Healthcare News of Note: McKinsey analyzes a range of scenarios based on the infectiousness, immune evasion and severity of disease linked to the omicron variant

• A McKinsey article discusses what the U.S. can expect with the onslaught of the omicron variant based on the variant’s infectiousness, immune evasion and severity of disease.
• CMS has finalized a proposal to rescind a drug pricing model that providers feared would have a substantially negative impact on their finances.
• Total healthcare utilization in 2020 was 11.4% below 2019 levels despite the increased use of telehealth services.

Over the last few weeks, I have found these industry news stories that should be of interest to healthcare finance professionals.

1. McKinsey analysis: What to expect with COVID-19 in the next several months

The McKinsey article “When will the COVID-19 pandemic end?” published Dec. 15 “presents analysis of a range of scenarios based on the infectiousness, immune evasion, and severity of disease caused by the Omicron variant.”

“Based on the evidence to date, we have posited a base-case scenario in which Omicron is about 25 percent more infectious, evades prior immunity to a greater degree (25 percent), and causes less severe disease, again by about 25 percent, all relative to Delta,” the authors wrote.

What does it mean for the U.S.?

“Our analysis suggests that in the United States, this combination of characteristics would lead to Omicron replacing Delta as the dominant variant in the next few months and to a higher peak burden of disease than the country saw in the second half of 2021 (but likely below the peak reached in the winter of 2020–21),” the article states.

“In the pessimistic scenarios, the peak number of hospitalizations for COVID-19 could be much higher in the next six months than in the past six months, whereas in the optimistic scenario, the number would be higher but similar to that seen in the second half of 2021, as waning immunity causes ongoing disease from a combination of the Delta and Omicron variants.”

3 factors influencing the spread the omicron

“In the context of Omicron’s arrival and impending spread, three factors come to the forefront: the potential impact of new therapeutics in reducing hospitalizations and death, the criticality of boosters in the context of waning immunity, and clarity and consensus in public-health measures,” wrote the authors.

In one example, the authors note that although there are several benefits to oral therapeutics, such as a significant reduction in “the chance of progression to severe disease after symptom onset” — thus enabling “a higher fraction of cases to be managed as outpatients” — there are also questions about the use of oral medications to treat COVID-19 that remain unanswered.

2. CMS formally rescinds the Most Favored Nation drug pricing model

CMS in late December finalized a proposal to withdraw a drug pricing model that providers feared would have a substantially negative impact on their finances.

Established in the final months of the Trump administration, the Most Favored Nation Model initially was set to take effect at the start of 2021. It was designed to lower prescription drug costs by setting a cap based on prices paid to drug manufacturers in comparable countries.

In December 2020, a federal court issued an injunction that prevented the model from being implemented. In August 2021, with new leadership having been installed, CMS proposed to scrap the model and look for different ways of incorporating value-based payment into Medicare Part B drug payments.

CMS’s Office of the Actuary had estimated that during the model’s proposed seven-year period, savings would total $64.4 billion in Medicare fee-for-service, $49.6 billion in Medicare Advantage and $9.9 billion in Medicaid.

And HHS’s Office of the Assistant Secretary for Planning and Evaluation said provider revenue would drop by $59.3 billion during the seven-year time frame, including by more than $10 billion annually starting in the fourth year.

Among responses to the proposal to rescind the rule, stakeholders said projections of the model’s financial impact likely underestimated the adverse consequences for providers. Another concern was that some of the estimated savings would stem from reduced access to care and would not translate to lower out-of-pocket costs.

—    Nick Hut, HFMA senior editor

3. Medicare telehealth use in 2020 helped mitigate the declines in in-person physician visits