The New Political Landscape: 3 Opportunities for Employers to Shape Health Policy

November 6th, 2020
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The outcome of the presidential race has ended with Joe Biden the new President-elect, and the potential of a split Congress. The new political landscape has significant implications for large employers and health care purchasers, PBGH policy experts explained in a members-only webinar the morning after the election, Nov. 4.

If Democrats and Republicans maintain control of the House and Senate, respectively, a continued partisan stalemate is likely. That means that major health policy changes are unlikely, according to Bill Kramer, PBGH’s executive director of Health Policy, and Shawn Gremminger, director of Health Policy.

Top Priorities for Large Employers

Opportunities nonetheless may emerge for legislative action. With a Biden win and Republican Senate – the most likely outcome given where the race currently stands – we see three areas of potential policy activity that could impact large corporations and the health benefits they extend to their employees:

1)    Prescription drug costs: Employers are deeply concerned about high-priced drugs, and view this as a top issue. In fact, a poll taken during the post-election webinar found that 71% of employers feel that prescription drug pricing reform should be a top federal priority for 2021.

With a Biden administration and Republican-led Senate, it’s still possible that we’ll see movement on legislation improving transparency and even capping price increases. In addition, we could see limits on anti-competitive practices, such as pay-for-delay and other patent-related tactics, although they would face strong opposition from the pharmaceutical industry. These actions could lead to significant savings for large health care purchasers, and by extension, employees who receive health benefits on the job.

2)    Surprise billing: This continues to be a serious problem, and there is bipartisan support to pass legislation to eliminate surprise billing. Congress has been deadlocked, however, on the best way to limit the prices charged by providers who have not signed a contract to be “in-network” with a health plan If we can find a way to break the stalemate and set limits using existing local, market-based contract rates, there would be real savings for employers and protections for patients.

3)    High health care costs: High health benefit costs come at the expense of core business investments and hold down wages, dampen business growth and squeeze family budgets. The COVID pandemic and the related economic recession are making this growing crisis completely untenable as unemployment soars and many employers face existential threats.

Nearly 60% of employers who attended the PBGH post-election webinar said that policies to reduce health care costs beyond prescription drugs were a top priority heading into 2021.

Large employers would welcome action to accelerate the transition from fee-for-service to value-based payment models, which would help shift provider incentives from volume to quality and value. This could be accomplished by administrative action to introduce, test and spread value-based clinician payment and care models, especially for primary care.

In addition, health system consolidation has been a major driver of rising costs, and employers see a long-term benefit to stronger anti-trust enforcement and new prohibitions on anti-competitive practices, both of which are possible in the coming year.

Taking the Fight Against Rising Costs, Inequity Into Their Own Hands

Regardless of the ultimate makeup of the Senate, employers attending the PBGH post-election webinar identified several priorities they were likely to pursue on their own to stem rising health care costs, particularly in the wake of COVID.

Half (50%) said they planned to alter their company’s drug formularies to eliminate wasteful spending, and 44% said they intended to engage in value-based contracts to strengthen primary care. Another 50% indicated they would invest in methods to address inequities in care delivery and outcomes.

The days and weeks ahead will make clearer the configuration of our federal government post-election. We will have the opportunity to address the problems of high costs, inconsistent quality and racial disparities through administrative action as well as legislation, and the voice of employers will be an important influence in the upcoming health policy debates.

5 Political Sticking Points that Could Derail COVID Legislation

August 4th, 2020
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The Senate is working to pass another major COVID-19 bill, and the details of that legislation are of great concern for large private employers and health care purchasers seeking to manage COVID-19 costs during the sharpest economic contraction since the Great Depression.

Five priorities of large employers were outlined in a previous post. While all of those priorities come with their own detractors and will not be easily won, they are not the most headline-grabbing flashpoints likely to derail the Phase 4 Legislation.

Here are the five biggest disagreements likely to cause heartburn for negotiators.

  1. Size and Scope: Before House, Senate, and Administration negotiators can begin to tackle individual policy priorities, they will need to come to some agreement on the overall size and scope of the legislation. The House Democrats’ HEROES Act comes in at $3 trillion – the most expensive bill ever to pass a chamber of Congress – and includes policies affecting the economy well beyond the COVID-19 pandemic. Senate Republicans have insisted on keeping the bill to under $1 trillion and ensuring all its provisions are directly related to the pandemic. The White House has not provided an overall budget target, but seems to favor more spending if necessary to improve the economy in advance of the November elections.
  2. Unemployment Insurance Extension: The CARES Act provided $600 per week in enhanced unemployment benefits to those laid off during the pandemic, but the benefits expired at the end of July. The HEROES Act extends the expanded unemployment benefits at $600 per week through the end of January 2021. The White House and congressional Republicans have grudgingly agreed to extend the program, but at a lower amount.
  3. Business Liability Protection: Senate Majority Leader Mitch McConnell (R-KY) has insisted that the legislation must include comprehensive liability protections for businesses, schools, and other entities against legal claims based on the spread of COVID-19. Democrats did not include such protections in the HEROES Act.
  4. State and Local Fiscal Relief: Conversely, House Democrats have pushed hard for substantial spending to help offset tax revenue decreases and COVID-related expense increases for states and localities, including more than $700 billion in such relief in the HEROES Act. Senate Republicans and the White House have shown little interest in such spending.
  5. Stimulus Checks: The CARES Act provided up to $1,200 per adult and $500 per child in direct stimulus checks to Americans. House Democrats propose another round of checks at the same amount, but congressional Republicans are less enthusiastic. The White House has signaled its support for another round of stimulus checks, noting their likely popularity in an election year.

The August recess is officially scheduled to begin on Aug. 8 – the end of this week. But with so many disagreements between the major players, this negotiation could well last until the middle of the month or even later.

6 Things Large Employers are Watching for in the Next Round of COVID Legislation

July 27th, 2020
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More than three months after enactment of the landmark CARES Act, and more than two months after the House of Representatives passed the HEROES Act – their own “Phase 4” legislation – the Senate is finally taking steps to pass another major bill responding to the still raging COVID-19 pandemic. As the likely last chance to pass major legislation before the November elections, this bill is particularly vital for employers and health care purchasers seeking to stay financially stable and manage COVID-19 costs during the sharpest economic contraction since the Great Depression.

Congressional and White House negotiations over this high-stakes (and likely more than $1 trillion) bill will dominate the headlines coming out of the nation’s capital for the next several weeks. PBGH and its employer/purchaser allies have weighed in with Congress and the Administration, including in two letters this week, focused on testing and our other priorities, signed by more than 30 national, regional, and local purchaser organizations. Here are the six employer priorities you should watch out for in the weeks ahead and the six sticking points that could spell trouble for the bill.

What Employers and Purchasers Want to See

  1. Stopping Price Gouging and Ensuring Fair Prices: Since the pandemic began to affect the United States in February, stories have abounded about bad actors engaging in egregious pricing of critical equipment. While largely limited to personal protective equipment (PPE) and testing, price gouging could get worse as the pandemic wears on. Of particular concern, the CARES Act, enacted in March, stipulates that all health insurance plans must cover the cost testing in full for employees without placing any limit on what a provider may charge for a test. The House-passed HEROES Act could further exacerbate the problem by mandating coverage – with no out-of-network price limitations — for all COVID-19 treatment.Large employers are urging Congress to not mandate that they cover these costs in full without appropriate guardrails to ensure fair prices for out-of-network care and testing. Further, a blanket ban on price gouging for COVID-19 supplies and services, enforceable by the Federal Trade Commission and state attorneys general, is essential to ensuring a fair and reasonable market.
  2. Banning Surprise Billing: Surprise billing has been a top priority for employers and purchasers for several years, and while Congress has come close to banning this egregious practice, it has not yet reached a final agreement. Recognizing that this may be their last opportunity, congressional leaders, led by retiring Sen. Lamar Alexander (R-TN), are pushing to include a ban in the upcoming bill. Sen. Alexander’s legislation would ban surprise billing while stipulating a market-based benchmark price for out-of-network care. Such a benchmark has been found to reduce health care costs over time for consumers, purchasers, and taxpayers alike.
  3. Providing Subsidies for COBRA Coverage: The pandemic has led to the sharpest rise in unemployment in the nation’s history. With millions of people laid off or furloughed, the number of uninsured people has spiked. Employers want to ensure the availability of direct subsidies for COBRA coverage so that laid off and furloughed workers can continue to stay on their employer-sponsored insurance without having to pay the full – and often unaffordable – premium.
  4. Federal Funding for Testing: Nearly six months since COVID began to spread in the United States, the country still lacks sufficient diagnostic tests to provide timely access to COVID-19 diagnosis. With obvious concern about getting the U.S. economy back on its feet, and a recognition that the health of American citizens and the economy are interwoven, large employers are looking to Congress to infuse new federal spending to ensure timely access to tests for all who need them.
  5. Financial Support to Struggling Primary Care Providers: Paradoxically, the pandemic has led to a significant decrease in utilization of health care, particularly for primary care providers. Many such providers are struggling to keep their doors open during the ongoing pandemic. According to survey findings from a provider survey conducted by the Larry Green Center at Virginia Commonwealth University, 40% of primary care clinicians say they may lack the financial resources to stay open through the end of August. Employers are looking to Congress to set aside a portion of funds already appropriated to the Provider Relief Fund for struggling primary care providers.
  6. Policies to Mitigate Risk in the Employer Health Insurance Market: While health care spending is down since the beginning of the pandemic, many patients are deferring necessary care. Faced with a possible spike in utilization next year, purchasers are unable to accurately project spending into 2021. That’s why they’re largely supporting the establishment of a one-sided risk corridor that would provide financial support to purchasers if costs substantially exceed projections.

The August recess is officially scheduled to begin on Aug. 8, but negotiators are already signaling that they may not reach final agreement by then. Hopefully, employers will have a clear indication of what is in and what is out by the middle of the month.

Congress Gets Serious About COVID Phase 4 Legislation

May 18th, 2020
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To date, Congress has passed four bills to combat the threat of COVID-19:

Notice a theme?

First, the cost of the bills has increased exponentially. In the span of just three weeks in March, the amount of money Congress believed was necessary to combat coronavirus multiplied by more than 250 times. (The White House’s original request for Phase 1 was just $2.5 billion.) Even the roughly $2.2 trillion allocated under the CARES Act – to date the costliest bill enacted in U.S. history – proved insufficient, and Congress found itself having to renew funding for several programs less than a month later.

Second, the pace of lawmaking has slowed considerably. Notwithstanding “Phase 3.5,” Congress went from passing a new bill roughly every 10 days to having not funded any new programs for nearly two months. Since Phase 3 was passed in late March, however, the number of confirmed COVID-19 cases in the United States has risen from just over 100,000 to more than 1.4 million, and the number of confirmed deaths has increased from roughly 2,000 to more than 80,000. Equally concerning, the economy has gone into free-fall, with the official unemployment rate hitting nearly 15 percent, the highest figure since the Great Depression nearly 90 years ago. Economists expect the unemployment rate to continue to climb.

While some on Capitol Hill and in the administration continue to urge a “wait and see” approach, it is becoming increasingly clear that Congress will have to pass at least one more large virus response and economic stimulus bill. Unlike previous bills, which passed relatively quickly and with overwhelming support, the debate over “Phase 4” is likely to be more in line with what we have come to expect from Washington – a bitter partisan battle.

House Democrats Make the Opening Move

On March 15, the House of Representatives, H.R. 6800, the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES) Act, largely on a party-line vote. Weighing in at around $3 trillion, it roughly equals the amount of federal funding allocated so far in the four previous bills.

Spanning more than 1,600 pages and hundreds of individual provisions, the bill is particularly noteworthy for the nearly $1 trillion for state and local governments, $200 billion in hazard pay for essential workers, and allocating another round of $1,200 stimulus checks to individuals. While Republicans have already called the HEROES Act “dead on arrival,” is represents the Democrats’ opening bid in what will be a prolonged debate. It is after House passage that “real” negotiations with the White House and congressional Republicans will begin.

Republican Priorities

Republican leaders and the Trump Administration have other priorities. Republicans are split on how costly a Phase 4 bill should be. While President Trump appears to have no concerns about crafting a large bill, fiscal conservatives on Capitol Hill and in the administration are expressing alarm about the aggregate cost of COVID-19 on the federal budget. It is safe to assume the final bill will be smaller – perhaps much smaller – than $3 trillion. One area Republicans are united on is the need for businesses that reopen after stay-at-home orders are lifted to be given indemnity against lawsuits by consumers who may be exposed to COVID-19. Separately, the President has urged Congress to provide a payroll tax holiday in the next bill, though that idea has only lukewarm support among Republicans and Democrats.

What About Employers?

After passage of the CARES Act in late March, PBGH laid out a set of policy priorities on behalf of large employers with the overlying goal of helping employers continue to provide high quality health to their employees.

As noted in the chart below, the HEROES Act checks a few boxes, but there is still substantial room for improvement as we enter the coming debate.

As Congressional leaders begin to work out details of the final Phase 4 bill, PBGH will be engaging with congressional leaders on each of these topics, with a particular focus on strengthening the primary care system and preventing price spikes that could fundamentally destabilize the ability of its members to continue to provide high quality coverage to their employees. And on May 19, PBGH was jointed by 35 organizations representing many of the nation’s leading private and public sector employers in issuing a letter to congressional leaders requesting they take immediate action to ensure Americans have access to high-quality, affordable health care, both now and long after the COVID-19 pandemic ends.

COVID-19 Policy & Politics: Employers Take a Leadership Role

April 23rd, 2020
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The health care provisions of COVID-19-related legislation to date have focused primarily on ensuring health care providers have the resources they need to treat the influx of affected patients. In addition, Congress has rightly taken steps to slow the spread of the virus, ensure that patients have access to needed tests and treatment, and protect workers and businesses from the collapsing economy.

As Congress considers “Phase 4” legislation, it should seek to build upon the foundation set by the earlier legislation, with a particular focus on the downstream financial effects of the crisis. In the best interest of American businesses and consumers, the next wave of legislation should focus on seven priorities.

1. Maintain and Strengthen Primary Care

Many primary care groups are reporting dire financial situations and the possibility of imminent closure due to the loss of patient revenue during the COVID-19 crisis. In addition to the funding provided to-date for hospitals and providers (an unknown portion of which is likely to make it to primary care providers), Congress should specifically earmark financial support to vulnerable primary care practices. This is critical to ensure that primary care survives and thrives in the aftermath of the COVID-19 crisis.

In addition, Congress should take this opportunity to accelerate the move away from fee-for-service payment for primary care to a model that is prospective, population-based, team-based and addresses social needs[1].

2. Prohibit Price Gouging and Ban Surprise Billing

Media reports indicate that personal protective equipment (PPE) and other supplies have seen exorbitant price increases.[2] We need to ensure that the small number of unscrupulous actors do not take advantage of this crisis to engage in price gouging. During the pandemic, policymakers should explicitly ban price gouging on any health care items or services, prosecutable by the Federal Trade Commission and State Attorneys General.

In addition, Congress has been debating legislation to ban surprise medical bills for more than a year. With tens of thousands of people now seeking care for COVID-19, many will be forced to see out-of-network providers due to the overwhelmed health care system. It is more important than ever that Congress prioritize banning this abusive practice. This legislation should protect patients and hold down health care costs by using a local, market-based benchmark payment rate for out-of-network care.

3. Ensure Accountability and Transparency for Federal Funds

The CARES ACT (H.R. 748) and subsequent legislation provide more than $175 billion in direct financial support to hospitals and other health care providers. This funding is in addition to other financial support to hospitals, including suspension of budget sequestration, extension of Medicare Disproportionate Share Hospital payments, COVID-19 related add-ons, and others. Unlike the funding provided to other businesses, however, this funding provided to hospitals and other health care providers does not come with any meaningful transparency or accountability. To ensure reasonable oversight of federal taxpayer funding, policymakers should extend the same requirements as stipulated for other businesses.

4. Provide Risk Mitigation Mechanism

According to an analysis prepared for Covered California, the potential cost of coverage for COVID-19 related services could exceed $200 billion.[3] In the short-term, those costs may be offset by reduced demand for elective procedures. In the longer term, however, pent-up demand could substantially increase utilization once the pandemic has subsided. With health plans unable to accurately forecast cost effects, their fear about future costs could cause premiums to spike by as much as 40 percent.[4] Congress should avert potential premium spikes by enacting policies that protect insurers and self-insured employers from unexpected costs in the 2020 and 2021 plan years. Such policies could include a reinsurance mechanism or one-sided risk corridor, which would “kick in” only if costs exceed a certain threshold.

5.     Expand Access to Affordable Coverage

With millions of Americans losing jobs and income as a result of social-distancing measures, Congress should take immediate action to make affordable coverage available to those who have lost their jobs and access to employer-sponsored coverage.  Congress should provide subsidies for COBRA coverage for the duration of the crisis and offer a special open enrollment period for the health care exchanges. In addition, we need to find ways over the longer-term to provide coverage to everyone – for example, with enhanced subsidies for low-income people to buy individual coverage and financial incentives for all states to expand their Medicaid programs. At the same time, we need to ensure that coverage expansion is accompanied by meaningful policies to reduce the costs of our health care system.

6.     Prevent “Price Creep”

The CARES Act provides more than $175 billion in direct financial support to hospitals and other health care providers to help them deliver care to all patients during this public health emergency. However, despite this infusion of funds, we are concerned that some hospitals and providers will increase their future prices above what they had originally planned. This would cause overall health care costs to increase dramatically.  To prevent this, policymakers should consider limiting price increases.

7. Place a Moratorium on Industry Consolidation

During the COVID-19 crisis, many independent physician practices are under extreme financial duress, and some hospitals and health systems may take advantage of this opportunity to acquire these vulnerable practices at “fire sale” prices. To prevent this anti-competitive behavior, which has been shown to increase prices in the commercial market, Congress should consider a temporary moratorium on mergers and acquisitions among hospitals, health systems, health plans and physician groups. 

 

[1] One example of this is the AAFP’s proposed Advanced Primary Care Alternative Payment Model that was approved by PTAC. https://www.aafp.org/news/macra-ready/20171219apc-apm.html

[2] https://www.cbsnews.com/news/china-ppe-us-buyers-knock-offs-price-gouging/

[3] https://hbex.coveredca.com/data-research/library/COVID-19-NationalCost-Impacts03-21-20.pdf

[4] ibid.