|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
Nearing the peak of the coronavirus pandemic
By week’s end, 100,000 people had died worldwide from COVID-19, with more than 18,000 deaths in the US. More than 7,000 of those deaths were in hard-hit New York, with other “hot spots” like New Jersey, Michigan, Louisiana, and Illinois accounting for thousands more. Early data emerged this week indicating that African-Americans were disproportionately affected by the disease, and were dying at high rates. The US death rate continues to accelerate, although one hopeful indicator emerged this week as the “doubling rate” of new coronavirus cases began to slow in areas most impacted. That “flattening of the curve” pointed to the success of widespread stay-at-home orders and social distancing measures, leading President Trump and other White House officials to publicly discuss the possibility of “reopening” the American economy at the end of April. Public health experts, however, cautioned against loosening restrictions too quickly, for fear of an uptick in infection rates. In a White House briefing this afternoon, the President’s top health advisors underscored that it is “too soon” to pull back from aggressive social distancing measures.
Both the optimism and caution on “flattening the curve” come from different interpretations of models of virus transmission. This week, the model that the White House is relying on (from the University of Washington’s Institute for Health Metrics and Evaluation—IHME) was revised downward significantly, lowering estimates of potential deaths from the initial projection of 100K-240K to an expected 60K by the end of August. The model suggests that the US will hit peak healthcare resource use tomorrow—April 11th—and that the highest number of US deaths will occur today (a projected daily peak of 1,983). Importantly, the IHME model assumes that full social distancing measures stay in effect until the end of May. An April 9th internal White House document, leaked to the New York Times, describes a “best guess” of the implications of ending shelter-in-place orders after only 30 days—a month short of the IHME assumption—including 200,000 deaths if restrictions are lifted early.
Those projections will be balanced against the urgency of rescuing the American economy from the impact of widespread shutdown. This week, 6.6M more Americans filed for unemployment, bringing the national unemployment rate to an estimated 12 to 14 percent, according to economists—the worst rate since the Great Depression. JPMorgan analysts projected that US unemployment would eventually reach 20 percent, and that GDP could be down as much as 40 percent by the end of the second quarter. Restarting the American economy, on whatever timetable, will depend on two important capabilities: widespread testing to determine who has been infected with the virus, and “contract tracing” to understand how the virus might spread. As America approaches the end of the deadliest week of the coronavirus pandemic, expect much discussion in the weeks ahead of how to conduct testing and tracing. The critical issue: balancing civil liberties and individual rights with what could become a new healthcare “surveillance state”.
Providing $81B in emergency funding to COVID-hit hospitals
To help hospitals offset the steep losses caused by the cancellation of profitable surgery cases and the costs associated with COVID-19 care, the Centers for Medicare and Medicaid Services (CMS) announced this week that it has distributed $51B in advance payments, along with $30B in emergency grants. The former is part of the Accelerated and Advance Payment Program (AAPP), which allows hospitals to apply for early access to payment from Medicare, subject to later reconciliation and payback (along with 10.25 percent interest charges) based on care actually delivered. Of the 32,000 requests for advance payment received by CMS, it has approved 21,000, according to the agency. Meanwhile, as part of the CARES Act’s $100B “provider fund” relief package, CMS Administrator Seema Verma announced this week that her agency would deliver $30B of grants to hospitals immediately. These grants will be distributed based on historical Medicare billing, and funds will be directly deposited in hospitals’ bank accounts, without an application process and with “no strings attached”.
Basing the allocation on historical Medicare billing raised red flags among industry groups, including public and safety-net hospitals, and those who treat large populations of Medicare Advantage (MA) beneficiaries, who may be at a disadvantage. The Greater New York Hospital Association (GNYHA) said in a press release that the allocation approach “is woefully insufficient to address the financial challenges facing hospitals at this time, especially those located in ‘hot spot’ areas such as the New York City region.” While the allocation methodology needs refinement to address these issues, the quick cash infusion will come as welcome relief to hospitals who have seen their revenue decline by 50 to 75 percent in just the past month. More help may be on the way, in the form of a fourth-round of stimulus funding from Congress that may include another $100B for hard-hit providers. Stay tuned.
Biden expands his healthcare proposal after Sanders’ exit
On the heels of Sen. Bernie Sanders’ exit from the 2020 presidential race on Wednesday, presumptive Democratic nominee and former Vice President Joe Biden began to outline his vision for healthcare, proposing to lower the Medicare eligibility age from 65 to 60. Biden’s expanded coverage proposal aims to balance the need to appeal to Sanders’ base and a growing number of unemployed Americans with efforts to win over centrists and Republicans in the general election, for whom healthcare is sure to remain front and center. Details on the proposal—announced concurrently with one to expand student debt forgiveness programs for low- and middle-income families—are scarce, other than that it would be financed from general revenue, in order to protect the Medicare Trust Fund.
According to the most recent census numbers, around 20 million Americans are between age 60 and 64. Allowing them to opt into Medicare would lower the number of uninsured individuals in this demographic, as well as the healthcare cost burden of these individuals. A substantial portion of this age group joining Medicare would likely result in lower premiums for commercially insured individuals of all ages, as the 60-64 age cohort is among the most expensive to insure. But for many health systems and physician groups, this cohort of “rising seniors” accounts for much of the profitable volume. Should Biden’s proposal become reality, providers would stand to lose a significant portion of their commercial revenue as these patients switch to Medicare, which is unlikely to be offset by smaller gains in revenue from formerly uninsured patients who seek care. But unemployment is likely to remain high for quite some time in the wake of the coronavirus pandemic, and older workers may have the most difficulty regaining employment in an unstable economy, making Biden’s Medicare expansion proposal particularly relevant in the current environment.