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The Keckley Report

Four Issues HHS must solve as Becerra Takes Charge

By March 22, 2021March 1st, 2023No Comments

This week marks the first week on the job for newly confirmed HHS Secretary Xavier Becerra, the 11th anniversary of the passage of the Affordable Care Act (March 23,2010) and the House Energy and Commerce Subcommittee’s hearing “Building on the ACA: Legislation to Expand Health Coverage and Lower Costs” which will put a spotlight on the law’s health reforms.

Having served 12 terms in Congress representing downtown Los Angeles and most recently as California’s Attorney General, he’s no stranger to healthcare policymaking and politics. The U.S. Department of Health and Human Services he’ll oversee spans 11 operating divisions including the Food and Drug Administration (FDA), the Centers for Medicare and Medicaid Services (CMS), the National Institutes of Health (NIH) and the Center for Disease Control and Prevention (CDC) who have figured prominently in the pandemic. Its FY21 $1.4 trillion budget represents almost 30% of total federal spending covering its 80,000 employees. It’s a massive organization in the spotlight as never before due to the pandemic.

Secretary Becerra’s plate is full: the 4 most urgent challenges below are riddled with partisan brinksmanship but in need of attention:


We’re not out of the woods. Some states have thrown caution to the wind by suspending masking and social distancing. The President’s 100-day goal of 100 million vaccines in arms was reached on his 58th day in office but fear of a fourth surge is growing. The FDA is on the verge of approving Astra-Zeneca’s vaccine having approved Moderna, Pfizer and Johnson & Johnson already and normalcy seems nearby. Air travel reached its 9-month high over the weekend and the CDC loosened its guidance on school re-openings. But a 40% of the population including 3 of 10 frontline healthcare workers say they’ll not get vaccinated and troubling variants lurk. This weekend, the CDC discovered the deadly Brazilian variant in a New York covid case. Herd immunity is unlikely before mid-summer, but non-masked masses are crowding beaches. The challenge for the Becerra HHS team will be the consistency of its messaging and persistence of its effort.

Drug prices

Policies to control drug prices have not worked. Prescription drug spending increased 5.7% in 2019 vs. an overall increase of 4.6% for U.S. healthcare spending overall. Annual drug spending increased have ranged from 4-5% annually for the past decade—well-above inflation and wages. Laws that allow importation of prescription drugs from Canada; state regulatory boards to oversee price increases; targeted caps on prices for insulin and other high-demand classes; Executive Orders requiring drug price transparency; requirements that drug makers provide clinical evidence to justify annual price increases and a long list of other policy shifts have had no impact on drug spending. And proposals to allow Medicare to negotiate directly with manufacturers, limiting what Medicare pays for drugs to an International Index, changes to patent laws protecting branded drugs against competitors, forced disclosure of pharmacy benefits manager deals with manufacturers and payers and aligning drug prices with their actual production costs are on the table. At a time when 1 in 5 Americans suffers from depression and opioid-addiction is spiking, prescription drugs use and their associated costs, including societal costs for abuse by consumers and providers, is perhaps the system’s most vexing issue. The Becerra HHS will need strong support from a coalition representing consumers, employers, providers and payers to tackle drug prices: today, it’s lacking.


Policies about telehealth and virtual care are incomplete and inadequate. The issues of data protection, interoperability, liability, provider credentialling & scope of practice restrictions, patient responsibility, post-pandemic reimbursement and others are unresolved. At the same time, pandemic-induced demand for telehealth and virtual care, especially in mental health, has accelerated investor bets that disrupt digital care offerings by local hospitals and force rethinking about how mental health services (accounting for 75% of behavioral health visit last year) will be delivered in the future. Telehealth is tricky: adoption has been an unintended consequence of the pandemic and an unwelcome disruption for traditional providers and insurers. It represents a strategic but unwelcome shift for healthcare providers. It’s the centerpiece of the Amazon Care’s strategy announced last week, the care management backbone for senior health programs offered by insurtechs like Alignment Healthcare, Oscar, Bright Health and other payers, the relationship bridge for patients with Humana’s new CenterWell clinics along with primary care centric models like Chen Med, Oak Health and clinics operated by Walmart, CVS, Walgreens Boots Alliance and much more. The rub for telehealth: its operators target insured populations. Studies have shown limited access to telehealth services in low income and under-insured and rural populations, so policy solutions that address discriminatory access while mainstreaming telehealth and virtual care into coverage will be prominent in Becerra’s HHS oversight.


Increasing access to health insurance coverage that’s affordable forces tension between private insurers and proponents of government run healthcare. Per Gallup, the majority believes everyone should be covered. The majority also prefers private insurers to a government-run plan though seniors and the military are more satisfied with their government-run programs (Medicare, Tricare) than enrollees with private coverage. Access to private coverage is shrinking as employers implement alternative strategies and a fourth of those covered find their premiums, co-pays and deductibles unaffordable. The administration wants to incent the 12 states that did not expand Medicaid with a two-year carrot while adding a public option and subsidies so under-insured populations can buy coverage. But the reality is this: private health insurers know the government is fast becoming their major customer as employers ‘do their own thing’ so the alignment between state and federal health policies and the financial sustainability of private insurers are co-dependent. The Becerra HHS will execute a full-court press to expand Medicaid coverage while cautiously developing its public option plans. With the 2022 mid-term elections ahead, policies around expanded coverage will be directionally focused on low income and calculated to increase the federal government’s role. Creating health insurance that’s affordable providing timely access to needed health and wellbeing services is the nut that has to be cracked by the Becerra team.


The Becerra-led HHS team will enact changes that advance its center-left philosophy. The toxic political climate, national disgust with the political process, growing influence of private investments in healthcare including SPACS, growing concern for affordability and transparency, the looming mid-term elections and powerful influence of incumbents who push-hard against bold change assure that the regulatory changes for healthcare will be incremental…for now. That leaves the door open for outsiders who relish breaking glass in our industry.

These four issues will not be the complete agenda for the Becerra-led HHS team: they’re the ones that have to be solved right away.


P.S. Today, the American College of Healthcare Executives (ACHE) will broadcast my interview with the CEOs of the three most prominent professional associations in our industry: Jim Madara, MD, of the American Medical Association (AMA), Matt Eyles of America’s Health Insurance Plans (AHIP), and Rick Pollack of the American Medical Association (AHA). They share concerns that the system adapts effectively to changes; address issues of diversity, equity and affordability and effectively shift to chronic condition management. And notably, their advocacy efforts will get heightened attention as the government’s role in healthcare is likely to increase. You can tune in here.


Amy Goldstein “Becerra squeaks through confirmation vote to become HHS secretary”; March 18,2021; Washington Post

Katie Palmer “4 health startups racing to shake up diabetes care” STAT News March 18,2021; STAT News

Cantor et al “Who Is (and Isn’t) Receiving Telemedicine Care During the COVID-19 Pandemic”; March 06, 2021; American Journal of Preventive Medicine

Casey Ross “How the wave of telehealth SPACs during the pandemic could create a ‘perfect storm’ for investors”; March 19, 2021; STAT News

Erin Brodwin “What Amazon Care’s nationwide expansion means for the telehealth industry”; March 18, 2021; STAT News

“CHIME/KLAS Survey Finds Interoperability Advancing in U.S. Healthcare” January 26,2021; KLAS

“Walmart partners with Commons Project, Clear to launch digital COVID-19 vaccine records” March 18, 2021; Walmart

“KFF/The Washington Post Frontline Health Care Workers Survey” March 19, 2021; KFF


CDC School Update: Social Distancing in Classrooms can be Reduced to 3 Feet

Friday, the CDC released its latest Operational Strategy for K-12 Schools through Phased Prevention:

  • In elementary schools, CDC recommends all students remain at least 3 feet apart in classrooms where mask use is universal — regardless of whether community transmission is low, moderate, substantial, or high.

  • In middle and high schools, CDC recommends students should be at least 3 feet apart in classrooms where mask use is universal and in communities where transmission is low, moderate, or substantial.

“CDC Updates Operational Strategy for K-12 Schools to Reflect New Evidence on Physical Distance in Classrooms” March 19, 2021; CDC

Study: Nursing Homes with High Infection Rates More Likely to Serve Under-Insured Resident Populations

Researchers analyzed characteristics of nursing homes (NH) with the highest COVID-19 prevalence to identify through October 11, 2020. Findings:

Compared to all NH residents, residents with higher COVID-19 cases were older (80.6 yrs. vs. 78.4 yrs.) and more likely to be enrolled in Medicaid (69.7% vs.68.9%). Their NHs had lower occupancy rates (−4.1%), fewer direct care hours per patient per day (−21.9%) and more likely to use advanced practitioners for direct patient care.

Chen et al “Nursing Home Characteristics Associated with Resident COVID-19 Morbidity in Communities with High Infection Rates”; March 16, 2021; JAMA Network

Global Vaccine Supply

The world has four major sources of coronavirus vaccines: China (33% of 169.4 million produced), the U.S. (27% of 136.1 million produced), the EU (19% of 96.2 million produced) and India (13% of 68 million produced). To date, 14 vaccines have been approved globally at prices ranging from $2.06 to $44.00 per dose.

“COVID-19 Vaccine Market Dashboard”; UNICEF

“E.U. Exports Millions of Covid Vaccine Doses Despite Supply Crunch at Home”; March 10, 2021; New York Times

KFF Washington Post Survey: 52% of Healthcare Frontline Workers Not Vaccinated

Based on interviews conducted from February 21 to March 7, 2021 with a nationally representative sample of 1,327 frontline health care workers (those with direct contact with patients and their bodily fluids), representing hospitals, doctors’ offices, outpatient clinics, nursing homes and assisted care facilities, and those working in home health care:

  • 1 in 2 said they had received at least their first vaccine dose at the time they were surveyed.

  • 1 in 3 said they were not confident vaccines were sufficiently tested for safety and effectiveness.

  • 2 in 10 health-care workers said they had scheduled a shot or were planning to, 3 in 10 health-care workers said they were unsure about getting vaccinated or not planning to do so and 1 in 6 health workers said that if their employers required them to get vaccinated, they would leave their job.

“KFF/The Washington Post Frontline Health Care Workers Survey” March 19, 2021; KFF


Update: Last Week Actions by CMS, OIG

CMS issued several notices, actions:

  • CMS released a notice March 17 walking back four of the 60 telehealth service codes that the agency said were inadvertently included on its final list because of technical errors.

  • CMS will not move forward with two changes to its Part D Payment Modernization Model, the agency said March 16.

  • CMS delayed a final rule that aims to speed up the FDA approval process for Medicare coverage of new medical devices and technologies.

  • CMS on March 16 made available its applications for the second cohort of its Primary Care First payment model and a request for participants in the Primary Care First (PCF) Model beginning in January 2022.

  • CMS increased the amount Medicare will pay to providers for administering the COVID-19 vaccine to $40 for each dose.

  • HHS’ Office for Civil Rights announced a 45-day extension to May 6 for the public-comment period for the Notice of Proposed Rulemaking to modify the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule. The proposed changes to the HIPAA Privacy Rule include strengthening individuals’ rights to access their own health information among other provisions.


“Comment Period Extended for Extensive Changes to HIPAA Privacy Rule”; March 16, 2021; National Law Review

Study: Majority of Large Hospitals Noncompliant with Price Transparency Rule

Per the “Price Transparency Requirements for Hospitals to Make Standard Charges Public,” law that requires hospitals to post rates negotiated with payers for 300 services in an online machine-readable format effective January1,2021, researchers analyzed compliance for the largest 100 hospitals in the US (by certified bed count) from late January 2021 to early February 2021. Findings:

  • 65 of the 100 were unambiguously noncompliant. Of the remaining 35, 22 appeared to be compliant and some exceeded the regulations in terms of the amount of information they shared.

  • 12/65 (18%) did not post any files or provided links to searchable databases that were not downloadable.

  • 53/65 (82%) either did not include the payer-specific negotiated rates with the name of payer and plan clearly associated with the charges (46) or were in some other way noncompliant (7).

Note: noncompliant hospitals can be penalized $300 per day for noncompliance.

Morgan Henderson, Morgane C. Mouslim “Low Compliance From Big Hospitals On CMS’s Hospital Price Transparency Rule“; March 16,2021; Health Affairs

Physicians: MedPAC Recommends 2% Medicare Reimbursement Increase for Hospitals, 0% for Physicians

In its annual report to Congress, the Medicare Payment Advisory Commission is advising that Medicare enrollee access to physicians is adequate and a reimbursement increase not necessary, based on its analysis of payments in 2019.

Previously, MedPAC recommended 0.5% increases for 2019 and 2020. The commission recommended a 2% reimbursement increase for acute care hospitals based on its analysis that their Medicare margins were -8.7% in 2019 continuing into 2021 at -6.0%

Related: per the 2021 Medical Resident Matching Report released Friday, resident applications in 2020 were up 8.3% to 48,700. The match rate to first-year residency positions declined from 80.8% in 2020 to 78.5% this year. Allopathic medical school students matching to first-year positions declined from 93.7% to 92.8%; the percentage for U.S. osteopathic medicine degree earners declined from 90.7% to 89.1%

Related: In a January 2021 analysis, Kaufman Hall found physician net revenue was down 4.5% in 2020 and practice operating expenses down 5.7% compared to 2019.

Related: By 2033, the US could face a shortage of between 54,100 and 139,000 physicians, according to a June 2020 report from the Association of American Medical Colleges (AAMC) due to large percentage of physicians who are nearing retirement age. Since the pandemic began, however, medical schools have seen an average 18% increase in applicants.

“2021 Main Residency Match Results”; March 19,2021; National Resident Matching Program

Joyce Frieden “MedPAC Again Recommends No Pay Raise for Docs Treating Medicare Patients”; March 15, 2021; MedPage Today

“US physician shortage is growing”; June 26, 2020; Association of American Medical Colleges

Study: Minor Differences in Medicare Advantage and Medicare Fee for Service Use of Low Value Services

In this cross-sectional study of 11 677 individuals enrolled in traditional Medicare fee-for-service and 5164 individuals enrolled in Medicare Advantage, researchers found, there were no significant differences between individuals enrolled in TM and those enrolled in MA in most measures of use of 13 specified low-value practices. low-value care. Statistically significant differences were found in 2 of the 13: use of low-value medications composite (17.6% in TM vs. 19.7% in MA) and NSAID use for hypertension, heart failure, or kidney disease (10.0% in TM vs. vs.12.9% in MA).

Park et al “Trends in Use of Low-Value Care in Traditional Fee-for-Service Medicare and Medicare Advantage”; March 17, 2021; JAMA Network

Bain: Healthcare Private Equity Deals Increase in 2020, Total Value Declines

Per Bain’s annual report on private equity activity in healthcare:

  • Private equity deal volume increased by 21% year-over-year to 380 deals last year, compared with 313 in 2019 vs. private equity activity across all sectors that fell 14%.

  • Healthcare deal value fell 17% year-over-year to $66 billion in 2020, from $79 billion in 2019. Deal value was up from 2018, however, when it was $64 billion.

  • Healthcare providers were North America’s most active sector, with 74 deals in 2020, compared with 96 in 2019. Provider deals as a share of total deals dipped to 52% in 2020 from 60% in 2019.

The report identified four areas of increased deal activity in healthcare: alternative sites of care, telehealth, modernization of clinical trials and provider consolidation.

“Global Healthcare Private Equity and M&A Report 2021”; March 16,2021; Bain

McKinsey: Savings Increase but not Helpful to Low-Income Households

McKinsey analysis showed savings as a percent of 2019 household income increased 6% and spending declined 4% increasing household savings 2.3 times 2019 levels, “but the recovery will benefit middle- and upper-income households and have marginal impact on young and lower income.”

“The consumer demand recovery and lasting effects of COVID 19”; March 2021; McKinsey

Report: One-Third Decline in Mental Health Status in Developed Countries

In its analysis of mental health status in 8 English speaking countries (United States, Canada, United Kingdom, Australia, New Zealand and the substantial English-speaking populations of South Africa, India and Singapore) researchers found…

  • Compared to 2019, overall mental wellbeing score for 2020 was 66 relative to a score of 90 obtained in 2019 representing an 8% decline in the MHQ scale (which ranges from -100 to 200). The percentage of respondents with clinical level risk increased from 14% in 2019 to 26% in 2020. The drop relative to 2019 was “most pronounced” for young adults aged 18-24.

  • The mental wellbeing of countries: The average mental wellbeing score was highest for respondents from Singapore and the United States and lowest for those from the United Kingdom and South Africa overall, and across multiple dimensions. Respondents from India, while in the middle overall, varied the most across dimensions of mental wellbeing.

Newson JJ, Pastukh V, Sukhoi O, Taylor J and Thiagarajan TC, “The Mental State of the World Report 2020”; March 15 , 2021; Sapien Labs

Study: Medicaid Enrollment, Spending Expected to Spike in 2021

Highlights of key takeaways from the Kaiser Family Foundation (KFF) and Health Management Associates (HMA) survey completed by 38 of state Medicaid directors conducted from August thru October 2020 and released March 12, 2021. Key finding: Medicaid enrollment is predicted to increase 8.2% in FY 2021 and spending by 8.4% in FY 2021.

“Kaiser/HMA50-state Medicaid Director Survey covid-19 update for FY2021and FY2022”; March 12,2021; HMA

Altarum: Healthcare Spending Lower in January Compared to Pre-Pandemic

Highlights of Altarum’s March Health Sector Economic Indicators (HSEI) brief:

  • National health spending in January 2021 was 0.2% lower than in January 2020; spending in January 2021, year over year, declined in all major categories except home health care, which grew by 6.4%. The greatest decline was in dental services, at -17.1%.

  • Overall health care price growth remained high in February at 2.6%, matching the year over year rate observed in January. February now marks the eighth time in the last twelve months where health care price growth has exceeded 2.5%.

  • Price growth for health care services continue to be the major contributor to overall growth with many of the major categories remaining near record levels: February hospital prices rose 4.6% year over year, physician prices rose 2.7%, and nursing home care prices increased 3.1%.

  • Conversely, price growth for prescription drugs was negative and fell further in February to -2.7%, falling from the prior month’s rate of -2.4%.

“Altarum March 2021 Health Sector Economic Indicators Briefs”; March 17, 2021; Altarum