|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
Encouraging hospitals to implement vaccine mandates
With the Delta variant now accounting for more than 83 percent of all new COVID cases in the US, daily new case counts more than quadrupling across the month of July, and hospitalizations—particularly in states with low vaccination rates—beginning to climb significantly, we appear to have entered a new and uncertain phase of the pandemic, now being dubbed a “pandemic of the unvaccinated”. Welcome news, then, that this week the American Hospital Association (AHA) publicly encouraged its members to put in place vaccine mandates for their employees. While several large health systems have taken the lead in implementing vaccine mandates, including Trinity Health, the Livonia, MI-based Catholic system that operates hospitals across 22 states, Phoenix, AZ-based Banner Health, Houston Methodist in Texas, and the academic giant NewYork-Presbyterian, others have been more reticent to compel employees to get vaccinated, citing concerns over employee privacy and the potential for workforce backlash. The New York Times reports that a quarter of all hospital employees remain unvaccinated nationwide, with many facilities reporting that more than half of their healthcare workers have not gotten the COVID vaccine. In our discussions with health system executives, one consideration frequently cited is the desire for full Food and Drug Administration (FDA) approval of the new vaccines before mandates are put in place. In a CNN town hall meeting this week, President Biden suggested that approval could come as soon as the end of August, although other reports point to likely approval much later, potentially not until January of next year. Facing a new variant of the virus that is much more transmissible and possibly more virulent than earlier strains, hospitals—and their patients—can’t afford to wait that long. For safety’s sake, hospitals should quickly put in place vaccine mandates, with appropriate exceptions.
New CMS payment rule is good news, bad news for hospitals
Two major policy developments emerged from this week’s release by the Centers for Medicare & Medicaid Services (CMS) of the FY22 proposed rule governing payment for hospital outpatient services and ambulatory surgical centers. First, CMS proposes to dramatically increase the financial penalties assessed to hospitals that fail to adequately reveal prices for their services, a requirement first put in place by the Trump administration. According to a report by the consumer group Patient Rights Advocate, only 5.6 percent of a random sample of 500 hospitals were in full compliance with the transparency requirement six months after the regulation came into effect, with many instead choosing to pay the $300 per hospital per day penalty associated with noncompliance. The new CMS regulation proposes to scale the assessed penalties in accordance with hospital size, with larger hospitals liable for up to $2M in annual penalties, a substantial increase from the earlier $109,500 maximum annual fine. In a press release, the agency said it “takes seriously concerns it has heard from consumers that hospitals are not making clear, accessible pricing information available online, as they have been required to do since January 1, 2021.” In a statement, the AHA stated that it was “deeply concerned” about the proposal, “particularly in light of substantial uncertainty in the interpretation of the rules.” The penalty hike is a clear signal that the Biden administration plans to put teeth behind its new push for more competition in healthcare, which was a major focus of the President’s recent executive order. We’d expect to see most hospitals and health systems quickly move to comply with the transparency rule, given the size of potential penalties.
More heartening to hospitals was CMS’ proposal to roll back changes the Trump administration made, aimed at shifting certain surgical procedures into lower cost, ambulatory settings. The agency proposed halting the elimination of the Inpatient Only (IPO) list, which specifies surgeries CMS will only pay for if they are performed in an inpatient hospital. Citing patient safety concerns, CMS noted that the phased elimination of the IPO list, which began this year, was undertaken without evaluating whether individual procedures could be safely moved to an outpatient setting. Nearly 300 musculoskeletal procedures have already been eliminated from the list, and will now be added back to the list for 2022, keeping the rest of the list intact while CMS undertakes a formal process to review each procedure. Longer term, we’d anticipate that CMS will look to continue the elimination of inpatient-only restrictions on surgeries, as well as pursuing other policies (such as site-neutral payment) that level the playing field between hospitals and lower-cost outpatient providers. For now, hospitals will enjoy a little more breathing room to plan for the financial consequences of that inevitable shift.
Missouri’s Medicaid expansion is back on
On Thursday, the Missouri Supreme Court unanimously reversed a lower court ruling that held that the state’s $1.9B Medicaid expansion, approved by voters in a 2020 ballot initiative, was unconstitutional. The ruling clears the way for the state’s Department of Social Services to begin implementation of the expansion, which is expected to cover 275,000 low-income Missouri residents. Under the Affordable Care Act (ACA), the federal government will pay 90 percent of the cost to cover the newly eligible Medicaid beneficiaries, along with an additional bump in federal funding for Missouri’s Medicaid program, thanks to a provision in the American Rescue Plan Act passed earlier this year. Missouri voters approved the expansion by a 53-47 margin last year, but the ballot initiative was held to be unconstitutional because it did not include a source of funding for the portion of coverage costs to be paid for by the state (and the state legislature refused to allocate money for the expansion, despite currently running a surplus). Five other states have turned to ballot initiatives to expand Medicaid under the ACA, seeking to work around state legislatures that have resisted the change. In all, a dozen states, mostly in the Southeast, have chosen not to expand their Medicaid programs, even despite the additional incentives Congress voted into law this year. Democrats on Capitol Hill are considering legislative alternatives to provide new coverage to low-income residents in those states, as part of the $3.5T reconciliation package currently being negotiated. Numerous studies have shown the positive impact of expanding Medicaid on health and financial well-being, but state-level politics have proven to be a challenge, especially in deep-red states. Meanwhile, tax dollars continue to flow from those states to fund Medicaid expansion elsewhere—now, including Missouri.