Over the weekend, President Biden called it quits and Democrats seemingly coalesced around Vice President Harris as the Party’s candidate for the White House. While speculation about her running mate swirls, the stakes for healthcare just got higher. Here’s why:
A GOP View of U.S. Healthcare
Republicans were mute on their plans for healthcare during last week’s nominating convention in Milwaukee. The RNC healthcare platform boils down to two aims: ‘protecting Medicare’ and ‘granting states oversight of abortion services. Promises to repeal and replace the Affordable Care Act, once the staple of GOP health policy, are long-gone as polls show the majority (even in Red states (like Texas and Florida) favor keeping it. The addition of Ohio Senator JD Vance to the ticket reinforces the party’s pro-capitalism, pro-competition, pro-states’ rights pitch.
To core Trump voters and right leaning Republicans, the healthcare industry is a juggernaut that’s over-regulated, wasteful and in need of discipline. Excesses in spending for illegal immigrant medical services ($8 billion in 2023), high priced drugs, lack of price transparency, increased out-of-pocket costs and insurer red tape stoke voter resentment. Healthcare, after all, is an industry that benefits from capitalism and market forces: its abuses and weaknesses should be corrected through private-sector innovation and pro-competition, pro-consumer policies.
A Dem View of Healthcare
By contrast, healthcare is more prominent in the Democrat’s platform as the party convenes for its convention in Chicago August 19. Women’s health and access to abortion, excess profitability by “corporate” drug manufacturers, hospitals and insurers, inadequate price transparency, uneven access and household affordability will be core themes in speeches and ads, with a promise to reverse the Dobb’s ruling by the Supreme Court punctuating every voter outreach.
Healthcare, to the Democratic-leaning voters is a right, not a privilege. Its majority think it should be universally accessible, affordable, and comprehensive akin to Medicare. They believe the status quo isn’t working: the federal government should steward something better.
Here’s what we know for sure:
- Foreign policy will be a secondary focus. The campaigns will credential their teams as world-savvy diplomats who seek peace and avoid conflicts. Nationalism vs. globalism will be key differentiator for the White House aspirants but domestic policies will be more important to most voters.
- Healthcare reform will be a more significant theme in Campaign 2024 in races for the White House, U.S. Senate, U.S. House of Representatives and Governors. Dissatisfaction with the status quo and disappointment with its performance will be accentuated.
- The White House campaigns will be hyper-negative and disinformation used widely (especially on healthcare issues). A prosecutorial tone is certain.
- Given the consequence of the SCOTUS’ Chevron ruling limiting the role and scope of agency authority (HHS, CMS, FDA, CDC, et al), campaigns will feature proposed federal & state policy changes and potential Cabinet appointments in positioning their teams. Media speculation will swirl around ideologues mentioned as appointees while outside influencers will push for fresh faces and new ideas.
- Consumer prices and inflation will be hot-button issues for pocketbook voters: the health industry, especially insurers, hospitals and drug companies, will be attacked for inattention to affordability.
- Substantive changes in health policies and funding will be suspended until 2025 or later. Court decisions, Executive Orders from the White House/Governors, and appointments to Cabinet and health agency roles will be the stimuli for changes. Major legislative and regulatory policy shifts will become reality in 2026 and beyond. Temporary adjustments to physician pay, ‘blame and shame’ litigation and Congressional inquiries targeting high profile bad actors, excess executive compensation et al and state level referenda or executive actions (i.e. abortion coverage, price-containment councils, CON revisions et al) will increase.
- Total healthcare spending, its role in the economy and a long-term vision for the entire system will not be discussed beneath platitudes and promises. Per the Congressional Budget Office, healthcare as a share of the U.S. GDP will increase from 17.6% today to 19.7% in 2032. Spending is forecast to increase 5.6% annually—higher than wages and overall inflation. But it’s too risky for most politicians to opine beyond acknowledgment that “they feel their pain.”
My take:
Regardless of the election outcome November 5, the U.S. healthcare industry will be under intense scrutiny in 2025 and beyond. It’s unavoidable.
Discontent is palpable. No sector in U.S. healthcare can afford complacency. And every stakeholder in the system faces threats that require new solutions and fresh voices.
Stay tuned.
Paul
PS: Today marks the second day of the American Hospital Association’s Leadership Summit in San Diego. As I observed in the Keckley Report last week, hospitals face 3 ominous, ongoing challenges: making services more affordable, creating a long-term vision and strategy for their organizations and building trust. (Most Hospitals Fall Short on Affordability, Vision and Trust – Paul Keckley). The Board of the American Hospital Association is grappling with these alongside its affiliated state associations. Akin to every sector in healthcare, it’s a pivotal time for hospitals. Their future is not a repeat of their past.
Sections in this Report
- Quotable
- Consumers
- Economy
- Hospitals
- Insurers
- Litigation
- Policy
- Polling
- Prescription Drugs
- Workforce
Quotable
Re: Primary care: “I think the concierge model can be a good one, but this trend within our healthcare system seems to reflect so many of the overarching problems with primary care, rather than the ultimate and best solution. If the answer to so many of the problems of our healthcare system today is a good solid foundation of primary care doctors to take care of everybody, then selecting out patients by their ability to pay doesn’t seem like the best way out. Instead, making sure patients can get the right care where they need it and when they need it, helping them navigate a complicated healthcare system, finding the right subspecialists who can help with complex issues, and building a robust team to ensure that all of the patient’s healthcare needs are met is what we really need…
It’s hard to plead poverty, but it’s less about direct reimbursement to the physician than it is investment in the primary care infrastructure at the health system level that might better level the playing field. I firmly believe that if we were to restructure things with a system focused on primary care, as it is in most countries around the world, by ensuring that everyone gets in for routine care, that everyone has boundless access to manage their acute and chronic medical problems, and that everyone can get all of their vaccines and other preventative healthcare maintenance issues addressed, then we might avoid the disease burden that too often comes from missing these opportunities…
Right now, we’re looking back on where our healthcare system was decades ago, and wishing we’d made these changes way back then. I can only hope that we won’t be somewhere down the line 10, 20, or 30 years from now, kicking ourselves for not having made these changes today.”
Let’s Make Primary Care a Primary Focus | MedPage Today
Re: birthrate decline: “Americans aren’t just waiting longer to have kids and having fewer once they start—they’re less likely to have any at all. The shift means that childlessness may be emerging as the main driver of the country’s record-low birthrate.
Women without children, rather than those having fewer, are responsible for most of the decline in average births among 35- to 44-year-olds during their lifetimes so far…Childlessness accounted for over two-thirds of the 6.5% drop in average births between 2012 to 2022… The change is far-reaching. More women in the 35-to-44 age range across all races, income levels, employment statuses, regions and broad education groups aren’t having children…
Birthrates among 35- to 44-year-olds give demographers who study fertility an early look into millennials’ changing approach to parenthood. But these researchers also look closely at women over 40, reasoning that if a woman doesn’t have a child by then, she is more likely to remain childless.
The number of American women over 40 who had no children was declining until 2018, according to Current Population Survey data, when it then began to rise again. Now, some demographers and economists expect the increase in childlessness will be sustained due to shifts in how people think about families. “
Why Americans Aren’t Having Babies – WSJ
Re: Sullivan Cotter CEO on workforce strategy: “Imagine a scenario where a healthcare organization is staffed to meet the exact needs of its patient population, where provider skill sets are accurately aligned to these needs and where individual or teams of clinicians are incentivized to deliver care in a high-quality, efficient and proactive manner—an aspiration we can all support.
Unfortunately, in the U.S., our traditional healthcare models are not designed to achieve this scenario. To work toward it, organizations need to change their operational models and systematically rethink organizational design strategies…
Effectively solving current operational and labor challenges doesn’t mean simply hiring more. It means having a clear understanding of the optimal system design, reducing or expanding the roles of existing employees and actively nurturing nontraditional pathways. Only by achieving these factors will we be on the path to success.”
Organizational Design Matters: How Health Care Is Evolving To Combat Labor Shortages (forbes.com)
Re: AEI on price transparency: “With the right rules, transparent pricing for medical services, which has bipartisan support, could lower health care costs without harming quality. Regulations forcing providers to disclose their charges online have exposed arbitrary pricing disparities that affected payers can now, with some effort, identify and resist. New legislation under development in Congress, if approved, would codify and improve these rules, but stronger incentives for consumers would make this legislation even more effective. To forcefully jump-start a patient-led market transformation, Congress should require service providers to specify pricing for consumer-focused standardized bundles. These bundles would cover all the costs for discrete, high-volume procedures and routine primary and preventive care. Existing public and private initiatives offer relevant models of the needed standardization protocols. Insurance coverage must be coordinated with these rules to ensure patients always benefit financially when choosing lower-priced providers.”
Price Transparency in Health Care: The Consumer Opportunity | American Enterprise Institute – AEI
Re: SCOTUS’ Chevron Decision fallout: “On June 28, 2024, the U.S. Supreme Court issued its decision in the companion cases of Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce, overturning the 40-year-old Chevron doctrine. Under Chevron, courts would defer to reasonable agency interpretations of ambiguous statutes. With breathtaking scope, the Loper Bright opinion reshapes the balance of power among the three branches of government, centering courts at the expense of the politically accountable branches: Congress and administrative agencies. Loper Bright will touch every aspect of society, but the potential consequences of putting generalist judges at the center of power are especially troubling for scientific and technical agencies within the Department of Health and Human Services. These implications could include increased litigation and regulatory uncertainty for the health care industry as well as diminished expert authority over the regulation of health care products and services — with heightened risks to patient safety and public health…
Whereas Chevron favored the government experts charged with administering public programs, Loper Bright favors well-funded industry insiders with the resources to litigate rules that threaten to curb waste, fraud, or abuse. For example, industry-driven litigation has hampered government implementation of the No Surprises Act, which has resulted in far less savings and weaker protections for patients from surprise out-of-network bills than anticipated. In all likelihood, the net effect of Loper Bright will be to move regulatory policy in an industry-friendly — and in many cases deregulatory — direction, to the detriment of patient welfare, public health, and safety…
In this regard, Loper Bright continues the Court’s assault on administrative authority and scientific expertise. The Court’s arrogation of this authority to itself now means that it is responsible for the consequences of its judicial choices for real people in the real world. As Kagan wrote, “What will the Nation’s health-care system look like in the coming decades? Expect courts from now on to play a commanding role.”
Re: deal environment: “As the macro environment of higher interest rates, persistent inflation, and geopolitical risks continues to challenge companies, dealmakers are showing new flexibility in the types of deals they choose and how those deals are getting done. Indeed, if there’s one lesson from the 2024 activity, it’s that companies are making deals designed to deliver both cost synergies and growth—not one or the other.
Healthcare remains a major catalyst for strategic M&A as companies seek to shore up top-line growth and optimize portfolios around therapeutic areas and technologies… Spin-offs can be hard to get right, however, and sometimes a separated asset finds a new home in someone else’s portfolio instead (for more… That’s what happened with the sale of Edwards Lifesciences’s critical care business to Becton, Dickinson and Company (BD). With this deal, BD reinforces its increasing importance in connected patient care while Edwards renews its focus on structural heart disease”
M&A Midyear Report 2024: Dealmakers Mine Multiple Sources of Value | Bain & Company
Consumers
Report: Prevalence of medical debt: “This analysis shows that 20 million people (nearly 1 in 12 adults) owe medical debt. The SIPP survey suggests people in the United States owe at least $220 billion in medical debt. Approximately 14 million people (6% of adults) in the U.S. owe over $1,000 in medical debt and about 3 million people (1% of adults) owe medical debt of more than $10,000. While medical debt occurs across demographic groups, people with disabilities or in worse health, lower-income people, and uninsured people are more likely to have medical debt.”
The burden of medical debt in the United States – Peterson-KFF Health System Tracker
Study: Medical debt and delayed mental health care: Researchers analyzed the association between medical debt and delayed or forgone mental health care via a cross-sectional study of 27,651 US adults. Key findings:
- 19.4% to 27.3% reported they had medical debt over the past year.
- Between 1 in 4 and 1 in 5 US adults with depression and anxiety carry medical debt. Medical debt was associated with more than a 2-fold increase in delayed or forgone treatment for mental disorders.”
Economy
Altarum: Highlights from the July 2024 brief:
- National health spending shows signs of acceleration
- In May, 2024, national health spending was 7.7% higher than in May 2023 and represented 17.8% of GDP.
- GDP in May 2024 was 5.7% higher than in May 2023, growing 2.0 percentage points more slowly than health spending.
- Personal health care spending growth in May was 8.3%, year over year, with utilization growth continuing to outpace price growth.
- Growth among major spending categories was highest by far for home health care, at 22.6%, year over year. Spending growth on each of the other major categories was below 10%, with spending on physician and clinical services growing the slowest, at 6.6%.
The overall Health Care Price Index (HCPI) increased by 3.3% year over year in June, matching the slightly revised growth rate from a month prior.
- Economywide inflation data were mixed, with year-over-year growth in the overall Consumer Price Index (CPI) falling slightly to 3.0%, but growth in the Producer Price Index (PPI) increasing to 2.6%.
- Among the major health care categories, prices for dental care (5.3%), nursing home care (4.6%), and hospital care (3.5%) were the fastest growing, while physician and clinical price growth was the slowest (1.7%).
- For major payers, year-over-year Medicaid price growth (6.4%) exceeded services price growth for private insurance (3.9%) and Medicare (1.7%) patients.
- The implicit measure of health care utilization growth was 5.0% year over year in May, matching the growth rate for utilization from April.
- Home health care utilization was, by far, the fastest growing component, increasing 20.1% year over year, followed by prescription drugs utilization (5.6%), and hospital care (5.5%).
July 2024 Health Sector Economic Indicators Briefs | Altarum
Governance
EY Report: Proxy season, nom-gov committee pressure: Board and committee leaders faced more opposition than peers but still secured strong support. Investor focus on director accountability and individual director qualifications and performance has increased in recent years. This is particularly true in the wake of universal proxy rules that allow investors to mix and match candidates from different slates in a proxy contest. Despite the increased scrutiny, support for directors increased this year. S&P 500 directors averaged 96.3% support compared with 95.8% in 2023…Nominating and governance committee chairs continued to draw the least support…Nominating and governance committee chairs have been impacted the most by the shift in investor voting. This likely reflects their responsibilities related to board composition, governance practices and (for an increasing number of nominating and governance committees) oversight of sustainability. Notably, among S&P 500 directors who received more than 15% opposition votes this year, 34% are nominating and governance committee chairs.
Support for “say-on-pay” proxy proposals among Standard & Poor’s 500 companies increased from 87% in 2022 to 90% this year even though 20 percent of investors raised concerns that performance stock unit awards lack rigor and are too complex, EY found in a review of the 2024 proxy season cited by CFO Dive (July 17, Tyson). Meanwhile, 15% of investors described one-time special awards outside the normal compensation plan as “red flags,” and 17% plan to place greater emphasis on exploring whether pay is excessive for the highest performing CEOs.
EY: ey-five-top-takeaways-from-the-2024-proxy-season.pdf
Hospitals
Report: SDOH and health system: “The Biden administration’s recently published The U.S. Playbook to Address Social Determinants of Health cites extensive research to argue that increasing public spending on housing, education, food, and neighborhood environments will often pay for itself by reducing health care costs. This justification has been used to expand the ability of states, insurers, and nonprofit organizations to claim Medicaid and Medicare funds for providing nonmedical services.
These nonmedical factors are called social determinants of health (SDOH), but the bulk of SDOH research is substandard and does not appropriately disentangle causation from correlation…
SDOH justifications have become so popular because they allow states, nonprofit groups, and other social policy advocates to tap into the much larger pool of federal funding that is allocated to health care. But health care costs will not be greatly reduced by increasing spending on social services; instead, it will tend to inflate expenses. Nor should social policies be structured according to their incidental impacts on health, as Americans who most need public assistance are often those whose health has the weakest prospects of recovery…
Social services are best provided by social work agencies, not doctors or hospitals. Hospitals interact with most patients only sporadically and are unlikely to have a good understanding of their specific nonmedical needs. Community residents with the greatest unmet social needs are likely to be those most disconnected from the health-care system and least likely to have well-established primary-care relationships…
Even if a social welfare program is a well-intentioned and wise idea, that does not make it health-care. Health care costs will not be greatly reduced by expanding the meaning of health-care to cover every social service; nor would doing so distribute nonmedical assistance to those who need it most.”
Is Everything Health Care? The Overblown Social Determinants of Health | Manhattan Institute
Op-Ed: mainstreaming addiction treatment: “…Imagine what it would look like if health care approached heart disease like it does addiction: A person who comes to an emergency department with a heart attack might be told they are to blame for their health condition because of lifestyle factors. If they were lucky, they might be given a list of cardiologists to call, and they might be sent home with a stern reminder not to have another heart attack. Even worse, they might be kicked out of the hospital, or fired by their cardiologist, if they had ongoing symptoms of their illness.
It is almost laughable to describe this absurd approach, yet it is continues to be a common experience for people with addiction. They are blamed, treated poorly, expected to navigate complex and siloed systems on their own, and are often terminated from care for ongoing substance use.
Now is the moment to turn away from this two-tiered approach, where addiction care bears little resemblance to the rest of medicine, and instead bring addiction treatment fully into health care systems.
This will require integrating addiction treatment into all primary care practices, as well as into every hospital and emergency department — essentially into every touchpoint across health care systems…”
Addiction treatment must be integrated into the health care system | STAT (statnews.com)
Insurers
PWC Updates Forecast:: PricewaterhouseCoopers’ Health Research Institute (HRI) researchers interviewed actuaries from more than 20 health plans that cover 100 million employer-sponsored members and 10 million Affordable Care Act members to estimate healthcare inflation for next year. Highlights:
“Commercial health care spending is estimated to grow 8.0% and 7.5% between 2024 and 2025, its highest level in 13 years, for Group and Individual markets, respectively. This near-record high is driven by continued inflationary pressures, prescription drug spending, and behavioral health utilization without new meaningful deflators…Meanwhile, new deflators are not enough to offset these forces. Growing adoption of biosimilars may provide some relief, while many health plans are looking inward to find opportunities across business operations to generate additional savings… Inpatient and outpatient utilization were driven by demand from deferred care since the pandemic, which was met by newly created inpatient and outpatient capacity given the shift in sites of care towards outpatient, professional, ambulatory care settings…Today’s medical cost trend signals urgency to various healthcare players to rethink their organizational strategies to more effectively manage the total cost of care.”
PwC’s Health Research Institute: PwC
Coverage gap in non-expansion states: “More than 1.6 million uninsured adults are stuck in the Medicaid “coverage gap,” with no path to affordable health coverage. They have incomes below the federal poverty level (FPL) — too low to qualify for financial help in the Affordable Care Act (ACA) marketplaces — yet they don’t qualify for Medicaid because they live in one of the ten states that have not adopted the ACA Medicaid expansion. People in the coverage gap are racially and ethnically diverse, and 65 % are people of color. Closing the coverage gap would therefore shrink ethnic and racial disparities in health coverage, which the ACA has significantly reduced but not eliminated.
Adults in the coverage gap range from ages 19 to 64 and include working families and parents caring for children. Compared to other adults, they are more likely to have disabilities. Among workers, adults in the coverage gap are more likely to be self-employed or to work in industries such as construction, retail, and food services, where wages tend to be low and employers are less likely to offer health coverage. Adults in the coverage gap are also more likely to be employed in caregiving occupations such as child care workers, home health aides, personal care aides, and nursing assistants.”
EY: Cybersecurity Investments by Health Plans
- 55% of health insurance executives surveyed say that compared with last year, their organizations are investing more or much more in cybersecurity solutions to meet compliance needs, protect member privacy and prevent data breaches.
- 91% of health insurance executives express some level of concern regarding the rising costs associated with implementing and maintaining advanced cybersecurity measures.
- 70% share that robust cybersecurity measures have increased member trust in using digital health services by ensuring their data remains secure.
Report: Office of Health Policy Insurance Coverage Trends 2010-2024: Highlights:
- In 2010, roughly 48 million Americans, or 16%of the population, lacked health insurance coverage. The uninsured rate fell substantially between 2013 (14.4%) and 2023 (7.7%).
- Since 2021, the ACA Marketplaces have expanded insurance coverage from 12 million Americans to over 21 million Americans, an increase of more than 77%.
ASPE/HHS, Improving Access to Affordable and Equitable Health Coverage: A Review from 2010 to 2024, June 2024
Campaign 2024 and Medicare Advantage: “Republicans tend to favor privatization of government services and have generally been friendlier to Medicare Advantage plans. Investors are betting that trend could continue under a second Trump administration. That could benefit not only Humana, but also companies such as UnitedHealth Group UNH 4.45%increase; green up pointing triangle and CVS Health CVS 2.56%increase; green up pointing triangle, which have a sizable presence in Medicare.
Since the presidential debate night last month, Humana is up 9.2% and UnitedHealth is up 12.8%, while the S&P 500 has risen by 3.4%. CVS, which has faced more serious financial pressures from its Medicare plans, is up by just 2.9% over that period…
Humana could also benefit if megadeals make a comeback…Not every insurance market will necessarily benefit with Republicans in power. Companies focused on serving populations in the Medicaid and Affordable Care Act programs could be more at risk of seeing their markets cut to size.
It is hard to imagine Republicans once again trying to repeal Obamacare, which is relatively popular in Red states such as Florida and Texas. But a Republican sweep come November might spell the end of enhanced subsidies that saw the program swell to more than 21 million members under Biden. Republicans also could take steps to weaken Medicaid. Insurers focused on those markets, such as Oscar Health OSCR -3.71%decrease; red down pointing triangle, Centene CNC -1.90%decrease; red down pointing triangle and Molina MOH -2.99%decrease; red down pointing triangle, could face some pressure in that scenario.”
The Games Insurers Play With Your Diagnosis – WSJ
Litigation
FTC investigation: dialysis clinics: The Federal Trade Commission is investigating the nation’s two largest dialysis providers over allegations they illegally thwart smaller competitors…
The investigation focuses in part on how the companies make it difficult for the physicians who work in their clinics to leave for rivals and start new businesses… The agency is investigating whether noncompete agreements the companies require doctors to sign snarl efforts by rivals that want to make it easier for dialysis patients to be treated at home.
The investigation began earlier this year and is in its early stages, the people said, and examines the business models of the two companies, DaVita and Fresenius Medical Care, which dominate the U.S. dialysis market, controlling at least 70% of outpatient clinics. Though neither company is a household name, their clinics are found in suburban shopping malls, big-city downtowns and rural communities in the U.S.
Feds tackle dialysis giants with antitrust probe – POLITICO
Academic health systems v. HHS: Hospitals belonging to the UNC Health, UChicago Medicine and Yale New Haven Health systems sued Health and Human Services Secretary Xavier Becerra last Friday, alleging the federal government underpaid hospitals for graduate medical education under an allegedly flawed reimbursement calculation. The complaint filed in the U.S. District Court for the District of Columbia cites the Supreme Court’s June ruling overturning what’s known as the Chevron deference, which gave broad authority to federal agencies in interpreting statutes.
In the complaint, the hospitals focused on funding changes related to how HHS defines full-time equivalent residents under the Inpatient Prospective Payment System. The federal government pays academic hospitals for resident salaries and other teaching expenses based on the weighted number of residents working at a facility and the treatment those facilities provide for Medicare patients.
Chevron ruling cited in hospital graduate medical education suit | Modern Healthcare
Physicians
Study: PCP relationships: Klein and Partners survey of 1005 “decision makers” conducted online March 5-9, 2024: Highlights:
- 87% have a PCP relationship and 24% of these say purpose if coordinate their care: of these, 89% are MDs, and 50% have had the relationship less than 5 years.
- 31% of the PCP relationships is unaffiliated with a health system vs. 44% who said it mattered: Boomers are most insistent with having a PCP who is affiliated with their preferred system and if they have to switch PCPs, any new PCP must be part of that preferred system. To those with a chronically condition, 66% said it was absolutely/very important.
- 63% have had difficulty accessing primary care and are typically waiting twice as long as they find acceptable
- Most Useful Source for Information on Hospitals before Choosing One: 43% do online reviews of hospitals (39% 2023 19% 2016) Quality ranking organizations: 25% (25% 2023 39% 2016) Neither: 17% (25% 2023 23% 2016) Not sure: 14% (11% 2023 19% 2016) Especially among Women, Millennials and Gen X, and Parents
Building a strong brand [Quantitative test of brand promise statements] (strategichcmarketing.com)
Op-Ed: physician pay adjustments: “… In 2021, CMS overhauled the fee schedule by increasing the work relative value units (RVUs) for most E&M codes by significant margins: approximately 15% for office/outpatient visits, 28% for inpatient/observation visits, and 26% for nursing facility visits. This unprecedented increase acknowledged a mounting body of evidence that E&M services were systematically and severely undervalued compared with procedural codes, with estimates of undervaluation ranging from 14% to 28%. By elevating the RVUs for these critical activities, such as diagnosis, treatment planning, risk assessment, and care coordination, CMS sought to compensate physicians more appropriately for their cognitive labor and nurture a health care system prioritizing thoughtful medical decision-making over procedural volume.
However, this projected $10 billion to $12 billion increase in E&M payments over 4 years was not intended as a permanent budgetary expansion beyond CMS’ jurisdictional authority. Instead, it represented the first phase of a multiyear process to fundamentally rebalance the fee schedule while remaining budget neutral overall, as mandated by Congress. To offset the rising costs from higher E&M valuations, CMS is now pursuing the next phase: adjusting the scaled conversion factor used to calculate payment rates for other services not receiving RVU increases. The proposed 3.4% conversion factor reduction in 2024 aims to eliminate the remaining financial deficit from the E&M increases while preserving their higher valuations. The impacts of this rebalancing are, however, uneven across certain medical specialties. Projections estimate that primary care specialties, such as family medicine, could see an almost 2% increase in allowed Medicare payments.
Conversely, some fields face reduced Medicare reimbursements overall, including radiology (–3% projected), emergency medicine (–1%), anesthesiology (–8%), and interventional radiology (–9%). This divergence stems from the reality that cognitive specialists like primary care physicians derive a much larger portion of their revenues from E&M billings compared with proceduralists. As E&M payments rise, the former group benefits disproportionately before factoring in the conversion factor reduction. This rebalancing reflects long-simmering debates around the methodology used by the American Medical Association’s Relative Value Scale Update Committee (RUC) to recommend RVUs for physician work…
…the health care system cannot afford to ignore these fiscal pressures indefinitely without risking exacerbated workforce shortages, declining professional satisfaction, and compromised quality and access to care, especially for disadvantaged patient populations. A path forward necessitates acknowledging the defensible premise behind rebalancing fee schedules while instituting safeguards against unintended specialty disparities. It means strategically expanding education financing options to empower promising medical candidates regardless of socioeconomic background…”
Financial Crossroads of Care: Physicians’ Struggle and Patient Outcomes (ajmc.com)
Policy
BPC Telehealth Recommendation: The Bipartisan Policy Center issued a report intended to establish permanency for telehealth as a key element of care delivery. It recommends:
- Develop a Long-Term Reimbursement Strategy Congress should direct the Centers for Medicare & Medicaid Services (CMS) to propose a long-term telehealth reimbursement strategy that balances access to services, quality of care, and cost considerations. Congress should require CMS to study the cost of telehealth, propose a long-term reimbursement strategy, and submit a report on its findings by June 2026. As part of this work, CMS should propose new reimbursement models that account for virtual care services delivered as part of a hybrid model of care (in-person, plus virtual). • CMS should permanently maintain all telehealth flexibilities for providers participating in value-based payment arrangements with two-sided risk.
- Ensure High-Quality Virtual Care Telehealth is an effective tool to expand access to care, but variations in quality and occasional system misuse persist. Congress and the administration should implement strategies to promote high-quality virtual care. progress notes with a patient’s usual care team. CMS should also require that providers offering telehealth services have the capacity to deliver or refer patients to inperson care, particularly in emergency situations.
- Explore Opportunities for Permanency Policymakers should push for permanent telehealth policy where the evidence warrants it. Permanent policy will provide stability for patients and providers and offer the certainty needed for health systems and practices to feel comfortable investing in telehealth technology. Specifically, Congress should amend Section 1834(m) of the Social Security Act to: • remove geographic and originating site restrictions; • authorize Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) to serve as distant providers; • allow all eligible Medicare providers to deliver services via telehealth, thus permanently including temporarily eligible providers, such as physical therapists and occupational therapists; and • repeal in-person visit requirements for telemental health services.
Positioning Telehealth Policy to Ensure High-Quality, Cost-Effective Carebipartisanpolicy.org/download/?file=/wp-content/uploads/2024/07/BPC_Telehealth-Brief.pdf
Polling
Gallup on Immigration: “Significantly more U.S. adults than a year ago, 55% versus 41%, would like to see immigration to the U.S. decreased. This is the first time since 2005 that a majority of Americans have wanted there to be less immigration, and today’s figure is the largest percentage holding that view since a 58% reading in 2001. The record high was 65%, recorded in 1993 and 1995.
Most of the rise in resistance to immigration in the June 3-23 poll is offset by a 10-percentage-point decline in those saying they want increased immigration, now at 16%. There has also been a decline in those wanting to see immigration kept at its present level, down six points to 25%: Republicans +15% to 88%, an 11-point increase among independents +11% to 50% and Democrats +10% to 28%.
Sharply More Americans Want to Curb Immigration to U.S. (gallup.com)
Prescription Drugs
46Brooklyn Drug Price changes May 2024:
- In May, there were 13 brand drug list price increases and 3 decreases ranging from -64% to +99%.
- The 10 net increases (combined increases and decreases) are slightly less than May 2023 and May 2022.
- Both the median increase and the weighted average impact of the price changes remain at decade-lows.
May the drug pricing deflation be with you — 46brooklyn Research
Workforce
ESRI: Compensation by industry: Healthcare is compared against 10 other industries and against roles:
- 76% increase in compensation for 2023-2024
- 2014-2024: Healthcare roles +29.9% (#8 of 10) vs. sales #1 of 10) +36.9%
- Mean salary: healthcare 139.266 (+4.1% 2023-2024)
National_Compensation_Forecast_July_2024.pdf (erieri.com)
Report: Gen Z work aspirations: “For over a decade, tech has enjoyed a near-total monopoly on the country’s smartest young workers. Millennials believed they were heading to Silicon Valley in service of a lofty mission. Tech, they were told, was going to democratize data, creating a digital bridge to a better and more equitable world. Instead, tech companies have been responsible for spreading misinformation, fueling hate speech, sowing digital addiction, and exacerbating an epidemic of mental illness among teens. To Gen Z, tech no longer looks like a force for good. On the high-school survey this year, more students said they believe artificial intelligence will have a negative effect on society than those who say it will have a positive one…
If Silicon Valley is going out of vogue, what will take its place as the next hot destination? One contender, according to the latest high-school survey, appears to be healthcare… If the pandemic taught Gen Z anything, it’s that no jobs are more important than those of the front-line workers who put their own lives on the line to save the lives of others… And with the healthcare industry facing severe staffing shortages, we need young people to pursue careers as doctors and nurses far more than we need them to optimize ads on the internet.”
Gen Z’s Next Hot Jobs: Less Tech, More Healthcare – Business Insider
Re: SDOH and health system: “The Biden administration’s recently published The U.S. Playbook to Address Social Determinants of Health cites extensive research to argue that increasing public spending on housing, education, food, and neighborhood environments will often pay for itself by reducing health care costs. This justification has been used to expand the ability of states, insurers, and nonprofit organizations to claim Medicaid and Medicare funds for providing nonmedical services.
These nonmedical factors are called social determinants of health (SDOH), but the bulk of SDOH research is substandard and does not appropriately disentangle causation from correlation…
SDOH justifications have become so popular because they allow states, nonprofit groups, and other social policy advocates to tap into the much larger pool of federal funding that is allocated to health care. But health care costs will not be greatly reduced by increasing spending on social services; instead, it will tend to inflate expenses. Nor should social policies be structured according to their incidental impacts on health, as Americans who most need public assistance are often those whose health has the weakest prospects of recovery…
Social services are best provided by social work agencies, not doctors or hospitals. Hospitals interact with most patients only sporadically and are unlikely to have a good understanding of their specific nonmedical needs. Community residents with the greatest unmet social needs are likely to be those most disconnected from the health-care system and least likely to have well-established primary-care relationships…
Even if a social welfare program is a well-intentioned and wise idea, that does not make it health-care. Health care costs will not be greatly reduced by expanding the meaning of health-care to cover every social service; nor would doing so distribute nonmedical assistance to those who need it most.”
Is Everything Health Care? The Overblown Social Determinants of Health | Manhattan Institute
