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Column | Legal and Regulatory Compliance

Paul Keckley: The healthcare regulatory climate for 2022 — What to expect

Column | Legal and Regulatory Compliance

Paul Keckley: The healthcare regulatory climate for 2022 — What to expect


Hospitals, physicians and long-term care and ancillary service providers can anticipate significant changes in the regulatory climate in 2022.

Although such changes are predictable, context is key: Regulatory policymaking in healthcare at this time is limited by three realities.

1 Congress is in dysfunctional gridlock. Given that partisan brinksmanship is Congress’ current modus operandi, it’s unlikely we’ll see major new legislation that alters the status quo in healthcare services. The No Surprises Act, which became law Jan. 1 this year, was actually passed by Congress in December 2020. And the Biden administration’s Build Back Better Act seems dead, with any possible resurrection likely limited to smaller, bite-size, less politically divisive legislation, such as modest drug price increases tied to inflation and targeted financial assistance programs. Thus, big, new laws impacting healthcare providers in 2022 are unlikely.

2 2022 is a midterm election year. All 435 House seats, 34 Senate seats and 39 gubernatorial races will be decided Nov. 8. Historically, mid-term elections to Congress are problematic to the incumbent President’s party: Barrack Obama lost 63 House and 6 Senate seats in 2010 and Donald Trump lost 40 House but gained 2 Senate seats in 2018, so odds are control of the Congressional agenda will shift to Republicans as the 2024 Presidential stage is set.

In Campaign 2022, the economy and inflation will be in the spotlight. The administration’s handling of the pandemic will be a wedge issue. Democrats will focus on equitable access to health insurance coverage and affordability, while Republicans will focus on government miscues in handling the pandemic and growing federal deficits. The Affordable Care Act will be demonized by critics and couched as a worthwhile start by supporters. Drug prices, executive compensation, lack of price transparency and profiteering by private equity will show up in campaign ads long on attack rhetoric and short on proposed solutions to acknowledged gaps in quality, costs and access. Healthcare affordability and efficiency will be soft targets for campaigners.

3 Public anxiety about the economy and the healthcare system is high and increasing. Per Axios’ polling, the issues that “matter most to you right now” are jobs and the economy (31%), democracy (17%) and healthcare (16%).a Overall, 50% expect the U.S. economy will suffer in 2022, and 33% think their household finances will he hurt. Healthcare bills are problematic: Per Kaiser Family Foundation, 46% of adults report struggling to afford out-of-pocket healthcare costs versus 26% in March 2019. They’re forgoing prescriptions (29%), physician office visits (24%), mental health services (17%) and hospital services (13%) due to cost. People are worried.

Likely drivers of regulatory change

These realities mean the most notable regulatory changes in 2022 will be through rulemaking and executive orders by federal agencies augmented by state-level activities.

Federal actions. Notably, HHS Secretary Xavier Becerra has pledged new rules to fix the “family glitch,” increase access to ACA marketplace credits and amend the definition of short-term plans that do not comply with ACA standards. HHS will use rulemaking to increase access to contraception services, compliance with the Mental Health Parity and Addiction Equity Act and collaboration between public health and local delivery systems that have a special emphasis on social determinants of health. And current efforts around workforce adequacy, expanded price transparency, drug addiction mitigation and medical management innovations in Medicaid will remain high priorities.

CMS Administrator Chiquita Brooks-LaSure and the Center for Medicare and Medicaid Innovation Director Liz Fowler will advance their value-based care agenda addressing issues such as “alternative payment fatigue,” gaming of risk-scoring leading to overpayments to Medicare Advantage plan sponsors and expanded access to Medicaid in under-served populations.

The Federal Trade Commission and Antitrust Division in the U.S. Department of Justice will intensify their reviews of horizontal and vertical integration among health services providers and payers and likely raise the bar for approvals for both. And legislative committees in Congress will hold hearings exploring competition, business practices and profitability in sectors of interest. How money is accessed and used in healthcare delivery will be more widely exposed.

State actions. To a much greater extent than on the federal level, state-level health regulatory changes will continue in 2022. Healthcare is a big deal in states: Spending for Medicaid, state employee health and social services consumes up to 40% of total state spending. From Jan. 1 to Aug. 25, 2021, state legislatures passed 6,139 measures on healthcare issues — second only to education issues (8,686) per Ballotpedia. States control licensing for most health professions, certification of health insurance plans sold in-state, marketplaces where individuals and small businesses access subsidized coverage, and abortion rights, to name just a few issues.

But there’s wide variability in how healthcare is organized and regulated in states:

  • 38 states expanded their Medicaid programs.
  • 35 states have Certificate of Need laws governing competition (to a limited extent).
  • 30 states have interstate compacts for credentialling physicians and other providers.
  • Each state regulates its vaccine, masking and pandemic preparedness programs autonomously.

Unlike the federal government, states must balance their books, so deficit spending is not the norm. Thus, policies impacting spending for healthcare programs hit close to home for employers and taxpayers.

The bottom line

Finance professionals in healthcare delivery settings should expect 2022 to be testy:

  • Labor and supply chain costs will increase.
  • Interest costs for borrowed funds will be higher as the Fed raises rates.
  • Healthcare costs and affordability will get more media attention.
  • Medicare reimbursement will shrink.

And the regulatory environment will alter none of these favorably for the reasons cited above.

Although the regulatory environment is unlikely to change dramatically in 2022, finance professionals in delivery settings should expect greater scrutiny of four key issues:

  • How dollars are spent
  • How prices are set
  • How leaders are compensated
  • How capital is acquired 

Footnote

a. Richardson, B., “Axios/Momentive Poll: 2021 year-end results, survey dates," Dec. 14-16, 2021.

About the Author

Paul H. Keckley, PhD,

is managing editor, The Keckley Report, Washington, D.C.

Sign up for a free guest account and get access to five free articles every month.

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