In late January 2020, with six confirmed cases of a new coronavirus, the federal government declared a public health emergency.
More than three years later, following 6 million hospitalizations and 1.1 million U.S. deaths, many of the regulatory flexibilities that were enacted to help the healthcare industry respond to the pandemic have now expired. As the healthcare industry moves into a post-pandemic world, these changes impact health systems, physician practices, payers, tech companies and patients.
In the past three years, the U.S. government took actions to support public health and stimulate the economy, including investing $4.4 trillion through multiple legislative packages, according to a report from McKinsey. The government also implemented more than 200 regulatory waivers under the PHE. These measures helped support testing and vaccination efforts, expand coverage and access to care and gave a lifeline to providers as they faced unprecedented challenges.
"With the end of the public health emergency, it’s valuable to reflect on what these waivers provided: a testbed to trial the effectiveness, adoption, and safety profile of a variety of new care modalities, such as audio-only services, payment models, like telehealth payment parity and regulatory changes to include cross-state licensure," said Sunny Kumar, M.D., partner at GSR Ventures, a venture firm investing in early-stage digital health companies.
Some flexibilities, such as the ability for doctors to remotely prescribe controlled drugs, have been extended, while others may become permanent in the future.
The end of the PHE triggered the wind-down of most pandemic-related programs and flexibilities, including those put in place by the Centers for Medicare & Medicaid Services (CMS), the Food and Drug Administration (FDA), the Drug Enforcement Administration (DEA) and other regulatory bodies.
"While sensible to wind down the programs that saw limited uptake, it would be regrettable to curtail programs that brought great value to patients, eased physician burdens, and created positive societal impact such as allowing the tele-prescribing of medication to treat opioid use disorder. These waivers, and others with similar positive impacts, should continue and be further incubated to foster greater digital health innovation and benefit the public," Kumar said.
The end of the PHE has significant operational, financial and compliance impacts for providers, payers, states and manufacturers.
The government spent hundreds of billions of dollars—including more than $30 billion on vaccines, $50 billion on testing and contact tracing and more than $170 billion in provider relief funding—and adjusted hundreds of regulatory requirements to enable the U.S. health system to respond to the pandemic, according to data from McKinsey.
Here are the most significant changes impacting the healthcare industry and how to prepare for what's next.
Provider funding and facility changes
Hospitals will no longer receive the 20% Diagnosis-Related Group add-on for COVID-19 patients.
COVID-19 relief funds that are set to end include $178 billion in provider relief allocated through the Provider Relief Fund (established under the CARES Act) in addition to $8.5 billion in American Rescue Plan rural funds to hospitals and other providers that have nearly all been allocated, with little chance of additional funding.
The federal government also delayed the 2% Medicare sequestration, but that has been phased back in.
The Hospital Without Walls program also has ended, which enables hospitals to use temporary expansion sites and to treat patients in alternate care settings such as convention centers, vacant stores or tents.
Hospitals will once again be required to have a separate nursing plan of care for each patient, and flexibilities around discharged patients to skilled nursing facilities will be rolled back.
The American Hospital Association also compiled a bulletin with a more comprehensive list of changes for hospital operations at the end of the COVID-19 PHE.
Telehealth
During the pandemic, Medicare coverage was expanded to telehealth services for the first time. States and private payers also took steps to increase access to telehealth and home health services. As a result, telehealth use in 2020 soared among both privately and publicly insured patients, particularly for mental health and substance use disorders.
During the PHE, healthcare providers did not have to be licensed in the state where the patient was located. And the federal government allowed providers to use non-HIPAA compliant telehealth platforms as long as they were not public facing. Both of these flexibilities ended May 11, and the Department of Health and Human Services' (HHS') Office of Civil Rights is providing a 90-day transition period for healthcare providers to come into compliance with the HIPAA Rules regarding telehealth. The transition period will be in effect beginning May 12 and will expire Aug. 9.
The DEA also extended telehealth flexibilities that enabled clinicians to virtually prescribe controlled medications to their patients for another six months.
With the passage of the Consolidated Appropriations Act 2023, Congress extended most—but not all—of the telehealth waivers until Dec. 31, 2024.
Permanent Medicare changes according to HHS include:
- Federally qualified health centers and rural health clinics can serve as a distant site provider for behavioral/mental telehealth services
- Medicare patients can receive telehealth services for behavioral/mental health care in their home
- There are no geographic restrictions for originating site for behavioral/mental telehealth services
- Behavioral/mental telehealth services can be delivered using audio-only communication platforms
- Rural emergency hospitals are eligible originating sites for telehealth
Flexibilities that will remain in place under the end of 2024 include:
- Medicare patients can receive telehealth services in their home
- There are no geographic restrictions for originating site for non-behavioral/mental telehealth services
- Reimbursement for audio-only services
- Reimbursement for telehealth services furnished by federally qualified health centers and rural health clinics
- The federal government extended the expanded the list of authorized telehealth providers to include physical therapists, occupational therapists, speech language pathologists and audiologists
- CMS added numerous categories of services to the list of reimbursable CPT codes, all of which are reimbursable through December 2024
- Reimbursement for Acute Care Hospital at Home program
The federal government enacted flexibilities to enable reimbursement parity for services performed via telehealth that typically would have been performed in person. CMS also temporarily changed the direct supervision rules to allow the supervising professional to be remote and use real-time, interactive audio-video technology. Both of these flexibilities will roll back at the end of this year.
"The end of PHE comes in phases, with the initial changes, as of May 11, impacting health systems and others who will now need to ensure that they are using HIPAA-compliant telehealth platforms and that their physicians are licensed in the states where they may be practicing telehealth, or they bring in partners who can service out of state patients. Meanwhile the later rollbacks on payment parity, geographic site extensions, and allowable provider types are most likely just delays that allow Congress time to review and make them permanent before they expire," said Lyle Berkowitz, M.D., CEO of KeyCare, an Epic-based virtual care company.
The end of the PHE has left many patients, providers and health systems wondering what direction telemedicine will take, noted Tom Milam, M.D., Iris Telehealth's chief medical officer.
"While many pandemic-era flexibilities remain, including a waiver of the requirement to provide in-person care to Medicaid members before beginning telehealth services and the permanent expansion of Medicare payment for telepsychiatry, states and the federal government are still working to align many telehealth regulations going forward. The demand for behavioral care skyrocketed during the pandemic and will continue to grow, fueled by patient needs, provider shortages, and the emphasis on integrated care. Providers who continue to embrace virtual care will not only improve the timeliness of the behavioral healthcare they deliver, the health of their patients, and their own work satisfaction, but also ensure their viability post-PHE," Milam said.
The American Medical Association also provides resources on changes to telehealth policies and coding.
Testing and vaccines
HHS officials said the federal government will continue to supply free COVID-19 vaccines and treatments such as Paxlovid until the federal supply runs out. The administration will then shift costs to insurers and consumers later this summer or fall.
People with Medicare coverage will continue to have access to COVID-19 vaccinations without out-of-pocket costs after the end of the PHE.
Medicaid will continue to cover COVID-19 vaccinations without a co-pay or cost sharing and COVID testing through Sept. 30, 2024. Free vaccinations will be available to the uninsured until the federal government's stockpile runs out.
Private insurers are required to cover vaccines as a preventable service, although the Affordable Care Act preventable service mandate is currently being challenged in court.
HHS created the Bridge Access Program For COVID-19 Vaccines and Treatments to maintain broad access to COVID-19 vaccines and treatments for uninsured Americans after the transition to the traditional healthcare market.
Insurance providers will no longer be required to waive costs or provide free COVID-19 tests. Under Medicare, cost sharing requirements will now apply for at-home tests, testing-related services and all COVID-19 treatments.
The federal government will no longer have the authority to require labs to report COVID-19 negative test results. That means the agency might no longer be able to track the percentage of positive tests in a region.
Payers
Insurers face the monumental task of restarting Medicaid redeterminations.
Back in 2020, states agreed to a boosted federal matching rate for Medicaid payments in exchange for not enrolling anyone off Medicaid for the duration of the COVID-19 PHE. Now that the emergency has ended, states have to redetermine eligibility for every Medicaid beneficiary.
States have been preparing for months for the start of redeterminations, with some believing it could take at least a year to finish the task.
States also are losing the 6.2% extra funding allotted for Medicaid to meet the needs of a growing number of unemployed at the beginning of the pandemic. The federal medical assistance percentage funding will be phased out, a process that started April 1 and will continue for the next three quarters until Dec. 31, 2023.
Some states will feel the fiscal burden as Medicaid enrollment reverts back to pre-pandemic levels, or even higher. Moody's Investors Service estimates that enrollment will return to pre-COVID-19 pandemic levels or settle even higher than those levels in 28 states even as federal funding for the program shrinks.
Not-for-profit hospitals will most likely take a hit to their revenue streams due to the Medicaid redetermination process, according to an analysis from Fitch Ratings.
The Urban Institute estimates that 18 million people could lose Medicaid coverage after the COVID-19 PHE ends, with 4 million becoming uninsured.