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Weekly line: The 5 biggest challenges awaiting HHS Secretary Xavier Becerra

By Heather Bell

March 19, 2021

    After 56 days without a confirmed leader, HHS has a new secretary. The Senate on Thursday voted 50-49 to confirm Xavier Becerra as the next HHS secretary.

    How will the Biden administration alter health policy? 3 takeaways from health care executives

    As the final vote suggests, Becerra's road to confirmation wasn't smooth. While leading insurer and provider groups came out in favor of Becerra (PhRMA has remained silent on the nomination), others—including many congressional Republicans—have raised concerns about his lack of hands-on health care experience, particularly during the Covid-19 crisis.

    But it's worth noting that while the United States is in the midst of one of the worst public health crises it's seen in recent history (and greatly needed a head of HHS), only three past HHS secretaries had medical training. It's far more common for HHS secretaries to have political and management experience. And Becerra is largely being viewed as political operative for the department, as opposed to an HHS secretary coming in with his own set of policy agenda items. In fact, one thing his confirmation hearings made clear is that Becerra is committed to carrying out President Biden's health care agenda. What will those policies be? Below, I outline the five biggest health policy challenges Becerra will face.

    5 health policy challenges facing Becerra

    1. Seeing the United States through the end of Covid-19 pandemic—and beyond

    While the United States is not out of the woods, there are increasing signs that the immediate Covid-19 crisis may wane throughout 2021 as more people get vaccinated and develop natural immunity. This means Becerra will need to see the country through the end of public health emergency.

    That's no simple task. Under the Biden administration, HHS and its related agencies play a leading role in many areas, including:

    • Coordinating vaccination distribution (and in the near term will need to work with states to meet President Biden's new goal of opening Covid-19 vaccinations to the general public by May 1).
    • Approving and authorizing new Covid-19 treatments and therapies
    • Distributing and managing the health care-related funds included in the Cares Act, Consolidated Appropriations Act, and the latest American Rescue Plan
    • Collecting loan repayments granted to providers through the stimulus packages above

    Becerra also will be tasked with lifting the public health emergency declaration—a decision that will impact provider reimbursement rates, insurer coverage requirements, telehealth reimbursement, and more. While some of those changes will require congressional action, others will fall to HHS and its related agencies. That is because many of the reimbursement and regulatory changes that went into effect to help the health care systems respond to the pandemic are tied to the public health emergency declaration. When that declaration is lifted, HHS and its related agencies will need to shepherd the industry into a new normal.

    2. Reducing the uninsured population

    In 2019, an estimated 30 million U.S. residents were uninsured—and reducing that number is one of the Biden administration's top health care priorities. Throughout Becerra's confirmation hearings, there was a lot of focus on his past support for single-payer proposals as a way to achieve universal health coverage. But, as Becerra told Senate committee members, he will support Biden's policy agenda—and Biden has been steadfast in his preference for a public option health plan and building on the ACA.

    We've already seen Congress take steps to temporarily expand subsidies to purchase exchange coverage and entice states to expand their Medicaid programs under the ACA. Becerra and HHS' agencies will be responsible for implementing those changes—including convincing holdout states to expand Medicaid under the ACA—and measure their success in reducing the uninsured rate. For instance, we could see HHS and CMS use the Medicaid waiver program to allow states to modify their programs in ways that makes Medicaid expansion more appealing, although the Biden administration has already signaled it will not allow Medicaid work requirements to continue.

    HHS and CMS also could allow states to use the Section 1332 waiver authority to test new approaches to coverage, such as public options or even single-payer systems. A handful of states are exploring public option or Medicaid buy-in programs, and Washington state this year launched its own public option plan, called Cascade Care. There appears to be little political appetite (at least at the moment) for a federal public option. But if Congress were to pass such a measure, Becerra would be responsible for implementing it—and could use his political background to help such a plan cross the finish line.

    3. Making health care more affordable

    Rapidly rising health care costs are a concern for policymakers and consumers. At the start of the pandemic, nearly half of U.S. adults ages 19 to 64 were underinsured and vulnerable to high medical bills. Nearly a quarter of adults in this age group had difficulties paying medical bills, 21% did not fill a prescription because of cost, and 21% skipped recommended care because of cost. And it's not just consumers who have a health care affordability problem. The Medicare Trust Fund is currently projected to be depleted in 2026, and some recent projections put the insolvency date at 2024.

    This means health care prices, and health care spending more broadly, will be a priority for Becerra. There are several ways the Becerra and the Biden administration can approach affordability. For example, HHS could build on or adjust Trump-era price transparency rules. CMS is expected to continue the U.S. health system's shift to value-based payment models, placing an emphasis on increasing provider participation. But we've already seen CMS review or delay several Trump-era payment models, including the Primary Care First model, the Geographic Direct Contracting model, and the Kidney Care Choices model. It will be interesting to see what new models come out of CMMI under the Biden administration.

    Given the looming Medicare insolvency, it's also likely that we could see CMS lower provider reimbursement rates in ways such as targeting certain specialties and continuing the shift toward outpatient and home-based care, with additional site-neutral payment cuts.

    Drug prices are another area ripe for congressional and regulatory action. Lawmakers on both sides of aisle have signaled their support for passing legislation to lower consumers' out-of-pocket drug costs. On the regulatory side, we could see HHS reform or modify existing programs. Drug rebates have been a hot topic in recent years, and Becerra has suggested that rebates would be a key area of focus for HHS. The department is currently reviewing several Trump-era policies, including the administration's Drug Pricing Rebate rule, which Becerra has called "rushed." During his senate confirmation hearings, Becerra told lawmakers that patients should not be caught in the middle between pharmacy benefit managers and drugmakers and that HHS would "make sure no one is trying to game the system."

    HHS will also be tasked with implementing the American Rescue Plan's temporary subsidy expansion, which some public health experts have praised for addressing the ACA's affordability problem. The changes are expected to be available to consumers purchasing plans on the federal exchange on April 1. It will be interesting to see how the increased subsidies impact both the uninsured rate and consumers' health care cost concerns, and whether Congress down the road will look to extend or make the new changes permanent.

    4. Addressing health inequities in the US health care system

    The fact that health care inequities appear fourth on this list doesn't mean it is a lower priority item. It's just the opposite. Each of the above challenges presents an opportunity to reduce health care inequities and should be addressed through a lens of doing so. For example, research has consistently shown the ACA's Medicaid expansion reduced racial and ethnic disparities in health coverage and access to care.

    But progress has largely stalled. The latest CDC report on life expectancy showed an overall decline of one year in 2020. But the decline was three years for Black Americans and a two-year decline for Latino Americans. CDC data also shows that Black women are more than twice as likely to die during pregnancy or after childbirth as white women, and minority groups have lower Covid-19 vaccination rates than whites.

    Biden has made inequity a priority for his administration, appointing Marcella Nunez-Smith to serve as the White House's first presidential adviser focused on combating racism and racial disparities in health care. But HHS under Becerra will need to develop the actual policies to address health care disparities and close existing gaps. One possibility is that HHS will focus its efforts is data collection and reporting among Medicare and Medicaid providers. Another potential area of focus, which we'll explore in more detail below, is identifying ways to reduce the uninsured population.

    5. Overhaul CMS star ratings programs and other policy priorities

    CMS' star ratings programs have been a point of contention for industry stakeholders since their inception. But a recent New York Times investigation and a California lawsuit accursing a nursing home chain of gaming the star ratings system are likely to put this issue front and center for Becerra, who was still serving as California AG when the suit was filed. While it's too early to say exactly how Becerra and CMS would approach the star ratings programs, the latest news suggests the agency may revisit those programs and seek to implement broader reforms.

    In addition to the above, it will be interesting to see how Becerra approaches several other policy areas. These include environmental health policy, which was a key focus for Becerra as California AG; antitrust activity (while this largely falls to other agencies, Becerra is likely to bring his background on anti-competitive behavior to how he approaches health care transparency and other policies); and reforming the 340B program, which Becerra has said he will work to strengthen.

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