What’s Next for Healthcare in the Biden Administration: Positioning the Industry for Success

The impact of the latest election cycle, occurring amidst a pandemic that itself will remake healthcare, could be profound

By Jeffrey Meyers and Benjamin Pollack, Guidehouse

The nation has officially elected Joe Biden as the next president of the United States and the Democratic Party has assumed a majority in both chambers of Congress.

The new administration’s policy agenda will be palpable.

President Biden has signaled that he will focus his immediate attention on the dual crises in healthcare and the economy, as well as the ongoing fight for racial justice and against the divisions that have torn our country apart.

As the pandemic continues, the challenges surrounding vaccine distribution and administration will keep healthcare at the top of the new president’s agenda. Additionally, the shift in leadership in the Senate may now provide Biden and his nominee to lead the Department of Health and Human Services (HHS), Xavier Becerra, new latitude in advancing a post-COVID-19 healthcare agenda that more closely mirrors the Biden Healthcare Plan.

During his campaign, Biden signaled his intent to bolster and build on the successes of the Affordable Care Act. The Biden Plan aims to insure 97% of Americans using policies that emphasize access, quality, prescription drug reform, and preserving healthcare as a right.

“Instead of starting from scratch and getting rid of private insurance, he has a plan to build on the Affordable Care Act by giving Americans more choice, reducing healthcare costs, and making our healthcare system less complex to navigate.” - Biden’s Healthcare Plan

Five Pillars Underlying the Biden Healthcare Plan

  1. Lower the Medicare eligibility age to 60.
  2. Enact a “public option” available to anyone—including the uninsured, those on state healthcare insurance exchanges, and those unhappy with their employer insurance. The 4.8 million Americans who qualify for expanded Medicaid but live in states that have not expanded may also enroll.
  3. Increase subsidies for insurance plans offered through the Healthcare Marketplace.
  4. End surprise billing.
  5. Reform prescription-drug pricing and delivery.

The Biden Plan would enable Medicare to negotiate pharmaceutical prices, limit launch prices and price increases for certain brands and biotech pharmaceuticals, allow Americans to purchase pharmaceuticals from other countries, remove pharmaceutical corporations’ tax breaks for advertisements, and accelerate the development of generics.

Other priorities in Biden’s plan are to address healthcare market concentration; increase wages for low-wage healthcare workers, including home-care workers; expand access to reproductive healthcare and mental healthcare; and reduce disparities in the provision of care and its outcomes.

While the shift in Senate control may breathe new life into the Biden agenda, significant changes will be hard to achieve.

This is especially true if the filibuster rule remains intact, which may require 60 votes to move legislation such as the public option forward. For that reason, the new president is likely to use regulatory levers and executive orders, as well as demonstration and waiver authority at the Centers for Medicare & Medicaid Services (CMS), to further his healthcare agenda.

In its final weeks, the Trump administration moved aggressively to issue new healthcare regulations, guidance, and Medicaid waivers. It has issued final regulations on insurer price transparency to mirror last year’s final rule governing hospital price transparency, adopted a new market-based approach to set hospital reimbursements, and issued a first-in-the-nation waiver authorizing use of a block grant to fund a state’s Medicaid program.

How the new administration responds to some or all these initiatives may not be fully addressed until Biden rounds out his healthcare team at CMS.

Beyond responding to the COVID-19 pandemic, there are six key healthcare challenges the new administration will confront.

  • Reinforcing the Affordable Care Act, especially considering an anticipated US Supreme Court ruling that could potentially enable executive order authority to reinstitute the individual mandate.
  • Delivering on Biden’s campaign promise of a public option for healthcare coverage.
  • Responding to or rescinding many of the Trump administration’s regulatory and policy changes, including Medicaid work and community engagement requirements and block grants, compliance measures for price transparency, and the discontinuation of Delivery System Reform Incentive Payment waivers.
  • Fulfilling the transition away from fee-for-service healthcare toward value-based reimbursement.
  • Implementing drug-pricing reform to effectively lower prescription costs.
  • Supporting providers and states as they recover from the impact of the COVID-19 pandemic while ensuring a public health system capable of facing the challenges of future crises.

Reimagining the role of public health in healthcare was brought to the forefront by the COVID-19 pandemic, but it also offers the next administration an opportunity to revisit the structure of federal healthcare agencies, especially the role and function of CMS. Some healthcare commentators have suggested that CMS be elevated to a Cabinet-level department and its scope broadened to continue to drive the transformation of healthcare—an idea worthy of early action by Congress.

Importantly, the inauguration of a new administration can both bring opportunities and risks in healthcare.

Industry organizations—payers, providers, and states alike—all need to be prepared to manage impending change.

Every election brings change. The impact of the latest election cycle, occurring amidst a pandemic that itself will remake healthcare, could be profound.

Strategies for Payers/Insurers

While commercial insurer earnings may have been stable through the early months of the COVID-19 pandemic, there are several trends that should impact both their thinking and planning.

  • Health must come first. Individuals, businesses, and governments must work together to advance individual and public health. Payers should be focused on incentives for improving population health, sharing data, and enabling individuals to track their health and health issues.
  • Plans and benefits may need to re-align to reflect changes in the market. Congress could decide to bolster employer-sponsored insurance through increased subsidies, as is included in “Bidencare,” but those policy changes may not be immediate. The shift could be more profound if the Supreme Court invalidates the Affordable Care Act.
  • Adjust provider networks to telehealth. CMS announced that it will support the permanent extension of certain telehealth access and reimbursement policies beyond COVID-19, and Congress has several telehealth expansion bills it is considering. Payers have responded by sharing platforms, waiving requirements for live video, payment for telehealth at in-person rates, and other measures. But the platforms must be sustainable, and payers should have a comprehensive strategy for how they will tap into digital health more broadly.
  • Like their provider counterparts, commercial payers are now subject to price transparency requirements that will profoundly impact the marketplace and competition. 

Strategies for Providers

Still reeling from the impacts of the COVID-19 pandemic, hospitals, health systems, and other providers continue to face regulatory challenges on the immediate horizon—the final price transparency rule, the interoperability and patient access rule, and significant new reporting requirements under the 2021 Inpatient Prospective Payment System. Scenario planning to take account of several changes will be key.

  • The new price transparency rule will remake the marketplace. Providers must understand their current rate position in the market; conduct a strategic risk assessment, implement short-term strategies for compliance, and, most importantly, design and implement a long-term plan for rate rebalancing to reduce future risk.
  • Winning consumer strategies to rebuild patient volume will be key. Remote consumer engagement is likely here to stay—beyond the current pandemic. Providers need a plan that utilizes telehealth, financial counseling, payment plans, and online portals to engage consumers.
  • Appropriate utilization of federal COVID-19 recovery resources such as the Provider Relief Fund, as well as other available funding, can allow providers to invest in equipment, supplies, staffing, and technology to preserve and expand the delivery of healthcare through and after the pandemic.
  • Strategic planning for potential longer-term changes in payer mix through the loss of commercial insurance or adoption of a new “public option” is critical. 

Strategies for States

Decreased tax revenues and increased demand for services such as Medicaid are already driving state budget deficits. There are several actions states should consider to address current challenges and plan for future needs.

  • Develop realistic budget projections that anticipate the increased need for services and carefully consider the consequences of short-term cost shifting. Work closely with state provider partners to ensure access to services.
  • Maximize all available federal program revenues and grants. In order to limit austerity measures such as hiring freezes, furloughs and program reductions, HHS departments and their leaders must secure sufficient funding to continue operating at the levels their states expect.
  • Carefully plan to avoid funding cliffs such as the Medicaid Federal Medical Assistance Percentage increase that will end with the termination of the current COVID-19 public health emergency.
  • Understand the landscape around you by communicating and establishing expectations with stakeholders.

With the “changing of the guard” and accompanying political developments, now is the time for public and private industry organizations to come together and strategically position themselves to mitigate risk and capitalize on these opportunities.

Jeffrey Meyers, Director

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