This Week in Health Care Reform: August 7th, 2020

Lawmakers continue to focus on advancing the next coronavirus legislative package; a new report identifies private equity interests as the leading cause of surprise medical bills; how the rebate rule will only increase costs for seniors and taxpayers; and, telehealth utilization explodes among the Medicare population.

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Week in Review

Coronavirus Bill: Congressional negotiators on both sides of the aisle continue to work towards finding a compromise on competing COVID-19 relief packages.  As a reminder, House Democrats passed their $3 trillion coronavirus bill (HEROES Act) back in May.  And, last week, Senate Republicans unveiled their own $1 trillion package (HEALS Act).  While there is general agreement on the need for a second round of stimulus payments for eligible Americans, the two sides remain far apart on a handful of issues, including enhanced unemployment benefits, liability protections, and increased funding for state and local governments.  With urgency to get a deal done mounting, Congressional leaders, in coordination with the White House, have reported progress in the ongoing negotiations, despite skepticism that a negotiated deal may be in the offing. 

Private Equity: With so much attention being trained on surprise medical bills, our understanding of who actually profits from this practice is also starting to come into focus.  We already know that emergency departments are prime perpetrators of surprise billing already-vulnerable patients.  But, what’s only slowly coming to light is the influence that private equity firms have exerted in exploiting – and, spending lavishly to protect – this profitable revenue stream.  A new report from the Department of Health & Human Services (HHS) only reinforces what we now know, pointing the finger at private equity interests as being largely responsible for the surprise medical bills ravaging patients and driving up health costs across the system.  In that report, HHS calls the practice “a market failure that will not correct itself” and calls for Congressional action on surprise medical billing – a charge that’s only taken on added significance in the wake of the coronavirus.

Rebate Rule: As previously covered, the newly-revived rebate rule re-released by the Administration late last month threatens to drive up drug costs for seniors and taxpayers.  Targeting the rebates that pharmacy benefit managers (PBMs) use to negotiate lower prices with drugmakers on behalf of consumers, employers, and the government, the rule was pulled last year when the Administration’s own actuaries determined that it would actually increase Medicare premiums for all seniors by 25 percent, hand those pharmaceutical manufacturers a $100 billion bailout, and leave taxpayers footing the bill.  Additional analysis from both the nonpartisan Government Accountability Office (GAO) and HHS’ Office of the Inspector General (OIG) also confirmed that PBM-negotiated rebates, in fact, lower prescription drugs costs in the Medicare Part D program.  Unsurprisingly, the pharmaceutical industry has been supportive of the rule, which effectively eliminates one of the only checks on their pricing power.

Telehealth & Medicare: In the early stages of our response to the coronavirus, telehealth proved itself to be a critical support, connecting people to the care they needed in a physical-distancing world.  Perhaps nowhere was this more evident than amongst the Medicare population, where telehealth utilization exploded exponentially, growing 120 times in just six weeks.  To put that in context, 11,000 Medicare beneficiaries received telehealth services in the week ending 7 March.  By the week ending 18 April, that number had swelled to 1.3 million members – an increase of nearly 12,000 percent.  Data also shows that telehealth made up almost half of all Medicare beneficiaries’ primary care in April.


Last week marked the 55th Anniversary of the Medicare and Medicaid programs, which were both signed into law by President Lyndon Johnson on July 30, 1965.  While the Medicare program continues to evolve to better serve the needs of its aging population, Medicaid has also established itself as an invaluable component in the larger social safety net – especially, in the midst of the coronavirus pandemic.

Stay safe and be well.

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