Medicare expects a big spike in spending on Leqembi

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Anne Klibanski on the Dana-Farber split

Mass General Brigham didn’t foresee the breakup with Dana-Farber Cancer Institute. But there won’t be any texts begging Dana-Farber to come back. The nonprofit hospital system is getting over it, Mass General Brigham CEO Anne Klibanski told me last week.

Here’s how she responded when I told her it seemed like there was no love lost: “There are clinical and research care teams that have worked together for decades. These are very powerful clinical relationships. The announcement came out from the Farber. This was a Farber business decision to build their own medical oncology hospital. That was their announcement. The people, the relationships, the care — that’s gone on for decades. So all the caregivers, physicians, and researchers were stunned by this announcement.”

I also asked Klibanski about Mass General Brigham, a generally profitable hospital giant, being in the crosshairs of state watchdogs who think the system’s prices continue to be too high, as well as about UnitedHealth Group’s pursuit of Steward’s physicians. Read my short interview with her.

Buckle up: It’s earnings season

In the coming weeks, we’ll learn a lot about how much medical care people got — or didn’t get — at the beginning of the year, as health insurers and hospitals release their first-quarter earnings. This week, we’ll be looking out for UnitedHealth Group and Elevance Health. Next week: Humana, Centene, Molina Healthcare, HCA Healthcare, and Universal Health Services.

We already know older adults are coming back for care they put off during the pandemic, but my colleague Tara Bannow learned the trend is broader than that. The amounts insurers had to shell out for their members’ care — the all-important “medical loss ratio” — grew in 2023 not only in Medicare Advantage, but also in managed Medicaid and commercial group plans, an analysis by TD Cowen found. That’s surprising because insurers have said the trend is isolated to Medicare.

A lot of folks are eagerly awaiting UnitedHealth’s results, which land tomorrow. It’s likely the Change Healthcare debacle worked out in the company’s favor, at least in the first quarter, because of all the medical bills it wasn’t able to pay during the outage. That might be true for other insurers as well. Hospitals and doctors have come down hard on UnitedHealth for its sluggish response to the outage, and the Biden administration has urged the company to fix things quickly.

A big Leqembi spike coming?

Back in February, the government’s actuaries were still working through how much to update Medicare Advantage payments for next year. And my colleague Rachel Cohrs Zhang and I noticed an interesting nugget buried in a document: Actuaries gave the most specific estimates to date about how much they think Medicare will spend on the new Alzheimer’s treatment, Leqembi.

Leqembi, made by the Japanese drugmaker Eisai and sold in partnership with Biogen, is expected to cost the traditional Medicare program around $550 million in 2024, and the entire Medicare program $3.5 billion in 2025, a spokesperson for the Centers for Medicare and Medicaid Services confirmed to STAT.

That shocked us, because that $3.5 billion figure is way more than what Wall Street analysts or even Eisai thinks it will collect from the drug, which is considered to have modest benefits at best for Alzheimer’s patients. But Medicare’s actuaries are very conservative and calculated, giving this number quite a bit of weight. Read more from Rachel and me.

A different view of Medicare physician spending

Physicians have decried the recent cuts to their Medicare payments, but this chart from the Medicare Payment Advisory Commission provides some helpful context.

Even though payment rates haven’t really increased much over the past two decades, the amount Medicare spends on physician services, per beneficiary, has gone up quite a bit. That’s because “the volume and intensity of clinician services delivered each year has increased,” MedPAC wrote in its March report. In other words, doctors are seeing more people, and are saying those visits involve sicker people that require more time to diagnose and treat.

The sky is falling, Medicare IPPS edition

Medicare proposed a 2.6% pay bump for hospitals next year, Tara reports from the big inpatient payment rule that came out last week. That would work out to an additional $2.9 billion, plus another $560 million in payments for treating low-income patients.

Industry analysts didn’t get too worked up about the news, although they noted it’s likely below investor expectations. Medicare typically increases those numbers in the final rule, once lobbying groups have sufficiently circulated their apocalyptic press releases. Last year, the 2.8% proposed increase was ultimately bumped to 3.1%.

Medicare will take comments on the proposed rule through June 10, and the final rule usually comes out in August.

Industry odds and ends

• It’s never too late to learn about anything, especially Medicare. If you’re new to health care (or even if you’ve been around for many years), and if you’ve got 2.5 hours to burn on Tuesday and Wednesday, the government is hosting webinars that are all about “understanding Medicare.”
• Fascinating new research about private equity ownership of physician practices from Brown University professor Yashaswini Singh and her colleagues: PE firms usually sell their physician groups to other PE firms, and they often unload the practices after just three years.
• MassMutual, one of the country’s largest life insurers, is offering free genetic risk assessments to some of its 4.2 million policyholders, but it’s a bit weird because those tests are for eight common, treatable conditions, Tara reports.
• Stephen Hemsley, UnitedHealth’s board chair who also runs his own investment firm, apparently sold off a bunch of company stock before its Justice Department inquiry became public, John Tozzi and Anders Melin of Bloomberg report.
• The Justice Department is looking into whether the health insurance company owned by Sentara Healthcare, a hospital system in Virginia, raised premiums too much a few years ago, Trevor Metcalfe of the Virginian-Pilot reports.

The Meme Ward

My colleague Elaine Chen and I meandered around Chicago to make this Wes Anderson trend TikTok for you. Enjoy. (Special thanks to our multimedia wizards Alex Hogan and Anna Yeo for putting it all together.)