|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
Flagging resolve as the US reaches a plateau
“Quarantine fatigue” set in across the country this week, with individuals increasingly flouting stay-at-home orders, governors announcing “reopening” plans despite no single state meeting federal criteria for “Phase 1” of the Opening America Up Again framework, and the Trump administration allowing its social distancing guidelines to expire. This is despite US deaths from the coronavirus continuing to average around 2,000 per day, a level that has stubbornly plateaued over the past few weeks. At the current pace, the total number of deaths in the US will hit a level in the next week that the widely-watched IHME model still predicts for early August—a worrisome sign, given growing momentum behind reopening efforts. Worldwide, the virus has now infected nearly 3.3M people, including 1.1M Americans, and has killed more than 230,000, with nearly 65,000 of those in the US. Some good news appeared on the horizon this week, however, with White House health advisor Dr. Anthony Fauci hailing early results from trials of Gilead Sciences’ antiviral drug remdesivir as a sign the drug could help lessen the effects of COVID-19 for the sickest victims of the disease. And hopes for an early vaccine were raised as pharmaceutical giant AstraZeneca agreed to produce as many as 100M doses of an experimental vaccine under development at Oxford University.
Meanwhile, the economic toll of locking down the economy continued to grow, with more than 3.8M new jobless claims this week, meaning that more than 30M Americans lost their jobs in the last six weeks. The federal Bureau of Economic Analysis released preliminary data on gross domestic product (GDP) for the first quarter, showing a 4.8 percent decline in the size of the economy, compared to a 2.1 percent increase in the fourth quarter of last year. Startlingly, nearly half of the first quarter decline was attributable to healthcare, as consumer spending on care dropped 18 percent, and hospitals and other providers shut down non-emergent care delivery. More than 42,000 healthcare jobs were cut in March, the first monthly drop in healthcare employment in more than six years. While the slow resumption of services may temper those numbers in the second quarter, the precipitous drop belies the notion that the coronavirus pandemic would result in more business for healthcare providers. Rather, it is insurers who stand to gain most from declining care delivery, with many beating earnings expectations for the first quarter. Healthcare has been a reliable growth engine for the US economy for years, and the disastrous impact of this health crisis on GDP shows just how fragile that reliance has become. Brace for the second quarter to tell an even more stark story about the fortunes of US healthcare delivery.
More COVID-related regulatory changes from Medicare
On Thursday, the Centers for Medicare & Medicaid Services (CMS) released a second set of sweeping regulatory changes aimed at improving access to telemedicine and COVID-19 testing, and shielding accountable care organizations (ACOs) from losses due to COVID-related care. A few key details: Medicare has expanded the types of providers who can bill for telemedicine visits to include speech, occupational and physical therapists, and agreed to reimburse telephone visits at parity with in-person encounters—key to increasing access for patients without internet access. Medicare will now pay providers to collect samples for coronavirus tests in the absence of other services, and cover FDA-approved, at-home testing. Hospitals will be allowed to bill for an expanded set of services delivered in “expansion” settings, including makeshift hospitals in hotels and public venues, as well as in patients’ homes.
The agency also made significant changes to the Medicare Shared Savings Program (MSSP), aimed at encouraging participants to stay in the program. The new rules use the program’s “extreme and uncontrollable circumstances policy” to mitigate losses for the duration of the public health emergency, and to remove COVID-related care from cost calculations. ACOs will also be allowed to remain at the same level of risk for 2021. More controversial was the decision to halt enrollment of new ACOs for 2021 (existing ACOs can still add new practices). While CMS cited a goal of allowing providers to focus on COVID-related care, critics countered that the decision slows doctors’ ability to organize around the coordinated, expanded care needed for the crisis. All in all, the new rule ushers in a welcome set of changes that provides payment and flexibility to enhance providers’ response to COVID-19, adding to a list of regulatory changes that could be truly transformative if allowed to continue once the pandemic wanes.
Optum to acquire behavioral telehealth provider AbleTo
Insurance giant UnitedHealth Group’s Optum division is expected to buy New York-based mental telehealth startup AbleTo for $470M, building on its previous investment in the company through its Optum Ventures arm. AbleTo has a network of more than 750 therapists and coaches that provide virtual mental health services to patients via phone or text chat. The company’s main service offering—an eight-week virtual therapy program—is covered by some insurers, and it also offers many free tools for the public on its website for coping with coronavirus. Demand for AbleTo’s services has increased by 25 percent since the pandemic began, with millions of Americans isolated under stay-at-home orders and unable to access in-person therapy. And the country’s behavioral health capacity needs, already in severe shortage, are predicted to intensify as the pandemic persists, increasing the need for mental health prevention and early intervention. United has previously been criticized for inadequate mental healthcare coverage, and AbleTo would allow it to address increasing demand for behavioral health access through its Optum platform. This acquisition continues Optum’s strategy of amassing care delivery assets and gives the company a stronger foothold at the intersection of the behavioral health and telehealth markets.