Healthcare News of Note: Drug manufacturers reap $6.7 billion in provider relief funding, leaving hospitals and health systems with no aid allotted for the delta and omicron surges

• The Biden administration used nearly $7 billion from the Provider Relief Fund to pay for COVID-19 vaccines and therapeutics, according to a report by STAT.
• Health plans and health insurance issuers will be held accountable for delivering parity for mental health and substance-use disorder benefits to those they cover, says a new report by the departments of Labor and Health and Human Services.
• Healthcare and life-sciences deal volume is expected to sustain a steady pace in 2022, according to results of a new survey.

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

1. Report: The Provider Relief Fund appears to be depleted, with no money earmarked for expenses and losses sustained during either the delta or omicron surge

The Biden administration used nearly $7 billion from the Provider Relief Fund to pay for COVID-19 vaccines and therapeutics, according to a published report by STAT.

Citing a document it had obtained, STAT reported that the administration used $6.7 billion to compensate manufacturers during the second half of 2021.

Now there is no money remaining in the fund, according to the report. The most recent general distributions to providers are part of the ongoing Phase 4 allocations, which cover expenses and revenue losses incurred between July 2020 and March 2021 and are set to total $17 billion. No distribution has been earmarked for expenses and losses sustained during either the delta or omicron surge.

STAT noted that when accounting for the Trump administration’s diversion of $10 billion as part of Operation Warp Speed, $16.7 billion from the PRF has gone to drug manufacturers. That’s more than 9% of the fund’s $178 billion total allocation as part of the March 2020 CARES Act.

A spokesperson for the U.S. Department of Health and Human Services told STAT the diversions are a valid use of PRF money since the vaccines and therapeutics are sent to providers at no cost.

The report quotes Stacey Hughes, executive vice president of the American Hospital Association (AHA), as saying the AHA “would be deeply troubled and frustrated to find out that billions of dollars have been siphoned off from the fund, especially since no funds have been allocated to the delta or omicron surges.”

Even before the news broke about the diverted funds, the AHA had requested that Congress apportion $25 billion in additional funding to help cushion the financial blow to providers from the latest surges. The hope is for such an allocation to be included in a government funding package that Congress is looking to pass by mid-February.

— Nick Hut, HFMA senior editor

2. Health plans and insurance companies to be held accountable for delivering parity for mental health and substance-use disorder benefits, says HHS report

Health plans and health insurance issuers will be held accountable for failure to deliver parity in mental health and substance-use disorder benefits to those they cover, according to the “2022 Mental Health Parity And Addiction Equity Act (MHPAEA) Report To Congress” issued by the Departments of Health and Human Services (HHS), Labor and Treasury.

The highlights of the report were announced in a Jan. 25 news release, in which HHS Secretary Xavier Becerra said: “Access to mental and behavioral health support is critical as the COVID-19 pandemic continues to impact so many lives across the country … [and] health plans and insurance companies are falling short of providing access to the treatment many working families need. We are committed to working with our federal partners to change this and hold health plans and insurance companies accountable for delivering more comprehensive care.”

According to the release, “MHPAEA requires that the financial requirements and treatment limitations — such as copayments and prior authorization requirements imposed by a group health plan or health insurance issuer on mental health or substance-use disorder benefits — cannot be more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical and surgical benefits.

“The report cites specific examples of health plans and health insurance issuers failing to ensure parity. For example, a health insurance issuer covered nutritional counseling for medical conditions like diabetes, but not for mental health conditions such as anorexia nervosa, bulimia nervosa and binge-eating disorder.”

An FY 2021 MHPAEA enforcement fact sheet was issued with the 2022 MHPAEA Report to Congress. The fact sheet highlights the Employee Benefits Security Administration’s (EBSA) landmark settlement against United Behavioral Health, as well as other enforcement data and significant results from MHPAEA investigations closed by the EBSA and CMS during the last fiscal year.

3. KPMG survey: Investors show continued interest in healthcare and life sciences M&A in 2022

Healthcare and life-sciences deal volume is expected to sustain a steady pace in 2022, according to more than 300 investment professionals responding to KPMG’s 2022 Healthcare and Life Sciences Investment Outlook Survey.

Key findings

Just a few of the report’s key findings are:

•  70% of survey respondents say they expect to increase their M&A activity in 2022, with more than half of healthcare and life sciences private-equity investors saying they plan to do at least 10% more deals than in 2021.
•  50% of investors say they expect rising inflation and the rising cost of capital to have a modest effect on their M&A activity in 2022, while another 28% said it will be a major headwind.
•  In the robust healthcare IT subsector, telehealth targets were the top choice cited by investors for 2022 deals.
• Medical device investors indicate a preference for small tuck-ins over strategic partnerships and expect a resurgence of hospital system spending on devices used in elective procedures. 

“Despite industry challenges with labor shortages, supply-chain bottlenecks, and inflation, investors are still actively competing for high-value targets, albeit limited in number,” wrote the authors of a KPMG News & Perspectives piece in January.

HFMA bonus content

Read ‘A just cause’: HFMA’s CEoH initiative addresses the factors that impede quality of health and raise healthcare costs. It’s the February hfm magazine cover story.

Register for HFMA’s 2022 Revenue Cycle Conference March 16-18 in New Orleans, Louisiana.

Listen to the latest HFMA Voices in Healthcare Finance podcast, where Rodrigo Heng-Lehtinen, the executive director of the National Center for Transgender Equality, discusses how healthcare organizations can remove barriers to care for the transgender population.  Also in this episode:

• Senior Editor Nick Hut and Policy Director Shawn Stack discuss the Supreme Court order around vaccine mandates.
• Policy Director Todd Nelson shares information about HFMA’s MAP Awards.