Labor Day Already?
September 3, 2026
|
|
Welcome to TrustWorks On Call, here with your healthcare business and strategy 411 for the week. If you enjoy our work, please consider forwarding it along to a friend and encouraging them to subscribe.
This week, we go Beyond the Whiteboard to weigh in on the No Surprises Act cost debate, before Dialing In on a surprise bill of our own. But first, going into this Labor Day Weekend, we want to acknowledge all of the labor that goes into healthcare, celebrating the millions of workers—including most of our readers—who make our system go. Remember, without healthcare, our economy would literally have no job growth!
|
Behind the Headlines
Unpacking the forces driving healthcare's biggest stories.
|
1. Breakthrough pancreatic cancer drug to cost $480K per year.
- Revolution Medicines set a list price of $478K per year, or $663 per twice-daily tablet, for its advanced stage pancreatic cancer drug Rasonque, which the Food and Drug Administration (FDA) approved last week.
- For patients with metastatic pancreatic cancer who have already tried chemotherapy, clinical trials showed that Rasonque improved median survival times from less than seven months to over 13 months, with a small number of patients seeing their tumor shrink to be undetectable.
TrustWorks Take: Causing over 50K deaths per year, pancreatic cancer is the third-deadliest cancer in the US, and one of the hardest to treat, with a survival rate of about three percent once it has become metastatic. For that reason, Rasonque’s effect of doubling late-stage survival times represents a monumental breakthrough that has given new hope to cancer patients and researchers. Unfortunately, that “differentiation and the meaningful benefit it provides for patients” is also the justification Revolution Medicines provides for its half-million-dollar annual price tag. Because the average age of a pancreatic cancer diagnosis is 70, Rasonque’s price tag is mostly a Medicare problem. The Inflation Reduction Act capped Medicare beneficiaries’ annual out-of-pocket drug spending, meaning Rasonque should only cost patients $2,400 next year, about one tenth their pre-cap exposure, but the rest of the economic burden still falls on the Medicare Part D financing system.
Fundamentally, the problem is that it is nearly impossible to put a price on lifesaving medication, even under the conditions where the patient is bearing the full cost. Moreover, by spreading the costs across risk pools (via private insurers) or our entire population (via Medicare and Medicaid), our insurance system obfuscates this “willingness-to-pay” dynamic even further, removing nearly all the market-based downward pricing pressures drugmakers might face. We should be funding the discovery of game-changing cancer drugs, and cancer patients should not be expected to bear the brunt of those costs, but the system by which we do those things is clearly broken. |
|
|
2. CDC disputes Pennsylvania’s claims of two measles deaths.
- The Centers for Disease Control and Prevention (CDC) excluded the two “measles-associated deaths” reported by the Pennsylvania Department of Health on August 25 from its Measles Cases and Outbreaks tracker, instead caveating that “available information does not establish whether measles caused or contributed to the deaths or whether the individuals died from other causes while infected with measles.”
- This action, reportedly ordered by recently confirmed director Erica Schwartz, MD, departs from CDC precedent to accept state-reported data and escalates a public dispute between PA Governor Josh Shapiro and Health Secretary Robert F. Kennedy Jr. over the role vaccine misinformation played in these deaths.
TrustWorks Take: This fixation on whether these “measles-associated” deaths were necessarily caused by measles echoes the chorus of anti-vaccine activists downplaying COVID deaths by saying people were merely dying “with” the disease rather than “from” it. What little merit this debate has completely falls away in the context of reported fact: an unvaccinated, pregnant woman contracted measles and, while feeling quite ill, gave birth to a still-born child. The child’s immediate cause of death was a ruptured spleen, an organ measles is known to impact. There is little reason to entertain the belief that his death was unrelated to his mother’s illness, her pregnancy complications, or his own measles infection.
Zooming out from this family’s tragedy, we can see that the CDC under Dr. Schwartz has failed an early test to place science above politics. The administration has also not provided any justification for its exclusion of Pennsylvania's second reported measles death, an unvaccinated adult about which little else is known. In the absence of any display of leadership or public statements by our CDC director, our focus instead turns to Health Secretary Kennedy, who mused baselessly that “the deaths may even have been altogether fabricated by one of [Governor Shapiro's] hopeful staffers.” That is not the statement of someone interested in a good-faith argument about the role the federal government should play in verifying state-level data.
|
|
|
3. Sanford-North Memorial merger closes with oversight deal.
- Sanford Health, a 58-hospital nonprofit system based in Sioux Falls, SD, finalized its acquisition of North Memorial Health, a nonprofit system with two hospitals in the Twin Cities region of Minnesota, after signing a ten-year oversight agreement with the office of Minnesota Attorney General, Keith Ellison.
- The agreement requires Sanford to invest $600M in North Memorial, maintain its Level 1 trauma center and core services, and honor existing collective bargaining agreements while retaining employees in good standing, among other provisions.
|
TrustWorks Take: Sanford, a rural-focused system with a history of attempted mergers, finally gets a foothold in the Minneapolis-St. Paul market for a relative bargain, by picking up a financially challenged North Memorial. Sanford can use this merger as a platform to bring its 415K-member health plan into the state, where it would be the only provider-sponsored plan in town, if it can assemble a viable network. For regulators, these conditional oversight agreements can be a useful tool to ensure the merging systems stick to their promises and remain committed to public benefit after the ink dries. However, this agreement leaves out one of the main concerns the public has with health system mergers: there are no protections against Sanford raising prices at legacy North Memorial hospitals.
|
|
|
Beyond the Whiteboard
Visualizing key trends from the healthcare industry
|
Dispute Resolution Process in Dispute
Researchers at the Georgetown University Center on Health Insurance Reforms published their analysis of the costs incurred by the No Surprises Act (NSA) independent dispute resolution (IDR) process, putting the total at $22.4B through 2025. Most of these costs come from the payment awards that reached nearly $13B in 2025, 85 percent of which went to providers. The authors argue that, although the NSA succeeded at its primary goal of protecting consumers from surprise out-of-network medical bills, it has failed to reduce premiums because a few private equity (PE)-backed provider organizations exploited design flaws in the IDR process: “providers have a clear incentive to keep filing disputes and to ask for higher and higher amounts [because] there is no evidence that there is any ceiling on the amount requested by providers that are deemed by IDR entities to be the superior offer.” Two PE-backed physician roll-ups, Radiology Partners and TeamHealth, and a middleman organization filing disputes on behalf of providers, HaloMD, were responsible for over 75 percent of dispute filings in 2025.
Some provider groups have pushed back against this study’s findings, particularly its $22B headline figure, on the grounds that the “qualifying payment amount” (QPA) used by the authors to calculate how much excess spending the payment awards generated is itself flawed, gamed by insurers to be artificially low. However, the authors noted that doubling the QPA in their estimates would only reduce 2025’s excess spending by about $2B. The Trump administration recently finalized changes that should reduce the volume of IDR disputes by formalizing communication during open negotiations, but it does not have a mechanism to reduce the ever-growing size of the awards. Without further changes, this cadre of PE-backed specialty groups and middlemen will continue to exploit the system, driving up costs for employers and unions, resulting in higher premiums for the commercially insured. Notably, PE-backed groups like these were also responsible for the surprise-billing exploits that prompted the No Surprises Act's passage in the first place.
|
|
|
Dialing In
Sharing insights from our work with clients
When Site Neutrality Gets Personal
A few weeks ago, one of our consultants took his five-year-old son for a routine outpatient cardiology visit at an off-campus clinic under the local children’s hospital’s brand. His son lay on a table for about 15 minutes watching an episode of Bluey while they performed a simple cardiac diagnostic procedure. Nothing about the experience felt remotely like hospital care, but then the bill arrived. The provider portion was $526, including $313 for the diagnostic procedure itself. However, there was also a separate $2,643 hospital/facility claim, more than 5x the entire provider bill. About 85 percent of the facility claim was for diagnostic procedures related to the same diagnostic test.
These are the consumer stakes of site neutrality. This consultant happened to have built our Site-Neutral Payment Calculator tool to model the impacts of a potential Medicare site-neutral reform on provider payments, but now he experienced the other side of the equation. His son, of course, is not on Medicare, but commercial payers are expected to follow Medicare’s lead on site neutrality. Health systems defend these charges as essential cross-subsidies to fund services across the system, but to a parent taking their kid to an outpatient clinic, located off the hospital’s campus, and still getting charged hospital prices, this explanation falls flat. Policymakers feel the same way, which is why site-neutral reforms are gaining momentum. Health systems relying on outpatient facility fees need to wean themselves off before site-neutral payments inevitably become the standard.
|
|
