Rae Woods: From Advisory Board, we're bringing you a Radio Advisory. My name is Rachel Woods. You can call me Rae. In one of our recent episodes, Christopher and I were talking about some of the surprising things that have happened since the onset of COVID-19. And the fact that health policy has the potential to shift what we might see next. We are now more than a year into the Biden administration, and we just heard the president's first State of the Union Address. So I wanted to sit down with somebody to talk about the policy implications in the healthcare space, because depending on who you talk to, we might see a lot or not very much. To do that, I have brought back a tried and true guest and friend, Christopher Kerns. Hey Christopher. Christopher Kerns: Hey Rae. What's up girl? Rae Woods: I don't know. I'm a little dare I stay sick of talking to you at this point. You've been on the podcast a lot lately. Christopher Kerns: I've been on the podcast a whole lot, even without you. So I'm actually looking forward to hearing your voice a whole lot more. Rae Woods: Yeah, you get to be the guest this time and not the host. Christopher Kerns: Always a good time. A lot less work for me. Rae Woods: There's a lot going on in the policy world right now. It's happening inside of healthcare. It's happening outside of healthcare. I want to take a moment and just level set with our audience. We are one year into the Biden administration. What's your take on the posture that President Biden is taking when it comes to healthcare policy? Christopher Kerns: It's been a bit of an odd time for health policy right now, because I think at the beginning of this administration year ago, we would have expected healthcare to be much more of a priority. We were talking about things like Medicare for all, and public option, and lowering the Medicare eligibility age. None of us are talking about that right now. And for a lot of obvious reasons, health policy has taken a bit of a backseat in the administration and frankly in Congress right now. Of course there's still issues with the pandemic that policy makers are having to grapple with. Omicron has thankfully passed, but it may not be the last of the variants that we are dealing with. There of course, is war in Ukraine right now. And frankly there are a number of legislative priorities that took precedence, Rae Woods: Yep. Christopher Kerns: In 2021. Rae Woods: It also hasn't been easy to legislate. Right. We know that technically there's a democratic majority in the House, the Senate, obviously in the White House, but we haven't necessarily seen unilateral success when it comes to legislating. I'm thinking specifically about Build Back Better. Christopher Kerns: For sure. And looking back, a lot of the political capital was spent on the COVID relief bill that was passed in early 2021. And then again, in the infrastructure bill, which managed to pass. That didn't leave a lot of political capital left over to pass Build Back Better. And at this point, as of this recording, it does look like it's dead. Rae Woods: Yeah, absolutely. And I can't believe I'm going to bring this up, but we're not that far away from thinking about midterms, which also changes the calculus when it comes to bringing forth possible legislation. Christopher Kerns: For sure. In fact, the rule of thumb on Capitol Hill is that you can expect to see big bills get passed until about April of an election year. After that point, you can expect that most legislators are going to be heading home for their reelection bids. Rae Woods: I'm in complete agreement with you right now, that it's an odd time in healthcare. Healthcare has been maybe a little bit more quiet than we would've expected. That said when I sat down to watch President Biden's State of the Union Address I was actually a little bit surprised at how much airtime healthcare got. There were lots of quick hits to some longstanding democratic priorities, as well as some new policy programs that were being kind of announced. So even though it's a weird time, policy in general isn't dead in healthcare, even though Build Back Better might be too far gone at this point. Christopher Kerns: For sure. Rae Woods: So let's talk about some of the immediate questions around policy. And I can't help, but talk about the actual crisis that we are still living through. COVID-19 has obviously been tragic, but the healthcare industry has benefited from some of the payment changes, some of the changes in regulations that have been offered because we are in a public health emergency. My question to you is can those flexibility continue indefinitely? Christopher Kerns: Potentially and technically, yes, the public health emergency can be extended as long as the HHS secretary wants to extend it. But the politics of doing so are a bit fraught right now. Rae Woods: Yeah. Christopher Kerns: On the one hand, there are a number of constituencies out there, especially within healthcare that would like to see the PHE extended, unless we get some sort of action from Congress because it allows for better reimbursement for telehealth. It's just one example. At the same time, there are a number of different constituencies, not in healthcare who would like to see the PHE ended yesterday. Rae Woods: Yes. Christopher Kerns: So right now you've got policy makers in a bit of a catch 22 on that front. Rae Woods: And there's an open question about how much regular people understand the classification of a public health emergency, but we're already seeing some of those political moves kind of shake out. Now every single state, Hawaii was the last state to end a statewide mask mandate. So clearly there is pressure to make it feel like we are, ugh, I hate this phrase, but back to normal. Christopher Kerns: Absolutely. Rae Woods: Of course, hospitals, health systems, healthcare leaders don't want to go back to the way things were in 2019 when telehealth wasn't reimbursed, when APPs couldn't practice independently, when they weren't benefiting from all of the things that frankly support healthcare institutions under a public health emergency. Christopher Kerns: Exactly. And I think that a lot of healthcare leaders would like to see a lot of those flexibilities made permanent, but the reality is that unless you want to extend the public health emergency for which there is not a great deal of support in the wider public right now, that's going to require an act of Congress. See all the challenges with passing legislation that we just talked about. Rae Woods: So in your mind then, is there a chance for new healthcare legislation to be passed anytime in the near future? Christopher Kerns: I think so. There are a number of must pass bills that have to get through Congress that are related to spending. And a lot of these issues that are not controversial can very easily find their way into those bills. So I'd be watching for a lot of omnibus spending bills as opposed to looking for flexibilities that come in a modified version of Build Back Better. Rae Woods: But I wonder, right, one of the big messages that was loud and clear in the State of the Union Address was an effort to focus on mental and behavioral health. And obviously Biden was elected, at least in part on his record of getting bipartisan support. Is there in your mind an opportunity for something like a bipartisan effort, maybe in one of the big areas that he proposed as being a focus for this year? Christopher Kerns: This is a really interesting space to watch. And I personally am going to be spending a lot of time looking into some of the details of what would be going through Congress over the next few months or so, because if there is an area for a big bipartisan win, I think it's here in the mental health and behavioral health space. We should remember that for the better part of the past 40 to 50 years, behavioral health has been defunded in this country. Rae Woods: Yeah, absolutely. Christopher Kerns: And that looks like it's changing. Fortunately for the first time in a very long time, we could see new reimbursement, new flexibilities for treating behavioral health that we haven't seen in a very long time. And I think it has a chance of getting real bipartisan support, given that the behavioral health challenges that we've experienced in this country over the past two years have affected just about everybody. It doesn't matter if you're a Republican or Democrat. So I think this is a space where we could see some real change. Will we get that in 2022? I don't know. Will we start to see momentum around it building? Absolutely. Rae Woods: We're talking about policy and I often feel like there's a sense of permanence when it comes to policy. Something has been passed, we need to accept this decision and react to it. It's black and it's white, but there's actually still a lot of open questions about how previously enacted policies are going to impact our industry right now. Christopher Kerns: Especially when HHS is being sued by the American Hospital Association. Rae Woods: Okay, let's get into this. I don't want to get down too much of a rabbit hole, but this is probably something that our listeners have heard rumblings about. What exactly is happening here? Christopher Kerns: So the details of the case are a bit arcane, but its implications are pretty huge here. And effectively from the healthcare perspective, the American Hospital Association is suing Health and Human Services saying that it does not have the authority to reduce reimbursement for hospitals that get 340B status that allow them to get drugs at lower costs than they otherwise would get. Rae Woods: And you're exactly right, that this is coming up in the context specifically around 340B. But my question is, could this have implications elsewhere? Christopher Kerns: This has huge implications that go well beyond healthcare, because this is getting at something called the Chevron doctrine, which is a Supreme Court precedent that essentially says that courts must defer to regulatory interpretation in areas where language might be vague. Now that could be getting revisited, meaning that tons and tons of statues that are passed by Congress that essentially leave it to the regulatory agencies to interpret, could get challenged in court going forward. And we don't even know exactly all the different areas where that could be effective, but expect that a Supreme Court were to strike down that historical Chevron doctrine, we could start to see many, many challenges to regulatory interpretations, which has huge implications for healthcare, but not just healthcare. Rae Woods: And that's exactly why we're going to be watching when the Supreme Court hears that case later this summer and our listeners are probably going to be watching as well. I also think that our listeners are paying close attention to what happens with surprise billing and price transparency. My hypothesis here, which is maybe a bit pessimistic is that the No Surprises Act is an area where our hospital friends might be dragging their feet a little bit. Christopher Kerns: Yeah. This is an area where there are also a lot of ongoing lawsuits. Little bit of background here is that you've got the AHA and AMA that are separately suing to challenge the rule saying that it unfairly advantages insurers and motivates them to cut providers out of their network in order to lower the median in network reimbursement rate. So again, pretty arcane stuff here. Now HHS has the option to appeal, but recent memos suggests that they will instead amend the rule. So the feet dragging may have worked here a little bit. Rae Woods: Hmm. What about on price transparency? Christopher Kerns: Well, this is an area where hospitals certainly were dragging their feet to comply at first when the penalties were pretty modest, but as the penalties have gone up to about $2 million, we are starting to see hospitals looking to comply with the letter of the law in the regulatory environment. One thing to keep in mind though, is that the price transparency rules are meant to help consumers and frankly, wholesale purchasers, Rae Woods: That's right. Christopher Kerns: Make apples to apples comparisons for different hospital and insurance prices. Whether or not that information is going to be apples to apples in comparison is really an open question. And frankly, both insurers and hospitals have an incentive to make sure that they're not. Rae Woods: We've talked about a bunch of policies so far, those related to the pandemic, those related to the healthcare industry more broadly, but there is still a lot of policies that could potentially have an impact on the healthcare industry. So Christopher, I actually want to propose that I put a little bit of your policy knowledge to the test. Can we do a bit of a rapid fire section? Christopher Kerns: Sure. Rae Woods: All right. I'm going to name a topic that is potentially ripped for congressional action and I want your take. Let's start with market consolidation. Christopher Kerns: Expect a lot more resistance coming from the regulatory environment, probably from both FTC and justice, more so than we would've seen during the Trump administration, but it's not going to stop a lot of organizations from trying. Rae Woods: Physician payments. Christopher Kerns: Going to have to get resolved probably in an omnibus bill from Congress coming up soon. Rae Woods: Here's a big one that everyone loves to talk about, drug pricing. Christopher Kerns: Definitely a big priority for the current speaker of the house. Not really gotten a lot of traction in the Senate. Don't expect it to go anywhere in the short term, but it's possible that we could see Congress and the regulatory agencies turning their attention to other parts of the drug value chain. So I guess that means the game's over. So how'd I do? Rae Woods: You won, you won knowledge. Christopher Kerns: Oh my God. Rae Woods: You are the winner of all the nerds that are tracking everything that's happening in policy. Christopher Kerns: I'll take that, winner of all the nerds. I'll take that one. Rae Woods: The truth is that every one of our listeners is probably paying attention to a different aspect of health policy. The policies that are most likely to impact their aspect of the healthcare industry. I actually want to ask you Christopher Kerns directly, what are you going to be watching for? Christopher Kerns: Well, I'm not going to be focusing just on congressional action because as we mentioned before, I think there are a lot of reasons to expect Congress to drag its feet across 2022, though I do think behavioral health is one that we can be watching. I'm going to be looking at the states for sure to see what sorts of innovations we can see there. Now we've seen a number of areas around universal coverage, for example, that have been dying in the state houses lately. But I think the states are where we can expect to see some innovation and payment innovation over the next few years. And I'm going to be looking at the judicial branch, which I can assure you is definitely going to be an area of change across 2022, if we get some big decisions from the court. Rae Woods: Yeah, absolutely. We're going to be watching that very closely, especially when we think about the future of Roe V. Wade, right? There are absolutely going to be changes that we're going to have to react to as an industry. Christopher Kerns: And it's not just Roe V. Wade, it's Planned Parenthood versus Casey. I think there are a number of different implications for what the Supreme Court could decide on reproductive rights. I do think that revisiting the Chevron doctrine could be huge. Rae Woods: Yes. Christopher Kerns: So the court is likely to be some of the biggest areas of change, if they rule in particular ways. Rae Woods: Yeah. We started off this conversation saying we're going to talk about legislation, but really our conversation kind of veered into talking about the Supreme Court quite a bit. Christopher Kerns: It's something that we don't often talk about here mostly because the Supreme Court doesn't take up healthcare cases all that often. I mean, I think the last time we really focused on the Supreme Court was back in 2012, Rae Woods: Yeah. Christopher Kerns: When they were deciding on the constitutionality of the Affordable Care Act. And there have been some challenges since then, but that was the last really serious, big challenge that we saw in healthcare. I think 2022 could turn out to be another year, like 2012. Rae Woods: Hmm. Well, Christopher, what is the one thing that you want our listeners to focus on when it comes to health policy? Christopher Kerns: I got to say, I'm pretty surprised you didn't ask me about some of the really big things such as the healthcare workforce, or value-based care, or what I know is your absolute favorite topic, which is health equity. You didn't ask me about any of those. Rae Woods: Oh, there's a reason for that though. There's reason for that Christopher. It's because they are big enough topics that we need to have dedicated episodes on them. So you're right. I skipped them, but I skipped them for a reason. Christopher Kerns: It's also important to keep in mind these are areas that Advisory Board is going to be spending a lot of its time on over the next several months. So I know you'll probably want to do a lot deeper dives in those areas. Rae Woods: That's exactly right. But you're not going to get away with not answering my question. So we do know that we need people to be thinking about value based care, health equity, the workforce, but what do you want our listeners to do? What do you want them to focus on? Christopher Kerns: I want them to focus on the fact that the pre pandemic workforce is not coming back. So that any policy change or any industry change is going to have to start by accepting that and realize that new care models and new technologies have to be part of the solution because otherwise if we think we can just throw money at this we're diluting ourselves. Rae Woods: Yeah. Regardless of what Congress says, regardless of what happens with reimbursement, I could not agree more. Christopher Kerns: Absolutely. Rae Woods: Well, thanks for coming on Radio Advisory. Christopher Kerns: It's always a pleasure. Thanks for having me. Rae Woods: Even absent huge legislation, there is clearly a lot to watch in the policy space and we want to help you unpack what that means for your part of the industry. So stay tuned for more from us and remember as always, we are here to help.