Ready for the Next Threat: Creating a Commercial Public Health Emergency Payment System
There are many examples of groundbreaking success in the development of life-saving vaccines, diagnostics, and therapeutics to which we can point in the response to the COVID-19 pandemic, such as the introduction of mRNA vaccines and the accelerated path to its authorization through Operation Warp Speed. However, in anticipation of future known and unknown health security threats, including new pandemics, biothreats, and climate-related health emergencies, our answers need to be much faster, cheaper, and less disruptive to other operations. One path to a more permanent state of readiness is to create a commercial public health emergency payment system to use the full power of commercial healthcare reimbursement, providing clear and tunable market signals to catalyze investment in anticipation and in response to public health emergencies.
Challenge and Opportunity
There are two key problems we have yet to solve. First, how do we break out of the panic/neglect cycle of investments in emergency medical countermeasures (MCMs), i.e invest more in prevention and preparedness than in response? Secondly, how can we avoid any friction in capital (both public and private) once there is an emergency, while preserving the ability to fine tune incentives as needs evolve?
Many of the most promising and impactful tools applicable to emerging infectious diseases and public health emergency (PHE) management more broadly (e.g. wastewater surveillance, home testing, vaccinations, improved indoor air quality), face strong headwinds due to small, poorly defined, and/or unstable markets, significantly reducing private investment in them and relying on seemingly stochastic public investments by a fragmented set of federal, state, and local agencies.
Additionally, there is a prevailing assumption within the health security community that it operates largely outside the commercial U.S. healthcare system due to lack of private incentives (as opposed to, for instance, the development and use of cancer therapies). This, however, reflects a policy decision and not fundamental underlying market demand. And yet there remain two key realities to contend with: pandemic-related demand is largely unpredictable, and we have, thus far, been unable to effectively amortize pandemic costs into interpandemic periods.
U.S. health care insurers process more than nine billion claims for payment each year – a process which features a sophisticated, standardized accounting system that is widely understood by the entire healthcare industry; it is also a powerful signal of future market expectations that drives private and public R&D investment decisions.
Plan of Action
The U.S. government should create a prospective healthcare reimbursement code set that can anticipate the need for any product or service in the context of PHEs, including MCMs and infrastructure-based countermeasures. The goal would be to provide clear market signals and pull incentives, to encourage and accelerate development and appropriate utilization of medical countermeasures (diagnostics, vaccines, therapies, early warning detection, and others). This would complement other strategies, such as advanced R&D investments made by federal funding agencies including the Biomedical Advanced Research & Development Authority (BARDA). Creating clear reimbursement pathways would likely immediately attract private investment in MCMs in ways that are notoriously difficult currently and help enable rapid response to public health emergencies.
The development and management of this reimbursement system should be housed within the Centers for Medicare and Medicaid Services (CMS), and would require introduction of legislation clearly authorizing CMS to pay for products and services under EUA and use of prospective payment policies.
There are a variety of additional benefits to using a payment system like this for emergency response. This system could be a unique and core source of surveillance data, through conditions of payment policies, that can be used to provide intelligence and manage evolving emergencies such as outbreaks and pandemics, significantly reducing the need for additional data collection systems – need which proved to be a major bottleneck during COVID-19. Prospective codesets are not common in public and private insurance, but the existence of them would likely serve as a new and powerful tool for private investment in a capability that would be certain to have public health benefit were it to exist.
We propose that reimbursable services be categorized into three tiers.
Tier 1. Existing and prospective medical products/services under FDA EUA
This is the set of regulated medical products that would typically be considered for emergency use authorization by the FDA. It can include infectious disease diagnostics, vaccinations, and therapeutics. It can even include the use of repurposed generic drugs to mitigate potential drug shortages.
Tier 2. Existing public health products/services typically not requiring FDA approvals, but may have other regulatory hurdles
There are a variety of products and services not considered medical products but nonetheless play critical roles not only in response but in prevention of public health emergencies. Many of these technologies struggle to find stable markets in which to operate and are relegated to the sidelines. This includes genomic surveillance, remnant sample sequencing, or other surveillance testing capabilities, early warning systems, use of commercial wearables as a check engine light for possible infection prior to symptom onset. Many of these technologies need to be “always on” to be most effective.
Tier 3. Prospective public health products/services typically not requiring FDA approvals, but may have other regulatory hurdles
This category deviates from current models of healthcare reimbursement, because it is comprised of interventions that are carried out by service providers outside of healthcare delivery, but which nonetheless have high impact potential. This can include indoor air quality upgrades, or wastewater detection. Again, the commercialization of indoor air quality is in part impeded by poorly defined markets.
Value-based care models
While the above items are largely “fee for service” payment models, we can also envision the use of value-based care models here, focusing on community outcomes and providing flexibility to communities or other systems to achieve them. This can include models to prevent hospitalization due to PHE (e.g. COVID-19), prevent community transmission (could be directed at local public health agencies or other agents), herd immunity vaccination rates, etc.
Conclusion
One of the biggest frustrations amongst the life science and medical device communities in the COVID-19 response was that the government was not clear about target product profiles and advanced market commitments for the full range of products and services needed. These types of systems, if implemented early, would have sent clear and powerful signals to the market that would have quickly unlocked the necessary private sector investment needed to expedite product development needed for the response. Using the already widely adopted and understood commercial healthcare reimbursement system to incentivize and pay for prospective emergency product development and delivery is a novel, powerful, and turnkey approach to pandemic preparedness.
This action-ready policy memo is part of Day One 2025 — our effort to bring forward bold policy ideas, grounded in science and evidence, that can tackle the country’s biggest challenges and bring us closer to the prosperous, equitable and safe future that we all hope for whoever takes office in 2025 and beyond.
In anticipation of future known and unknown health security threats, including new pandemics, biothreats, and climate-related health emergencies, our answers need to be much faster, cheaper, and less disruptive to other operations.
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