Hello, and welcome back to the Gist Weekly. You may have missed us last week, as some trouble with our marketing platform prevented the email from going out to some of our subscribers. The full newsletter and Graphic of the Week are posted on our webpage, so please catch up on last week’s news there. As always, we appreciate your continued readership and invite you to forward this email to friends and colleagues—please encourage them to subscribe as well!
In the News
What happened in healthcare recently—and what we think about it.
- Congress negotiates year-end healthcare legislation. With the year drawing to a close and a new Congress set to take over in 2025, Democrats and Republicans in both the House and Senate are negotiating a healthcare policy package to be passed within or alongside a government funding bill. Issues at stake include an extension of Affordable Care Act (ACA) enhanced subsidies past 2025, a repeal of the nursing home staffing rule, a re-extension of Medicare telehealth and hospital-at-home flexibilities, various pharmacy benefit manager (PBM) reforms, delays to Medicare physician pay cuts, and funding for community health centers. Republicans are also pushing to require hospital off-campus outpatient departments to have unique identifier numbers, featured in a bipartisan site-neutral reform bill. The most recent continuing resolution funds the government through Dec. 20, but Congress may reportedly need to stay open past that date in order to reach a budget deal.
- The Gist: As Democrats and Republicans continue to trade offers back and forth, there’s little certainty about what the ultimate bill will include. The looming deadline is expected to reduce the scope of the healthcare items that make it into the final bill, meaning broader PBM reforms may depend on the next Congress. Another Medicare telehealth extension seems likely, while Democrats appear to be losing the fight to extend the enhanced ACA subsidies. With the next administration expected to implement tax cuts, the ACA’s marketplace and Medicaid funding could be targeted as offsets. Health systems should be prepared for their number of uninsured patients to rise if public insurance funding shrinks.
- Federal judge blocks Dreamers’ access to ACA exchanges in 19 states. On Monday, Judge Daniel Traynor of the US District Court in North Dakota issued a preliminary injunction against a recent Centers for Medicare & Medicaid Services (CMS) rule that had allowed Deferred Action for Childhood Arrivals (DACA) recipients to enroll in ACA marketplace plans. As a result, DACA recipients, also known as Dreamers, living in the 19 plaintiff states will no longer have access to 2025 marketplace plans. Judge Traynor indicated that the plaintiffs were likely to win their case, finding that CMS had improperly redefined the term “lawfully present” to include Dreamers. Victory for the plaintiffs would reinstate Dreamers’ ineligibility to access the exchanges nationwide, impacting an estimated 100K previously uninsured Dreamers. The Biden administration is expected to appeal, but the incoming Trump administration could choose to drop the case before the appeal takes place.
- The Gist: In a recent interview, President-elect Donald Trump expressed interest in a legislative solution for Dreamers, in contrast to his promises of mass deportations and interest in ending birthright citizenship. His administration’s stance on this case, which intertwines healthcare and immigration policy, will serve as an early indication of whether Dreamers will receive more favorable treatment than other classes of undocumented immigrants. In the meantime, this case generates a material impact for health systems, as even a slight reduction to the uninsured population would have been beneficial, while setting the stage for more interactions between Trump’s immigration policy and the healthcare industry.
- Elevance scraps plan for anesthesia coverage time limits. Last week, Anthem Blue Cross Blue Shield, an Elevance Health subsidiary, announced it was retracting a policy change that would have set time limits on anesthesia coverage and reimbursement for certain surgeries, based on CMS Physician Work Time data. The policy, announced in November and initially applying to Anthem plans in New York, Connecticut, and Missouri, was immediately denounced by anesthesiologists, who feared being denied reimbursement whenever complications arose. In the wake of the fatal shooting of UnitedHealthcare CEO Brian Thompson, the policy became a focal point of intense public backlash against private health insurers. Elevance cited “significant widespread misinformation” as the reason behind the reversal, adding that “it never was and never will be the policy of Anthem Blue Cross Blue Shield to not pay for medically necessary anesthesia services.”
- The Gist: The initial fight between Elevance, intending to combat anesthesia upcoding, and anesthesiologists, opposed to yet another arbitrary utilization limit imposed by insurers, was entirely subsumed by the cultural moment surrounding Brian Thompson’s death. Providers may be relieved with the reversal, but no one in the healthcare system wants policies to be decided by viral anger from a poorly informed public. There’s some dispute about whether the policy would have stuck patients with the bill, or if the status quo leads to higher premiums, all of which folds into a broader debate about the right way to design utilization management policies. The merits of that debate were not weighed in the reversal of this decision.
Plus—what we’ve been reading.
- A new business case for health equity. Published in Health Affairs, this piece details how some payers in Massachusetts are utilizing a new approach to address health disparities: paying providers more when health disparities are reduced. The author illustrates how value-based payments “had inequities baked right in to the models” and that public and private payers alike were aware of these potential harms. These value-based arrangements perpetuated “a vicious cycle” for resource-strapped hospitals with more complex patients and led many to avoid the voluntary value-based programs. To correct for past errors, more payers are transforming their approach to value-based care, with CMS launching the ACO Reach model specifically to improve health equity. It is still too soon to tell if CMS’s ACO Reach reforms or this Massachusetts pay-for-disparity-reductions program are having the desired effects. However, this new philosophy and engagement from stakeholders may be a catalyst that brings struggling communities one step closer to equitable care.
- The Gist: Value-based care has long been touted as “a rising tide that will lift all boats,” but this piece demonstrates how value-based arrangements can produce the opposite effect and exacerbate health disparities. The Massachusetts payers’ program aims to align the incentives around business and equity by specifically rewarding disparity reductions. This approach presents a philosophical quandary as to whether stakeholders should prioritize disparity reduction, especially for the most disadvantaged, versus general improvement for all. While there are merits to both sides of this ethical dilemma, gathering demographic data so one can measure these disparities and test these programs’ efficacy is paramount and a clear first step, which both the ACO Reach model and this Massachusetts program have adopted.
Graphic of the Week
Assessing the results of Medicaid unwinding
With the onset of the pandemic in March 2020, states were required to provide continuous enrollment for Medicaid and Children’s Health Insurance Program (CHIP) beneficiaries in exchange for enhanced federal funding. This led to immense growth in Medicaid rolls that states could not begin to unwind until April 2023. This week’s graphic illustrates the outcomes of Medicaid redeterminations—a process which most states completed by August 2024—and provides a comprehensive coverage update. As this undertaking nears completion, most beneficiaries have had their Medicaid coverage renewed during redeterminations. Around 30% of recipients, or about 25M beneficiaries, lost Medicaid coverage. Nearly 70% of these cuts were made for procedural reasons, such as state agencies not processing beneficiaries’ documents before their cases closed or beneficiaries never receiving the renewal notices. Despite significant nationwide reductions, 8M more people were enrolled in Medicaid and CHIP in August 2024 than just before continuous enrollment began in February 2020. Throughout continuous enrollment, an elevated share in Medicaid and a lower uninsured rate were the most notable differences to a coverage landscape that has otherwise remained largely stable. Somewhat surprisingly, initial evidence suggests that the net effect of continuous enrollment and subsequent Medicaid redeterminations equaled out, and many former recipients have gained coverage elsewhere. While the national uninsured rate increased to 8.2% in Q1 2024 following a record low in 2023, the uninsured rate remains lower than it was in 2019.
This Week at Kaufman Hall
What our experts are saying about key issues in healthcare.
The incoming Trump administration has made clear that it intends to extend the 2017 tax cuts and perhaps add further tax policy changes. Less clear is where it will look for spending cuts to help offset reductions in federal revenue.
In a recent blog, Ken Kaufman urges hospital and health system leaders to remain vigilant. Both the Medicaid program and the enhanced Affordable Care Act subsidies enacted in 2021 may be targeted for spending cuts, and the stakes for hospitals could be very high. In a time of considerable uncertainty, the best approach is to always be prepared.
On our Podcast
The Gist Healthcare Podcast—all the headlines in healthcare policy, business, and more, in ten minutes or less every other weekday morning.
Last Monday, JC was joined by Carol Skenes of the healthcare data platform Turquoise Health to discuss what we've seen on the market side since the Hospital Price Transparency Act went into effect in January 2021.
This Monday, JC speaks with Ben Leonard, congressional healthcare reporter for POLITICO and the co-author of the POLITICO Pulse newsletter, about President-elect Donald Trump’s picks to lead several healthcare-related agencies and what they could signal about the administration’s healthcare priorities.
To stay up to date, be sure to tune in every Monday, Wednesday, and Friday morning. Subscribe on Apple, Spotify, Google, or wherever fine podcasts are available.
Thanks for reading! We’ll see you next Friday with our last edition of 2024. In the meantime, check out our Gist Weekly archive if you’d like to peruse past editions. We also have all of our recent “Graphics of the Week” available here.
Best regards,
The Gist Weekly team at Kaufman Hall
