Healthcare Policy Watchlist

It is typical for federal legislative activity in the U.S. Congress to slow down during election years. Health policy and rule-making attention shifts to state legislatures, the Veterans Administration (VA) and the U.S. Department of Health and Human Services (which oversees the Centers for Medicare and Medicaid Services (CMS) and the Food and Drug Administration. (FDA). Here are some “watchlist” items for health system leaders and partners.

The Congressional Watchlist for February

• Surprise medical billing: Bipartisan legislation featuring arbitration for claims for payment by providers is proceeding. Pushback from certain industry organizations, led by private equity backed physician groups, and hospital operators have effectively slowed legislative action.
• Drug prices: Little federal action is anticipated. Bipartisan action faces hurdles to cap drug prices in specified classes and link them to international comparisons. In addition, some states are advancing their own price control legislation.
• Medicare Access and CHIP Reauthorization Act: Congress is expected to re-authorize funding.

The CMS, HHS, FDA Watchlist for February

Interoperability rule: The final rule from CMS and the Office of the National Coordinator is expected this month. It faces pushback from major healthcare information technology (HIT) players, but appears certain to proceed.

Alternative payment changes: The Next Gen ACOs (accountable care organizations participating in the Medicare Shared Savings Program – MSSP) expire this year. CMS intends to change rules of participation in the MSSP and Bundled Payments for Care Improvement Programs to require providers to assume more financial risks.

Stark and Anti-Kickback Law changes: Comments about proposed changes to both laws were due December 31. Proposed changes would lessen restrictions to encourage greater participation in value-based payment models, including new safe harbors.

Site-Neutral Payments: HHS is intent on advancing its site-neutral payment policy, with strong opposition from the American Hospital Association, among others.

Pharmacists’ Scope of Practice: CMS’ Administrator Seema Verma intends to seek provider status for pharmacists that would, in effect, extend services provided in retail pharmacy settings.

Medicare Advantage: CMS will issue guidance that assures Medicare Advantage (MA) enrollee reimbursement by Medicare is not biased toward Medicare fee-for-service (FFS). A key issue will be the risk adjustment formula used to compare the health status of enrollees. Studies have shown MA plans attract healthier Medicare enrollees leaving FFS with sicker and more expensive enrollees and higher costs.² A much-watched possibility is that MA enrollees might be able to share in savings of MA plan sponsors.

Medicaid expansion: 14 states have not expanded their Medicaid programs through the Affordable Care Act provisions. In Idaho and Utah, Medicaid expansion passed legislatures and coverage began last month. In 11 states (Delaware, Indiana, Montana, Montana, New Hampshire, North Carolina, North Dakota, Utah, Vermont, Washington, and West Virginia), Medicaid funding and eligibility are certain to be issues.

Medicaid block grants to states: Currently, only one state, Tennessee, has applied to CMS for block grant through a Section 1115 Waiver. Public comments were due December 27 and a final rule is pending.

Medicaid work requirements: Medicaid work requirements face court battles. Three states have put their requirements on hold (Virginia, Arizona, and Indiana) and Section 1115 Waiver applications by Idaho, Montana, South Dakota, Oklahoma, Mississippi, Alabama, and Tennessee that include work requirements are pending the court ruling.

In The Courts

Texas. v. Azar: The Supreme Court has passed on reviewing the ruling in this case, but is expected to add it to next year’s docket. The issue: Does the elimination of the individual mandate in the Affordable Care Act render the entirety of the law null and void?

Special Issue: Senior Care Workforce

Senior care faces major challenges, particularly in its workforce:^{1, 3, 4}

• 20 million adults in the U.S. need assistance with daily tasks due to physical, cognitive, developmental, or behavioral conditions.
• The number of direct care workers has increased 52 percent since 2008 to 4.5 million in 2018. Nearly 90 percent were women, almost 60 percent were people of color, and about 1 in 4 were migrant workers.
• Hourly wages from 2008 to 2018 for personal care workers have remained flat: personal care workers +10.36% to $11.40/hr., home health aides +3.79% to $11.77/hr., residential aides +2.03% to $12.07/hr., and nursing home aides +3.08% to $13.88/hr. Fifteen percent of direct care workers have incomes below the federal poverty level, while 44 percent earn under 200 percent of the poverty level.
• There will be 8.2 million job openings in nursing homes, home care and residential care through 2028. Meanwhile, first-year turnover can exceed 80 percent.
• Unpaid caregiving by family members or friends is increasing and is especially burdensome to lower and middle-income households.

Key Considerations

Monitor state legislative activity closely. States are playing larger roles in determining scope of practice limits for providers, setting drug prices, expanding Medicaid, and specifying services for seniors and other special populations.

Incumbent stakeholders are vulnerable to new competitors. The confluence of political dysfunction in DC, pressure from payers to constrain health spending, and significant increase in private capital from lenders and investors means the landscape will change. New players who are well-capitalized will operate leveraging modern facilities, retail competencies, analytics, and scale to create new competitors to community-based providers.

The senior care market is at a tipping point. The senior care market is rife with opportunities for operators, private equity investors, and health system partners working at scale to meet the gaps that currently exist in demand for more affordable offerings, staffing shortages, and improved service offerings. Healthcare leaders should consider this in their strategies, particularly in light of the high consumption of healthcare services by this population.

These considerations should be part of your strategic planning. ERDMAN Analytics can help. For more information, contact us.