CMS on Wednesday (June 9) increased pay for at-home COVID-19 vaccination of Medicare beneficiaries from $40 to $75 per dose, meaning providers will receive about $70 more between the two vaccine doses.
The agency said there are 1.6 million Medicare beneficiaries aged 65 or older who might have trouble accessing the vaccine because they have difficulty leaving their homes.
“CMS is committed to meeting the unique needs of Medicare consumers and their communities – particularly those who are home bound or who have trouble getting to a vaccination site. That’s why we’re acting today to expand the availability of the COVID-19 vaccine to people with Medicare at home,” said CMS Administrator Chiquita Brooks-LaSure. “We’re committed to taking action wherever barriers exist and bringing the fight against the COVID-19 pandemic to the door of older adults and other individuals covered by Medicare who still need protection.”
The agency says there are challenges with delivering vaccinations to the at-home population, including ensuring appropriate vaccine storage temperatures, handling and administration. But the pay bump helps “address the financial burden associated with accommodating these complications.” CMS says the extra pay will help account for the clinical time needed to monitor a beneficiary after the vaccine is administered, as well as the upfront cost tied to administering the vaccine safely and appropriately in beneficiaries’ homes.
The pay rate for each vaccine dose will be geographically adjusted based on where the service is provided.
Hospital mergers and acquisitions are often imbued with the promise that they will transform healthcare. But executives spend less time on the process and consequences of unwinding if the deal sours.
Several notable hospital transactions have fallen apart over the past year, as the acquired hospital or system claims that expectations weren’t met, cultures clashed, executive turnover disrupted operations, performance declined or the hospital’s autonomy was stripped. The separations can drag operations for years as they divert resources from patient care.
“These unwinds have implications across nearly every facet of an organization’s operations, from governance, to finance, to IT, to branding, to credit ratings,” said Ian Spier, director of healthcare at Wells Fargo Securities. “In some cases, they have to reestablish end-to-end administrative and back-office functions to facilitate and support care delivery—that can be quite complicated.”
Newport Beach, Calif.-based Hoag Memorial Hospital Presbyterian and Renton, Wash.-based Providence are amid a legal battle to dismantle their 2013 merger as Hoag argues that Providence didn’t hold up its end of their population health initiative. After being part of Ascension for 18 years, St. Mary’s Healthcare in Amsterdam, N.Y., split from the St. Louis-based chain last year because St. Mary’s said it has been paying more into Ascension than it was receiving.
Yakima (Wash.) Valley Memorial Hospital separated from Seattle-based Virginia Mason Medical Center last year after CHI Franciscan and Virginia Mason pursued a merger. Egg Harbor Township, N.J.-based AtlantiCare and Danville, Pa.-based Geisinger Health agreed to a divorce last year after both parties sued each other for breaching the terms of their 2015 agreement. The separation was complicated by $62.5 million that Geisinger invested in AtlantiCare.
“I’m surprised by how many people in similar situations have reached out to me. This is a conversation wanting to be had in the industry for a long time,” said Robert Braithwaite, CEO of Hoag Memorial. “Some institutions, advisers and healthcare think tanks are talking about this counter trend to mergers and acquisitions and realize it needs further exploration and support.”
St. Joseph Health and Hoag Memorial Hospital Presbyterian announce plans to mergeAUG. 15, 2012“Our affiliation will introduce innovative care processes that will improve clinical outcomes, reduce the overall cost of care, and enhance the healthcare experiences of all members of our community.”Dr. Richard Afable, then-president and CEO of Hoag Memorial
MAY 17, 2021“Rather than getting closer to the community and achieving our population health objectives, that vision got farther away. Providence’s perspective is national and ours is in Orange County, and that really affected the Providence and St. Joseph merger.”Robert Braithwaite, CEO of Hoag Memorial Presbyterian Hospital
AtlantiCare and Geisinger sign a definitive agreement to mergeMay 27, 2014“Geisinger is a national model for innovation and value that is on the leading edge of transforming healthcare, and we are pleased and excited to enter into this definitive agreement,”‘David Tilton, then-president and CEO of AtlantiCareJan. 23, 2020“Michael Charlton, AtlantiCare’s chairman and a member of Geisinger’s board, breached his fiduciary duty to Geisinger and was aided and abetted by AtlantiCare’s CEO, Lori Herndon.”Geisinger alleged in a complaint filed in a Pennsylvania federal courtSHOW ME THE MONEY
Most hospitals that joined a larger system generated more revenue but didn’t become more efficient, Modern Healthcare’s analysis of Medicare cost reports from 2013 to 2019 shows.
Hoag Memorial Hospital, for instance, saw its estimated operating revenue per day increase 29.2% from 2015—two years after it merged with Providence—to 2019. But its average operating expenses per day rose 34.1% over that span, dropping its average operating income per day 19.3%. Meanwhile, its full-time equivalent employees per average occupied bed rose from 5.99 to 6.75 from 2015 to 2019.
Although Medicare cost reports do not capture all of a hospital’s data, they can provide general estimates of financial health. Cost reports are audited by the hospitals, and not a third party like annual earnings reports. They exclude physician practice metrics and system-wide measures, among other data. Modern Healthcare used 2013 as a baseline because the Medicare cost reports’ format changed that year.
Modern Healthcare’s analysis supports other research that found mergers yield minimal cost savings. Supply chain spending, for instance, only dropped about 1.5% after hospitals merged, which represents only about 10% of what is typically claimed for a merger justification, according to a University of Pennsylvania Wharton School working paper that analyzed hospital supply purchase orders from 1,200 hospitals from 2009 to 2015.
“People are beginning to understand that mergers don’t bring about cost reduction,” said Lawton Robert Burns, professor of healthcare management at the Wharton School, who wasn’t affiliated with the study, noting the recent decline in M&A transactions as executives are being more careful.
Acquired hospitals typically pay what’s essentially a tax to support the system’s central office, said Dan Higgins, a partner at Dentons who is legal counsel for Hoag. Ideally, those centralized support offices produce more efficiencies than their cost to maintain them, he said.
“We have been paying an enormous amount, and what are we relying on them for?” Higgins asked. “The answer is fundamentally nothing.”
Providence frames it differently. Providence helped Hoag build up its medical group, diagnostics, ambulatory surgery centers, orthopedic services and mental health offerings, said Erik Wexler, president of operations and strategy for the 51-hosptial system’s southern footprint. The system also deployed the Epic electronic health record platform across Hoag’s network, he said.
“If someone says nothing in population health improved, that wasn’t the case,” Wexler said. “Their improvements in quality and patient satisfaction have exceeded their own care standards, which illustrates the benefits of being together.”
The court proceedings won’t change day-to-day operations with Hoag, Wexler said, lauding the hospital and its medical staff. But it may slow long-term initiatives, he said.
“It may slow down other innovative opportunities because the parties are waiting to learn about what the court feels,” Wexler said. A trial date is set for April 2022.
Higgins said the cultures didn’t align either.
Hoag requested to change bedside monitors so that it would alert the nurses station when vital signs were off, rather than wake the patient. Higgins said Hoag allegedly couldn’t get Providence’s approval because it “wasn’t part of Providence’s program,” he said.
“It was one of a thousand pin pricks where the corporatized parent wouldn’t allow a financially well-endowed, fast-moving hospital to do what it needed at the physician level,” Higgins said.
“Decision-making was so far removed from the community, it was a hindrance to community care,” Braithwaite said. “There’s an undermining of the commitment to the level of service and quality for the purpose of strengthening the financials at Providence. It felt counter-directional and certainly counter-cultural.”
Wexler rebutted the claims that Providence stripped Hoag of its authority, saying that “nothing could be further in the truth.” There are corporate offices in Irvine, he noted, adding that it is “really unfortunate Hoag is trying to pull apart a system of care that’s all within a 20-mile radius.”
Providence acquired St. Joseph Health in 2016. At that point, all of Providence’s focus was on improving St. Joseph’s financials and it tabled its population health initiative with Hoag, Braithwaite said.
Providence’s operating income declined $536 million from 2015 to 2016, posting 1.4% and -1.2% operating margins, respectively. The group of Orange County, Calif., hospitals, including Hoag, helped mitigate losses incurred at Seattle’s Swedish Health—which Providence acquired in 2012—and Providence’s Los Angeles operations. Hoag’s operating margin exceeded 5% from 2015 to 2019, according to the Office of Statewide Health Planning and Development data.
Southern California represents more than 30% of Providence’s operating revenue. That share increased from 29% in 2018 to 32% in 2020.
Hoag accounts for less than 6% of Providence’s operating revenue, Providence said in its 2020 earnings report. But that’s an oversimplification, said Nathan Kaufman, founder and managing director of the healthcare consultancy Kaufman Strategic Advisors.
“Hoag is such a significant part of Providence’s financial performance, but they don’t have a say commensurate with that,” he said.
M&A advisers offered several recommendations on how to best handle proposed transactions:
Transparency: Hospital executives should tell their teams how organizational structures would change if the deal goes through, including direct reports and goals of department committees. They should also tell the community why they would merge and what would change.
Unwinding provisions: Include how assets would be divided in the event of a breakup to try keep matters out of the courts.Culture: Identify cultural differences between the two organizations related to how they work with physicians, daily workflows and strategic goals, among other issues.
Integration plan: Set a timeline and process for integrating service lines, executive/staff positions, back-office operations, vendor/payer contracts and IT systems.
Alternatives: Explore strategic options like joint operating agreements that could yield many of the same efficiencies without a change of control.
Expense growth outpaced or mirrored revenue growth at three of the four hospitals Modern Healthcare analyzed to try to gauge why they sought to leave their parent systems.
“These systems are not put together to really cut costs or improve quality or for other reasons that CEOs explicitly say,” said Wharton’s Burns. “They are put together to grow.”
St. Mary’s Healthcare increased its average estimated operating revenue per day 25.4% from 2013 to 2019 while still a part of Ascension. But its operating expenses rose 32.2% over that span.
AtlantiCare Regional Medical Center, the health system’s flagship hospital, was the exception. The estimated operating revenue per patient day was nearly double its expense growth from 2013 to 2019, increasing 26.4% and 14.9%, respectively.
Yakima Valley Memorial, which separated from Virginia Mason Medical Center last year after CommonSpirit Health’s CHI Franciscan and Virginia Mason pursued a merger, saw its estimated operating revenue per day grow 47.9% from 2013 to 2019, falling short of its 71.9% increase in expenses.
“One reason for dissolution of some mergers is about access to reproductive services when the parent (company) is affiliated with a Catholic health system. Clearly, that was a factor in Yakima Valley and potentially one with Hoag,” said Bill Kramer, executive director for health policy at the Purchaser Business Group on Health.
Looking further back, the $1.3 billion bankruptcy of Allegheny Health, Education and Research Foundation in July 1998 was, at the time, the nation’s largest not-for-profit dismantling. The system, which grew from $195 million in revenue in 1986 to $2.1 billion in 1997, became overleveraged as it picked off a series of horizontal and vertical deals while reimbursement from major payers contracted. University of Pennsylvania Medical Center pulled some residencies out of Allegheny as a defensive strategy, which compounded matters. The rift between now-Highmark Health and UPMC persisted for decades.
We are a trendy industry and people bought the value-based care myth, the population health myth and the scale myth,” Kaufman said. “When you add the conflict of many of the advisers making money on these deals, you end up with this stuff.”
UC San Francisco and Stanford merged in 1997, expecting to yield $256 million in savings over three years by pooling resources and increasing bargaining power. Instead, the combined entity lost $86 million in 1999, when the merger officially dissolved. Executives blamed lower reimbursement levels and culture mismatches.
“You could say that failed deal catalyzed Sutter (Health),” said Jeff Goldsmith, founder and president of healthcare consultancy Health Futures. “Markets were permanently altered.”
A report that Goldsmith co-authored when he was at Guidehouse found that scale didn’t guarantee better financial results. Some of the largest hospitals’ expenses grew by 3 percentage points faster than their revenue from 2015 to 2017, according to the consulting firm’s analysis of 104 highly rated health systems. That led to a combined $6.8 billion erosion of earnings, a 44% reduction.
“These big deals are really fragile because they rest on such a narrow political base,” Goldsmith said. “If there are not tangible benefits to the clinical workforce, middle management and patients, stress arises and the organization cracks.”
Politics, egos and operational efficiency can all get in the way. There is often significant internal and external pushback when jobs or services are cut. Some doctors or executives refuse to budge. Systems may lack the expertise to properly identify what needs to be consolidated.
“One of the biggest things that does not happen is consolidating services,” said Lyndean Brick, CEO of healthcare consultancy Advis. “When you are unwilling to do that, you are not going to improve quality and cost. That can absolutely be a tipping point.”
Blaming culture is a convenient, and ambiguous, curtain to hide behind, Brick said.
“It means we didn’t do things that we could’ve done like eliminate redundant executives to lower costs,” she said. “Certainly a lot of ego is involved, which can be the undoing, although it’s never the stated reason.”
Unwinding provisions in final M&A agreements are becoming more common as executives see other mergers fail. There will be “out clauses” related to certain unmet performance or financial thresholds. But they are relatively rare, and certainly not in every merger agreement, observers said.
“There is the thrill of the kill of getting to the finish line and not a lot of attention is spent on integration,” said John Washlick, a shareholder at the law firm Buchanan Ingersoll & Rooney. “There have been situations where I asked for an integration plan, and it was never produced.
Mergers are inherently disruptive. Executives often wait to disclose they are discussing a merger because it triggers job security concerns. But the lack of transparency can also cause anxiety.
“It’s almost like, ‘we’ll deal with that when we get there.’ Then they get there, and all these problems are brewing and fester in each separate hospital,” Washlick said.
More deals are coordinated largely between CEOs, even when management teams and governing boards are less enthusiastic about the transaction, experts said.
“Post-transaction decision-making is a critical aspect of all these mergers,” said John Fanburg, chair of healthcare law at Brach Eichler, adding that the smaller hospital or system’s control is often muted.
“There’s an economic incentive to hear what they have to say, but ‘it’s our money and we call the shots,’ ” Eichler said.
By design, merger agreements can make it very painful and create significant disincentives to unwind the relationship, Wells Fargo’s Spier said.
“If you make the off-ramp too easy, you may never achieve initial integration,” he said. “It may be a combination in appearance only.”
Hospital executives continue to point to “synergies” to justify mergers.
A study commissioned in 2019 by the American Hospital Association found that acquired hospitals saw a 2.3% reduction in operating expense per admission from 2009 to 2017. Although academics questioned the integrity of the study, pointing to evidence to the contrary.
In a presentation for the J.P. Morgan Healthcare Conference in January 2019, Baylor Scott & White said its 2013 merger between Baylor Health Care System and Scott & White Healthcare has resulted in more than $700 million in savings—exceeding its $657 million target. The bulk stemmed from supply chain followed by managed care. Still, research shows, savings don’t often translate to lower prices.
“Economists always say that consolidation results in higher prices. The answer is, you bet,” Kaufman said. “But without the higher prices, certain hospitals probably wouldn’t have survived or retained their doctors—that’s the other side of the equation.”M&A REBOUND
Even though some deals are unwinding, they aren’t expected to meaningfully slow M&A activity. Pent-up demand from a relatively quiet 2020 is expected to boost hospital transactions this year and into 2022, industry observers said.
There were only 79 announced hospital deals in 2020, partly due to the COVID-19 pandemic, Ponder & Co. found. That was down 25% from the trailing 10-year average and the lowest annual tally since 2009, although volume rebounded in the fourth quarter. Still, the number of deals that are unwound pale in comparison to the announced transactions every year.
Scale is still seen as a defensive strategy, potentially insulating systems from growing competitors and unexpected emergencies.
“Merger mania continues on,” Fanburg said. “People should learn from the failed relationships, but people are still talking.”
Fitch Ratings expects more mergers over the next two years, said Kevin Holloran, senior director at the ratings agency. Scale helped organizations weather the pandemic as they shifted resources based on demand and had more cash on hand, he said.
But key members of the Biden administration have historically been tough on hospital mergers, particularly Vice President Kamala Harris and HHS Secretary Xavier Becerra when they served as California attorneys general. Bills are moving through Congress as well as the states that would bolster regulatory oversight of hospital deals and hospital acquisitions of physician practices.
That could be part of the drive behind a renewed interest in joint operating agreements, Spier said. More are taking the place of fully integrated membership substitutions, he said.
“Folks are seeking a model that allows them to achieve many or most of their strategic goals without necessarily fully integrating or ceding control,” Spier said, adding that a joint operating agreement can result in 80% to 90% of the benefits of full integration while adding some flexibility. “If you align incentives and ensure both parties have skin in the game, a joint operating agreement can be an effective form of partnership.”
As health systems pitch mergers, executives should take note of the ones that have failed, M&A experts said.
They recommended increased transparency, sharing how potential transactions would impact operations as well as the surrounding community. Prepare for unwinding in the due-diligence process. Identify cultural differences and establish concrete steps to integrate.
But for some deals already consummated, the writing is on the wall, Kaufman said. More CEOs are waking up to the fact that they would’ve been better off independent, and that the pricing and access to capital benefits that accompany consolidation aren’t as important, he said.
“There are a lot of disgruntled system CEOs, especially in the not-for-profit sector, that feel disenfranchised,” Kaufman said.
The Biden administration has tapped Erin Richardson, a top lobbyist at the Federation of American Hospitals, as chief of staff to CMS Administrator Chiquita Brooks-LaSure, according to multiple sources familiar with the move.
Richardson and representatives for CMS and HHS did not immediately respond to a request for comment.
Richardson, who most recently served as senior vice president of government affairs at the lobby representing for-profit health systems, previously worked at the White House Domestic Policy Council during the Obama administration. Before that, she worked on the House Ways and Means Committee, which also counts Brooks-LaSure and HHS Secretary Xavier Becerra among its alumni.
Background: The administration has been slow to fill top health jobs at the agency central to implementing much of President Joe Biden’s health care agenda, with some key regulatory deadlines approaching. The agency will help lead work on implementing a new law banning surprise medical bills and deciding whether to keep or tweak controversial Trump-era drug pricing policies.
Agency hiring may pick up after Brooks-LaSure’s confirmation last month. Jon Blum, another Obama-era CMS alumnus, was recently named the agency’s principal deputy administrator. However, the heads of the Medicare, Medicaid and private insurance offices have not yet been named.
House Ways & Means ranking Republican Kevin Brady (TX) suggested President Joe Biden’s fiscal 2022 budget ignores a need to continue telehealth coverage after the COVID-19 public health emergency, but HHS Secretary Xavier Becerra told lawmakers Tuesday (June 8) he does not intend to go backwards on such coverage, although the department could use some help from Congress.
“I hope we can work together on issues like the underserved, the poor, the rural, as well as–as ensuring that telehealth, which was one of the saving graces in COVID, can become permanent access and flexibility to connect our patients with their healthcare providers,” Brady said at a Ways & Means hearing on Biden’s budget.
Brady noted that committee Republicans had said at an earlier hearing in April there is room for bipartisan work to expand telehealth use beyond the pandemic.
However, Brady also said that “[t]he possibility that telehealth benefits may soon be stripped from those who relied on it to get through the COVID pandemic is another problem ignored in the Biden budget.”
Becerra also received questions from other lawmakers on the future of telehealth. He responded to a question from Rep. Mike Thompson (D-CA) by saying telehealth was one of the bright spots of the pandemic but, as authorities to cover telehealth are expiring soon, “now it’s a matter of figuring out how we can deploy some of that long term.”
“We look forward to working with you because some of that authority will have to come through statute. Some of that we could probably do through administrative regulation. But what we do know is we can’t go back to the old way of doing business. We have to take advantage of telehealth,” Becerra said.
Becerra also emphasized a need for broadband across the country, which he had raised at a House Energy & Commerce Committee hearing last month. Plus he stressed the importance of accountability for telehealth services in Medicare and Medicaid. As HHS covers care “further and further from the source, we just want to make sure it’s accountable because taxpayer money, whether Medicare or Medicaid, is in there. We have to make sure we’re getting the value for our dollar,” Becerra said.
Becerra said providing such coverage in an equitable way is important, as well.
House Democrats are deploying a crunch-time plan to move forward on the coming year’s budget while still giving President Joe Biden more room to negotiate on infrastructure.
Budget Chair John Yarmuth (D-Ky.) plans to introduce a measure within the next week or so that sets forth about $1.5 trillion in government funding for fiscal year 2022 — which starts Oct. 1 — so appropriators can finish bills to boost federal agency budgets. That so-called deeming resolution would cut through hours of debate, allowing Democratic leaders to meet their goal of passing annual spending bills on the House floor by the end of July.
Normally, that’s all Democrats would technically need in order to eventually keep the government funded. But since Democrats expect to pass some version of an infrastructure bill without Republican support, Yarmuth must prepare a separate budget proposal in order to launch the process that will allow his party to press ahead on its own while avoiding a filibuster.
Progressives, fed up with the slow pace of bipartisan infrastructure talks, are ready to go it alone now. But Yarmuth’s plan is a signal that despite Democrats’ increasing impatience, the party is still deferring to the White House on when to proceed with reconciliation — the powerful budget tool already used by Democrats to pass Biden’s $1.9 trillion pandemic relief package along party lines earlier this year.
“I think we’re still waiting on the call from the White House as to when they do or don’t give up on a bipartisan infrastructure package,” Yarmuth said.
The separate budget resolution he’s preparing will include defense and nondefense funding for the coming fiscal year and a blueprint for using reconciliation to fulfill the president’s jobs and infrastructure priorities without GOP support. Timing is unclear and pulling that legislation together will take several weeks, Yarmuth said.
“Every day that goes by without a call on reconciliation delays it a little bit,” he said. “Theoretically we could do [a budget resolution] late this month, but I hesitate to put a target on it. It will be done before the August recess, that’s for sure.”
Biden has been talking for weeks with Sen. Shelley Moore Capito (R-W.Va.), a lead GOP negotiator on infrastructure. But talks officially collapsed on Tuesday afternoon, with both parties still about $700 billion apart. Biden is now pivoting to negotiations with a bipartisan group of 20 senators, but the administration has already signaled that it will wind down bipartisan discussions absent significant progress in the coming days.
Majority Leader Chuck Schumer also indicated on Tuesday afternoon that the party is increasingly committed to wielding reconciliation in the coming weeks.
“We all know as a caucus we will not be able to do all the things the country needs in a bipartisan way,” he said. “So at the same time we are pursuing the pursuit of reconciliation.”
Yarmuth — who said he’s meeting with Senate Budget Chair Bernie Sanders (I-Vt.) for dinner this week to compare budget resolution notes — expects Democrats to use reconciliation even if there is a bipartisan deal. It’s necessary to pass all of the priorities that Republicans will never agree to, Yarmuth said, like caregiving and climate change proposals included in Biden’s $2.3 trillion infrastructure plan and his $1.8 trillion families proposal.
The Kentucky Democrat isn’t sure if his party will use reconciliation to address the debt ceiling or pass elements of immigration reform.
“I can’t see any scenario in which there isn’t some reconciliation process,” Yarmuth said. “Because Republicans aren’t going to agree to a lot of what’s in the jobs plan and families plan.”
Democratic priorities are piling up with Congress’ August recess on the horizon. Congressional leaders struck a deal in 2019 that suspended the debt ceiling through July 31. While the Treasury Department can then take so-called extraordinary measures to keep paying the government’s bills on time while lawmakers work out another deal, Treasury officials have warned that those measures may run out sooner than expected due to pandemic-related uncertainty over spending and revenues.
Government funding expires at the end of September, with federally enhanced unemployment benefits also ending that month. Any deal to fund the government can’t be tucked into a reconciliation bill, however — spending bills require support from at least 10 Senate Republicans.
While reconciliation remains a big question mark, Yarmuth said he isn’t expecting a messy fight among Democrats over the defense and nondefense spending levels that would also be included in a forthcoming budget resolution. Back in 2019, Yarmuth was forced to “deem” the numbers amid a progressive revolt over military funding. The margins are much smaller now — Democrats can only afford to lose four votes as of June 21.
The top-line government funding numbers this time around will likely look similar to those outlined in Biden’s fiscal 2022 budget proposal, Yarmuth said. The administration’s request calls for a total of $769 billion for nondefense programs in the upcoming fiscal year, which begins Oct. 1. Biden has also asked for $753 billion for national defense programs, including cash for overseas activities. That amounts to a 16 percent increase over current funding levels for domestic programs, while providing a less than 2 percent increase for the military.
But that small increase is still too much for some progressives to stomach. Sanders, for example, has pushed for a 10 percent cut in Pentagon spending. But with massive investments in infrastructure and the middle class on the line, there’s more at stake for Democrats typically raring for a defense funding fight.
Yarmuth said Democratic leaders are proceeding on the assumption that a budget resolution allowing Democrats to pass significant increases for domestic programs on party lines will garner enough party support to pass on the House floor, despite defense funding concerns.
“But not without some pain,” Yarmuth said. “It will be difficult for a lot of members to swallow.”
President Joe Biden will direct federal agencies to shore up production and delivery of pharmaceuticals, computer chips, advanced batteries and critical minerals after completing reviews of their supply chains.
New task forces, production rules: The actions include a $60 million investment in research for advanced pharmaceutical manufacturing through the Department of Health and Human Services, and new domestic manufacturing rules and funding for batteries at the Energy Department, a senior administration official said.
The Biden administration plans to release a “comprehensive strategy” for diversifying the supply of rare earth minerals used in electronics, the official said, and assign multiple task forces to address shortages in “semiconductors, home building and construction, transportation and agriculture and food.” It also will form a new “supply chain strike force” to combat unfair trade practices from other nations.
100-day reviews: The moves come at the conclusion of 100-day reviews of supply chains for the four sectors that were launched in February. The reviews sought to ascertain whether industries critical to U.S. national security are overly reliant on foreign suppliers, particularly in China, or affected by pandemic-related shortages, like semiconductors and lumber.
Drug onshoring: To prevent shortages of key medicines, HHS plans to establish an onshoring consortium with major drugmakers under authority of the Defense Production Act, a Cold War-era law that allows the government to mandate domestic production of key products. That group’s first task will be to identify 50 to 100 drugs for an “enhanced onshoring effort,” according to a fact sheet released by the administration.
Battery, mineral task forces: DOE will release a 10-year “blueprint” for battery production and release $17 billion for manufacturing and recycling from its Loans Office. The administration also plans to create a cross-agency working group with corporations, tribes and other local governments to explore new mining and recycling options for rare earth minerals, with DOE making $3 billion available immediately for new projects.
Trade strike force, magnet investigation: The administration plans to establish a “strike force” office led by the U.S. Trade Representative to identify and combat unfair trade practices from other nations. And the Commerce Department will consider initiating an investigation of neodymium magnets commonly used in motors to ascertain whether tariffs should be placed on imports.
An investigation would come under Section 232 of the Trade Expansion Act, the same section Commerce used during the Trump era to cite national security grounds in placing tariffs on imports of steel and aluminum.
Longer term efforts: In addition to the 100-day reviews, the administration in February also set up year-long reviews for six broader sectors: defense, public health, information technology, transportation, energy and food production. Those reports are still on track to be delivered next February, the official said.
The Biden administration will soon release guidance on what health-care providers can do with unspent stimulus funds, Health and Human Services Secretary Xavier Becerra told lawmakers.
HHS this month will outline how health-care providers can “apply for and make use, good use, of their monies,” Becerra said Tuesday. He declined to say whether the department will extend the June 30 deadline for providers to spend Covid-19 stimulus funds.
Becerra signaled that HHS under the Biden administration will change how the remaining $24 billion in relief money will be distributed compared with the $150 billion already given out over the past year.
“We’re trying to make sure we don’t make the mistakes of the past,” Becerra told members of the House Ways and Means Committee.
Congress, through two laws, approved $178 billion in provider relief funds, money to hospitals and doctors that shut down services during the early spread of Covid-19. Those that received money through the two laws (Public Law 116-136, Public Law 117-7) face a June 30 deadline to spend it.
Hospital groups in May asked HHS to extend that deadline and distribute the remaining $24 billion in the relief fund. Long-term care groups have complained they didn’t get their fair share of the relief.
Providers must spend the relief money on Covid-related activities and many are still not back to pre-pandemic revenue, Michael Strazzella, head of federal government relations at Buchanan Ingersoll & Rooney PC, a law firm and lobbying group, said. Some hospitals want to funnel the funds to vaccination programs or to bring back staff cut during the pandemic, he said.
“Every dollar is meaningful to these providers,” he said.
The Trump administration released the relief money through several waves that each took a different tack: $46 billion was given to providers that billed Medicare; almost $6 billion went to providers in Medicaid; and $24.5 billion was distributed to providers who reported financial losses. Other funds were targeted to safety net and rural hospitals as well as other facilities.
Becerra said the HHS wants to give providers some flexibility in how they use the funds and remain transparent about how they’re distributed.
Sen. Bernie Sanders is using his new perch as head of a key health panel to expand the number of federally supported medical residency positions.
Sanders (I-Vt.) announced Thursday he’ll introduce legislation to add 14,000 Medicare graduate medical education slots over seven years, potentially training thousands of new doctors each year.
“This is a solvable program,” Sanders, who is head of the Senate Health, Education, Labor and Pensions Committee’s health panel, said during a Thursday hearing. “This is the wealthiest country on earth. We can have enough doctors and nurses in the places where we need them.”
Public health groups say the U.S. faces a shortage of at least 54,000 primary care and specialty doctors over the next decade.
Sanders said his legislation would reserve half of the new slots to train new primary care doctors.
David J. Skorton, president and chief executive officer of the Association of American Medical Colleges, said his group has asked for 3,000 slots to be added each year to Medicare’s graduate education program. That program, along with others, pays hospitals to train medical school graduates to become doctors.
Increasing Medicare funding for this program could allow hospitals to train more doctors, Skorton said.
A confluence of factors is creating a shortage of health-care providers in the U.S. The 65-and-older population grew by over a third, 13,787,044 people, during the past decade, putting pressure on the U.S. health system. At the same time, 40% of active physicians will reach 65 in the next 10 years, putting many into retirement, according to AAMC data.
The Senate parliamentarian’s ruling allowing Democrats to sidestep a GOP filibuster only one more time in 2021 is forcing Democratic lawmakers to rethink how they can advance President Biden’s agenda.
Democratic aides now say the $2.3 trillion infrastructure package will have to be even bigger since they have just one more opportunity before the 2022 election year to go it alone on major legislation.
“The bottom line is the next one is going to be bigger because you can’t divide it up,” said a Senate Democratic aide, referring to the remaining reconciliation package.
Democrats aren’t counting on passing another reconciliation package after April 1, 2022 — which they are entitled to do under the Senate rules — because it will be just months away from the crucial midterm elections and the political dynamic could be much different by then.
“Everybody’s a different person in an election year,” the aide said.
Senate Majority Leader Charles Schumer (D-N.Y.) thought as recently as April that he might be able to pass two more reconciliation bills this year — after the Senate used its first reconciliation vehicle to pass the $1.9 trillion American Rescue Plan in March.
Parliamentarian Elizabeth MacDonough indicated to Schumer’s staff in April that they would be able to create multiple reconciliation vehicles this year.
But in a more extensive ruling circulated in recent days, MacDonough clarified that reconciliation vehicles beyond the remaining one for 2021 would first require majority approval on the Senate Budget Committee, which is evenly split at 11 votes a piece for Democrats and Republicans.
As a result, Democrats have only one more chance this year to sidestep a filibuster, since there’s virtually no chance of a Republican on the committee voting with them.
Aides say there’s now more pressure on Biden to cut a deal with Senate Republicans on a scaled-down infrastructure package because that would allow for more spending in a reconciliation package with priorities that are unlikely to get GOP support.
Those include raising the corporate tax rate, repealing the cap on state and local tax deductions, tax breaks for clean energy and hundreds of billions of dollars for social programs ranging from expanded child care to long-term home care for the disabled and elderly.
Another reality dawning on Democratic aides and progressive activists is that with only one remaining reconciliation package available until April, passing this year’s might not happen until the fall. That would force the White House to reconsider its goal of passing an infrastructure bill before the end of the summer.
A second Senate Democratic aide said the prospect of not being able to move a reconciliation package until the fall or closer to the end of the year could put pressure on Biden to strike a bipartisan infrastructure deal before then.
“I think it does,” the aide said of the parliamentarian’s ruling putting pressure on Biden to reach an agreement with Republicans.
White House officials on Wednesday reportedly made a major concession to Sen. Shelley Moore Capito (W.Va.), the lead Republican negotiator on infrastructure, when they lowered their proposed spending target to $1 trillion and shifted away from their proposal to raise the corporate tax rate from 21 percent to 25 percent.
Instead, White House officials suggested a minimum effective tax rate of 15 percent for corporations that would otherwise pay almost nothing in taxes.
“I think it is more likely Biden will cut a deal on infrastructure just because he’s only going to have one reconciliation shot and there are other priorities where there’s no hope of getting Republican support that will be more important,” said Darrell West, director of governance studies at the Brookings Institution.
West says it’s a possibility that “hard” infrastructure priorities such as roads, bridges, public transit, rail, airports and expanded internet broadband access could be lumped into the same package but that it would make more sense to pass them separately.
“The bigger the bill, sometimes the harder it is to pass because any senator who objects to one provision may doom the entire package,” he said. “It’s going to be hard to keep the coalition together the bigger the package is and the more items are in there.”
West predicted the “overall number” of the reconciliation package “is going to be in the trillions.”
“That frightens voters and politically it becomes a more difficult challenge,” he added.
Now, many Democratic priorities will be competing for inclusion in this year’s remaining reconciliation package.
Sens. Sheldon Whitehouse (D-R.I.) and Brian Schatz (D-Hawaii) are pushing for an ambitious array of tax incentives and other provisions to combat climate change, while Sen. Elizabeth Warren (D-Mass.) wants to dramatically boost the funding Biden has proposed for child care. Sen. Bob Casey (D-Pa.) wants to ensure there will be $400 billion for long-term home care for the elderly and disabled.
Senate Budget Committee Chairman Bernie Sanders (I-Vt.), meanwhile, says he is focused on including language to expand Medicare and lower the cost of prescription drugs in the reconciliation package.
Matt House, a Democratic strategist and former senior aide to Schumer, said the parliamentarian’s ruling will make it more “complicated” to pass a reconciliation package, but he doesn’t think it upends Biden’s negotiations with Capito on a scaled-down infrastructure package.
“It was always going to be the case that Democrats would give bipartisan negotiations a chance to either flourish or fail or move forward on their own, and I think that’s still the case in the wake of the parliamentarian’s ruling and it doesn’t affect that fundamental dynamic,” he said.
House said that while a reconciliation package may not move until the fall, it won’t significantly change how much time the administration and Senate Democrats will be willing to devote to infrastructure negotiations with Republicans.
“The dynamic that governs the length of time is more, ‘What is the level of Republican seriousness in the talks?’ Not just Shelley Moore Capito but Republican, because she’s not the center of gravity in those talks,” he said.
“Step two may get a little bit more complicated because of the restrictions on reconciliation,” House said of the road ahead for Schumer and other Democrats once those talks fail, as many Senate Democrats expect.
Robert Borosage, co-founder of Campaign for America’s Future, a progressive advocacy group, said Biden may feel more pressure now to strike a deal with Republicans, but he doubts Senate Republicans will agree to anything that can pass the House, where progressives wield more power.
He said the parliamentarian’s ruling would make it more likely that Biden strikes a bipartisan infrastructure deal “if you had 10 Republicans who would make a serious offer.”
Borosage said the GOP counteroffers on infrastructure so far have been a “joke” because they’ve proposed spending only a fraction of what Biden wants in new money.
“Progressives were always for one big bill and then the parliamentarian made a ruling [in April] and so that allowed Biden to argue, ‘Let’s keep the bills separate, we can do them in different reconciliation [packages] when we prove we can’t get Republican support,” he added.
“It’s a huge change because we’re all the way down this rabbit hole of infrastructure negotiations.”
President Joe Biden’s budget request, which was released Friday, May 28, includes $133.7 billion for the Department of Health and Human Services – a 23.4% increase from the fiscal 2021 enacted level of $108.6 billion. Some of the biggest items on Biden’s health agenda will require extensive work with Congress. The request doesn’t specify how much those policies would cost or how to pay for it – but instead urges Congress to enact some of his other healthcare initiatives.
The American Hospital Association looks forward to working with CMS on implementing the good faith estimates and advanced explanation of benefits (EOB) required by the No Surprises Act. We are very supportive of efforts, such as these, to better help patients access the information they need as they prepare for their care, including price information.
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Includes proposals to extend expansion of health insurance coverage and funding for preparedness, among other health care provisions
President Biden today submitted to Congress his budget request for fiscal year (FY) 2022. The budget primarily includes proposals from President Biden’s American Jobs Plan and American Families Plan.
The budget request, which was released this afternoon, is not binding, but can act as a guide for Congress and the Administration as they debate health care issues this year. Highlights of some of the provisions affecting hospitals and health systems follow. More details about these and other proposals are included in the Department of Health and Human Services’ (HHS) Budget in Brief document.
The budget includes a discussion of certain health care policies, such as a public option, lowering the Medicare eligibility age to 60, reducing the costs of prescription drugs and expanding coverage in non-Medicaid expansion states through a Medicaid-like federal public option, but does not include details on these proposals or their fiscal impact in the budget.
In addition, the budget says that “evidence shows that we can reform Medicare payments to insurers and certain providers to reduce overpayments and strengthen incentives to deliver value-based care, extending the life of the Medicare Trust Fund, lowering premiums for beneficiaries, and reducing Federal costs.”
The budget calls for making permanent the marketplace subsidy expansions that were temporarily enacted as part of the American Rescue Plan that was signed into law and were proposed by the Administration to be extended in the American Families Plan. These provisions reduce the cost of Marketplace coverage for subsidy-eligible individuals and families by increasing the dollar value of premium tax credit subsidies and expand eligibility to individuals with incomes above 400% of the federal poverty level. The 10-year cost of this is estimated at $163 billion.
The budget does not reflect any reductions in Medicare or Medicaid payments to health care providers.
The budget proposes $6 billion in new mandatory funding for HHS in FY 2022, as part of a multi-department four-year program totaling $30 billion to prepare for future pandemics.
As part of the community health and hospital resilience portion of the American Jobs Plan, the budget proposes $1 billion to increase support for hospital infrastructure, $250 million for health emergency preparedness, and $250 million to build resilience against climate effects.
The budget includes several sources of new funding to address issues of health equity and racial disparities in health care. This includes $3 billion over five years to invest in maternal health and reduce the maternal mortality rate and end race-based disparities in maternal mortality.
As previously released on April 9, the budget calls for $1.5 trillion for appropriated spending in FY 2022, including $769 billion for domestic programs, a 16% increase over last year’s level.
The budget proposes nearly $134 billion for HHS, a 23% increase over last year’s enacted level. This includes the following policies and funding levels:
President Biden May 28 submitted to Congress his budget request for fiscal year 2022. The budget primarily includes proposals from President Biden’s American Jobs Plan and American Families Plan. The budget request is not binding, but can act as a guide for Congress and the Administration as they debate health care issues this year.
On Wednesday, Sen. Patty Murray (D-Wash.), chairwoman of the Senate Health, Education, Labor and Pensions (HELP) Committee, and Rep. Frank Pallone Jr. (D-N.J.), chairman of the House Energy and Commerce Committee, issued a public request for information to solicit feedback on different aspects of the bill.
“We believe bold steps are necessary in order to achieve universal coverage and lower health care costs,” the lawmakers wrote. “As we work to draft bold legislation, our goal is to ensure that every American has quality affordable coverage regardless of income, age, race, disability, or zip.
Murray and Pallone want feedback from key stakeholder groups, as well as the general public, on some of the most basic, but thorny questions.
For example, they want to know what criteria should be considered in determining prices. They also want to know what the role of states in a federally-administered plan will be, as well as how the public option will interact with other public programs, like Medicaid and Medicare.
President Biden campaigned on creating a public option, touting it as a way to reduce costs without completely ending private insurance, in contrast to “Medicare for All.” The Medicare-like government insurance plan would be sold on ObamaCare’s marketplaces.
“While the Biden Administration has taken a number of steps to expand coverage, including opening a special enrollment period that enabled over one million people to sign up for coverage on the Federal Marketplace alone, tens of millions of American still remain uninsured or underinsured,” Murray and Pallone wrote.
The idea polls well. Seven in 10 Americans support a public health insurance option. But the process faces an uphill battle. Republicans are almost universally opposed, as is the deep-pocketed health care industry. Centrist Democrats may also balk at supporting such a plan. plan.
During the campaign, Biden said his plan would cost $800 billion, a massively daunting price tag without a viable way to pay for it right now. The administration is currently focused on passing the American Families Plan, which includes $200 billion for permanent expanded ObamaCare subsidies, but no public option.
Congressional Democrats urged Biden to include a plan that would allow Medicare to negotiate drug prices, which would bring in $450 billion in savings to pay for coverage expansions. But that was also left out of the families plan.
Two key committee chairs in the House and Senate are taking the first step toward crafting legislation to create a public health insurance option, reviving a debate between the parties on the federal government’s role in coverage and setting up a fight with the insurance industry.
Senate Health, Education, Labor and Pensions Chair Patty Murray, D-Wash., and House Energy and Commerce Chair Frank Pallone Jr., D-N.J., issued a request for information Wednesday asking for input on a public option, which would establish a government-run health plan to compete with private insurers.
“Our goal in establishing a federally administered public option is to work towards achieving universal coverage, while making health care simpler and more affordable for patients and families,” the pair wrote.
Democrats abandoned plans to establish a public option through the 2010 health care law, but the proposal has gained support among Democrats in the ensuing years. The debate over whether to move toward a public option or a more ambitious Medicare for All, government-run program was a defining issue of the 2020 Democratic primary, with President Joe Biden supporting a public option.
Since taking office, Biden has focused on other goals, such as expanding the size of subsidies under the 2010 health care law and broadening eligibility for them. He did not include a public option in the economic proposals he is working to pass this year.
Democrats are also writing legislation to lower the cost of prescription drugs, which would create savings they could use to finance other priorities.
With razor-thin majorities in both the House and Senate, Democrats would have a difficult time passing legislation to enact a public option, which Republicans oppose. Democrats could use the reconciliation process to consider public option legislation, which would allow them to pass legislation without Republican support, but that would require adherence to budget rules and no defections among Senate Democrats.
The health care industry has already mobilized to oppose this type of legislation.
“Now is not the time for us to become embroiled in debates over issues like public option,” Chip Kahn, president and CEO of the Federation of American Hospitals, said in a statement. “It would be a mistake to allow such distractions to stand in the way of enacting legislation that sets the pathway to all Americans having the health coverage and health care security that all of us deserve and should expect.”
Democrats in both chambers have proposed different bills that would establish a public option, but Murray and Pallone indicated they would develop a new proposal.
There are several different ways lawmakers could set up a program. Murray and Pallone’s information request poses questions including who should be eligible for coverage through a public option, how the benefits should be structured and how prices for health care items and services should be set. The pair also asked how Congress could ensure that people enrolled in a public plan have adequate access to providers, what type of premium assistance should be available under a potential plan, what role states should have in administering a federally run option, how it might interact with Medicare and Medicaid and how a public option could address other health care objectives, like delivery system updates and reducing health inequities.
Other lawmakers who support a public option praised the effort and touted their own ideas.
“We are glad to see a public option gaining momentum in the Senate. Over the last five years, we have worked with people from Colorado to Virginia and everywhere in between to draft the Medicare-X Choice Act, which we believe is the best public option proposal available,” said Sens. Tim Kaine, D-Va., and Michael Bennet, D-Colo., who reintroduced legislation for a program they call “Medicare X,” earlier this year. “We look forward to working with the Biden Administration and our Senate leadership and colleagues in moving a public option forward to bring us one step closer to achieving universal health care in this country.”
Interested parties, which might include industry groups, health insurance experts and employers, have until July 31 to send Murray and Pallone their suggestions.
On May 25, 2021, the Senate Committee on Health, Education, Labor & Pensions approved three hospital industry-supported bills aimed at improving maternal health and supporting front-line health care workers.
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