SCOTUS decision:

  1. MANDATE: Republican attorneys general challenging the law argue that, by zeroing out the individual mandate’s tax penalty, Congress has invalidated the law.
  2. SEVERABILITY: The key question is whether the mandate can be severed from the law if the mandate is no longer valid. If the justices rule it is not severable, the whole ACA would be invalidated.

Public Option

Given the likelihood congress will remain divided, primarily with the Senate leaning Republican, there’s no chance of passing Biden’s platform proposals for expanding health insurance coverage. Senate Republicans have zero interest in a public option for insurance exchanges or lowering the age for Medicare eligibility to age 60.

Depending on the outcome of the SCOTUS’ decision on the ACA, Biden may attempt to enroll more people in health coverage under the ACA marketplaces, by possibly creating a special enrollment period for uninsured people to sign up for coverage as well as increase spending on marketplace advertising and outreach. Allowing family members of people with low incomes to get marketplace subsidies is on Biden’s wish-list.

Market Concentration

The Democratic platform calls for a retroactive review of some mergers and acquisitions approved by the Trump Administration. Without needing congressional approval, the Biden administration can influence past M&A activity. Candidate Biden has pledged to aggressively use antitrust authority to tackle market consolidation in healthcare and scrutinize future acquisitions based on impacts to prices and competition, in addition to labor markets, low-income communities and racial equity. States, however, still have significant discretion over which deals are approved. This will be one area to watch under the Biden Administration.

Drug Prices

Both parties seem to be in agreement that skyrocketing drug costs of specialty drugs and new drugs coming on the market threaten to bankrupt the system. Yet pharmaceutical companies and their powerful lobbying efforts have a proven track record in preventing bold measures to address high drug prices. With a divided Congress, the work of lobbyists will probably be less demanding.

Price Transparency Rules

Regarding Trump’s transparency agenda, it is uncertain whether Biden would concur with the hospital and insurer executive orders. One possibility would be to let the lawsuits by the hospital groups and potential insurer lawsuits play out in the courts. Perhaps the deadlines for hospitals and insurers to adhere to transparency requirements could be extended into the future.

Summary

Having a divided government will greatly temper any aggressive healthcare initiatives a Biden Administration will have in the next two-to-four years. SCOTUS’ eventual decision on the ACA will greatly determine health policy direction in the years ahead.

Finally, for all veterans of all branches: Thank you for your sacrifice, your bravery, and the example you set for our country.

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Finalized Price Transparency Rules for Insurers

Happy post-election day! Time to take a breather, right?

We are living in uncertain and contentious times. Actually, this is a bit of an understatement.

With Tuesday’s election, in addition to another erupting episode of the COVID-19 pandemic and see-saw economic news, one pertinent healthcare story was relegated to the third page of last week’s Wall Street Journal.

The story? “Health Insurers Face Price Transparency Rule.”

As directed by President Trump’s executive order in June 2019, the Department of Health and Human Services (HHS), Department of Labor, and the Department of Treasury issued on October 29, 2020, the final rule for American consumers to have healthcare price transparency when shopping for hundreds of ‘shoppable services’ beginning on or after January 1, 2023. Insurance companies and self-funded employer health plans will be required to post in-network and out-of-network rates negotiated with providers, in addition to developing online price transparency tools to help assist patients with cost-sharing information.

Under the final rule, by January 1, 2023, insurers and employer payers will need to make available a list of 500 shoppable services through an online tool. And one year later, all other items and services must be added to those self-serve tools. Negotiated rates will also need to be machine-readable files showing rates for in-network providers and historical payments and charges to out-of-network providers.

This rule affects most non-grandfathered group health plans or health insurance issuers offering non-grandfathered health insurance coverage in the individual and group markets. A non-grandfathered health plan is one that was put in place after March 23, 2010, the date the Affordable Care Act (ACA) became law. A good primer on grandfathered vs. non-grandfathered health plans, can be found here.

The recent rule affects insurance companies, while this same executive order generated a final rule in November 2019 that requires hospitals to disclose the rates they negotiate with insurers and post the payer-specific negotiated rates online in a searchable and consumer-friendly manner for 300 of the most popular services. Hospitals are required to comply this coming January 1. The final rules on hospitals appeared to have survived challenges and lawsuits by hospitals.

Executive Orders

Developing healthcare policy via executive orders is akin to building a house on sand, it can prove to be short-lived. Once issued, executive orders remain in force until they are canceled, revoked, adjudicated unlawful or simply set to expire. It is typical, for example, that a new president reviews in-force executive orders while in the first few weeks in office. In the short term, executive orders may possibly be effective, however, when one-fifth of the economy evolves around healthcare, more substantive approaches are necessary to ensure long-term certainties.

Will Transparent Pricing Work in Healthcare?

Persuasive arguments have been made by hospitals, insurers and some economists that transparent medical prices will not change the fundamental problems baked into the existing healthcare system. After all, they argue that Americans seldom search for the cost of any given medical procedure, but rather, are most concerned that their desired doctor and hospital are in the health plan’s network of providers. They have even argued that price transparency “would confuse patients.” Advocates for price transparency claim otherwise.

Without question, seeking real medical prices is similar to searching for a needle in a haystack, and most people are disheartened with the process and eventually give up because the ‘system’ was not designed for ‘true’ payers to price and quality shop.

I will stand by what I wrote in a December 2019 blog on this topic:

“By itself, real prices made public will not solve the inherent problems that persist throughout the healthcare system, but price transparency is a good first-step to have. Clearly, it is not the sole remedy to a ‘system’ that requires massive incremental fixes. The push for healthcare ‘consumerism’ has been admittedly slow. However, it is likely that consumerism will find new legs due to third-party entrepreneurs and technology companies who will find disruptive ways to make pricing a relevant decision-making tool for many patients. All purchasers want the best value in the healthcare being purchased.”

The healthcare ‘system’ we have to date is doing what it was designed to do, but it’s time to reboot a system that desperately needs a new blueprint that accentuates intended consequences and minimizes costly (and sometimes deadly) adverse consequences.

For the record…

President Trump’s executive order for hospital price transparency does not at all suggest that he has an overall healthcare policy that would replace the Affordable Care Act. The fact is, he doesn’t appear to have a specific vision that addresses the holy trinity of healthcare: 1) coverage, 2) quality care, and 3) affordability. Platitude statements that his eventual healthcare plan will be “beautiful” does not cut it, and frankly is both disingenuous and empty. We need more, much more.

For price transparency to be meaningful in the future, providers will need to charge prices that will cover their costs. Additionally, providers will need to have a comprehensive understanding of how variable and fixed costs are allocated to the care they deliver, allowing them to make informed decisions on how to price their services to the more cost-conscious consumer.

With this ray of hope, try to enjoy your post-election life. And remember, stay safe!

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The Plight of Rural Hospitals (Part 2)

As shared in last week’s post, hospitals, specifically critical access hospitals (CAHs), are having a difficult time surviving under the strain of various financial challenges. This week discusses how highly-stressed hospitals can possibly be identified to warrent additional attention.

Similar to our vehicle’s check engine light, we hope to be alerted with any major problem BEFORE something catastrophic happens. Sometimes, however, depending on the make, model and year of the vehicle, once the red or yellow light is flashing, the damage may have been done, leaving us shocked, frustrated and perhaps stranded in the middle of nowhere.

Similarly, we don’t want this to happen to our CAHs. If a financial stress light is not activated early enough, indicating that a particular rural hospital is in deep financial trouble, local officials and state policymakers are forced to react to something that could’ve been addressed earlier had the problem been closely monitored. It’s about being proactive and having the right tools to assess and manage over a period of time.

National Academy for State Health Policy

In early August, I received an email from the National Academy for State Health Policy (NASHP) that caught my attention. NASHP is a “nonpartisan forum of policymakers throughout state governments” whose mission is to convene state leaders on health policy issues to help “lead and implement innovative solutions to health policy challenges.”

The email’s headline was simple and direct: “Transparency Model Law Requires Hospitals to Report their Financial Health.” In order to address rising healthcare costs and/or assure financial stability for hospitals so they continue to provide access to care, NASHP’s approach is for state policymakers and the public to have “detailed hospital financial information to understand a hospital’s assets as well as its expenses and liabilities.” Hospitals encompass one-third of each dollar spent on healthcare.

After reviewing many policies and practices from other states, NASHP developed hospital transparency model legislation that would give states the authority to collect data needed from hospitals – including what data to be collected and which hospital documents to be used to obtain this information. It is also important to determine which state agency or office would be responsible for analyzing this data on an ongoing basis.

The model legislation also includes a reporting template for hospitals. (Click on the ‘Hospital Financial Transparency Report Template’ link to download an Excel spreadsheet template.) By having this template, the state agency would receive standardized financial information from all hospital and medical organizations that would be required to annually submit this information. Additionally, NASHP provides a Q&A on how states can use this Model Law and Template to increase hospital and health care system financial transparency. Finally, NASHP shares A Community Leader’s Guide to Hospital Finance, which provides an overview of key questions policymakers can ask to better understand hospital finances.

Current Iowa Hospital Financial Reporting vs. NASHP Model

The NASHP Model legislation and reporting template naturally created more questions about ‘if’ and ‘how’ Iowa hospitals currently report audited financial statements to the Iowa Department of Public Health (IDPH). As mentioned in my Part 1 post, Iowa Code Section 135.75 generally outlines basic annual reports that hospitals and health care facilities must file to the IDPH. From this requirement, other Codes also apply, including:

Are the data elements found in the Iowa reporting requirements adequate to address rising healthcare costs and/or hospital solvency metrics? NASHP provided me with a very brief side-by-side comparison of the Iowa Hospital Financial Reporting versus the NASHP Model. It is worthwhile to mention that the NASHP model is intended to give broad authority to a designated state agency that would implement a uniform reporting system via regulations. The specific data elements of the NASHP Model are outlined in the template rather than in the legislation. Iowa’s current law appears to prescribe a few specific reporting elements that the IDPH must incorporate in a uniform reporting system. However, there is no Iowa ‘template’ and IDPH has indicated that not every hospital participates, nor is the information collated when received by IDPH. Finally, IDPH is not adequately staffed to do much with the information collected from hospitals.

According to NASHP, a few key takeaways from the brief comparison include:

  • The NASHP Model is more comprehensive and breaks down each data element – such as all types of assets, liabilities, gross and net patient revenue by payer while Iowa’s law broadly indicates that hospitals must report assets, liabilities, income, and expenses.
  • NASHP recommends reporting on a system-level basis while Iowa invites hospitals and facilities to report per facility. NASHP’s systems approach is based on the fact that, because of increased consolidation, most hospitals and health systems are now part of larger systems, and data must be collected from each parent system.
  • NASHPs Model template automatically analyzes hospital-reported data and requires the state agency to produce annual reports while Iowa no longer has an annual reporting requirement.

In other words, the NASHP Model requests data that is immediately actionable and helps policymakers understand key metrics of a hospital system’s financial status. This is very important, because state agencies – the IDPH included – may not have the necessary resources (personnel and financial) to analyze and summarize this data appropriately. What one does with the collected data is often just as important as the type of data being collected.

The Iowa Hospital Association and American Hospital Association Annual Survey 

After the Part 1 post was published last week, Perry Meyer, executive vice president of the Iowa Hospital Association (IHA), brought to my attention that the IHA, in conjunction with the American Hospital Association (AHA), “works with ALL Iowa hospitals each year to collect the AHA Annual Survey of Hospitals.” Perry further mentioned, “This is a comprehensive survey that includes Iowa hospitals reporting their audited financial information. Each year when completed, IHA provides this data on all Iowa hospitals to the IPDH in lieu of IDPH conducting a separate licensure survey. This agreement between IHA and IDPH has been in place for 30+ years. The comprehensive survey data is public and IDPH should have the information.”

This information from Perry is greatly appreciated. The IHA has a good pulse on what is happening to its hospital members, and with this knowledge, serves as a lobbyist for their members in Iowa legislative sessions. IDPH acknowledged receipt of the AHA/IHA survey results. And the data, according to my IDPH contact, is used to “check the number of licensed beds of each hospital.” The limited use of this data is a bit underwhelming, if not concerning, as the AHA annual survey also includes audited financial information that can be reviewed and analyzed. The IHA – presumably with the blessing of the state – appears to assume the check engine role for financially-stressed hospitals within our communities.

Going Forward…

The upcoming election will begin to determine the ‘new normal’ during the next two-to-four years. If former V.P. Joe Biden is elected president and the Democrats take hold of the Senate in addition to maintaining House majority, healthcare policy will be – along with Covid-19 and the economy – the top issue for years to come. Under this scenario, the Biden public health option will most likely be front and center, and the battles will become contentious by political party, payer and healthcare provider. As a result, one large battle will likely be centered around reimbursements for providers, specifically hospitals.  Bundled payments and alternative payment methods will presumably be analyzed to ensure that quality of care is being incentivized appropriately. But a key issue for hospitals and other providers will be just how much the public option will reimburse hospitals and how does it compare to current Medicare reimbursements that are largely considered to be at or below hospital cost.

In the final analysis, having a due diligence process in place, similar to the NASHP Model, will be necessary when assessing the survival of our critical access hospitals.

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