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The Keckley Report

The Lame Duck Session of Congress will not be Lame for Healthcare

By October 17, 2022March 1st, 2023No Comments

Mid-mid-term election day is 22 days away. The “official end” of the Covid public health emergency has been delayed to January 11. The Federal Reserve is expected to increase its borrowing rate for the sixth time this year at its November meeting as it attempts to slow inflation and the stock market is under-water as year-end approaches.

Regardless of the mid-term outcome and the state of the economy, healthcare will be prominent in the upcoming lame-duck Congress. Four items will get attention:

·        Public Health Emergency (PHE) Extenders: Last week, the administration postponed the official end of the Covid PHE until January 11. That means issues like telehealth, temporary subsidies for marketplace coverage, flexibilities after the COVID-19 Public Health Emergency and more.

·        Medicare Sequestration Cut: Offsetting the $1.9 trillion deficit cost of the American Rescue Plan of 2021 will be a target. Unless retrospectively included in PAYGO regulation, a 4% cut by Medicare could hit hospitals, doctors and other providers.

·        Medicare Fee Schedule Cuts for Physicians, Labs: The 2023 Medicare Physician Fee Schedule Proposed Rule includes a 4.4% cut to the conversion factor used in determining payment for codes billed for care provided to Medicare beneficiaries, resulting in payment reductions for a wide range of providers. It also includes a 15% cut for certain lab services. Congressional Action is necessary to avert both before their scheduled implementation in January.

·        Payment Adjustments for Specific Services: Congress must act on a number of legislative bills that modify payments for ambulance services, rural hospitals and add funding for mental health services.

This lame duck Congress will also consider implementation of the Inflation Reduction Act of 2022 (IRA) provisions limiting insulin costs and out of pocket caps on drugs and hold key Committee/Subcommittee hearings involving their queries about key agency activity. Examples:

·        Simplification, standardization of alternative payment models requiring downside risk (CMMI)

·        Increased scrutiny of hospital consolidation, insurer (FTC).

·        Concessions for hospitals in maintaining 340B drug discount program (HHS)

·        Compliance with core-data anti-blocking interoperability requirement for EHI data (ONC)

·        Compliance with Trusted Exchange Framework and Common Agreement (TEFCA). (HHS)

·        Expanded access to telehealth services (HHS, VA)

·        Alteration of Medicare Advantage Star Ratings, risk-scoring methodology (CMS)

·        Enforcement of privacy and security compliance including civil penalties and corrective actions (FTC)

·        And others

So, for healthcare, the lame duck session is far from lame. It will be a prime-time for every stakeholder!


PS: Two of the most respected names in healthcare are Ken Kaufman, Managing Director and Chair of Kaufman Hall and David Johnson, CEO of 4Sight Health and a respected thought leader.  Recently, the two squared off on a sensitive issue: not for profit hospitals. Kaufman’s October 5 commentary is a full-throated defense of NFP hospitals arguing disruptors like Amazon and Google serve only their paying customers. Johnson’s counter “In Defense of Value: A Response to Ken Kaufman,” is equally provocative: –

“Despite mission statements to the contrary, nonprofit healthcare follows the money. The only meaningful difference between nonprofit and for-profit healthcare is tax status. Each seeks to maximize treatment revenues by manipulating complex payment formularies and using market leverage to negotiate higher commercial payment rates…”

There’s truth in both views but the bigger issue is this: healthcare is a capital intense industry and hospital funding is screwed up. The majority of health Insurers, drug and device manufacturers, HIT vendors, physicians, professional services providers, consultants, accountants and lawyers operate as for-profit businesses. Only a small portion of health delivery and financing is purely “not for profit.”

It’s also ironic that not-for-profit hospital systems like Ascension, Advent and others actively invest in for-profit ventures and private equity funds that acquire not-for-profits. And it’s equally notable that giant corporations like UnitedHealth aka Optum operate “for profit” companies in every sector of healthcare except hospitals (for the time being at least).

What’s really needed is re-set for hospital financing that requires re-balancing between investments in prevention and treatment, integrates local health and social services seamlessly and operates with complete price transparency, total cost of care and global budget constraints.

The not-for-profit designation for hospitals is not the issue: the issue is transforming the U.S. health system from hospital-centricity to regional systems of health. Accessing capital cost effectively is a means to an end.

In Defense of Not-for-Profit Healthcare Ken Kaufman October 5, 2022

David Johnson 4Sight Health October 11, 2022


BLS: CPI up, housing costs playing bigger role: The core Consumer Price Index increased 0.4% in September and 8.2% in the last 12 months, the government said Thursday-above government forecasts. Core inflation — which removes food and energy costs — rose to a one-year rate of 6.6%, the highest since 1982. Other findings:

·        Housing costs were up 0.7% for the month

·        Transportation costs 1.9% last month–the largest one-month increase across core CPI components.

·        Medical services increased 1%

Key inflation measure climbs to 40-year high as Fed efforts ring futile and shoppers brace for more pain Business Insider October 13, 2022

Bureau of Labor Statistics October 13, 2022


Midwives under-utilized in US system: A recent study linked midwifery care from hospital-based midwives to 30% to 40% lower rates of C-section for low-risk women. In the United States, about 32% of births occur by C-section, even though the World Health Organization recommends rates not exceed 10% to 15% for optimal maternal and neonatal outcomes. At 24 deaths per 100,000 live births, the U.S.maternal mortality rate is more similar to that of Iran than of economic peers like the United Kingdom or Germany. Preterm birth, a major cause of infant death and lifelong disability, occurs in 1 of 10 births….

The reasons for America’s high-cost, low-quality maternity care are complex. But one rarely acknowledged difference between the U.S. and countries with better outcomes is that they use more midwives. The U.S. has a similar number of OB-GYNs per 1,000 births compared to countries like Britain, the Netherlands, and France. But in those countries, midwives are an integral part of the health care system, outnumbering OB-GYNs 3 to 1.

“Overcoming decades of bias against midwifery won’t be easy… At 1 in 10, the number of midwife-attended births in the U.S. is the highest it has been in decades. Women are increasingly choosing midwives, putting pressure on health care systems to respond to the demand by hiring more of them. Healthcare administrators may also notice that, at $116,892 compared to $302,301, the yearly cost of employing a certified nurse-midwife is significantly cheaper than employing an OB-GYN.

Maternity care in the U.S. is in crisis. It’s time to call the midwife October 12, 2022

March of Dimes study: Maternity deserts found in a third of US Counties: Seven million women across the country live in areas of limited or no access to maternity health care services. The number of counties considered maternal care deserts — places without obstetric providers or obstetric care in local hospitals — has grown 2% since 2020.  They’re disproportionately found in states that restrict abortion.

No Where to Go: March of Dimes Report on Maternity Deserts October 2022

Nurse turnover costs $46,000: Per the 2022 NSI National Health Care Retention & RN Staffing Report based on input from 272 hospitals in 32 states:

·        The average cost of turnover for one staff RN increased 15% from 2020 to 2021, to $46,100 (range $33,900 to $58,300 depending on the state).

·        In 2021, the turnover rate for staff RNs increased by 8.4%, resulting in a national average of 27.1%. 

·        Each % increase in RN turnover cost or save the average hospital $262,300 per year. 

·        The RN Recruitment Difficulty Index is 87 days on average, regardless of specialty, meaning it essentially takes 3 months to recruit an experienced RN.

·        For every 20 travel RNs eliminated, a hospital can save $4,203,000 on average.

2022 NSI National Health Care Retention & RN Staffing Report October 2022

 Study: wide variation in access to personal care aides: Using 2013–17 data from the American Community Survey and the Office of Management and Budget, researchers analyzed potential need for personal care aide services among adults and the supply of aides across the US. Findings:

·        The study, led by the University of California, San Francisco, found the number of adults with self-care disabilities were highest in the South, as well as parts of Maine, the Pacific Northwest, and New Mexico, ranging from 3.9% to 8.7% across the U.S.

·        Meanwhile, the states with the lowest number of personal care aids per 1,000 adults with a self-care disability were mostly southern, including Mississippi, Alabama, Georgia, Florida, North and South Carolina, Arkansas, Oklahoma, Tennessee and Kentucky

Care Aide Staffing Shortage Has Biggest Impact In Rural Areas: Study October 5, 2022 www. Care Aide Staffing Shortage Has Biggest Impact In Rural Areas: Study | Kaiser Health News (


Study: misrepresentation of Covid adherence high among adults during Covid: In this national survey study of 1733 US adults conducted in December 2021: one-third had had COVID-19, one-third who had not had COVID-19 and were vaccinated, and one-third who had not had COVID. Findings:

·        41.6% reported misrepresentation and/or nonadherence regarding COVID-19 public health measures. The most common reasons included wanting life to feel normal and wanting to exercise personal freedom.

·        24.3% told someone they were with or about to be with in person that they were taking more COVID-19 preventive measures than they actually were

·        Those who had greater distrust in science had significantly higher odds of misrepresentation and/or nonadherence for at least 1 of the 9 items.

Levy et al Misrepresentation and Nonadherence Regarding COVID-19 Public Health Measures JAMA Network Open October 10, 2022;5(10):e2235837. doi:10.1001/jamanetworkopen.2022.35837

Private Equity, Disruptors

Strategics expanding healthcare investments: Amazon bought primary-care company One Medical in August for $3.9 billion. In September, CVS spent $8 billion to acquire Signify Health and its network of 10,000 clinicians who make home visits (both virtually and IRL). The same month, Walmart entered into a 10-year agreement with the world’s largest health insurer, UnitedHealth Group. Notably…

·        In physician services, all directly employ physician practices led by United (64,000)

·        In pharmacy services, CVS has 10,000 pharmacy locations. Walmart has 5,100 of its own Amazon leverages its 2018 acquisition of Pill Pack into its own pharmacy offering in all 50 states.

·        In insurance services, Walmart has a partnership with UnitedHealth with 10 million MA members, CVS acquired Aetna in 2017 and Caravan (2022) and all three have announced plans to launch/expand Medicare Advantage programs.

·        And Walmart announced last week it is adding family planning and clinical research capabilities next year thru its Walmart Healthcare Research Institute.

Company websites: Amazon, CVS, Walmart

PE role in women’s health increasing: In its series “Patients For Profit: How Private Equity Hijacked Health Care,”  Kaiser Health News’ latest installment is focused on obstetrical emergency departments. “Three of the four major companies that set up and staff OBEDs are affiliated with private equity firms, which are known for making a profit on quick-turnaround investments. Private equity has been around for a long time in other medical specialties, and researchers are now tracking its move into women’s health care, including obstetrics. These private equity-associated practices come with a promise of increased patient satisfaction and better care, which can help the hospital avoid malpractice costs from bad outcomes.

Note: Three of the main companies that set up and staff OBEDs — the OB Hospitalist Group, or OBHG; TeamHealth; and Envision Healthcare — are affiliated with private equity firms. The fourth, Pediatrix Medical Group, formerly known as Mednax, is publicly traded. All are for-profit companies…

Baby, That Bill Is High: Private Equity ‘Gambit’ Squeezes Excessive ER Charges From Routine Births October 13, 2022

Amazon doubles-down in cost management: Amazon urged frugality in an all-hands meeting last week: “There are no extra points for growing headcount, budget size, or fixed expense,”. Specific strategies outlined in the slides included:

  • Maintain cash balances and liquidity

  • Adjust inventory levels to meet demand

  • Reduce discretionary costs not tied to customers

  • Adjust hiring based on business needs and priorities

  • Prioritize customer experience over new initiatives

  • Double down on frugality

Ashley Stewart, Eugene Kim “Leaked Amazon slides instruct employees to ‘double down on frugality’ in all-hands meeting “CT 12, 2022

Healthcare Investing

Venture funding slowed in Q3 2022: Global venture funding reached $74.5B in Q3’22, hitting a 9-quarter low. The new funding level represented a 34% drop quarter-over-quarter — the largest quarterly percentage drop in a decade — and a 58% decline from the investment highs reached in Q4’21.

·        Deal activity hit 7,936 deals total, marking a 9.5% quarterly drop and a 7-quarter low.

·        Q3’22 saw only 25 new unicorns (private companies valued at $1B+) — the lowest unicorn birth count since Q1’20.

·        $100M+ mega-rounds collectively accounted for $29.6B in Q3’22, marking a 9-quarter low and a 44% drop QoQ.

·        Quarterly digital health funding is down 31% (419 deals) avg deal size 16M 2.9B/231 deals in US—5.0B thru 3 Q vs. peak 2Q 16.8B (821 deals)

State of Venture Q3’22 Report CB Insights October 11, 2022

Clinical Research, Therapeutics, Prescription Drugs

Alzheimer’s drug shows marginal efficacy: Although Biogen and Eisai’s lecanemab cleared plaque from patients’ brains, researchers say the benefits may be limited: Lecanemab cleared accumulations in the brain of beta-amyloid and slowed the disease’s progression compared with placebo, reducing cognitive decline by 27%.

But the drug’s benefit to patients may be limited, physicians and neurology researchers said. The reduction of cognitive decline that patients experienced was modest, they said, and might be too slight in some patients to justify potentially dangerous side effects. About 12% of patients who took lecanemab developed swelling and bleeding in the brain, Biogen and Eisai said.

Dominique Mosbergen Alzheimer’s Drugs Advance but Slowing Disease Remains a Challenge Wall Street Journal October 10, 2022

Study: Colonoscopy benefit challenged: Researchers constructed a randomized control trial involving 80,000 adults 55-64 years of age followed for 10 years. Findings:

After 10 years, the researchers found that the participants who were invited to colonoscopy had an 18% reduction in colon cancer risk but were no less likely to die from colon cancer than those who were never invited to screening. Of the participants who were invited to colonoscopy, only 42% actually did one.

Bretthauer et al Effect of Colonoscopy Screening on Risks of Colorectal Cancer and Related Death NEJM October 9, 2022

Coverage, Health Insurance, Medicare Advantage

NYT: MA fraud allegations widespread: “By next year, half of Medicare beneficiaries will have a private Medicare Advantage plan. Most large insurers in the program have been accused in court of fraud….. The Medicare Advantage program was created to allow private health insurers to bring innovation into Medicare. It’s on track to potentially become the dominant form of Medicare coverage seniors select next year, over traditional Medicare.

The NYT report revealed 8 of the 10 largest MA insurers has been accused of submitting inflated bills while four of the five largest MA insurers faced federal lawsuits for overbilling.

The Cash Monster Was Insatiable’: How Insurers Exploited Medicare for Billions New York Times

Related: CMS orders freeze on Centene MA activity: Last week, CMS ordered Centene to freeze its MA enrollment in 9 plans that cover counties in Ohio, North Carolina, Arizona, Connecticut & Nevada impacting 84,000, or 5%, of Centene’s 1.5 million Medicare Advantage members with Part D prescription drug coverage. The freeze stems from a technical update the Centers for Medicare and Medicaid Services introduced in its final rule in May that stipulates that Medicare Advantage plans receiving 2.5 stars or fewer for two consecutive years will be denied service area expansion for the coming year. A single “poor performing” contract will freeze geographic growth for every contract operated under the associated legal entity. 

Centene barred from growing some Medicare Advantage plans Modern Healthcare October 10, 2022

Study: insurer forecast for increased health benefit costs: WTW surveyed 257 insurers in 55 countries. Findings:

“2023 Global Medical Trends Survey reveals that after rising from 8.2% in 2021 to a higher than anticipated 8.8% in 2022, the healthcare benefit cost trend for 2023 is projected to remain at a stubbornly high global average of 10%.” The U.S. forecast increase is 6.5%. Related findings:

·        The percentage of insurers most concerned about providers driving up costs by recommending too many services rose from 64% in 2021 to 75% in 2022.

·        52% of insurers that insured members’ poor health habits are among the top factors affecting medical costs per person, up from 35% in the prior year.

·        Consistent with previous surveys, the high cost of new medical technologies (62%) and the profit motives of providers (35%) will be the key factors affecting medical costs as well as the decline in the quality or funding of public health systems (27%) and geopolitical conflicts (19%).

2023 Global Medical Trends Survey WTW October 12, 2022


AHA pursuing 340B remedy: Last month, the U.S. Supreme Court unanimously ruled against HHS cuts in 340B payment cuts to hospitals. On remand, the American Hospital Association (and certain nonprofit hospitals) motioned to vacate the 340B reimbursement rate in the 2022 Outpatient Prospective Payment System (OPPS) on a prospective basis for the remainder of the 2022 year. The AHA also motioned to remedy, on a retrospective basis, all underpayments to 340B hospitals under the reimbursements rates established in OPPS Rules from 2018 to 2022. The Court indicated that this issue would be addressed separately, in part due to concerns voiced by non-340B hospitals regarding potential recoupments by HHS to fund the retrospective payments claimed by 340B hospitals.

340B Update: District Court Rejects 2022 Payment Methodology for 340B Hospitals Following Supreme Court Win National Law Review October 6, 2022

Study: hospitals run by physician CEOs not associated with higher safety, HCAPS scores: In this cross-sectional study of 6162 US hospitals for performance year 2019:

·        383 (6%) of 6162 hospitals had physician CEOs

·        A positive association was found between physician CEOs and HCAHPS patient willingness to recommend the hospital, but the multivariable model found no significant association between hospitals led by a physician CEO and higher HCAHPS ratings or Leapfrog grades.

·        A positive Spearman correlation coefficient was found between physician CEOs and HCAHPS patient willingness to recommend the hospital but the association between CEO medical background and Leapfrog safety grades or HCAHPS ratings did not reach a level of significance in the multivariable ordinal logistic regression models.

See et al Comparison of Quality Measures From US Hospitals With Physician vs Nonphysician Chief Executive Officers JAMA Network Open October 13, 2022;5(10):e2236621. doi:10.1001/jamanetworkopen.2022.36621

Campaign 2022

KFF Campaign 2022 Poll: Abortion drawing voter attention: Per the October  KFF Health Tracking Poll  released last Tuesday:

·        Abortion: 50% of voters now say the Supreme Court’s decision overturning Roe v. Wade has made them more motivated to vote in this year’s elections, up from 43% in July and 37% in a in May. Nationally, 82% of voters oppose laws that would prohibit abortion in cases of rape and incest, as is now in place in some states such as Texas, Tennessee, South Dakota, Missouri, Louisiana and Kentucky. About six in ten (59%) oppose prohibiting abortions after a fetal heartbeat is detected, which is usually at around six weeks. In addition, large majorities of voters oppose punitive abortion laws, such making it a crime for doctors to perform them (74%) or for women to get them (79%), and allowing private citizens to sue people who provide or assist in abortions (81%).

·        Inflation Reduction Act: awareness of the law’s Medicare provisions is low: allowing Medicare to negotiate some drug prices (36%), capping monthly out-of-pocket insulin costs for people on Medicare (29%), and limiting overall out-of-pocket prescription costs for those on Medicare (29%). Large majorities of older voters say they would be more likely to vote for candidates who support these provisions: limiting out-of-pocket prescription costs (73%), allowing Medicare drug price negotiations (65%), and capping monthly insulin costs (64%).

KFF Health Tracking Poll October 2022: The Issues Motivating Voters One Month Before The Midterm Elections October 12, 2022


Up to 1 million to benefit from subsidy extension: Tuesday, the Biden Administration finalized a rule that expands eligibility for insurance premium tax credits for Affordable Care Act (ACA) marketplace plans. The rule is in place to fix a glitch in a 2013 regulatory law that has caused the average annual employee contribution for family coverage in employer-sponsored health plans to increase 30%, nearly 2X the rise in the consumer price index since that time. The fix will mean that dependents of a worker with access to employer-sponsored health insurance will be eligible for premium subsidies on ACA plans if the family premium under employer coverage exceeds 9.5% of the family’s income in 2022. The change will increase the federal deficit by an average of $3.8 billion a year over the next 10 years,

New Affordable Care Act Rule Expands Subsidies to Families Wall Street Journal October 11,