5 biggest health care provisions inside the House reconciliation bill

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House to consider modified reconciliation bill with health care provisions | AHA News

After months of negotiations, House Democrats on Friday passed their version of the Build Back Better bill—an expansive $1.7 trillion package that contains some of the largest health reforms since the Affordable Care Act’s passage in 2010.

While the overall scope of the bill is roughly half the size of President Biden’s original $3 trillion proposal, many of Democrats’ key health care provisions made it in, albeit with some modifications. What’s more, the Congressional Budget Office projected that while the overall bill would add $367 billion to the deficit over the 10 year period, the health care provisions would all be largely paid for by provisions aimed at lowering drug prices.

Below, I round up the five biggest health care changes included in the House bill.

Find out where the states stand on Medicaid expansion

1. Health care coverage expansions

The House bill leverages the ACA’s exchanges and federal tax credits to expand access to coverage in two ways. First, the bill would extend the American Rescue Plan’s enhanced ACA tax credits through 2025. The enhanced tax credits, which are currently slated to expire in 2023, fully subsidize coverage for people with annual incomes up to 150% of the federal poverty level (FPL) and have enabled people above 400% FPL to qualify for subsidies and capped their premium costs at 8.5% of their incomes.

While Democrats had originally proposed to permanently expand those subsidies, they ultimately had to scale back this—and other proposals—to ensure they could cover the costs. But as we’ve seen in the past, it is much harder to take away an existing benefit or subsidy than it is to create a new one—so while the current bill was able to cover the cost of the health care provisions by making them temporary, lawmakers will have to revisit the tax credits before 2025 and find new money to either further extend them or permanently authorize them. This is one of several health care provisions we could see the Senate take a closer week at in the coming weeks.

Second, the House bill takes aim at the so-called Medicaid coverage gap. The bill would enable residents below 138% FPL who live in states that have not expanded their Medicaid programs to qualify for fully subsidized exchange plans through 2025. While an earlier version of the House bill included language for a new federal Medicaid program covering those below 138% FPL who live in non-expansion states to begin in 2025, the final House bill contains no such program.

Instead, the bill aims to encourage non-expansion states to expand their Medicaid programs by reducing their Disproportionate Share Hospital (DSH) payments by 12.5% beginning in 2023—a significant cut that the American Hospital Association (AHA) estimates would reduce DSH payments in those states by $2.2 billion over five years and $4.7 billion over 10 years. At the same time, expansion states would see their federal match for spending on the Medicaid expansion population rise from 90% to 93% from 2023 through 2025.

While the AHA and others are pushing back against the proposed DSH payment cuts—the move addresses the moral hazard component that critics raised about earlier versions. It no longer rewards holdout states for not expanding their programs—effectively punishing those who did and are now on the hook for 10% of their expansion population’s costs. It’s a clever move, and one we’ll be watching to see if it survives the Senate.

2. New Medicare benefits.

The House bill adds a hearing benefit to Medicare beginning in 2023. The hearing benefits would cover hearing aids and aural rehabilitation, among other services. While this is certainly a win for many Medicare beneficiaries who do not have or cannot afford private Medicare Advantage plans, this is significantly scaled back from the original proposal to add hearing, as well as dental and vision benefits.

However, given that Sen. Bernie Sanders (I-Vt.) has named Medicare benefit expansions as one of his top priorities, it’s possible we could see this topic revisited in the Senate. But any meaningful change would mean Democrats need to find more money to cover the costs—and so far, that has proved challenging.

3. Medicaid home and community care.

The House bill allocates $150 billion for home- and community-based care. The funding would be used to help increase home care provider reimbursement rates and help states bolster home- and community-based care infrastructure.

While the funding is down from an original proposal of $400 billion, the Biden administration—and the Covid-19 pandemic—have made it clear that home-based health care will continue to grow and be a key player in the U.S. health care delivery system. Providers looking at their offerings should keep an eye on how states are investing these funds and building out home-based health care delivery in their areas.

4. Lowering the costs of prescription drugs.

Democrats scored a huge win in the House bill, and that is securing Medicare authority—albeit narrower authority than they sought—to negotiate prices for some of the highest-priced Part B or Part D drugs. Under the bill, HHS would be able to select 10 drugs to negotiation in 2025, up to 15 drugs in 2026 and 2027, and then up to 20 drugs per year in 2028. To be eligible for negotiation, a drug could no longer be subject to market exclusivity.

Drug manufacturers that do not negotiate eligible drug prices could be subject to an excise tax. This was perhaps one of the most contentious provisions debated in the health care portions of this bill. Democrats for years have been seeking to give Medicare drug pricing authority, but intense lobbying and Republican—and some Democrat—objections have kept this proposal on the shelf. While it’s not the first time the House has passed a bill with drug price negotiation—it is the first time we are in a place where the Senate could reasonably pass either this or a modified version of the proposal.

The bill also would redesign the Medicare Part D benefit to create an annual cap of $2,000 on seniors’ out-of-pocket drug costs, and impose an inflation rebate on drug manufacturers’ whose drug prices rise faster than inflation (based on 2021) in a given year.

5. Other notable provisions.

The House bill also includes provisions to permanently fund CHIP, bolster the country’s pandemic preparedness and response, and bolster the health care workforce through new training and workforce programs, the nation’s first permanent federal paid family and medical leave program, investments in childcare, and more.

What’s next?

While the health care provisions in the House bill are notable, it’s important to remember that this is not the end of the road. The House bill now goes to the Senate, where the Senate parliamentarian will check provisions against the Byrd rule—a Senate rule requiring reconciliation bills to meet certain budgetary requirements.

Democrats also will enter a new round of negotiations, and industry groups—including PhRMA and AHA—are expected to launch a new round of lobbying. PhRMA objects to the bill’s drug price negotiation provision and AHA is fighting the provision to reduce DSH payments in non-Medicaid expansion states by 12.5%. Any Senate-passed reconciliation bill will need to go back to the House for final approval before it can go to Biden’s desk.

But this is not the only thing on lawmakers’ plates in December. Members of Congress also face several other deadlines, including addressing looming physician payment cuts and passing end of the year spending bills. The short-version is, while there’s a lot to learn from the House-passed bill, it’s possible the Senate version could look very different—and it may take several weeks before we see that bill take shape.

How much nurse pay is rising—and why

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Travel Nurse Guaranteed Pay: The Truth - The Gypsy Nurse

Amid a nationwide staffing shortage, rising demand for nurses has led hospitals to increase salaries and other benefits to attract and retain workers, Melanie Evans reports for the Wall Street Journal.

Hospitals increase salaries, benefits to keep up with nursing demand

Hospitals across the country have been struggling amid staffing shortages, particularly of nurses, Evans reports. According to health care consultancy Premier, nurse turnover rates have increased to around 22% this year, up from the annual rate of about 18% in 2019.

“We are employing more nurses now than we ever have, and we also have more vacancies than we ever had,” said Greg Till, chief people officer at Providence Health & Services.

To retain their current nurses and attract new staff, many hospitals have increased their nurses’ salaries to remain competitive in the job market, Evans reports.

For example, HCA Healthcare, one of the largest hospital chains in the country, said it increased nurse pay this year to keep up with Covid-19 surges and compete with rivals also trying to fill vacant positions.

Similarly, Jefferson Health in May raised salaries for its nearly 10,000 nurses by 10% after the system discovered that rivals had increased their compensation. “The circumstances required it,” said Kate Fitzpatrick, Jefferson’s chief nurse executive.

In addition, Citizens Memorial Hospital in Bolivar, Mo., this month raised its nurses’ salaries by up to 5% after rivals in other nearby cities increased their workers’ wages. Sarah Hanak, Citizen Memorial’s CNO, said the hospital also increased the hourly wages of nurses working overnight shifts by around 15% to ensure sufficient staffing for those shifts.

“We were forced to,” Hanak said. “We absolutely have to stay competitive.”

Overall, the average annual salary for RNs, not including bonus pay, grew to $81,376, according to Premier—a 4% increase across the first nine months of the year. This is larger than the 3.3% increase in the average annual nurse salary for 2020 and the 2.6% increase in 2019, Evans writes.

In addition to salary increases, some organizations, such as Providence, are also offering other benefits to attract and retain nurses, such as more time off, greater schedule flexibility, and new career development opportunities. Many hospitals are also hiring new graduates to work in specialized roles in ORs and other areas, allowing them to advance their careers more quickly than they would have before.

Overall, this rising demand for nurses has allowed those entering the workforce to negotiate higher salaries, more flexible working hours, and other benefits, Evans writes.

“I think you get to write your ticket,” said Tessa Johnson, president of the North Dakota Nurses Association.

Nurse compensation increases were inevitable—here’s why

It was inevitable that we would get to this point: baseline nurse compensation on a clear upward trajectory. Inevitable because this boils down to laws of supply and demand. Amid a clear nursing shortage, organizations are being forced to raise baseline compensation to compete for increasingly scarce qualified nurses. This is true in nearly every market, even for those considered to be ‘destination employers.’

If anything, what’s most surprising in the data from Premier is the moderated increase of around 4%. From a worker’s perspective, that’s not even covering cost of living increases due to inflation. However, amid this new data, it’s important to keep two things in mind:

Two considerations for health care leaders

  1. New data only captures baseline compensation.Differentials—which organizations must standardize and expand across shifts, specialties, and even settings—plus overtime put baseline compensation much higher. Not to mention lucrative sign-on bonuses, that members tell us are increasingly table stakes in their markets. In general, we don’t recommend this type of incentive that does nothing for retention. You’re better off investing those resources in baseline compensation as well as beefing up your RN bonus plan to incentivize retention.
  2. There is a new floor for wages (and it’s only going up from here).

Open questions (and important indicators) we are assessing

  • What happens to wages for entry-level clinical roles? As the shortage of RNs persists, organizations will need to make a shift to team-based models of care, and those are only possible with a stable workforce of entry-level personnel. Right now, that part of the health care workforce is anything but stable. When you consider their work and their wages in comparison to out-of-industry players that pay the same or better, that’s a clear area where investment is required. 
  • Will the share of nurses working permanently with travel agencies return to pre-pandemic levels? That’s to say, what will those RNs who experienced the traveler lifestyle and pay value more moving forward: the flexibility and premium pay or stability of permanent employment? Even if this number stabilizes a couple percentage points above pre-pandemic levels, that will aggravate provider’s sense of shortage.

New campaign to thank health care workers

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The American Hospital Association, the American Medical Association and the American Nurses Association teamed up to release a new “Forever Grateful” TV and digital ad campaign on Monday to thank health care workers.

Why it matters: The campaign comes in the face of record levels of reported health care worker burnout tied, in part, to the prolonged emergency response to COVID-19.

  • The AHA also released a new video thanking health care professionals working in America’s hospitals and health systems for their work.

Axios-Ipsos poll: Thanksgiving Roulette

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Axios-Ipsos poll: Americans are ready to play COVID roulette for Thanksgiving

Two-in-three Americans will celebrate this Thanksgiving with friends or family outside their immediate households, and about half of those say their gatherings could include unvaccinated people, according to the latest installment of the Axios/Ipsos Coronavirus Index.

Why it matters: Vaccinations and booster shots are giving more people confidence to resume traditions like sitting around a packed table with masks off. But many are doing so with heightened awareness of what they don’t know when it comes to their holiday companions.

  • This year, 31% see a large or moderate risk in seeing friends or family for Thanksgiving — way down from 64% a year ago.
  • People’s assessment of overall risk of returning to their normal pre-COVID lives is also down, with 44% seeing it as a large to moderate risk this year compared with 72% last year.
  • But when Americans are asked how concerned they still feel about the virus, the numbers haven’t diminished all that much: 69% compared with 85% a year ago.

What they’re saying: “We’re just in a holding pattern,” said Cliff Young, president of Ipsos U.S. Public Affairs.

  • “They’re going to Thanksgiving because they have to, they have to see their family and friends, it’s human nature,” Young said. “But Americans are still deploying mitigating strategies.”
  • Ipsos pollster and senior vice president Chris Jackson said the vaccines “have attenuated some of that risk. But there’s a larger sense of anxiety or concern that hasn’t been dealt with.”

By the numbers: 67% of U.S. adults surveyed said they’ll see friends or family outside their households. That’s 73% of Republicans, 70% of independents and 63% of Democrats.

  • 30% of them said the guests will include unvaccinated people, and another 17% said they don’t know whether other guests will be vaccinated or not.
  • 38% said they’ll be with people who don’t regularly wear masks outside the home, while another 21% said they didn’t know if their guests regularly wear masks.
  • 4% said they’ll be seeing people who’ve been exposed to COVID-19 in the last two weeks; another 28% aren’t sure if people at their gatherings have been exposed.

Between the lines: There’s a modest partisan gap around openness to returning to the communal Thanksgiving table — but a gulf around who you’re willing to sit with.

  • 41% of Republicans expect to spend the holiday with someone who’s unvaccinated, compared with 17% of Democrats.
  • When we asked unvaccinated respondents, 56% of those who will celebrate Thanksgiving with friends and family outside the home expect the guests to include other unvaccinated people.

The big picture: This week’s findings show overwhelming support (86%) for every vaccinated American who wants a booster being able to get one. But only about one in four respondents said they knew much about an anti-viral COVID-19 pill awaiting FDA approval.

  • 23% hadn’t heard about the pill at all, and half had heard of it but said they didn’t know much about it.
  • When the unvaccinated were asked whether they’d rather get a shot to prevent the virus, or wait to catch the virus and then take an approved pill to treat it, the pill drew a slight edge (17% versus 12%) and 15% had no preference, while a majority — 53% — said they’d prefer to take neither.
  • That suggests the pill won’t be a silver bullet — and offers more evidence that there is a segment of American society that doesn’t trust science or government to tell them what to do.

Booster strategy could backfire

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Federal officials waited months before making all American adults eligible for a COVID-19 booster shot — meaning millions of Americans may not have the strongest possible protection as they head into holiday travel.

Why it matters: Critics say the confusing process undermined what has now become a critical effort to stave off another wave of the pandemic.

  • Most vaccinated people, even without a booster, still have very strong protection against serious illness or death. But a third shot drastically increases people’s defenses against even mild infections, which could in turn help reduce the virus’ spread.
  • And some vulnerable vaccinated adults are at risk of serious breakthrough cases.

What they’re saying: “We have a consensus. Boosters are very important in maintaining people’s defenses against COVID. We need to get as many people vaccinated and boosted [as possible] as the winter sets in,” David Kessler, the chief science officer of Biden’s COVID response, said in an interview.

Context: Preliminary data released months ago suggested a significant decline in the vaccines’ effectiveness at preventing infection, although they held up well against severe disease.

  • Based on that data, the Biden administration had hoped to begin allowing booster shots in September for any American adult who was at least eight months removed from their second dose.
  • The CDC and the FDA opted instead to only authorize boosters for seniors, people with high-risk medical conditions and people at high risk of infection, before opening them last week to everyone at least six months out from their initial shots.

In the meantime, red and blue states alike decided to ignore the CDC and open up booster eligibility on their own, and breakthrough infections have become increasingly common.

  • Millions of people who weren’t technically eligible for boosters got them anyway, and a large portion of the most vulnerable patients still haven’t gotten one.
  • Where it stands: Only 41% of vaccinated Americans 65 and older have received a booster shot, as have 20% of all vaccinated adults, per the CDC.

“Some of us were there several months ago. Some wanted more data. In the end, there’s a convergence of opinions. It’s the way an open scientific public health process should work,” Kessler said.

Between the lines: The U.S. drug approval process — with its insistence on high-quality data and careful expert reviews — is the world’s gold standard precisely because it moves deliberately. Regulators have been trying this whole time to figure out how to adapt that system to a fast-moving pandemic.

Some federal officials, as well as many outside experts, said there wasn’t enough data to make a broad booster recommendation earlier this fall.

  • Early on, many public health experts also argued that it was unethical to give Americans a third shot while much of the rest of the world awaited their first shots.
  • Israel embraced boosters before the U.S. beginning over the summer, and its emerging data has been key to making the case that boosters are needed and can help bring surges under control. However, experts still don’t know how long the enhanced protection they give will last.

What they’re saying: “Some argued early on that the primary series was good enough and we should conserve doses for the world. What’s emerging is that all people in the world are going to need to be boosted,” a senior administration official said.

  • “Everyone has a different threshold for how much data they need in making a decision,” the official added. “What made this different is that there’s a pandemic underway, and many saw we were heading into a winter surge.”

CVS wants to employ doctors. Should health systems be worried?

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HealthHUB | CVS Health

We recently caught up with a health system chief clinical officer, who brought up some recent news about CVS. “I was really disappointed to hear that they’re going to start employing doctors,” he shared, referring to the company’s announcement earlier this month that it would begin to hire physicians to staff primary care practices in some stores. He said that as his system considered partnerships with payers and retailers, CVS stood out as less threatening compared to UnitedHealth Group and Humana, who both directly employ thousands of doctors: “Since they didn’t employ doctors, we saw CVS HealthHUBs as complementary access points, rather than directly competing for our patients.” 

As CVS has integrated with Aetna, the company is aiming to expand its use of retail care sites to manage cost of care for beneficiaries. CEO Karen Lynch recently described plans to build a more expansive “super-clinic” platform targeted toward seniors, that will offer expanded diagnostics, chronic disease management, mental health and wellness, and a smaller retail footprint. The company hopes that these community-based care sites will boost Aetna’s Medicare Advantage (MA) enrollment, and it sees primary care physicians as central to that strategy.

It’s not surprising that CVS has decided to get into the physician business, as its primary retail pharmacy competitors have already moved in that direction. Last month, Walgreens announced a $5.2B investment to take a majority stake in VillageMD, with an eye to opening of 1,000 “Village Medical at Walgreens” primary care practices over the next five years. And while Walmart’s rollout of its Walmart Health clinics has been slower than initially announced, its expanded clinics, led by primary care doctors and featuring an expanded service profile including mental health, vision and dental care, have been well received by consumers. In many ways employing doctors makes more sense for CVS, given that the company has looked to expand into more complex care management, including home dialysis, drug infusion and post-operative care. And unlike Walmart or Walgreens, CVS already bears risk for nearly 3M Aetna MA members—and can immediately capture the cost savings from care management and directing patients to lower-cost servicesin its stores.

But does this latest move make CVS a greater competitive threat to health systems and physician groups? In the war for talent, yes. Retailer and insurer expansion into primary care will surely amp up competition for primary care physicians, as it already has for nurse practitioners. Having its own primary care doctors may make CVS more effective in managing care costs, but the company’s ultimate strategy remains unchanged: use its retail primary care sites to keep MA beneficiaries out of the hospital and other high-cost care settings.

Partnerships with CVS and other retailers and insurers present an opportunity for health systems to increase access points and expand their risk portfolios. But it’s likely that these types of partnerships are time-limited. In a consumer-driven healthcare market, answering the question of “Whose patient is it?” will be increasingly difficult, as both parties look to build long-term loyalty with consumers. 

Understanding the mechanics of the 340B drug pricing program

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The 340B Drug Pricing Program, designed to increase access to specialty pharmaceuticals for low-income patients, is a perennial area of concern for health policy. The program has grown exponentially since its inception almost 30 years ago: 340B providers increased purchases of discounted drugs from $4B in 2009 to $38B in 2020, five times faster than the overall growth rate of US drug sales. Insurers and drug manufacturers are advocating for significant changes to the program, or even favor eliminating it entirely, claiming that 340B has grown beyond its original intent to help safety net facilities, and simply enriches providers without directly benefiting patients. Indeed, the profits from 340B have become essential for many hospitals’ sustainability; some systems tell us that 340B accounts for their entire margin.
 
In the graphic above, we outline the basics of revenue and product flow within this complex program. The 340B program is meant to allow hospitals that treat low-income, underserved patients to purchase drugs from manufacturers at a 25 to 50-plus percent discount, but still be reimbursed by payers at standard network rates. The discounts are intended to help hospitals overcome losses they incur in providing uncompensated care, but apply to drugs for all patients, regardless of income and insurance status. 340B providers often partner with independent pharmacies to dispense the drugs, and payers are billed the full list price for the medication. Thus, insured patients pay co-payments on the full price of drugs, leading to criticism that 340B savings are not passed on to patients. 340B providers share an estimated $40B in total annual profit with partner contract pharmacies.

The program has been targeted for overhaul by both the Trump and Biden administrations, and faces another threat later this month, when the US Supreme Court is set to hear a case between the hospital industry and the Department of Health and Human Services (HHS) to decide whether the Centers for Medicare & Medicaid Services (CMS) has the authority to enact payment cuts through rulemaking. 

If the court rules in favor of the agency, 340B providers could see significant cuts in payment rates. In our next edition, we’ll dive deeper into the potential impact of that ruling on the industry.