Axios Vitals

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August 31, 2017

Good morning ... Quick reminder that the Sam Baker era of Vitals begins next week. I'll hand off to him after Labor Day, and he'll guide you through the next big stories in health care politics, business, and technology. I'll still pop up from time to time, probably in flashbacks or maybe a dream sequence.

The cancer drug pricing firestorm

The biggest question on everyone's minds yesterday following the Food and Drug Administration's decision to approve Novartis' new cancer drug therapy known as CAR-T: What's the price?

Now we know, thanks to Bob Herman: $475,000 for a one-time treatment. And that doesn't include other costs, like doctors' fees or staying in an intensive care unit, so a full course of CAR-T treatment could cost well above a half-million dollars.

Deeper dive: The lofty figure represents another heated episode in the nation's debate over high drug prices versus the diseases they attempt to cure. Bob gathered these takeaways from the CAR-T approval and Novartis' pricing decision:

  • The price is actually lower than what biotech investors had expected.
  • The initial patient population is small. That's because it's only meant for children and young adults who have a certain form of leukemia.
  • There are questions about why it should cost more than proven life-saving measures like bone marrow or kidney transplants.
  • Patient advocates say Novartis isn't acknowledging the more than $200 million of federal money that helped support the initial research.
  • National Institutes of Health director Francis Collins warned that there are "still too many severe reactions, too many non-responses or relapses."
  • The Centers for Medicare and Medicaid Services said Novartis' drug, and the company's commitment to only get paid if patients benefit within the first month of treatment, will push the agency to explore more "innovative payment models."

What Tennessee’s insurance commissioner wants

Senate HELP Committee chairman Lamar Alexander will pay a lot of attention to what's happening in his home state of Tennessee when he moves ahead on an Affordable Care Act stabilization bill. Here's what he's likely to hear from Tennessee insurance commissioner Julie McPeak, who's scheduled to testify at one of the hearings on the bill next week.

The bottom line: McPeak tells me she wants help for insurers and more flexibility for the states to regulate insurance, but the first is a more urgent priority than the second. And even though Tennessee didn't end up with any "bare counties" with no health insurance options next year, she says the state isn't anywhere near out of danger, since only 17 counties out of 95 will have more than one insurer.

What it will take to stabilize the markets, according to McPeak:

  • Congress should fund the ACA's cost-sharing reduction payments to insurers for another year, which is part of Alexander's plan.
  • There should be a reinsurance or high-risk pool program to help relieve insurers of the costs of the sickest patients — which may be off the table for this proposal, as Caitlin Owens reported last week.
  • State flexibility is important, but it might be better to create a different kind of state waiver than the ACA's "Section 1332" waivers, since those have to be approved by state legislatures. That's a problem, McPeak said, when they're not in session for the rest of the year.
  • In the long term, she said, Congress should look at the sustainability of the ACA... "but I think that's a lot for Congress to take on right now."

The big picture: Nationally, 1,476 counties — with roughly 2.6 million ACA marketplace customers — could have only one insurer next year, according to a map released by CMS yesterday.

How to keep ACA stabilization narrow

The politics of the ACA will make it tough to keep the stabilization bill narrow, as I wrote yesterday. But Kaiser Family Foundation's Drew Altman writes this morning that the ACA markets are a manageable problem — and they should be easily fixed, as long as Congress can stay focused and the media doesn't blow it out of proportion.

For context: Yes, the individual market is facing some crushing, double-digit rate hikes next year — but the rest of the health system where most Americans get their coverage looks very different. As the chart shows:

  • Average premiums in the employer insurance market, where 151 million Americans get their health coverage, rose by an average of just 3% last year. And that trend of moderate growth is expected to continue this year.
  • Likewise, per capita spending for Medicaid is projected to grow a modest 3% in 2017, with per capita Medicare spending growing by just 2%.

The repair list: The biggest problems in the individual market are unhealthy risk pools and the uncertainty surrounding Trump administration policies, especially whether the cost-sharing reduction subsidies will be paid to insurers. Fix those, and the picture begins to look a lot better.

Maine governor wants to call Medicaid expansion “welfare"

Here's another example of the ideological divide over Medicaid: Maine may vote this fall on a ballot initiative to expand the program, and Gov. Paul LePage wants the ballot language to call it “welfare," per Talking Points Memo.

"It's free health care paid for by the taxpayers, and it's got to be said that way," LePage said in an interview with a local radio station.

Between the lines: As Drew Altman wrote for us in June, Republicans are more see likely to see Medicaid as a welfare program than Democrats and independents, who view it as government health insurance. That disconnect drove a lot of the problems Republicans faced in the ACA repeal bill, when they faced a harsh backlash over its Medicaid spending reductions.

Why it matters: Maine voters may not view Medicaid expansion as negatively as LePage does — unless the wording of the ballot initiative includes the word “welfare" and this turns some of them off.

Medicare’s hospital data dump

CMS unveiled new data Wednesday documenting how much Medicare paid hospitals for inpatient and outpatient services in 2015 — and how much hospitals actually charged for those services.

The takeaway: Not much has changed in hospital pricing systems and payments, according to Bob, who glanced at the spreadsheets. Medicare's fixed payments often bear no resemblance to the hospitals' retail prices, which vary widely across the country. Hospital charges are important because those are the rates uninsured patients have to pay, and they are a basis for negotiating with private insurers.

Here's just one example from the latest round of data:

Inpatient: major joint replacement

  • Median payment from Medicare: $11,474
  • Highest charge: $235,132 at Memorial Hospital of Salem County in New Jersey
  • Lowest charge (excluding low-volume hospitals): $16,687 at University of Maryland St. Joseph Medical Center

Behind the numbers: Why is the lowest charge higher than the median payment? Because all but one low-volume Native American hospital charge more than the median. Yet another example of how the charges bear no resemblance to what Medicare actually pays.

What we're watching today: Govs. John Kasich and John Hickenlooper are expected to release their ACA stabilization plan.

What we're watching next week: Senate HELP Committee hearings on bipartisan ACA stabilization bill, Sept. 6 and 7; 2017 Wells Fargo Healthcare Conference in Boston, Sept. 6-7; markup of Senate funding bill for HHS, dates TBD.

Also, Kasich and Hickenlooper discuss their ACA proposal at a joint American Enterprise Institute-Center for American Progress event, Sept. 8. RSVP here.

What we're watching in September: Senate Finance Committee hearing on CHIP reauthorization. Also, Healthcare Security Forum, sponsored by the Healthcare Information and Management Systems Society, Sept. 11-13.

Let me know what we missed: [email protected]