Policy Recommendations for the Lame Duck

I’ll be covering for Brian this week as Paragon works to prepare for what will assuredly be a furiously busy lame-duck session leading into a new Congress and White House.

Paragon has put out three new pieces in the past week, looking at past policy actions, present items on the to-do list, and future considerations. These include a look at the costliest Medicaid rules in the Biden administration, a policy brief on the lame-duck session, and a huge report on what Congress needs to know about telehealth.

Opportunities for the Close of the 118th Congress

Paragon released a brief today that covers some big health care policy issues that Congress may work on until the end of the year and a set of recommendations, including:

• Telehealth: Congress has to decide whether or not to extend Medicare flexibilities on telehealth. We recommend against permanently extending any flexibilities until Congress has a better understanding of the implications of telehealth on the cost and quality of care.
• Community Health Centers: Congress is considering adding significantly more funding to community health centers (CHCs), in conjunction with more funding for graduate medical education (GME) and the National Health Service Corps (NHSC) programs. We recommend a minimum amount of extra funding for CHCs, and that any additional funding should be discretionary spending. We also recommend against additional funding for GME and NHSC programs, which have proven to be poor tools for increasing the number of medical residents and providers in American medicine.
• Physician payments: The Medicare Physician Fee Schedule (PFS) is set to take a 2.83 percent cut to the base payment rate next year, and Congress is considering either preventing the cut entirely or mitigating it. We argue that Congress should consider mitigating it, but should avoid net increases to Medicare spending given that the growth of Part B is already a key contributor to our deficit. Reducing excessive payments for hospitals and Part B drugs is also a key part of this equation.
  Pharmacy Benefit Managers: Pharmacy benefit managers (PBMs) negotiate rebates on drugs for insurers and receive as compensation a percentage of the overall rebate. These rebates reduce both total drug spending and premiums. Congress is considering eliminating this practice in Medicare Part D by “delinking” PBM revenue from the rebate in Part D plans. We recommend against delinking PBM revenue from rebates, because it is key incentive for PBMs to negotiate the best price on drugs possible.
• Site Neutral Payments: Congress is considering expanding site neutral payments, whereby Medicare pays the same rate for a given service regardless of whether it is performed in a hospital, an ambulatory surgical center, or physician office. Paragon has led the policy community in building support for Medicare site neutral payments, which would reduce costs for seniors, save Medicare hundreds of billions of dollars, and reduce incentives for consolidation.

Paragon’s New Telehealth Report

Paragon’s Dr. Joel Zinberg has released a major new paper Evaluating Telehealth: What Congress Needs To Know. Before the COVID-19 pandemic there were regulatory barriers to, and limited insurance coverage for, using telehealth services. The pandemic changed things dramatically, as states and the federal government significantly loosened telehealth regulations while insurers increased flexibility around telehealth services. After the COVID-19 public health emergency ended, many of these federal regulatory flexibilities ended while others were extended through the end of 2024. Congress made flexibilities permanent for mental and behavioral health services.

Congress is now considering proposals to permanently or temporarily extend the expiring flexibilities. Joel reviews the evidence on telehealth utilization, access, cost, and quality of care from before, during, and after the pandemic to help inform their deliberations.

Joel found that telehealth visits rose quickly, partially offsetting the major drop in in-person outpatient visits during the early pandemic. As more people returned to in-person services, telehealth usage dropped off to near pre-pandemic levels for most medical services. The exceptions were for mental and behavioral health, where telehealth offset the decline in in-person services and continued to be widely used after the pandemic subsided. Overall mental health services remain above pre-pandemic levels, a result that is entirely due to increased mental and behavioral telehealth utilization. Interestingly, Joel notes that urban areas utilized telehealth more than rural areas, despite previous beliefs that telehealth would be a boon for rural areas where health care is less accessible.

Joel found that the evidence of telehealth’s quality of care is mixed. The quality is heavily dependent on the type of service and area of medicine. Telehealth seems best suited to specialties where physical examination is less important, such as mental and behavioral health. While patients seemed generally content with telehealth, physicians worried about its effect on the doctor-patient relationship and had concerns about not being able to conduct adequate physical examinations.

There is a “paucity of good evidence,” according to Joel, that telehealth has reduced any spending:

“Claims that telehealth will reduce spending are not supported by the available evidence. Telehealth could lower spending if it substitutes for in-person services at lower payment rates or if it reduces the use of downstream services including more expensive care such as emergency department (ED) visits, hospitalizations, and hospital readmissions. Conversely, telehealth could increase spending if telehealth services increase the total number of services delivered and/or increase the use of downstream services.”

Overall, the long-term cost implications of telehealth will depend on how payment levels and utilization for telehealth vs. in-person services shake out.

Joel recommends caution for policymakers on telehealth policy:

“Congress should resist making telehealth flexibilities permanent in government programs until there is more evidence on these questions. But Congress should consider temporary extensions of telehealth flexibilities provided they are coupled with a research agenda to obtain good evidence about the quality and cost-effectiveness of telehealth. Until the evidence is in, patients and their providers should have the freedom to choose telehealth services.”

Medicaid Rules

Last week, Paragon published my policy brief on some of the costliest Medicaid rules the Biden administration has dropped in the past year. In Biden’s Medicaid Changes: High Costs, Misguided Policy, I highlight four rules that will cost the federal government between $68.5 billion and $134.8 billion over five years and cost the states between $46.3 billion and $82.6 billion. These rules include:

• A massive and unprecedented expansion of state-directed payments.
• Changes to Medicaid enrollment rules intended to make it as difficult as possible for states to remove ineligible enrollees.
  An eligibility expansion for Medicare Savings Programs (through which Medicaid pays Medicare enrollees’ premiums) that will enable greater waste, fraud, and abuse.
• An onerous nursing home staffing mandate rule that will require the nation’s nursing homes to magically find over 90,000 new staff (a 15.4 percent increase above current levels) – and the money to pay for them.

Thanks for reading,

Jackson Hammond
Senior Policy Analyst
Paragon Health Institute