|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
President Biden lays out his sweeping legislative agenda
In his first address to a joint session of Congress, delivered on the eve of his 100th day in office, President Biden laid out his vision for two major legislative proposals to follow the $1.9T stimulus package he signed into law last month. The first, described as an “infrastructure” bill, focuses largely on investing in transportation-related improvements, building projects, and “green” upgrades to the nation’s energy grid, along with a $400B investment in home-based care for the elderly and people with disabilities—which amounts to over 17 percent of the package’s $2.3T price tag. The second, which he unveiled in Wednesday’s speech, is a $1.8T “families” bill, is largely aimed at expanding childcare subsidies, early childhood education, paid family and medical leave, and educational investments. Included in that package is $200B to extend the temporary subsidies—approved as part of last month’s stimulus law—for those seeking health insurance coverage on the individual marketplaces created by the Affordable Care Act (ACA). Notably absent from either proposal were two categories of healthcare reform that received much focus and airtime during last year’s election campaign: reducing the cost of prescription drugs and lowering the eligibility age for Medicare to 60 or below. Given the closely divided makeup of the new Congress, and the relatively moderate position staked out by the Biden administration on healthcare issues (with a bias toward bolstering the ACA rather than pursuing sweeping changes), we’re not surprised to see the Medicare expansion go unmentioned. But the bipartisan popularity of lowering prescription drug costs seems like a missed opportunity for Biden, who encouraged the Congress to return to it separately, later in the year. We’ll see. For now, with even some Democrats expressing concern about the $4.1T price tag of Biden’s proposals, we would be surprised if all $600B of the healthcare-related spending makes it to the final legislation. In particular, our guess is that some portion of the home-care spending will get traded away in favor of other components of the package. Expect negotiations to be intense.
Medicare’s proposed payment rule benefits hospitals
The Centers for Medicare & Medicaid Services (CMS) released its 2022 Inpatient Prospective Payment System (IPPS) proposed rule this week. Overall, the rule brings good news for hospitals: Medicare reimbursement rates are slated to increase by 2.8 percent, resulting in a $2.5B payment boost to the industry. In another win, hospitals will no longer be required to disclose their contract terms with Medicare Advantage (MA) insurers. Hospitals had previously been mandated by the 2021 rule to report median, payer-specific, negotiated charges for MA insurers on their Medicare cost reports. Medicare’s goal was to use this data to create a new, market-based, inpatient reimbursement methodology—an effort which has also been tabled, at least for now. Led by the American Hospital Association, hospitals have been embroiled in lengthy legal challenges over a variety of CMS price transparency requirements, maintaining they are neither beneficial for consumers, nor helpful in lowering healthcare costs. It’s too early to tell whether this step back from price transparency, which was a key goal of the Trump administration, signals anything about the Biden administration’s priorities; it’s possible CMS may just be slowing down the effort in the wake of the pandemic. Other highlights of the proposed rule include funding 1,000 more residency slots over the next five years, and extending payments for COVID-19 treatments to the end of 2022, as CMS expects COVID patients will need care beyond the duration of public health emergency. The agency also proposed several changes to its readmissions and other value-based purchasing programs, to ensure hospitals aren’t penalized by COVID-related impacts on quality measures. Comments on the proposed rule are due by June 28th.
Physician enablement company Privia Health goes public
Arlington, VA-based Privia Health, a company supporting physician practice operations and transformation, launched its initial public offering yesterday. Founded in 2007, Privia has a network of over 2,700 providers across six states. The company offers a scalable technology and care management platform to support the formation of physician-led value-based care networks, and has also helped its practices pivot to add telemedicine services during the pandemic. While its practices have largely been successful in value-based programs, like Medicare’s Shared Savings Program (achieving $57M in savings last year), more than 85 percent of Privia’s 2020 revenues came from fee-for-service claims, according to its S-1 filing. The company has also begun to partner with health systems, striking its first deal with Florida-based Health First in 2019, although it remains to be seen how much of its future growth it will derive from health systems looking to “outsource” the management of their physician networks, rather than from aggregating more independent physicians, which has been its niche thus far. Privia’s successful IPO is another indication that the physician practice space is a hot target for investors as the COVID pandemic subsides. Whether the long-term prospects for owning and running doctor practices are as rosy remains to be seen, but in the short-term, the opportunity to aggregate and roll up physicians clearly has investors interested.