THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
- Feds poised to fight to preserve mask mandate for travel. The Department of Justice (DOJ) is appealing a Florida judge’s Monday decision to strike down the mask requirement for public transportation. Federal judge Kathryn Mizelle ruled the Centers for Disease Control and Prevention (CDC) exceeded its authority under the Public Health Service Act of 1944. Meanwhile, giddy passengers and flight crew have been discarding their face coverings as airlines, the Transportation Safety Administration, several local transit authorities, Uber and Lyft, all removed their mask requirements.
The Gist: Despite DOJ’s appeal, which appears to be aimed at preserving its own authority to act during health crises, rather than reinstating the current mask requirement (which was set to expire in two weeks anyway), the tone of the Biden administration is clearly shifting. Earlier this week President Biden told reporters that the decision to wear a mask is “up to them,” meaning individual Americans. In the bumpy transition out of the emergency phase of the pandemic, we now have a patchwork of rules for masking. This is even true within healthcare facilities: some, including Houston Methodist and Iowa-based UnityPoint Health, are no longer requiring masks for visitors or employees who are not involved in patient care. With COVID cases now rising in 41 states as mask mandates fall, the next month will prove critical in determining whether “endemic” COVID remains manageable, or once again stresses the healthcare system and other critical infrastructure.
- Medicare proposes 3.2 percent inpatient pay bump. The Centers for Medicare and Medicaid Services (CMS) released its 2023 Inpatient Prospective Payment System (IPPS) proposed rule this week, which includes a 2 percent hospital payment increase. The American Hospital Association called the increase “simply unacceptable,” given the economy’s current inflation rate. With proposed reductions to disproportionate share and other payments, some hospitals will actually see a net decrease in reimbursement next year. CMS also plans to adjust penalties for its readmissions and hospital-acquired conditions programs, and to add new reporting measures based on social determinants of health and opioid-related adverse events. The proposed rule is open for public comment through June 17th.
The Gist: Inflation in healthcare prices tends to lag the broader economy, as commercial insurance contracts are often negotiated one or more years in advance. But there is no delay for spiking supply and labor costs. If Medicare payment can’t be counted on to keep up with inflation, health systems will face even more significant margin pressures heading into next year, compelling leaders to act more quickly to reconfigure unsustainable elements of their legacy business models amid mounting cost pressures.
- Insurtech Bright Health stumbles amid fast growth. The Minneapolis-based insurer was fined $1M by the Colorado Department of Insurance for failing to complete basic health plan functions, including paying claims, communicating with members, and processing consumer payments. Bright claims its rapid growth, along with COVID-related challenges, contributed to its failures in the Colorado individual and family plan market, where it serves about 50,000 enrollees. But there are also signs of other problems. After posting $1.2B in losses in 2021, Bright laid off five percent of its employees in March, and says it plans to exit the individual market in six states, which make up less than five percent of its revenue. Bright is instead focusing on integrating its provider arm, NeueHealth, into its insurance business in fast-growing markets like Texas, North Carolina, and Florida.
The Gist: While Bright, along with other insurtechs, has garnered attention with promises of an enhanced customer experience and lower costs, its stumbles with basic health plan functions in Colorado may signal more systemic problems. This news could deter health systems and other providers from partnering with the insurer. After years of hype, most insurtechs still have minimal market share, and most have yet to turn a profit. Unless performance improves, it may not be long before Bright, Oscar, and others become acquisition targets for larger, more established players.
Plus—what we’ve been reading.
- Departures of younger nurses driving nursing shortage. While reports of Baby Boomer nurses opting for early retirement have led many hospitals to focus their retention strategies on older, more tenured nurses, a new piece in Health Affairs shows that the decline in registered nurse (RN) employment in 2021—the sharpest decline in the last 40 years—was largely driven by nurses younger than 35, and was exclusive to the hospital employment setting. From 2019 to 2021, the RN workforce under the age of 35 shrank by four percent, contributing to an overall 1.8 percent decline in the total RN workforce over two years.
The Gist: COVID has exacerbated a long-known problem of high attrition among early-career, hospital-based nurses. Many new graduates’ training was disrupted by COVID. Challenges for new nurses continued with truncated onboarding and residencies, along with fewer support programs. While nursing school enrollment is still up, growth has slowed across the last year. Hospitals must work to reverse educational gaps and the early-career employment dip, doubling down on efforts to support and sustain younger nurses after two years of pandemic stress.