News: 💰 Axios Vitals: Buying spree ahead

Wednesday, September 28, 2022

💰 Axios Vitals: Buying spree ahead

Presented By PhRMA

Axios Vitals

By Tina Reed · Sep 28, 2022

Good morning, Vitals readers! I'm back after a couple of days checking out Napa Valley and enjoying some not-so-healthy bouts of wine and food.

🍗 Speaking of food: The White House Conference on Hunger, Nutrition, and Health is on the menu today, and will include some high-profile commitments from private companies. That includes efforts like redesigning kids' menus at the fast food brands Burger King and Buffalo Wild Wings, a senior administration official said.

Let's get to today's newsletter, which is 936 words or a 3 1/2-minute read.

1 big thing: Health care M&A activity expected to accelerate

Illustration of small red crosses forming a larger one.

Illustration: Shoshana Gordon/Axios

The Justice Department's failed attempt to block UnitedHealth's $13 billion acquisition of Change Healthcare could bode well for other mega-deals, Axios' Arielle Dreher writes.

The big picture: As Axios' Dan Primack points out, it highlights how, while President Biden's antitrust team has significantly stepped up reviews and litigation, its bark can be worse than its bite.

Between the lines: Antitrust regulators vowed to make health care a major target this year and are increasingly going to court to block deals to satisfy competition concerns.

But they lack the resources to go toe-to-toe with powerful corporate legal interests.
Efforts in Congress to give DOJ and the Federal Trade Commission more authority appear to be stalling.
"They are willing to bring cases and lose because they believe it will increase pressure on Congress to change antitrust laws," Chris Meekins, an analyst at Raymond James, told Axios.

Be smart: Meekins said the UnitedHealth case showed companies should expect to go to court, but can still win, at least in vertically integrated deals where one company's product is a component or complement of the other's.

Yes, but: The exception could be hospital system mergers.

Pressured by staffing and supply costs, health care systems are evaluating where they can boost profits, and reposition themselves to a world with more digital care focused on the consumer experience.
"The better, cheaper, faster art of health care is where the focus is now," Anu Singh, partner on Kaufman Hall's M&A team, told Axios.
But horizontal mergers of large health care systems could be challenging under the current regime, Meekins said.

The bottom line: As DOJ and the FTC continue to take aim at the health care sector, the success of deals will likely depend on who's trying to acquire who — and how solid a legal team they can assemble.

2. Rural hospital programs in, pandemic money out

A stopgap spending bill to fund the government into December would extend two Medicare programs benefiting rural hospitals but has no new funding to fight COVID-19 and monkeypox, Axios' Peter Sullivan writes.

Why it matters: Rural hospitals are getting a temporary reprieve from a $600 million funding cliff at the end of September.

The short-term continuing resolution extends funding for the Medicare-Dependent and Low-Volume Hospital programs until Dec. 16.
A longer-term extension would become part of the massive year-end funding deal, where Congress will also decide whether to delay other pending Medicare payment cuts to providers.

The big picture: The stopgap package that's up for a vote this week is silent on other items the White House says are crucial to fight the pandemic, like vaccine research and money to boost testing capacity.

Republicans have long resisted the new funding requests ($22.4 billion for COVID-19 and $4.5 billion for monkeypox) saying the administration could repurpose existing funds. They also point to President Biden's recent comments that the pandemic has ended.
But the lack of money could leave the country without enough testing for a winter surge, or investments in next-generation vaccines that can better fight multiple variants.

3. Nonprofit hospitals' vague charity care criteria

Illustration of a question mark with a dot shaped like a medical cross

Illustration: Annelise Capossela/Axios

Tax-exempt hospitals revamped their charity care policies during the pandemic, in some cases using vague language to describe who was eligible and occasionally tightening access based on immigration status, Arielle writes, about an analysis in JAMA Network Open.

Why it matters: Safety net hospitals play a key role in low-income communities and use charity care as a justification for maintaining their tax-exempt status. The Affordable Care Act requires them to establish and publicize financial assistance policies.

By the numbers: The 151 hospitals surveyed mostly expanded eligibility between 2019 and 2021 with more generous income cutoffs or discounted care.

But 7.9% made policies more restrictive, through steps like excluding non-U.S. residents or specifying how long a person had to live in the country to qualify for charity care.
Some hospitals also excluded coverage of birth control or services to patients in the custody of law enforcement.
The vague language in many hospital eligibility guidelines "limits patients' understanding of charity care policies and may conceal policy changes over time," the authors wrote.

The bottom line: The analysis didn't provide sufficient evidence that hospital consolidation and Medicaid expansion could lead to the expansion of charity care and more generous charity care policies, the researchers said.

A message from PhRMA

Americans want policy reforms that improve their insurance

Did you know 39% of insured Americans say they don't understand what's covered by their insurance? Health insurance coverage should be predictable and transparent, and insured Americans agree.

Learn more from PhRMA's latest Patient Experience Survey report.

4. Quote du jour: Medicare price drop

President Biden delivers remarks in the Rose Garden at the White House on Tuesday about lowering health care costs. Photo: Chip Somodevilla/Getty Images

"The premium for [Medicare] Part B will, in fact, decrease this year. That's a fee you pay for Medicare to cover your visits to your doctor. For years, that fee has gone up. Now, for the first time in more than a decade, it's going to go down and, [for] millions of seniors and people on disability, that means more money in their pocket while still getting the care they need."

— President Biden on Tuesday in remarks on lowering health care costs

President Biden doubled down on his pledge to lower health care costs on Tuesday, touting a Medicare premium drop for 2023 while slamming Republicans for opposing the Inflation Reduction Act and its drug cost controls, Axios' Shawna Chen reports.

Driving the news: The Biden administration announced Tuesday that the monthly premium for outpatient care coverage under Medicare will drop roughly 3% in 2023.

Medicare imposed a steep premium hike this year, in large part due to the high price of Aduhelm, an Alzheimer's drug for which it wound up only offering limited coverage.

5. Catch up quick

🍼 Walmart plans to offer fertility treatments as an employee benefit. (Axios)

🐻 Hibernating bears could hold a clue to treating diabetes. (National Geographic)

🐓 The next pandemic could be brewing on the Netherlands' poultry farms. (Bulletin of the Atomic Scientists)

🧠 An experimental Alzheimer's drug from Japanese pharmaceutical company Eisai showed benefits in a phase 3 trial. (NBC News)

A message from PhRMA

How insured Americans navigate unclear insurance coverage

According to new findings, insured Americans favor policy solutions that improve their ability to navigate and access their care while lowering their out-of-pocket costs.

An example: Tackling the barriers introduced by insurers and middlemen like pharmacy benefit managers.