Axios Vitals

A briefcase with a red cross on the front.

March 22, 2019

Good morning ... Look, let's start off here with what is by far the most important news of the day: Kentucky won its first-round game last night by 35 points. Fellow Kentuckians Murray State also won, and Louisville lost. I'll take it.

1 big thing: A blind spot for medical AI

Animated illustration of a health cross with 0s and 1s running across, some sequences are highlighted as malware.

Illustration: Aïda Amer/Axios

Artificial intelligence systems are susceptible to attacks that try to trick them into doing the wrong thing — for example, making a stop sign look to an autonomous vehicle like a "speed limit 100" sign. And medical AI may be particularly vulnerable, my colleague Kaveh Waddell reports.

How it works: Consider a photo of a mole on a patient's skin. Research has shown that it can be manipulated in a way that's invisible to the human eye, but still changes the result of an AI system's diagnosis from cancerous to non-cancerous.

The big question: Why would anyone want to do this?

  • We're not talking about a malicious doctor manipulating cancer diagnoses — "There's way more effective ways to kill a person," says Samuel Finlayson, the lead author of a new paper on this topic — but rather about a future where AI is involved in billing, diagnosis, and reading medical scans.
  • Finlayson sees a future where basic adversarial attacks are used to fool AI systems into accepting fraudulent claims.
  • Despite this possibility, hospitals and the pharma industry are flying blind, he says. "Adversarial attacks aren't even on the map for them."

Go deeper.

2. States looking to cap hospital rates

Some states are trying to control health care costs by tying hospital payments in their state employee health plans to the amounts Medicare pays, Kaiser Health News reports.

  • States experimenting with these measures include North Carolina, Montana, Oregon and potentially, Delaware.

The other side: This is a nightmare scenario for hospitals, which usually charge private insurance plans several times more than they get from Medicare.

  • Hospitals say Medicare underpays them, and they must charge private patients more to recoup the costs.

Reality check, from Axios' Caitlin Owens: Hospitals are doing very well financially, although it's also true that many rural hospitals — which have a lot of Medicaid patients — are already struggling.

What they're saying: "Government workers will get it first, then everyone else will see the savings and demand it," Glenn Melnick, a professor at the University of Southern California, told KHN. "This is the camel's nose. It will just grow and grow."

Go deeper: How hospitals protect high prices

3. CVS planning ahead for Trump rebate rule

Drug companies haven't pledged to lower their prices once the Trump administration finalizes a rule to overhaul the rebate system used by pharmacy benefit managers. CVS Health is asking drugmakers to at least not start charging more.

Driving the news: CVS Health has sent letters to 60 pharmaceutical companies asking them not to increase the net cost of their drugs — the price after factoring in rebates — in response to the Trump administration's rule.

Between the lines: The timing will be tight on this regulation once it's finalized (there's some talk of it being delayed, for that reason) — leaving insurers without much time to restructure their Medicare drug plans for a new reality without PBM rebates.

  • Due to that tight timing, to prevent sudden last-minute premium hikes, CVS is asking drugmakers to commit to not raising the price insurance plans will pay for their drugs, no matter how the specifics of the rebate rule shake out.
  • Medicare drug plans have relied on drugmakers' existing prices as they designed their plans for next year, and will have to redesign those plans (probably with bigger premium hikes) if drugmakers raise their prices, the letter says.

What they're saying: "What we're asking is very simple help minimize uncertainty for plan sponsors and lessen the financial burden on beneficiaries and taxpayers by making this commitment," CVS spokesman T.J. Crawford said.

4. Providers get cold feet on Medicare experiment

Hospitals and doctors are dropping out of a Medicare program designed to change the way it pays for care, Axios' Bob Herman reports.

By the numbers: The number of providers participating in the program, which makes 1 lump-sum payment for certain services, has dropped by 16% since the first round of participants was announced in October.

  • Initially, 1,547 providers (832 hospitals and 715 physician groups) agreed to give the new bundled payment model a try.
  • Now, 1,295 providers (715 hospitals and 580 physician groups) are participating, according to new data from the Centers for Medicare & Medicaid Services.

Between the lines: Providers had until March 1 to withdraw without any financial penalty. Some groups simply didn’t think they were ready to accept lump payments for things like sepsis patients or major joint replacements.

Yes, but: Bundled payments are not a new idea, and there’s still concerns they won’t reduce costs or eliminate unnecessary care.

5. Roberts changed his ACA vote twice

Supreme Court Chief Justice John Roberts sits with Justices Stephen Breyer and Elena Kagan at the 2018 State of the Union

Roberts, Breyer and Kagan. Photo: Win McNamee/Getty Images

We all know Supreme Court Chief Justice John Roberts changed his vote relatively late in the game to uphold the Affordable Care Act's individual mandate. But CNN's Joan Biskupic, who has written a new book about Roberts, reports that the Medicaid expansion was also part of that evolution.

When the justices went around the table after oral arguments, there were 5 votes, with Roberts joining the other 4 conservatives, to strike down the individual mandate, and then 5 votes — the 4 liberals plus Roberts — to uphold the Medicaid expansion with no changes.

  • But Roberts, unlike his conservative colleagues, didn't want to strike down the entire ACA along with the mandate, which set him on the search for a compromise — first with the conservatives, who rebuffed him, then with the liberals.

The intrigue: What's new in Biskupic's reporting is that the law's Medicaid expansion became optional for states as part of that compromise.

  • The Medicaid section of the court's ruling was ultimately 7-2, with the 5 conservatives plus liberal Justices Stephen Breyer and Elena Kagan voting to let states opt out.
  • "Breyer and Kagan had voted in the private March conference to uphold the new Medicaid requirement, and their votes had been unequivocal," Biskupic writes. "But they were pragmatists. If there was a chance that Roberts would cast the critical vote to uphold the central plank of Obamacare ... they were willing to meet him partway."

Where it stands: 36 states have adopted the Medicaid expansion; 14 have not.

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