|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
Tennessee takes Trump administration up on Medicaid block grants
The Tennessee Legislature passed a bill this week ordering the Governor to submit a waiver application to the Centers for Medicare & Medicaid Services (CMS) to become the first state to convert its Medicaid program to block grant funding. If approved, the waiver would radically change how the state’s Medicaid program is funded. Today, states get open-ended funds from the Federal government that match state spending on Medicaid patients. Block grants would cap Federal spending, providing a single, predetermined lump-sum payment, in return for allowing the state flexibility in benefit and program design. Proponents claim this flexibility can enable novel care and coverage models that enhance states’ ability to deliver efficient care, while critics charge that the proposals endanger Medicaid’s coverage guarantees and are merely a means to reduce enrollment and benefits. Some block grant proposals allow states to redirect any savings to non-healthcare spending priorities, further fueling the argument that they provide a way for states to shift money away from healthcare for the poor. Tennessee’s proposed waiver comes on the heels of a waiver filed by Utah to apply per-capita spending caps to its Medicaid program, which was conditionally approved by CMS in March.
Legal experts question whether 1115 waivers, which provide states flexibility to test new approaches for Medicaid, can be extended to permit block granting. In 2018, the Trump administration removed the requirement that waivers must include the goal of increasing coverage. But experts question whether Tennessee’s proposal meets the intent of the waiver program, which is to advance the Medicaid statute’s purposes, or if new legislation would be required to make this change. University of Michigan law professor Nick Bagley writes, “The whole point of block grants—if we’re being honest—isn’t to run an experiment or make Medicaid work better. The point, instead, is to give states the latitude to cut beneficiaries or benefits. That doesn’t sound to me like it’s consistent with Medicaid’s purposes.” The bill requires the state to submit the waiver to CMS within six months. If approved by the administration, it is certain to trigger legal challenges. Federal courts have already invalidated the use of waivers for some work requirements. Block grants represent an even more drastic step, making Tennessee’s waiver and legal challenges to it a critical test of the viability of the Trump administration’s efforts to circumvent Congress and use waivers and rulemaking to radically restructure the Medicaid program.
Saying goodbye to a lion of healthcare journalism
The country lost one of its greatest healthcare reporters with the passing of Robert Pear, who died this week after complications from a recent stroke. Pear covered healthcare for the New York Times for 40 years and was known for his deep understanding of the industry, scrupulous methodology, and brilliance in explaining complexities to readers with clarity and deep insight. We had the honor of being called by him several times over the years to share our thoughts on topics he was researching, and we always approached those calls with humility. Even if Pear was calling for your expert input, he would undoubtedly know more about the topic, right down to the details in footnotes of articles or the minutiae of a thousand-page piece of legislation—and you’d leave the conversation having been educated by him. His relentless digging into the legislative process exposed internal arguments and meddling by special interests, annoying lawmakers to no end—and perhaps even turning the tide of public perception of the Clinton administration’s healthcare reform efforts in 1993. He took criticism with humor: Pear visited a DC-area sausage factory to understand how sausage is made—concluding that the comparison of lawmaking to sausage-making does a disservice to sausage makers. Pear kept a low profile and was dubbed “the most important reporter in Washington you have never heard of”. His acumen, unparalleled knowledge, authoritative voice, and pursuit of excellence over personal recognition will be deeply missed.
At $2M per patient, the new “Most Expensive Drug in America”
A new therapy for a devastating degenerative disease will soon be released by Novartis with a potential tag of $2M, making it the highest-priced drug therapy in America, according to a recent piece in the Wall Street Journal. Zolgensma treats spinal muscular atrophy (SMA), an inherited genetic disorder. SMA is similar to amyotrophic lateral sclerosis, or Lou Gehrig’s disease, but is usually diagnosed in infancy and leads to death by age two. Zolgensma isn’t a drug in the traditional sense, but a gene therapy that uses a virus to replace the defective gene in patients. According to the company, it can be curative in a single dose, justifying its high price. While all 12 infants treated with the drug showed drastic improvement, critics question whether the effects will be lasting. Regardless, Zolgensma is sure to spark debate over how to value—and pay for—a single-dose treatment that provides a potential lifelong improvement. Insurers are accustomed to high-priced treatments for which dosing and payment is spread out over a long course of therapy, but may balk at “holding the bag” for the full price of a curative therapy, highlighting the conflict that can emerge when real innovation, delivered at a very high cost, collides with our complex and rigid third-party payment system.
Kaiser launches online network for social care
Kaiser Permanente announced the launch of Thrive Local, on online platform to connect healthcare and social services providers to address non-clinical care needs. Kaiser is partnering with technology start-up Unite Us to build the network of community providers, create an interface and communication channel with Kaiser’s electronic health record, and enable Kaiser providers to directly connect patients with resources for housing, food insecurity, transportation and other social needs. Thrive Local is set to launch this summer, with an ambitious rollout goal of reaching the entire system in three years. This initiative is part of a Kaiser’s larger investment in social determinants of health, which also include a $100M investment to address homelessness announced in January. These investments are critical to manage higher-need patients in the system’s Medicare Advantage and Medicaid populations, which are likely to account for a growing portion of Kaiser’s future business. Most health system programs to address social determinants of health have been focused around a single need or partnership, and have been managed locally with little system oversight, making them difficult to scale. Thrive Local is a model worth watching, one that could create a centralized, integrated platform capable of addressing a broad category of social needs across a range of geographies.