On Thursday, President Biden reaches a new milestone: one year in office. As expected, the Biden administration's first year was dominated by the Covid-19 pandemic, as federal agencies continued to authorize and approve new therapies, extend the public health emergency and related waivers, dole out Covid-19 response funding, and issue guidance intended to connect Americans with needed masks and tests. The road has been bumpy to say the least, and as a result meaningful progress on other health care priorities were largely sidelined.
But key health care agencies and Congress did begin to lay the groundwork for deeper health policy shifts in 2022. Advisory Board recently published the top 10 health care policy topics that industry executives should watch in 2022. And register now for a webinar to discuss those policy topics leading up to Biden's next milestone, his first State of the Union address on March 1.
Below, I round up three of the top 10 policy topics that are ripe for congressional or regulatory action in 2022.
1) The fate of Build Back Better
One area we could see movement on early in 2022 is the fate of Biden's human infrastructure bill, called the Build Back Better (BBB) Act. In 2021, progress on BBB stalled in the Senate after Sen. Joe Manchin (D-W.Va.) said he would not vote for the existing version of BBB.
The wide-ranging package contains several health care initiatives, including extending the ARP's subsidies for exchange plans, adding new Medicare benefits, expanding Medicaid coverage in non-expansion states, prescription drug pricing reforms, new investments in home and community-based care services, policies to improve equity and strengthen mental health parity, and provisions to bolster the provider workforce.
While Manchin's opposition appears to have killed the current version of BBB, Democratic leadership and the White House may pursue a scaled-down version that could gain Manchin's backing—and it's likely they will aim for a consensus on such a bill by Biden's State of the Union address on March 1. This means policies that Manchin has raised concerns about, such new Medicare benefits and Medicaid expansion for holdout states, are likely to be left out. Other policies where Democratic lawmakers have struggled to reach an agreement, such as giving Medicare negotiating authority over prescription drug prices, could be sidelined or significantly scaled back. It's also important to remember any new version of BBB would need to be re-approved by the House, where Democrats spent months working out disagreements in the original bill.
If a revised BBB leaves out certain health policies or Congress ultimately fails to pass a new version of the bill, lawmakers also could seek to incorporate individual policies into other legislative packages. For example, the ARP's enhanced exchange subsidies are set to end in 2022. If Congress does not extend that funding as part of BBB, lawmakers will likely face pressure to do so by the end of the year.
2) Medicare cuts and physician pay
In December 2021, Congress passed a bill that mitigated a trifecta of cuts that threatened to reduce Medicare Part B payments for many physicians by nearly 10%. The bill increased Medicare payments under the physician fee schedule by 3%, mitigating most of a scheduled 3.75% rate cut. It also postponed a 4% PAYGO cut for one year and partially delayed a 2% sequester cut by imposing a 1% cut from March to June, after which the full 2% cut resumes.
This marked the second consecutive year Congress had to step in to alleviate major payment reductions to providers, and additional action will be required to avoid cuts in 2023. While Congress could pass another one-time payment bump, health system and physician group leaders should expect to hear more debate in 2022 on broader reforms to mitigate this issue and be prepared to weigh in on potential changes.
3) Value-based payment models
At the start of Covid-19 pandemic, providers expressed renewed interest in value-based payment models as they saw volumes and related revenues decline under the traditional fee-for-service model. Since then, providers have been heads down trying to stay ahead of each wave of Covid-19 patients and address workforce challenges that have been exacerbated by the pandemic. Providers also spent most of 2021 waiting to hear how the Biden administration would approach value-based payment models.
In October 2021, the industry received it's first insight into the Center for Medicare and Medicaid Innovation's (CMMI) new strategy and the future of value-based payment models. Under the strategy, CMMI aims to have all Medicare and most Medicaid beneficiaries in accountable care arrangements by 2030. CMMI also expressed an interest in re-examining and streamlining the overall number of alternative payment models it oversees, as well as finding ways to incorporate equity into existing and future models.
While many questions remain unanswered, such as the administration's approach to risk, health care leaders should expect to learn more about potential new payment models in the coming year. We also expect to find out next steps for the Oncology Care Model, which is set to end in 2022, and see applications for a new cohort of the currently paused Direct Contracting (DC) model.
While CMMI could make changes to the DC model, recent pushback from House Democrats suggests legislative changes also may be looming. Though its worth noting lawmakers have not yet coalesced around any concrete policies.
The outlook for health policy in 2022 could move in multiple directions and industry executives should take note of shifts that impact their strategic plans. And remember, legislative priorities not tackled early in 2022 are likely to be impacted by the midterm congressional elections in November.