Reflections on 2020 and Predictions for 2021

Continued Responses to COVID-19

State and Federal Responses to COVID-19 in 2020 and Expectations for 2021

At the start of 2020, COVID-19 was a peripheral thought for most people in our country. However, it soon became front and center for the entire nation, dictating daily life in a manner few could have predicted. Health Policy News joined other news outlets in immediately pivoting our coverage last winter, dedicating the primary focus of nearly every edition since to the federal and state response to COVID-19, including best practices and guidance for states.

Since the declaration of a national public health emergency, the United States has seen a deluge of federal policy developments specific to the COVID-19 pandemic—which have offered guidance and flexibility to states, providers, and insurers, as well as funding for states and front-line providers. Specific major developments have included federal legislation, such as the Coronavirus Response and Relief Supplement Appropriations Act included in the Consolidated Appropriations Act passed this week; federal guidance in the form of regulations, bulletins, FAQs and other subregulatory guidance; waivers for states, including Section 1135 Waivers[1] and Appendix K under Section 1915(c) waiver authority;[2] and provider relief funding.

In addition to news from the federal level, Health Policy News has covered state responses to the pandemic. Our March and April editions featured roundups of initial state actions, which included offering flexibility for health insurance consumers through Special Enrollment Periods and premium grace periods; expanding the use of telehealth; and implementing requirements related to testing and treatment. We have also outlined best practices for states to consider in dealing COVID-19’s impact on their healthcare systems on topics such as critical incident management systems, mitigation of COVID-19 related commercial insurance costs, documentation of federal funding, and contact tracing (the last of which is discussed in more detail below).

Looking forward to 2021, the COVID-19 vaccine is top of mind as states begin an unprecedented administration effort to prioritize and distribute the vaccine. With potential relief from the public health crisis in store in 2021, states must plan for a wind-down of the flexibility that has been provided during the public health emergency. As we noted in April, the federal guidance and waivers that have been promulgated in response to COVID-19 are temporary, and states must be prepared to make changes to comply with federal requirements when COVID-related flexibilities end.

On the other hand, there is nothing preventing the federal government and states from permanently extending policy changes that they determine would be beneficial on an ongoing basis. One area where this is most likely to happen is in the field of telehealth. Many have pointed to the expansion of telehealth during the COVID-19 pandemic as a silver lining—with policies enacted that have temporarily made more sites and healthcare services eligible for telehealth; granted flexibility on the type of communication technology used; provided reimbursement parity; and allowed states greater flexibility for expanding telehealth via Medicaid.

As we reported in September, telehealth was a significant topic of discussion at this year’s National Academy of State Health Policy (NASHP) Conference. It is very likely that in the coming year, at least some of the telehealth expansion resulting from the pandemic will be maintained by the federal government, states and commercial carriers in the long run. That began earlier this month, when the Centers for Medicare and Medicaid Services (CMS) released the annual Medicare Physician Fee Schedule final rule that made access to telehealth service expansions permanent for Medicare enrollees.

However, as they consider how to continue leveraging the demonstrated benefits of telehealth, policymakers and other leaders must also grapple with important considerations about its wider implementation. These include determining: what services can be successfully delivered via telehealth; how to ensure telehealth remains an option as appropriate, but does not become a barrier to accessing in-person healthcare; how to address access issues; and what balance to strike relative to interstate healthcare delivery. Our NASHP Conference recap from September outlines each of these considerations in more detail, as well as the steps states can take now to ensure telehealth remains a viable and positive part of their healthcare systems going forward.

Contact Tracing Continues into 2021

When we first wrote about contract tracing mid-summer, it was assumed that PCG’s work on contact tracing projects would be winding down by this point in the year. Many of us saw infection rates improve, and the positive impact of tracing efforts across the country, and presumed that case counts would continue to trend downwards—with sporadic outbreaks here and there centered around specific events or locations.

We published a piece on July 30th of this past year entitled “Insights from the Front Lines of Contact Tracing” that included what we thought were grim statistics about the virus’ prevalence in the U.S. (per the COVID Tracking Project, approximately 61,498 new cases of COVID-19 were reported in the United States on July 28, 2020[3]). However, the numbers as of writing this piece (December 15th, 2020) are staggering. There have been single-day and seven-day average infection records, record hospitalizations (both single- and seven-day), as well as the highest seven-day average of COVID-19 related deaths in the United States. States reported 1.7 million tests, 190,000 new cases and almost 3,000 deaths, and 112,000 people hospitalized with COVID-19[4].

 COVID-19 Daily Tracker As of 12/22

The U.S. positivity percentage for the past seven days is almost at 10%—and yet, while making contact tracing calls, we continually hear from people opposed to the public health best practices. Additionally, we continue to see backlog, and delays in relaying critical exposure, and quarantine instructions.  One update to the lessons learned that HPN team put forth this summer specifically relates to the clinical needs and backlog many states are experiencing. Although many states invested in onboarding contact tracers, the need for more clinical experts (to discuss the diagnosis and provide isolation instructions) continues to have downstream effects on the time between diagnosis and case investigation/contact identification. Numerous states have asked regional or local board of health nursing professionals to assume this role, but the sheer number of outreach calls to be made is beyond state or local capacity. Additionally, case investigation requires specialized skills, including understanding of medical terminology; coordination with hospitals and health care facilities; crisis counseling and experience with supporting patients during health crises; HIPAA confidentiality; and technical skills, in order to utilize tracking systems. Looking forward to 2021, I hope the vaccine alleviates the current pressure on clinical capacity—but realistically, this need is likely to continue throughout the winter.

A New Federal Administration and Another Landmark Supreme Court Case in 2020 and Their Impact on Health Policy in 2021

Our most recent edition provided updates on two federal events that will inevitably have significant implications for U.S. health policy going forward: the Presidential election and the Supreme Court argument in California v Texas.

The Incoming Biden Administration

With the electoral college vote final, all eyes are on President-elect Biden’s plans for 2021 and beyond. Our November article outlined expectations relative to health policy for the Biden administration, as well as the impact of the current landscape. Undoubtedly, President-elect Biden’s top focus upon entering office will be addressing the COVID-19 pandemic, which has already proven to be the case in his early statements and actions.

As we detailed in our article, he is also likely to take early action relative to the Patient Protection and Affordable Care Act (ACA)—in preparation for and response to the Supreme Court decision in California v. Texas; to shore up and build upon the law. While the passage of any comprehensive legislation is a non-starter given the make-up of the incoming Senate (as we outlined last month), the administration may seek to advance smaller fixes with bipartisan support or—depending on the outcome of the Georgia Senate runoff elections—through budget reconciliation, as well as through regulations, guidance, and other administrative action. A likely starting point for the incoming administration is revisiting regulations and guidance promulgated by the current administration—including the Exchange regulations that are currently pending and could be finalized before the current administration leaves office, and the significant changes made via the 2017 Market Stabilization Rule. Prescription drug policy is another area we predicted the new administration will prioritize, and where it may find it can forge bipartisan collaboration.

The President-elect’s statements during this interim period between his election and the inauguration have reaffirmed the policy priorities we expected. He has stated that he will ask—and, where he has the authority to do so (such as in federal buildings and interstate transportation), require—all Americans to wear masks for 100 days upon taking office, with an effort to get the pandemic well-enough under control during that time to open most schools. The President-elect has also stated that he supports further COVID-19 relief legislation (beyond the most recent package) and will prioritize ramping up vaccine distribution, while letting evidence dictate how the vaccine is administered.

The President-elect has also given a sense of his priorities with his health appointments. Among the top roles he has announced are: Vivek Murthy to reprise his role as Surgeon General; Dr. Rochelle Walensky to head the Centers for Disease Control and Prevention; and highly touted infectious disease expert Dr. Anthony Fauci to not only maintain his role as the director of the National Institute of Allergy and Infectious Diseases, but also to serve as his chief medical advisor. Dr. Fauci’s appointment, in particular, is a nod to the fact that President-elect Biden sees the COVID-19 pandemic as the nation’s most pressing healthcare priority as he enters office, as well as to the deference he gives to scientists in fighting the impact of the pandemic.

In addition to appointing a broader team to lead the administration’s response to COVID-19, Biden has nominated Xavier Becerra to be Secretary of the Department of Health and Human Services. Known for his political and legal experience, Becerra—who served in Congress and is currently California’s attorney general—has no direct healthcare experience but does have significant experience in health policy. Not surprisingly, he is a staunch defender of the ACA. He will likely play a key role in helping the administration defend and build upon the law and, as needed, pivot following the Supreme Court decision (in which he has been heavily involved on behalf of the state of California). More generally, Becerra has been a strong supporter of health access and equity, as well as reproductive rights, and has challenged the pharmaceutical industry. His long-time support of single-payer healthcare may also shape the role he envisions for a public option at the federal or state levels. Becerra’s recent remarks make it clear, though, that he too sees the COVID-19 pandemic as his top priority on day one.

However, Becerra and many of Biden’s other picks likely will not be part of the administration on day one—as they must be confirmed by the Senate to be appointed, and Senate Republicans have indicated they will delay hearings on appointments until the Senate approves committee assignments. This will undoubtedly impact the speed at which the administration can ramp up its efforts and the confidence the President-elect has in his chosen leaders joining the administration.

California v. Texas

The Supreme Court decision in California v. Texas is also key to how health policy moves forward in the coming year—though no decision is expected for months. Health Policy News outlined the possible paths forward for the verdict in our November article on the topic. While most legal experts do not expect the law to be overturned in its entirety, the individual mandate could be overturned (which would have no current practical impact), as well as certain other provisions. As the incoming administration awaits the decision, part of its focus must be on how it will respond to the case’s various possible outcomes. For example, any changes to the law would require the new administration to determine how to move forward with somewhat less-comprehensive protections.

The Latest in Medicaid and State Innovation Waivers and Expectations for 2021

Renewed Interest in Medicaid Expansion and an Expected Shift in Medicaid Waivers

As we approach a change in federal administration, the debate over Medicaid expansion may continue to gain traction and be front of mind for state-level lawmakers and policy leaders. As we noted in our fall white paper “The Affordable Care Act Ten Years Later: States Take the Lead”, a few holdout states have begun to move toward expansion via ballot initiative, and other states have begun to explore this option as a way to alleviate COVID-19-related health care costs. In South Dakota, two ballot initiatives are attempting to gather the requisite signatures to put Medicaid expansion to a vote in 2022. At a meeting in Wyoming to address the COVID-19 crisis, lawmakers voted to include Medicaid expansion as a policy discussion for the state’s Joint Revenue Committee in the coming months. Time will tell if more states join South Dakota and Wyoming in pursuing expanded Medicaid in the wake of the COVID-19 pandemic.

Additionally, the white paper highlighted Kanas as a state to watch in 2021. In 2019, a bipartisan Medicaid expansion proposal made its way through the Kansas state legislature. The compromise proposal, which included a January 1, 2021 deadline for expansion and premiums, work referral elements, and a plan to transition 100-138% of the FPL from Medicaid to Exchange coverage, was to be funded through a hospital surcharge. Although the bill failed to pass the state legislature last May, it is likely this debate will continue in some form in 2021.

More broadly, the ongoing struggle to provide healthcare during the COVID-19 pandemic, as well as pandemic-driven job losses and the economic crisis, have renewed the Medicaid expansion discussion in states that have traditionally been anti-expansion. We expect this drive to innovate to continue, especially as federal funding and flexibility from the COVID-19 public health emergency winds down.

On this topic, our fall white paper also highlighted recent activity around Section 1115 Medicaid Demonstration Waivers and their expected evolution under a new administration. 2020 saw continued activity around work requirement waivers at both the state and federal level, as well as in the courts. The current federal administration continued to consider Tennessee’s pending global waiver application this year; it is possible that it will take action on that waiver—as well as pending work requirement waiver requests—prior to leaving office, knowing they will not be approved by the incoming administration. The new administration has the ability to terminate waivers, however, CMS included new terms in its recent approval of the Georgia Section 1332 Waiver that make it more difficult to do so and could do the same with any additional approvals.

Once the new administration takes office in January, the focus of activity around Section 1115 Waivers is likely to change. It is unlikely to advance work requirement waivers (or defend those being challenged in courts) or global waivers and will undoubtedly turn its attention to revoking the Healthy Adult Opportunity guidance. On the other hand, it is likely to be interested in promoting waivers to advance state-based public options, as we noted in our fall white paper.

Section 1332 Waivers Continue

The recent momentum in Section 1332 Waivers continued in 2020, with new waivers granted to Pennsylvania, New Hampshire and Georgia. Waivers also went newly into effect this year in Colorado, Delaware, Montana, North Dakota and Rhode Island. The total number of states with Section 1332 Waivers is now 16.

While all three waivers granted in 2020 include a state-based reinsurance program—like nearly every other approved Section 1332 Waiver—Georgia’s waiver also includes a second “phase,” to begin in 2023, which will eliminate the state’s Health Insurance Exchange and allow certain non-Qualified Health Plans (QHPs) to be sold side-by-side with QHPs. In place of federal premium tax, the state will also provide state-based subsidies, which can be used to purchase non-QHPs. The waiver is outlined in more detail in our November edition.

As we noted in our fall white paper, we may see an uptick in innovative Section 1332 Waiver approaches going forward. It is likely that the opportunity to leverage federal pass-through funding to support state-based reinsurance programs will continue to appeal to states seeking to shore up their markets, particularly in light of the pandemic’s impact. States may consider designing these waivers specifically to address COVID-19 costs, such as through a condition-based or hybrid model. The approval of Georgia’s more expansive waiver and the introduction of a new administration may also encourage states to consider opportunities beyond state-based reinsurance programs. A waiver like Georgia’s would likely face more scrutiny from the new administration, given the elimination of the health insurance Exchange (a centerpiece of the ACA) and the promotion of plans that do not meet ACA QHP standards.[5] However, the approval of only the second more comprehensive waiver may encourage states to consider broader concepts that would meet the scrutiny of the new administration.

In particular, we expect the new administration to give more weight to the projected impacts of any waiver concept on the four waiver guardrails: coverage, affordability, comprehensiveness, and federal deficit impact. In fact, the new administration will likely revisit the Section 1332 guidance promulgated in 2018, that overturned 2015 guidance and provided more flexibility in meeting the waiver guardrails. As we outline in our overview of the proposed Notice of Benefit and Payment Parameters for 2022, that rule seeks to enshrine that guidance into regulations. However, even if that provision is finalized prior to the change in administrations, it can still be changed through a longer regulatory process.

Ultimately, while new waiver proposals will need to pass what will likely be heightened scrutiny, the new administration is also likely to welcome proposals for comprehensive waivers that support and advance the guardrails.


Footnotes

[1] Five additional Section 1135 Waivers were granted since our last update.

[2] 13 additional Appendix Ks were approved since our last update.

[3] https://www.statista.com/statistics/1102816/coronavirus-covid19-cases-number-us-americans-by-day/

[4] https://covidtracking.com/data

[5] The new administration could even potentially rescind Georgia’s waiver. However, as we noted in our November article, the current administration included language in the waiver Specific Terms and Conditions (STCs) making it harder for CMS and the Department of Treasury to do so. At the same time, the STCs include heightened compliance, transparency and reporting requirements and reviews, which may provide an avenue for the new administration should it have concerns about the impact of the waiver.

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