Inside Carbon's dispute with Elevance Health

Screen Shot 2023-05-01 at 1.50.03 PM-1

Primary care startup Carbon Health went public with an insurance battle it says has been brewing since last year: Anthem Blue Cross, part of the recently rebranded Elevance Health, no longer considers Carbon to be in-network. In a blog post, the startup said Anthem Blue Cross's contract had lapsed because the insurer refused to pay a rate guaranteeing its employees "livable wage" and was reimbursing Carbon substantially less than other providers; in a statement, Anthem Blue Cross called Carbon's demands "excessive." (In 2021, Anthem used similar language to justify terminating its contract with Dignity Health. )

Carbon decided to make the dispute public when Anthem Blue Cross unexpectedly begun denying claims for patients who visited Carbon as an out-of-network provider, and more recently stopped processing those claims altogether, the company said, though Elevance said that charge was false.

It's a rare window into behind-the scenes disputes between providers and payers. Those negotiations are rarely public, and companies typically don't escalate them unless they're trying to put pressure on the other party, UCLA's Gerald Kominski told me.

"The fact that [Carbon is] a startup is maybe why they're in this position," he said. "Their relative power — there's not symmetry here in terms of power in the two sides negotiating." Read more here.

Legal

Masimo v. Apple case ends in mistrial

The California jury hearing a trade secret case between wearable device maker Masimo and tech giant Apple was unable to reach a verdict. The judge presiding, James Selna, declared the case a mistrial yesterday. Masimo had asked Apple for more than $1.8 billion in damages.

Masimo initially filed the suit against Apple in January 2020, claiming that the tech giant hired away key Masimo executives and stole trade secrets that it then folded into its Apple Watch. Masimo also alleged that Apple infringed on patents related to its blood oxygen-measuring technology.

"While we are disappointed that the jury was unable to reach a verdict, we intend to retry the case and continue to pursue legal redress against Apple," Masimo told STAT in a statement. The company also referenced a ruling by an International Trade Commission judge that Apple infringed on one of Masimo's pulse oximetry patents. The commission has yet to decide on implementing an Apple Watch import ban. Read more here.

private equity

A new investment firm for medical devices

Patient Square Capital, a health care private equity firm that recently raised $3.9 billion, is launching a standalone company focused on medical devices: Elevage Medical Technologies, my colleague Lizzy Lawrence reports. The firm has given Elevage $300 million to start, with the mandate to advise and invest in late-stage medtech companies.

Evan Melrose will serve as CEO, coming from a founding managing director role at Spindletop Capital. The company plans to be proactive in finding companies to advise, Melrose told STAT, though its focus will be companies already on the market and looking for widespread adoption. He hopes to prioritize sectors such as regenerative medicine, minimally invasive surgery, and AI-enabled imaging platforms.

"While the specialties may be unique, the challenges of the companies are very similar," Melrose said. "How do we navigate FDA? How do we navigate reimbursement? How do we drive patient awareness, if the company is direct to consumer? How do we scale up marketing?"

Artificial intelligence

Scientists are trying to use AI to decode your thoughts

A team of researchers is working on a "brain decoder" system using artificial neural network GPT-1 that aims to analyze brain scans and make sense of the brain's activity. As my colleague Brittany Trang reports, after listening to several hours of training data, the tool was able to accurately describe the stories in podcasts that three participants listened to — just by looking at their brain activity on a functional MRI. Alexander Huth and a team from the University of Texas at Austin described their findings in a Nature Neuroscience paper. Read more on the proof-of-concept study — and what decoding the brain would really entail — here.

Digital therapeutics

Orexo hits a wall on reimbursement

Swedish pharmaceutical company Orexo says its efforts to make software-based treatments a key part of its business have stalled, my colleague Mario Aguilar reports.

Almost all of its $60 million revenue last year came from U.S. sales of a drug used to treat opioid use disorder, and a negligible amount came from its three software-based treatments in the first quarter of 2023. It's a far cry from the ambitious goals Orexo laid out when it entered the digital therapeutics space — and that gap is largely due to reimbursement challenges.

"If the reimbursement system works, we believe there is a demand," CEO Nikolaj Sørensen said in an earnings call. "But right now, we don't have an efficient system in the U.S., and that's something we're reflecting on how we can improve efficiencies in the organization to ensure that we are ready when we find reimbursement ways that work."

Privacy

Mental health apps see modest privacy improvements

Mozilla is out with another analysis of consumer mental health apps' privacy practices — and things still aren't looking great a year after the open web nonprofit called out online therapy companies like BetterHelp and Talkspace out for vague privacy policies and harmful data practices.

This year, the nonprofit revisited and rated the same companies plus a few more, including Cerebral and Ginger. Results were mixed: Some, like Calm and Modern Health, have clarified their privacy policies in the past year to inform patients of their right to access or delete their own data.

But Mozilla said others, including BetterHelp and Talkspace, continued worrying practices this year: In March, the Federal Trade Commission slapped Teladoc division BetterHelp with a $7.8 million charge — to be paid to consumers — for allegedly handing sensitive information over to Facebook and other companies for targeted advertising. Talkspace's privacy practices still say the company can use data from sign-up questionnaires, including information about whether visitors are depressed, for marketing, Mozilla said.

More around STAT

Check out more exclusive coverage with a STAT+ subscription

Read premium in-depth biotech, pharma, policy, and life science coverage and analysis with all of our STAT+ articles.

What we're reading

How Amazon Clinic's authorization form signs away privacy, The Washington Post
Washington state has passed a new privacy law, The Verge
Bright Health looks to exit insurance entirely, STAT

Thanks for reading! More on Thursday - Mohana

Mohana Ravindranath is a Bay Area correspondent covering health tech at STAT and has made it her mission to separate out hype from reality in health care.