The end of the COVID-19 public health emergency: What’s next?

Following the declaration of the COVID-19 public health emergency (PHE) in January 2020, the US government took unprecedented actions to support public health and stimulate the economy, including investing $4.4 trillion through multiple legislative packages¹This includes all pandemic-related economic interventions, not just those under the PHE umbrella. “The federal response to COVID-19,” USA Spending, accessed April 28, 2023. and implementing more than 200 regulatory waivers under the PHE.²COVID-19 emergency declaration blanket waivers for health care providers, Centers for Medicare & Medicaid Services (CMS), updated October 13, 2022. These measures had a substantial impact on the entire US healthcare ecosystem, helping to stimulate testing and vaccination efforts, expand coverage and access to care, and support providers as they faced unprecedented challenges.

More than three years later, with the public health emergency expiring, much of the funding and flexibility that helped expand testing, vaccination, coverage, and access to care is also coming to an end (see table). The current administration has announced plans to end the PHE on May 11, 2023.³“H.R. 382 – A bill to terminate the public health emergency declared with respect to COVID-19,” Executive Office of the President, January 20, 2023. A separate “national emergency” declaration ended on April 10, 2023, with the enactment of H.R. Res. 7: “H.J.Res.7 - Relating to a national emergency declared by the President on March 13, 2020,” Congress.gov, April 10, 2023. Although Congress has recently extended certain accommodations through 2024 (for example, Medicare telehealth flexibilities and the Acute Hospital Care at Home program), the federal government is set to continue phasing out a majority of the funding and regulatory support initiatives currently in place, with many expiring concurrent with the end of the PHE. Also ending is a provision that had increased federal funding by 6.2 percent to provide incentives for state Medicaid agencies to keep individuals enrolled in the program (forgoing eligibility redeterminations). While redeterminations and increased federal funding were previously tied to the PHE, Congress is now allowing states to redetermine Medicaid eligibility as of April 2023 (states have some flexibility with when to start), and it is gradually reducing the additional funding throughout 2023.⁴Meghana Ammula and Jennifer Tolbert, “10 things to know about the unwinding of the Medicaid continuous enrollment provision,” Kaiser Family Foundation (KFF), April 5, 2023.

The impending changes in federal relief dollars (for example, the 20 percent increase in Medicare inpatient payments for COVID-19 treatment⁵Jakob Emerson, “The 20% Medicare cut coming for hospitals,” Becker’s, February 13, 2023.) and reductions in care delivery and workforce flexibilities (such as the expanded scope of practice for non-physicians) will have broad implications for private stakeholders.

This article examines the federal government’s expanded role during the pandemic, the changes coming with the expiration of PHE, the impact and potential implications of these changes for private stakeholders, and how stakeholders may respond. For example:

• Providers could double down on operational efficiencies to mitigate additional financial hardships that they were already facing due to rising costs.
• Payers could prepare for shifts in enrollment and negotiate new contracts for items and services that had been temporarily covered by the federal government.
• Manufacturers and distributors could adjust their operations in anticipation of increased demand uncertainty.

Regardless of the specific actions they take, these affected stakeholders would likely benefit from responding quickly and decisively to their new environment.

The federal government’s role in the pandemic, and what may change

The federal government implemented a wide range of COVID-19 pandemic interventions, from vaccination, testing, treatment, and access to care delivery and healthcare coverage. In total, the government spent hundreds of billions of dollars—including more than $30 billion on vaccines,⁶Cynthia Cox, Jennifer Kates, and Josh Michaud, “How much could COVID-19 vaccines cost the U.S. after commercialization?,” KFF, March 10, 2023. $50 billion on testing and contact tracing,⁷Federal support for domestic COVID-19 test availability, Congressional Research Service, February 18, 2022. and more than $170 billion in provider relief funding⁸Teresa A. Coughlin, “The COVID-19 Provider Relief Fund,” Urban Institute, August 29, 2022.—and adjusted hundreds of regulatory requirements to enable the US health system to respond to the pandemic. Healthcare industry stakeholders that have benefited from these funding opportunities and regulatory adjustments can consider how to respond to their planned rollback.⁹Unwinding the Medicaid continuous enrollment provision: Projected enrollment effects and policy approaches, Assistant Secretary for Planning and Evaluation (ASPE), August 19, 2022; Matthew Buettgens and Andrew Green, The impact of the COVID-19 public health emergency expiration on all types of health coverage, Urban Institute, December 5, 2022; Alice Burns et al., “Fiscal and enrollment implications of Medicaid continuous coverage requirement during and after the PHE ends,” KFF, May 10, 2022.

Vaccination. The US government has played a substantial role in COVID-19 vaccine development, procurement, and distribution, investing more than $30 billion in total while accelerating regulatory approval processes to authorize three vaccines by early 2021 through Operation Warp Speed (OWS) and other initiatives.¹⁰A fourth vaccine, Novavax, received an emergency use authorization (EUA) in October 2022: “Operation Warp Speed contracts for COVID-19 vaccines and ancillary vaccination materials,” Congressional Research Service, updated March 1, 2021; “Domestic funding for COVID-19 vaccines: An overview,” Congressional Research Service, updated November 22, 2021. As of March 2023, the federal government had prepurchased 1.2 billion doses of the Pfizer and Moderna vaccines.¹¹“How much could COVID-19 vaccines cost after commercialization?,” March 10, 2023. Although the government paid for the costs of the vaccines, it required commercial payers, Medicare, Medicaid, and other programs to cover the costs of administering them.

Upon expiration of the PHE, Medicare and private payer in-network coverage for vaccination will continue, though patients may see out-of-pocket costs associated with vaccine administration. Medicaid will continue coverage for at least a year after the PHE ends. The government recently announced it will allocate $1.1 billion in additional funds that will provide vaccines for the uninsured through at least a portion of 2024.¹²“Fact sheet: HHS announces ‘HHS bridge access program for COVID-19 vaccines and treatments’ to maintain access to COVID-19 care for the uninsured,” US Department of Health and Human Services (HHS), April 18, 2023. With payers required to cover vaccines and waning federal funding and vaccine provisioning, payers will assume new costs to cover COVID-19 vaccination. Both payers and manufacturers will need to negotiate contracts for vaccines that have to date been largely funded by the federal government.

Testing. The US government also played a critical role in COVID-19 testing and tracing. Appropriating more than $50 billion for COVID-19 testing and contact tracing,¹³Federal support for domestic COVID-19 test availability, Congressional Research Service, February 18, 2022. the government mailed more than 700 million at-home tests,¹⁴Courtney Rozen, “Biden mailed 737 million Covid tests but mum on who got them,” Bloomberg Law, February 2, 2023. expedited the tests’ regulatory authorization process, subsidized testing for the uninsured ($11 billion),¹⁵“Testing, treatment, and vaccine administration for the uninsured,” Tracking Accountability in Government Grants System (TAGGS), accessed April 19, 2023. provided tests directly to schools ($10 billion¹⁶Phyllis W. Jordan, “What congressional funding means for K-12 schools,” FutureEd, December 12, 2022.) and to American households ($6 billion¹⁷Courtney Rozen, “Biden mailed 737 million Covid tests but mum on who got them,” Bloomberg Law, February 2, 2023.), and helped to set up a coordinated surveillance and reporting system, including testing sites that are free to use.

The end of the PHE may limit the federal government’s continued investment in prepurchasing and providing tests. Funding for testing uninsured individuals¹⁸The 2021 US Census results estimated there were 27.2 million uninsured individuals in the United States. Lisa N. Bunch and Katherine Keisler-Starkey, “Health insurance coverage in the United States: 2021,” US Census Bureau, September 13, 2022. expired March 22, 2022, prompting the administration to warn that it no longer had adequate funding to replenish the national stockpile of at-home tests.¹⁹“Summary of funding request to meet critical needs,” White House, September 2, 2022. Medicare and Medicaid will continue to cover test charges for the calendar year following the end of PHE.²⁰Juliette Cubanski et al., “What happens when COVID-19 emergency declarations end? Implications for coverage, costs, and access,” KFF, January 31, 2023. As an essential health benefit, COVID-19 tests will be required coverage for individual and small group private payers,²¹“FAQs on essential health benefit coverage and the coronavirus (COVID-19), CMS, March 12, 2020. and other private payers are likely to cover some tests (for example, they may cover PCR but not home-based antigen tests). But testing coverage requirements for large group payers will end along with the PHE. Although private payers have been covering at least a portion of COVID-19 testing costs throughout the pandemic and patient demand for testing has declined, payers can anticipate and prepare for a potential increase in the proportion of testing-related claims as federal provision of tests and testing sites diminishes.

Treatment. The US government has also played a role in the treatment of patients with COVID-19, including by developing and providing therapeutics, increasing funding for patient care, and expanding care flexibility. For instance, in the first two months of 2022, the US government provided more than 2.5 million COVID-19 treatments and therapies to US states.²²“Secretary Becerra announces HHS purchase of 600,000 treatment courses of new monoclonal antibody that works against Omicron,” HHS, February 10, 2022. Federal investment included therapeutic drug development and manufacturing,²³“Biden administration to invest $3 billion from American Rescue Plan as part of COVID-19 antiviral development strategy,” HHS, June 17, 2021. fast-tracked regulatory approval,²⁴“Coronavirus Treatment Acceleration Program (CTAP),” US Food and Drug Administration (FDA), January 24, 2023. drug procurement and distribution,²⁵“Fact Sheet: Biden administration increases access to COVID-19 treatments and boosts patient and provider awareness,” White House, April 26, 2022. and support for providers caring for COVID-19 patients (more than $20 billion for Medicare enrollees²⁶“Preliminary Medicare COVID-19 data snapshot,” CMS, December 17, 2021. and $25 billion for the uninsured²⁷Sarah Kliff and Noah Weiland, “For the uninsured, Covid care has entered a new stage of crisis,” New York Times, December 6, 2022.).

Beyond existing grants, there are no publicly announced plans for additional federal funding, advanced purchasing, or procurement of COVID-19 therapeutics, although the Biden administration has requested more funding from Congress.²⁸“Summary of funding request to meet critical needs,” White House, September 2, 2022. Additionally, Medicare is set to impose Part B cost sharing (normally 20 percent) for monoclonal therapeutics in January the year after the Food and Drug Administration’s emergency use authorization (EUA) expires,²⁹“After the public health emergency: Implications for Medicare and U.S federal health care policies,” Hogan Lovells, March 13, 2023. and treatment coverage requirements for Medicaid enrollees will end one year after the PHE expires.³⁰Juliette Cubanski et al., “What happens when COVID-19 emergency declarations end? Implications for coverage, costs, and access,” KFF, January 31, 2023. If government coverage ceases, private payers will likely need to make coverage decisions about these therapeutics based on use patterns, clinical benefit, and patient demand. Providers and payers would also need to negotiate and enter contracts to directly procure therapeutics from manufacturers and distributors, and prepare for potential cost increases.

Access to care delivery. To facilitate greater access to care for the US population during the COVID-19 pandemic, the federal government supported strained providers by providing financial assistance, staffing and material resources, and flexibility in care delivery models.

Financial assistance came in the form of increased payments, loans, and reduced reimbursement sequestration. Increased payments included the 20 percent diagnosis-related group (DRG) add-on for COVID-19 patients³¹“Coronavirus update: CMS releases guidance implementing CARES Act provisions,” American Hospital Association, April 16, 2020.; the CARES Act, which freed up $150 billion in federal aid³²“CARES Act Coronavirus Relief Fund frequently asked questions,” IRS, January 31, 2023.; and nearly $180 billion in provider relief funding provided by the Health Resources & Services Administration (HRSA).³³Teresa A. Coughlin, “The COVID-19 Provider Relief Fund,” Urban Institute, August 29, 2022. The Centers for Medicare & Medicaid Services (CMS) provided more than $107 billion in COVID-19 Accelerated and Advanced Payment (CAAP) loans.³⁴Medicare accelerated and advance payments program COVID-19 public health emergency payment data, CMS, updated December 21, 2022. The federal government delayed the 2 percent Medicare sequestration, which went fully back into effect in July 2022.³⁵“2% payment adjustment (sequestration) changes,” CMS, December 16, 2021. Federal Emergency Management Agency employees deployed by the government offered staffing relief at hospitals and schools and provided much-needed COVID-19 supplies and infrastructure (such as ventilators; personal protective equipment; testing, screening, and cleaning supplies; and temporary barriers) as well as related labor costs (for example, temporary nursing care and overtime).

Finally, the federal government temporarily waived regulations that made it challenging to access care in an era of physical distancing and prevented hospitals from operating at capacity. Medicare coverage was expanded to telehealth services for the first time, and more than 200 waivers and modifications were implemented, including site-of-care and capacity expansions that gave hospitals flexibility in using hospital space.³⁶“COVID-19 emergency declaration blanket waivers for health care providers,” CMS, October 13, 2022. Additional waivers expanded the scope of practice for non-physicians and loosened hospital reporting requirements.

The uncertain future of government coverage and financial support for care related to COVID-19 may prompt providers and patients to prepare for a greater out-of-pocket burden for such services and treatment. Upon expiration of the PHE, hospitals will no longer receive the 20 percent DRG add-on for COVID-19 patients.³⁷“Coronavirus update: CMS releases guidance implementing CARES Act provisions,” American Hospital Association, April 16, 2020. While Medicare coverage of audio-only services for mental health was made permanent, most other telehealth waivers are set to expire at the end of 2024. Of particular importance will be the reduction of site-of-care and workforce flexibility, including expanded scope of practice for non-physicians.

Healthcare coverage. The COVID-19 pandemic ushered in an economic downturn following a decade of growth in US payroll employment.³⁸“COVID-19 ends longest employment recovery and expansion in CES history, causing unprecedented job losses in 2020,” US Bureau of Labor Statistics, June 2021. Between January and April 2020, 22 million Americans lost their jobs, and the US unemployment rate surged from 3.5 to 14.8 percent (by July 2022 the US economy had regained the number of jobs lost).³⁹Unemployment rates during the COVID-19 pandemic, Congressional Research Service, August 20, 2021. Job losses and furloughs led to losses in employer-sponsored health coverage and the purchasing power to participate in healthcare exchanges.⁴⁰Estimates of workers and their dependents who lost employer-sponsored healthcare coverage because of a pandemic-related job loss in 2020 range from 2.7 million to 14.6 million. Paul Fronstin and Stephen A. Woodbury, “How many Americans have lost jobs with employer health coverage during the pandemic?,” Commonwealth Fund, October 7, 2020; “Health insurance coverage declined during the pandemic,” Duke University, September 8, 2021. In response, the federal government intervened to expand coverage and fund governmental programs, including state Medicaid programs. This helped contribute to a historically low uninsured rate of 8.9 percent in the third quarter of 2021.⁴¹“Health coverage changes from 2020-2021,” ASPE, January 27, 2022.

The federal government intervened in the following ways to increase healthcare coverage throughout the pandemic: protecting Medicaid enrollees from disenrollment through most of the PHE,⁴²Juliette Cubanski et al., “What happens when COVID-19 emergency declarations end? Implications for coverage, costs, and access,” KFF, January 31, 2023. opening a special enrollment period for residents of the 36 states that use the US health insurance marketplace to secure health coverage, and providing federal subsidies to offset the cost of COVID-19 care to states (for example, via an additional 6.2 percent in federal medical assistance percentage, or FMAP, for non-expansion populations and 100 percent FMAP for states providing COVID-19-related Medicaid coverage to the uninsured) and to individuals (for example, via premium tax credits through the American Rescue Plan and the Inflation Reduction Acts).⁴³Katie Keith, “CBO analyzes American Rescue Plan coverage expansions,” Health Affairs, February 18, 2021; Cynthia Cox, “Five things to know about the renewal of extra Affordable Care Act subsidies in the Inflation Reduction Act,” KFF, August 11, 2022.

The 6.2 percent enhanced FMAP—which provided approximately $100.4 billion in additional funding to states from fiscal year 2020 to fiscal year 2022—began to decrease on April 1, 2023, and will phase out through the rest of the calendar year.⁴⁴“10 things to know,” April 5, 2023; “KFF analysts find that between 5.3 million and 14.2 million people could lose Medicaid coverage following the end of the public health emergency and continuous enrollment requirement, with an unknown number able to find new coverage,” KFF, May 10, 2022. Additionally, the 100 percent FMAP for the 15 states that have opted into providing COVID-19-related Medicaid coverage for the uninsured will end on the last date of the month that the PHE ends.⁴⁵“COVID emergency declarations are ending. What happens to migrant & immigrant health and health access?,” Migrant Clinicians Network, February 6, 2023; “States can test for COVID-19 under the uninsured Medicaid eligibility option, but why are many opting out?,” The Commonwealth Fund, August 27, 2023. Also, as of April 1, 2023, states may restart redetermination and disenrollment, which could lead to a potential 5 to 20 percent drop in Medicaid enrollment.⁴⁶Unwinding the Medicaid continuous enrollment provision, August 19, 2022; The impact of the COVID-19 public health emergency expiration, December 5, 2022; “Fiscal and enrollment implications,” May 10, 2022.

The impact and potential implications for private stakeholders

As the unprecedented level of federal government COVID-19 pandemic support phases out, private stakeholders could strategically plan for their new responsibilities (exhibit).

Providers. Faced with rising operating costs and inflation, providers may find the time is right to take on operational efficiency programs to mitigate the additional financial impact of the loss of provider relief funds, loans, and the 20 percent DRG add-on. A reduction in Medicaid enrollment following the restart of Medicaid redeterminations may also affect reimbursement dynamics across some markets. The regulatory landscape will continue to influence provider investment decisions as many systems seek to expand ambulatory and telehealth service offerings. Telehealth has spurred huge consumer uptake and provider investment already.⁴⁷“Telehealth in the pandemic—How has it changed health care delivery in Medicaid and Medicare?,” US Government Accountability Office, September 29, 2022. Congress recently extended many of the Medicare telehealth flexibilities and the Hospital Without Walls waiver through 2024.⁴⁸“CMS waivers, flexibilities, and the transition forward from the COVID-19 public health emergency,” CMS, February 27, 2023. However, other related practitioner eligibility expansions are set to expire with the end of the PHE, which may affect providers’ ability to leverage alternative care settings for their patients. In a tight healthcare labor market, it is particularly important for providers to prepare for the rollback of site-of-care and workforce flexibilities (such as expanded scope of practice for non-physicians).

Private payers. Private payers will be required to absorb the costs of COVID-19 vaccination, testing, and treatment that were previously shouldered by the federal government. A likely increase in claim volume related to treatment, testing, and vaccination stresses the importance of use management efforts, particularly in the context of ongoing COVID-19 waves. Payers may also see higher costs related to vaccine administration. Finally, with the drop in Medicaid enrollment related to the resumption of Medicaid redeterminations,⁴⁹Unwinding the Medicaid continuous enrollment provision, August 19, 2022; The impact of the COVID-19 public health emergency expiration, December 5, 2022; “Fiscal and enrollment implications,” May 10, 2022. private payers on the exchanges should prepare for a potential increase in enrollment. An estimated one-third of beneficiaries no longer eligible for Medicaid will qualify for subsidies on the exchanges.⁵⁰“Mitigating coverage loss when the public health emergency ends,” blog entry by Sabrina Corlette and Maanasa Kona, Commonwealth Fund, April 26, 2022.

Manufacturers and the healthcare industrial base. Manufacturers of COVID-19-related products will face uncertainty in demand as federal prepurchasing recedes and the regulatory climate reverts to pre-EUA requirements. Manufacturers that manage large federal contracts may need to prepare to juggle a higher number of smaller contracts (for example, with health systems and retail pharmacies) to maintain production levels. Manufacturers may also shift to seasonal production of COVID-19 supplies (the US Food and Drug Administration has suggested shifting boosters to a schedule similar to the flu shot)⁵¹Future vaccination regimens addressing COVID-19, FDA, January 26, 2023. and pursue expansion into international markets if domestic demand remains unpredictable. The end of large-scale federal advance purchasing of COVID-19 products such as tests and vaccines could affect the country’s healthcare industrial base. Manufacturers will run the risk of having insufficient dedicated manufacturing capacity in the event of a potential future surge, which could lead to downstream public health consequences.⁵²Notably, the absence of federal R&D dollars will have less impact on manufacturers than the rollback of advanced purchasing, given that revenue from existing COVID-19 products is likely sufficient to fund any additional R&D required to further advance vaccine and testing technologies.

Distributors. Waning federal involvement could have a more direct impact on companies involved in the distribution of COVID-19 vaccines, tests, and therapeutics than on other stakeholders. For example, health systems and pharmacies have had ongoing involvement in purchasing therapeutics and tests (particularly rapid tests). Distributors may now need to identify and secure contracts with manufacturers, hospitals, and pharmacies to take over the government’s previous role in provisioning products. At the same time, traditional distribution channels will likely be sufficient to deliver these products to consumers in a postpandemic era, assuming volume remains relatively predictable and care shifts back to traditional settings from, for example, vaccination drives at stadiums.

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Since the COVID-19 public health emergency was declared in January 2020, the US government has invested trillions of dollars in public health and stimulus packages and implemented an unprecedented number of regulatory flexibilities to expand testing, vaccination, coverage, and access to care while supporting providers. As the public health emergency comes to an end, along with many corresponding funding and regulatory flexibilities, stakeholders have an opportunity to make strategic plans, respond quickly and decisively, and succeed in the new environment.