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The Keckley Report

The Teachable Moment Healthcare Can Ill-Afford to Waste

By March 30, 2020March 1st, 2023No Comments

The big news of the week was passage of the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act (S.3548) and the announcement yesterday that self-distancing guidelines will continue to April 30.

The $2.2 trillion CARES Act comes at a precarious time for our country: our economy is in recession, job losses are mounting, and the public’s fear is palpable. The extension of social distancing is equally significant: the social fibre of our society, in our workplaces and communities is defined by relationships that are disrupted by the coronavirus.

Here’s where we are:

  • The latest worst-case scenario from the CDC is that the virus will infect at least 160 million in the U.S. requiring hospitalization for up to 21 million and resulting in between 200,000 and 1.7 million deaths.

  • The expected hospital next surge is hitting hospitals in New York now. Next are Detroit, Chicago and New Orleans in the next 2-4 weeks.

  • Supplies of masks, PPE and ventilators are inadequate to meet this demand. Manufacturers and distributors of these have increased their production and their prices, thus taking advantage of the demand.

  • Widespread testing of asymptomatic populations and aggressive social distancing are keys to mitigation. Self-testing along with expanded capacity in commercial labs are key, especially if insurers agree to waive testing fees and subsequent treatment.

  • Vaccines and treatments will be available next year at the earliest.

  • The CARES Act addresses short-term economic relief for businesses and individuals. It does little to address the stress in the health system.

The events of the past 45 days have forced healthcare into the spotlight. The dedication of our frontline caregivers has been the bright spot. The promise of new drugs and vaccines gives us hope. And bipartisan collaboration among our elected officials is refreshing.

But the public’s also been exposed to its challenges—pandemic preparedness, hospital capacity, and the complexity of global public health. It’s a teachable moment for the system.

Hopefully, we’ll settle back into a new normal by June 2 when Democratic primaries in 10 states and the District of Columbia are scheduled. No doubt, we’ll also be debating round 4 of emergency relief to stabilize the economy and address unmet needs in the first three. (See My Take in CARES Act Summary below).

Maybe, when the dust settles, we will celebrate the U.S. system. But in this, the most teachable moment in its short history, maybe we should reflect on what works well and fix what doesn’t. It’s a matter of life and death.



Summary: Coronavirus Aid, Relief, and Economic Security (CARES) Act Passes: $2.2 trillion Emergency Relief Package

Last week, Congress passed and the President signed the CARES Act. The 880-page bill includes loans, grants and regulatory waivers intended to lessen the economic impact of the coronavirus on industries, employers, businesses, individuals and state/local health agencies most directly impacted. At a high level, its key provisions are these:

Relief to Individuals/Households:

  • $250 billion for one-time direct payments to individuals and families ($1,200 per adult making up to $75,000 a year and $2,400 to a married couple making up to $150,000 plus $500 per child. The payments phase out for singles earning more than $99,000; head-of-household filers with one child, more than $146,500; and more than $198,000 for joint filers with no children.

  • $250 billion in unemployment insurance benefits ($600 per week above state unemployment benefit thru July)

Relief for Employers:

  • $454 billion in loans to companies in distressed industries companies, businesses (ex. $25B airlines $4B cargo airlines) that preclude use of funds for stock buybacks

  • $367 billion in small business loans for companies with fewer than 500 full/part-time employees

  • $50 billion tax credit to encourage employers to retain workers on the payroll and cover 50% of workers’ paycheck up to $10,000

  • Deferral of payment of the 6.2% Social Security payroll tax payment for companies receiving funds.

Relief to States, Municipalities and Tribes:

  • $500 billion loan program accessible by cities, states, and businesses and $250 billion in direct funding to state and local governments ($3 billion for the District of Columbia and major U.S. territories, $8 billion for federally recognized Tribal governments every state guaranteed at least $1.25 billion)

  • $30 billion for the Education Stabilization Fund for states, school districts and institutions of higher education for costs related to the coronavirus.

  • $150 billion for a state and local Coronavirus Relief Fund

  • $150 billion emergency services provided by states, localities and tribes

  • $45 billion for the Disaster Relief Fund for the immediate needs

Special provisions for Hospitals, Nursing Homes, Community Health Centers, Veterans Health and Medical Practices:

  • $117 billion in grants for hospitals, community health centers (Includes provision for hospitals that treat Medicare patients for COVID-19 will get a 20% payment increase for all services provided).

  • Delay of 2% sequester cuts from May 1 to December 31, 2020 (Note: sequestration would be extended an additional year past its original end date).

  • Requirement that insurers pay either a negotiated price with a provider or a cash price posted by the provider for the testing.

  • $6.3 billion for the Strategic National Stockpile for critical drugs and medical supplies including personal protective equipment

  • $14 billion for the Department of Veterans Affairs

  • $1.3 billion in emergency funding for community health centers.

  • Special provision to allow hospitals to request advance Medicare payments based on prior years’ payments and pay them back over at least 12 months.

  • Delay of cuts to Medicaid disproportionate-share hospital payments to November.

  • Requirement that employers and health insurers are required to pay hospitals and labs their charges are for COVID-19 tests if a contract is not in place.

  • Delay of scheduled Medicare cuts in payments to labs to 2021

The CARES Act is more a short-term economic stimulus package for businesses and individuals than fix for the pandemic. Less than 8% targets the health system directly, mostly through short-term relief regulatory compliance deadlines and directives about insurance payments. It advances telehealth as no prior legislation has done and gives states wide latitude to address their urgent public health needs. But it does little to address the long-term impact of the coronavirus on the health system. Specifically,

  • It does not adequately fund the direct negative financial impact on hospitals for their losses of elective procedure income and costs for treating the coronavirus: conservatively, the negative impact on hospitals will exceed $300 billion and likely more.

  • It does not address the needs and challenges in nursing homes where the most vulnerable are disproportionately victimized by the pandemic.

  • It does not address the negative economic impact on the majority of physicians who are adversely impacted but otherwise ineligible for CARES Act loans/grants.

  • It does not adequately fund the surge in state and local community and public health programs of special importance to 80 million in our population who lack access to routine primary and preventive health.

And the addition of $2.2 trillion to our burgeoning $22.7 trillion national debt will put additional pressure on policymakers to restore economic growth without adding more debt.

The CARES Act is primarily about economic stability—that’s appropriate and necessary. But the next stimulus package needs to focus on the health system: it’s on the brink.

Coronavirus Aid, Relief, and Economic Security (CARES) Act

IHME Analysis: Hospital Demand Peak in April

The Institute for Health Metrics and Evaluation in Seattle found Excess demand for hospital beds (64,175 beds) and intensive care unit beds (17,309) will peak the second week of April. They forecast an estimated 81,114 deaths over the next four months, or 2,300 deaths daily by the second week of April.

“Forecasting COVID-19 impact on hospital bed-days, ICU-days, ventilator days and deaths by US state in the next 4 months” Institute for Health Metrics and Evaluation, University of Washington March 26,2020

Fair Health Study: Total Costs $139 and $558 billion

Assuming 66 million to 198 million Americans become infected and that from 4.9 million to 19.8 million require inpatient stays, and the average charge per inpatient stay is estimated at $73,300 and average in- cost per commercially insured patient at $38,221 “The total costs for all hospitalized COVID-19 patients may range from a low of $362 billion in charges and $139 billion in estimated in-network amounts to a high of $1.449 trillion in charges and $558 billion in estimated in-network amounts, depending on the incidence rate and severity of the infection in the US population.”

“COVID-19: The Projected Economic Impact of the COVID-19 Pandemic on the US Healthcare System” Fair Health March 25, 2020;

NIH Updates: Covid-19 Vaccines and Treatments

Per the U.S. National Institutes of Health: “The SARS-CoV-2 virus emerged in December 2019 and then spread rapidly worldwide, particularly to China, Japan, and South Korea. Scientists are endeavoring to find antivirals specific to the virus. Several drugs such as chloroquine, arbidol, remdesivir, and favipiravir are currently undergoing clinical studies to test their efficacy and safety in the treatment of coronavirus disease 2019 (COVID-19) in China.” Remdesivir and chloroquine have shown efficacy in late term trials and appear most promising.

Related: UnitedHealth Group released a study last Wednesday showing that self-collected COVID-19 swab tests are as effective in identifying infection as clinician-collected tests, with a 90%accuracy rate. The study, based on nearly 500 OptumCare patients in Washington state, suggests that adoption of the self-test has the potential to decrease exposure for healthcare workers and increase testing efficiency across the country.

Cell Res. 2020 Mar;30(3):269-271. doi: 10.1038/s41422-020-0282-0. Epub 2020 Feb 4.
‘Remdesivir and chloroquine effectively inhibit the recently emerged novel coronavirus (2019-nCoV) in vitro’Drug Discov Ther. 2020;14(1):58-60. doi: 10.5582/ddt.2020.01012.

‘Discovering drugs to treat coronavirus disease 2019 (COVID-19).’ ‘

“UnitedHealth Group Study Clears Path for Self-Administered COVID-19 Test, Improving Testing Efficiency and Protecting Health Care Workers” UnitedHealth Group March 25, 2020

AHIP Board: Insurers to Help Hospital Transfers During Covid-19 Response

Last Monday, the AHIP released this statement:

“Given the imperative to expand hospital, health system and provider capacity right now for COVID19 patients, the AHIP Board of Directors is committed to partnering with hospitals to build capacity in those regions facing these challenges and to simplify and accelerate the transfer and discharge of patients.”

In essence, the policy encourages hospitals transferring patients to post-acute settings to notify the patient’s insurance company the next day, thus setting aside pre-authorization by the plan. Note: The commercial health care market is projected to face anywhere from $34 billion to $251 billion related to testing and treatment for COVID-19 (Covered California)

Statement by the AHIP Board of Directors “Helping Our Hospital and Health System Partners Build Capacity and Confront Coronavirus (COVID‐19)” March 23, 2020

Related: Last week CVS-owned Aetna announced it is waiving all copays and other out-of-pocket costs for its commercially insured enrollees who are hospitalized from the new coronavirus until June 1. Previously, Aetna had announced it was waiving cost-sharing for COVID-19-related telemedicine and testing. Cigna announced it is waiving prior authorization for hospitals to transfer patients to long-term acute care hospitals and other subacute facilities. Blue Cross Blue Shield of Massachusetts also removed prior authorization requirements for long-term hospitals and other transfers.  Washington state’s insurance commissioner is ordering all health insurers to expedite or waive the prior authorization process for similar transfers. And Humana and Premera Blue Cross joined United, Aetna and Blue Shield of CA in announcing waivers of co-pay’s for telehealth visits.

CMS Relaxes Requirements for Value-Based Models due to Coronavirus

Last week, CMS announced that its quality reporting deadline for Merit-Based Incentive Payment System (MIPS) will be delayed to April 30, 2020, from March 31, 2020. due to the ongoing COVID-19 pandemic. The 1.2 million MIPS eligible clinicians who have yet to submit any quality and cost data to the program by April 30, 2020, will not be penalized. In addition, CMS announced it would apply similar quality reporting flexibility in its other models:

  • Medicare Shared Savings Program (MSSP)

  • Hospital-Acquired Condition Reduction Program

  • Hospital and Skilled Nursing Facility Value-Based Purchasing Programs

  • Hospital Readmissions Reduction Program

  • Promoting Interoperability Program for eligible hospitals and critical access hospitals

  • CROWNWeb National ESRD Patient Registry and Quality Measure Reporting System

  • End-Stage Renal Disease (ESRD) Quality Incentive Program

Also last week, CMS withdrew its proposed rule to crackdown on state Medicaid eligibility determinations from the Office of Management and Budget’s regulatory review process.


NAACO: Covid-19 Will Wipe Out Shared Savings in Medicare ACO’s

The National Association of Accountable Care Organizations (NAACO) model assumes hospitalization rates for the 55 million seniors will range from 17% to 27% at a 90-day bundled rate of $22,780:

“We estimate the potential cost to Medicare of the COVID-19 epidemic over the next 12 months could range from $38.5 billion to $115.4 billion…. About 20% of all Medicare beneficiaries are assigned to a Medicare Shared Savings Program (MSSP) or Next Generation (NextGen) Model ACO. Therefore, potential new COVID-related costs for Medicare ACO beneficiaries could range from $7.7 billion to $23.1 billion. Total spending for MSSP- and NextGen ACO-attributed beneficiaries was about $125 billion in 2018, so these COVID estimates represent a spending increase of 6- 18%. In 2018, MSSP ACOs reduced spending by 1.6% on average relative to their benchmarks (spending targets) and NextGen ACOs reduced spending by 1.4%. Even under the lower-bound estimate, new spending of this magnitude would wipe out shared savings for the current performance year and create major losses for ACOs in models with downside risk.”

Potential Impact of COVID-19 on Medicare Spending: Implications for ACO’s National Association of ACO’s March 24, 2020–implications-for-acos


CMS Office of the Actuary Forecast of National Health Expenditures

National health expenditures are projected to grow at an average annual rate of 5.4% increasing from 17.7% of GDP ($3.65 trillion) to 19.7% ($6.19 trillion) of U.S. gross domestic product from 2019 to 2028. Healthcare prices are expected to increase at an average annual rate of 2.4% over that span and account for 43% of total spending growth vs. a quarter of total expenditure growth from 2014 to 2018.

Keehan et al “National Health Expenditure Projections, 2019–28: Expected Rebound In Prices Drives Rising Spending Growth” Health Affairs March 24, 2020

U.S. Department of Labor: 3.3 million File for Unemployment Benefits

Last Thursday, the Labor Department reported that 3.283 million Americans applied for unemployment benefits last week —up from 282,000 the week before and 5 times the previous record set in 1982. Some economists predict the unemployment rate could approach 13% by May up from 3.5% last month.

UNEMPLOYMENT INSURANCE WEEKLY CLAIM, U.S. Department of Labor March 26, 2020;