This week, the House Energy and Commerce and Ways and Means Committees begins work on the reconciliation bill they hope to complete by Memorial Day. Healthcare cuts are expected to figure prominently in the committee’s work.
And in San Diego, America’s Physician Groups (APG) will host its spring meeting “Kickstarting Accountable Care: Innovations for an Urgent Future” featuring Presidential historian Dorris Kearns Goodwin and new CMS Innovation Center Director Abe Sutton. Its focus will be the immediate future of value-based programs in Trump Healthcare 2.0, especially accountable care organizations (ACOs) and alternative payment models (APMs).
Central to both efforts is the administration’s mandate to reduce federal spending which it deems achievable, in part, by replacing fee for services with value-based payments to providers from the government’s Medicare and Medicaid programs. The CMS Center for Medicare and Medicaid Innovation (CMMI) is the government’s primary vehicle to test and implement alternative payment programs that reduce federal spending and improve the quality and effectiveness of services simultaneously.
Pledges to replace fee-for-service payments with value-based incentives are not new to Medicare. Twenty-five years ago, they were called “pay for performance” programs and, in 2010, included in the Affordable Care as alternative payment models overseen by CMMI. But the effectiveness of APMs has been modest at best: of 50+ models attempted, only 6 proved effective in reducing Medicare spending while spending $5.4 billion on the programs. Few were adopted in Medicaid and only a handful by commercial payers and large self-insured employers. Critics argue the APMs were poorly structured, more costly to implement than potential shared savings payments and sometimes more focused on equity and DEI aims than actual savings.
The question is how the Mehmet Oz-Abe Sutten version of CMMI will approach its version of value-based care, given modest APM results historically and the administration’s focus on cost-cutting.
Context is key:
Recent efforts by the Trump Healthcare 2.0 team and its leadership appointments in CMS and CMMI point to a value-agenda will change significantly. Alternative payment models will be fewer and participation by provider groups will be mandated for several. Measures of quality and savings will be fewer, more easily measured and and standardized across more episodes of care. Financial risks and shared savings will be higher and regulatory compliance will be simplified in tandem with restructuring in HHS, CMS and CMMI to improve responsiveness and consistency across federal agencies and programs.
Sutton’s experience as the point for CMMI is significant. Like Adam Boehler, Brad Smith and other top Trump Healthcare 2.0 leaders, he brings prior experience in federal health agencies and operating insight from private equity-backed ventures (Honest Health, Privia, Evergreen Nephrology funded through Nashville-based Rubicon Founders). Sutton’s deals have focused on physician-driven risk-bearing arrangements with Medicare with funding from private investors.
The Trump Healthcare 2.0 team share a view that the healthcare system is unnecessarily expensive and wasteful, overly-regulated and under-performing. They see big hospitals and drug companies as complicit—more concerned about self-protection than consumer engagement and affordability. They see flawed incentives as a root cause, and believe previous efforts by CMS and CMMI veered inappropriately toward DEI and equity rather than reducing health costs. And they think physicians organized into risk bearing structures with shared incentives, point of care technologies and dependable data will reduce unnecessary utilization (spending) and improve care for patients (including access and affordability).
There’s will be a more aggressive approach to spending reduction and value-creation with Medicare as the focus: stronger alternative payment models and expansion of Medicare Advantage will book-end their collective efforts as Trump Healthcare 2.0 seeks cost-reduction in Medicare.
What’s ahead?
Trump Healthcare 2.0 value-based care is a take-no prisoners strategy in which private insurers in Medicare Advantage have a seat at their table alongside hospitals that sponsor ACOs and distribute the majority of shared savings to the practicing physicians. But the agenda will be set, and re-set by the administration and link-minded physician organizations like America’s Physician Groups and others that welcome financial risk-sharing with Medicare and beyond.
The results of the Trump Healthcare 2.0 value agenda will be unknown to voters in the November 2026 mid-term but apparent by the Presidential campaign in 2028. In the interim, surrogate measures for performance—like physician participation and projected savings–will be used to show progress and the administration will claim success. It will also spark criticism especially from providers who believe access to needed specialty care will be restricted, public and rural health advocates whose funding is threatened, teaching and clinical research organizations who facing DOGE cuts and regulatory uncertainty, patient’s right advocacy groups fearing lack of attention and private payers lacking scalable experience in Medicare Advantage and risk-based relationships with physicians.
Last week, the American Medical Association named Dr. John Whyte its next President replacing widely-respected 12-year CEO/EVP Jim Madara. When he assumes this office in July, he’ll inherit an association that has historically steered clear of major policy issues but the administration’s value-based care agenda will quickly require his attention.
Physicians including AMA members are restless: at last fall’s House of Delegates (HOD), members passed a resolution calling for constraints on not-for-profit hospital’ tax exemptions due to misleading community benefits reporting and more consistency in charity care reporting by all hospitals. The majority of practicing physicians are burned-out due to loss of clinical autonomy and income pressures—especially the 75% who are employees of hospitals and private-equity backed groups. And last week, the American College of Physicians went on record favoring “collective action” to remedy physician grievances. All impact the execution of the administration’s value-based agenda.
Arguably, the most important key to success for the Trump Healthcare 2.0 is its value agenda and physician support—especially the primary care physicians on whom the consumer engagement and appropriate utilization is based. It’s a tall order.
The Trump Healthcare 2.0 value agenda is focused on near-term spending reductions in Medicare. Savings in federal spending for Medicaid will come thru reconciliation efforts in Congress that will likely include work-requirements for enrollees, elimination of subsidies for low-income adults and drug formulary restrictions among others. And, at least for the time being, attention to those with private insurance will be on the back burner, though the administration favors insurance reforms adding flexible options for individuals and small groups.
The Trump Healthcare 2.0 value-agenda is disruptive, aggressive and opportunistic for physician organizations and their partners who embrace performance risk as a permanent replacement for fee for service healthcare. It’s a threat to those that don’t.
Paul
PS: Last week, Catholics welcomed Chicago-native Cardinal Robert Francis Prevost as Pope Leo XIV. I’m not a Catholic but, as a healthcare educator and analyst, I have followed the church and its healthcare ministries closely. Pope Leo XIV brings a heart of social justice to his role, life experiences in the U.S. and Perus with decidedly unique health systems, a humble spirit as a leader and a profound awareness of current events like tensions in Gaza and Ukraine where “the least of these” is devastated by political hubris and military aggression.
Resources in addition to references below:
- A More Holistic Approach to Measurement for Value-Based Care | Health Affairs
- America’s Physician Groups America’s Physician Groups is a national association representing approximately 360 physician groups with approximately 170,000 physicians providing care to nearly 90 million patients. APG’s motto, ‘Taking Responsibility for America’s Health,’ represents our members’ commitment to clinically integrated, coordinated, value-based health care in which physician groups are accountable for the costs and quality of patient care.
- Pope Leo XIV: What to know about Chicago-born Robert Prevost
- AMA calls for tougher oversight of nonprofit hospitals
Quotables
Ways and Means on CMMI role: “We write to express our interest in the priorities of the Center for Medicare and Medicaid Innovation (CMMI) under the Trump Administration…We believe that with the right leadership, CMMI can produce models that promote value over volume, result in meaningful program savings, improve care for the most vulnerable beneficiaries living in rural and underserved communities, and better incorporate public input.
CMMI has a track record of promoting a political agenda ahead of its Congressionally mandated purpose. This fact was demonstrated during the Biden Administration by a 2021 “Strategy Refresh”1 published by CMS that declared CMMI would focus on promoting a health equity agenda and minimized the importance of cost savings in models. Accordingly, the Congressional Budget Office found that CMMI increased direct spending by $5.4 billion in its first decade. In its nearly 15-year lifetime, only 6 out of more than 50 models have yielded significant savings. We were pleased to see CMMI recommit to the goal of pursuing payment models that will save money, including concluding or modifying existing models to achieve savings as evidenced in a recent press release.
Jason Smith, Chairman Committee on Ways and Means, Vern Buchanan Chairman, Subcommittee on Health Committee on Ways and Means Final-CMMI-Letter-4.28.25-Signed.pdf
ACP calls for collective action by physicians: “Physicians are increasingly frustrated with the nation’s health care system. The erosion of the patient–physician relationship, diminished clinical independence, the mounting burden of administrative tasks, and the growing influence of non-clinicians in the health care system have left many physicians disempowered, demoralized, and burned out. As a result, physicians, most of whom are employed by hospitals, health systems, and other organizations, are exploring collective action to enhance their ability to deliver high-quality care to patients, regain control of their profession, and improve their well-being. In this position paper, the American College of Physicians offers recommendations on how physicians can become effective advocates for their patients and their profession through advocacy, the organized medical staff, responsible collective bargaining, and other means.”
Politico on birthright citizenship oral argument: “ Next week, the Supreme Court will hold its biggest oral argument of the year so far. It will consider whether to maintain a series of nationwide injunctions that have prevented the administration from enforcing President Donald Trump’s executive order ending birthright citizenship. The ruling in next week’s case alone could change the lives of thousands of children that will be born in the country — to both undocumented and temporarily legal immigrants — between now and whenever the Supreme Court issues a final ruling on the merits of the order. Those children could be born stateless in the meantime and exposed to deportation proceedings.
The Supreme Court’s oral argument will no doubt be closely watched by legal and political observers across the spectrum. If this ends up being one of the cases in which Roberts and his conservative colleagues opt to ignore the “real-life practical consequences” of their ruling, it could bode poorly for the other challenges to Trump’s aggressive and unprecedented assertion of executive power.”
The quiet blockbuster ahead for the Supreme Court – POLITICO
Surgeon General nominee Casey Means on health system: “I deeply respect doctors, but I want to be very clear on something: at every hospital in the United States, many doctors are doing the wrong things, pushing pills and interventions when an ultra-aggressive stance on diet and behavior would do far more for the patient in front of them. Suicide and burnout rates are astronomical in health care, with approximately four hundred doctors per year killing themselves. (That’s equivalent to about four medical school graduating classes just dropping dead every year by their own hand.) Doctors have twice the rate of suicide as the general population. Based on my own experience with depression as a young surgeon, I think a contributor to this phenomenon is an insidious spiritual crisis about the efficacy of our work and a sense of being trapped in a system”
Casey Means, Good Energy: The Surprising Connection Between Metabolism and Limitless Health
Vinay Prasad on direction for FDA biologics focus: “The last few FDA commissioners under both Democrat and Republican presidents are the same. They are pro-corporate, sell outs. They tend to work in Government and then consult for or work for Pharma. That’s true of Scott Gottlieb (Trumps last FDA Commish who is now on the Board of Pfizer) and Bob Califf (Obama and Biden’s FDA commish who has consulted for Pharma and worked for Verily) They are incrementalists, status quo folks.”
“The philosophy shared by these two is the most dominant philosophy in health care regulation. Make the efficacy bar slightly lower, keep the burden to get the market, ensure high prices, and then when you are done in Government go to Pharma to reap your reward.”
Note: Prasad is FDA Commissioner Marty Makary’s pick to run the FDA’s Center for Biologics Evaluation and Research where vaccines et al. are evaluated.
Vinay Prasad in his own words: How he might exert influence at the FDA
Vinay Prasad to run key FDA division that oversees vaccines | STAT
Bill Gates on philanthropy and future of Gates Foundation: “…One of the best things I read was an 1889 essay by Andrew Carnegie called The Gospel of Wealth. It makes the case that the wealthy have a responsibility to return their resources to society, a radical idea at the time that laid the groundwork for philanthropy as we know it today.
In the essay’s most famous line, Carnegie argues that “the man who dies thus rich dies disgraced.” I have spent a lot of time thinking about that quote lately. People will say a lot of things about me when I die, but I am determined that “he died rich” will not be one of them. There are too many urgent problems to solve for me to hold onto resources that could be used to help people.
That is why I have decided to give my money back to society much faster than I had originally planned. I will give away virtually all my wealth through the Gates Foundation (worth $108 billion today) over the next 20 years to the cause of saving and improving lives around the world. And on December 31, 2045, the foundation will close its doors permanently.”
20 years to give away virtually all my wealth | Bill Gates
Politico on politics of Medicaid cuts: “Ultimately, history lessons go only so far. The fate of Medicaid — like almost everything, including the price of Barbies — comes down to President Donald Trump. As Politico has reported, he gives mixed signals. He vows to “cherish” Medicaid, but wants to pay for his tax cuts.
At the end of the day, if Trump opts for cuts, he’s got a darn good track record of getting Republican votes, even from those who bear personal political risk. If he decides it’s political poison, the hardline entitlement cutters may have to, for now, yield to history once again.”
The uphill battle to cut entitlements – POLITICO
Hopkins on trust in health system: “Trust is a foundational yet largely understudied topic in the economics of health care. We present results from a nationally representative survey of American adults, guided by a simple theoretical model expressing health care-seeking behavior as a function of economic and behavioral fundamentals and highlighting the role of trust. We report several findings. First, we document a strong association between trust in the health care system and both retrospective and anticipated care-seeking behavior across various scenarios, including routine check-ups and vaccinations. Our results suggest a primary role of trust, independent of factors such as access to care or knowledge about its importance. Second, the impact of trust on health care utilization is similar in magnitude to that of factors such as income and education, long recognized as crucial in the existing literature. Third, the relationship between trust and care-seeking behavior appears to be mediated by key mechanisms from our theoretical framework, notably individuals’ beliefs about the system’s capabilities and their personal disutility from medical visits. Fourth, we ask respondents about trust in specific health care sectors, finding that the results hold when focusing on trust in doctors, nurses, or hospitals but not when focusing on trust in insurers. Finally, we find no differential relationship between trust and care- seeking for Black respondents, but we find important differences by age and political affiliation. Our findings have significant policy implications, especially as trust in medical and scientific expertise becomes harder to establish.”
Trust and Health Care-Seeking Behavior | NBER
Andrews on hospital future: “It is precisely because hospitals now stand all alone – openly opposed by payers and policymakers and billionaire energy traders-cum-health policy experts, facing the unique challenges of treating any emergent patient without respect to that patient’s ability to pay, anchored by aging, or ancient, infrastructure while competing with ambulatory providers on every side – that I wonder whether it is the beginning of the end for the hospital industry.
I can and frequently do note the flaws that are common to many hospitals, including poor governance, “directionally correct” strategic planning, suboptimal resource allocation, inconsistent quality and inscrutable billing processes, among others. Those flaws represent the “tools” that hospitals refuse to drop, “the way we’ve always done it,” even if they cannot articulate why they use or benefit from those tools. Of course, I could level most of the same criticisms at every other health economy stakeholder…
Value for money has been the winner in the U.S. economy for 250 years, and the only two industries that don’t deliver it – higher education and healthcare – are now under tremendous scrutiny. The winners of healthcare’s negative-sum game will eventually be those who exemplify the words of John Houseman: “They make money the old-fashioned way. They earn it.”
Hospitals on the Rack: Lessons from the Mann Gulch and South Canyon Fires “
Interior Secretary on U.S. balance sheet: “Many early conservationists embraced the common-sense view that America’s national lands, given their vastness, should serve the multiple goals of preservation, recreation and development. Only modern political generations imposed a rigid “lock it up” attitude that has turned the federal portfolio into a money pit. States don’t do this—even liberal Oregon funds its schools with logging revenues. Nor does the private sector, which understands land to be one of its greatest assets. Leave it to the feds to accomplish the rare feat of making land a liability, even as it has put many of its holdings at immediate risk of fire, insects or disease due to pathetic management.
None of this is an excuse for Congress to shirk its pressing duty to get its spending house in order. Republicans might instead look to America’s assets to help pay down its debt. That’s what smart companies do, and it turns out America Inc. still has a lot of value.”
America Inc.’s Balance Sheet – WSJ
National Academy of Medicine on GenAI in healthcare: “… Early evidence on the applications of GenAI is promising but also points toward issues in output accuracy, relevance, and user acceptability. It is clear that thoughtful design, rigorous evaluation, ongoing monitoring, and effective regulation of GenAI are crucial.
There is an increasing understanding that previous regulatory approaches for AI and other technologies are probably insufficient for GenAI… Thus, the bulk of regulatory responsibility for these technologies may move to state- and local-level AI governance frameworks, with public–private collaborations establishing voluntary industry standards for fairness and transparency…
It is important to be deliberate and comprehensive in the application of GenAI to health care. All innovations in health care require balancing new approaches with appropriate guardrails and infrastructure to ensure that care quality and safety are preserved. GenAI is no different. Our hope is that the ideas presented in our report help in achieving that balance.”
Generative AI in Medicine — Evaluating Progress and Challenges | New England Journal of Medicine
Phil Gramm and Donald Boudreaux on GDP decline: “U.S. gross domestic product shrank by 0.3% in the first quarter of 202…the decline is mostly a statistical artifact: “The decrease in real GDP in the first quarter primarily reflected an increase in imports, which are a subtraction in the calculation of GDP. ” The GDP number for the quarter is down because America produced less, not because it imported more.
So, what did cause the decline in growth in the first quarter? It appears to have been largely the product of the massive uncertainty that the Trump administration’s trade policy has created as it wreaked havoc on supply chains and global commerce. Since most of the proposed tariffs have yet to go into effect, the negative growth of the first quarter is simply a warning of much worse to come if the administration doesn’t call off its trade war…
While imports don’t directly add to GDP, restricting them will quickly harm U.S. production. More than 61% of U.S. imports are component parts used in the American production process, according to the BEA…
If the tariffs take effect, Americans will see dramatic evidence that imports enhance our ability to produce, consume and enjoy the growth premium that the world calls American exceptionalism. It’s a shame that lesson may end up being so painful
Yes, the US GDP Decline Is an Ominous Sign
Sachin H. Jain on non-profit health plans: “The nonprofit health plan sector is at a crossroads. The status quo is not tenable — and survival will not be granted to those who simply wait it out. It will favor the bold, the collaborative and the adaptive.
As someone who has had the privilege of leading both national and regional organizations, I believe deeply in the importance of these local institutions. They are often the conscience of the healthcare system — mission-driven, member-focused and committed to equity. But good intentions don’t balance budgets. It’s time to get serious about structural transformation or risk losing the very organizations our most vulnerable communities depend on.”
Nonprofit Health Plans Are Dying. Here’s How to Save Them
KFF on Trump support for MAHA: “…But even as he extols MAHA, Trump has unleashed a slew of policies likely to make Americans less healthy. He’s slashing 20,000 full time positions from HHS and cutting more than $4 billion in indirect costs related to health research grants, including studies into treatment for Alzheimer’s and cancer. He also supported a GOP plan likely to kneecap Medicaid, a joint federal-state program that covers about 72 million Americans.
The contradictions raise doubts about the sincerity of Trump’s support for the MAHA agenda and his administration’s commitment to making a dent in chronic disease — conditions that afflict about 133 million Americans and account for roughly 90% of the $4.5 trillion spent annually in the U.S. on healthcare.
The administration’s attention to chronic disease is also notable for its lack of focus on expanding health insurance. Research shows people with coverage have lower death rates; insurance provides free or low-cost preventive care that can help manage chronic disease and reduce risks of serious complications.
Trump Policies at Odds With ‘Make America Healthy Again’ Push | MedPage Today
Coverage
WSJ: House GOP Medicaid cuts: “House Republicans are releasing their plan to cut Medicaid spending, with the program’s defenders in the GOP appearing to win the intraparty clash over how aggressively to change the system that provides health insurance to more than 70 million low-income and disabled people. “
- The plan includes work requirements and eligibility checks.
- Party leaders want to pass the measure in the House by Memorial Day, along with the rest of Trump’s “big, beautiful” tax and spending bill.
- The proposal faces opposition from Democrats, hospitals, and groups dependent on Medicaid funding, who warn of devastating consequences.
“While GOP budget hawks are trying to find at least $1.5 trillion in spending cuts over the next decade, with the goal of reaching at least $2 trillion, a bloc of Republicans have vocally warned that deep reductions in Medicaid coverage will hurt GOP voters who depend on the program and hamper their efforts to keep the House majority in 2026. “
Exclusive | Proposal Cutting Medicaid Aims for GOP Middle Ground – WSJ
CBO Estimates for Medicaid Policy Options and State Responses, May 7, 2025 sent at request of Ranking Member Wyden (Senate Finance) and Ranking Member Pallone (House Energy and Commerce): “This letter provides the Congressional Budget Office’s estimates you requested for five policy options concerning Medicaid and explains how the agency projects that states would respond to those policies.”
- Option 1, Set the Federal Medicaid Matching Rate for the Expansion Population Equal to That for Other Enrollees.
- Option 2, Limit State Taxes on Health Care Providers.
- Option 3, Establish Caps on Federal Spending for the Entire Medicaid Population.
- Option 4, Establish Caps on Federal Spending for the Medicaid Expansion Population.
- Option 5, Repeal Medicaid’s Eligibility and Enrollment Rule
CBO analysis: 2025-2034 Impact (Assumes implementation October 1, 2025):
| Reduction in Federal Deficit ($Bil) | Reduction in Medicaid Coverage in 2034 (Mil) | Increase in Uninsured People in 2034 (Mil) | |
| Option 1 | 710 | 5.5 | 2.4 |
| Option 2 | 668 | 8.6 | 3.9 |
| Option 3 | 682 | 5.8 | 2.9 |
| Option 4 | 225 | 3.3 | 1.5 |
| Option 5 | 162 | 2.3 | 0.6 |
“The estimates described above consider each policy option as though enacted separately. Where CBO estimated the effects of a set of policies involving Medicaid, the agency considered whether states would realize net savings or net costs from the policies combined. In the agency’s estimation, that effect would then inform states’ responses to any particular policy… An area of ongoing analysis involves CBO’s expectations of the states’ responses to changes in federal Medicaid funding. State budget conditions and Medicaid programs are continuously changing.”
Wyden-Pallone Letter_Medicaid_5-7-25
Study: Impact of rural closures on nearby hospital prices: “Rural hospitals in the US have closed at a rapid pace in recent years, raising concerns about decreased access to care and declining competition in rural markets. Because prices paid by commercial health insurance plans are negotiated between hospitals and insurers, hospital closure may give “surviving” hospitals increased leverage to negotiate higher prices. Using commercial claims data, we studied the effect of hospital closure on the prices charged by nearby surviving hospitals. We found that hospital closures during the period 2014–18 led to a 3.6% increase in prices at surviving hospitals, driven by larger price increases in the three to four years after closure. Price effects were concentrated among surviving hospitals with market power—hospitals with system affiliations and hospitals operating in less competitive markets. We also found that closed hospitals charged lower prices than nearby hospitals in the preclosure period. Thus, closure eliminated low-price hospital options from rural markets. Overall, our findings suggest that hospital closure can have a meaningful impact on commercial prices. Policies targeting rural hospitals should consider the anticompetitive effects of closure, in addition to devoting continued attention to access to and quality of care.”
Hospitals
Study: Hospital market power and price increases: “Prices charged by hospitals in commercial markets are, on average, high and growing rapidly, and they vary within markets. The narrative around these facts has focused on hospitals gaining market power through mergers and acquisitions. Hospitals may also increase their market power by investing in capacity, services, or amenities that, although potentially desirable, increase demand and differentiate them from competitors. Independent of market-power changes, average prices may increase if volume shifts toward high-price hospitals. This study investigated the market dynamics linking hospital capital expenditures during the period 2010–19 to changes in volume, market share, and prices. We found that hospitals investing more in capital gained market share and raised prices, whereas hospitals investing relatively less in capital lost market share and increased prices less. Taken together, these forces perpetuate a cycle of expanding and withering hospitals. Study findings suggest important limits to antitrust as a mechanism to address high and rising prices, and the findings could inform policies to forestall or eliminate the financial decline of withering hospitals, thereby preserving access and promoting competition.”
Study: Hospital ownership and patient outcomes: “Private equity (PE) firms have increasingly invested in US hospitals, raising concerns about their effects on the quality of surgical care. We evaluated the impact of PE acquisition of acute care hospitals on outcomes from four common general surgical operations among Medicare beneficiaries, using a difference-in-differences approach. Our study included 67 hospitals acquired by PE and 634 control hospitals not acquired by or previously owned by PE. We found that PE acquisition was associated with a 2.7-percentage-point increase in thirty-day postoperative mortality compared with control hospitals, driven primarily by an increase in failure to rescue (3.9 percentage points), with no observed change in the rate of complications. Subset analysis revealed that the increase in mortality was particularly pronounced for unplanned (emergent) surgeries, whereas no significant changes were observed for planned (elective) surgeries. Our findings suggest that PE acquisition may adversely affect the management of emergent surgical cases, raising critical considerations for policy makers and health care stakeholders regarding the influence of PE ownership on patient safety.
Tenet files lawsuit against Leapfrog: Five Tenet Healthcare Corp. hospitals have filed a lawsuit against The Leapfrog Group, alleging the nonprofit healthcare watchdog engages in a “brazen pay-to-play scheme,” pressuring hospitals to participate in its safety grades process. The suit, filed April 30 in the Southern District Court of Florida, alleges hospitals who receive the highest grades from Leapfrog are paying for them under the guise of membership fees. It also alleges the group pressures hospitals to submit their data and participate in its grading process.
The suit comes five months after Tenet sent Leapfrog a cease-and-desist letter, which Leapfrog shared with Modern Healthcare. In that January letter, the system demanded that Leapfrog remove all Tenet hospitals from its lists. Leapfrog responded, declining to suppress safety ratings for Tenet.
The suit alleges that lack of revenue and declining hospital participation in Leapfrog’s survey led the organization to begin automatically failing hospitals on any metrics where they did not provide data. In a statement, Leapfrog refuted the allegations, saying the grades the hospitals received were not based on whether or not data was willingly provided by the facilities and the survey is free for any hospital to complete.
Florida hospitals sue nonprofit over ‘pay-to-play’ safety rankings
Insurers
Farrah Report: Blues financial results mixed: “The vast majority of 31 Blues companies reported weaker operating margins and overall membership decreased 1%, according to an analysis of state financial filings that Mark Farrah Associates…
Across the 31 Blues, operating margin fell 3.2%, to a 2.9% loss in 2024 after a 0.3% gain in 2023. Just 8 Blues companies reported positive operating margins last year. Another one broke even. That contrasts with the annual margin growth enjoyed by all national, publicly traded insurers. For-profit insurers’ average operating margin rose 1.6 percentage points to 2.4% in 2024.
On average, for-profit Blues companies performed better than nonprofits. More than half of Blues companies included in the analysis, 17, reported positive net income margins in 2024. Still, average net income margins dropped to 0.9% last year from 2.5% in 2023, according to Mark Farrah Associates. Membership also dropped. Across the Blues, enrollment fell nearly 1% to 168.5 million commercial, Medicare and Medicaid enrollees as of Dec. 31.
The share of every premium dollar Blues companies spent on medical claims rose 3.2%to 90.9%. Insurers refer to the portion of premiums spent on member costs as their medical loss ratio, or MLR. Blue Cross of Wyoming posted the highest MLR of 98.1%, while Blue Cross Blue Shield of Louisiana posted the lowest at 85.7%”
Profit Margins Trend Downwards for Aggregate BCBS Plans in 3Q24
Physicians
Kaufman Hall Physician Flash Report May 7, 2025: Key Takeaways:
- Two out of five providers in physician practices are advanced practice providers (APPs). The gap between APPs and physicians continues to close and is driven primarily by surgical and primary care.
- Subsidies for surgical specialties continue to grow. Physician practices must carefully consider site of service, which impacts revenue and margin.
- Provider compensation is growing slowly. Physician practices should consider retention strategies to keep talent in today’s highly competitive marketplace for physicians and clinicians.
Key Metrics:
| Q1 2025 | % Chg.
Q1 2025 vs. Q1 2024 |
% Chg.
Q1 2025 vs. Q1 2023 |
|
| Investment/Subsidy per Provider | $237,569 | +4 | +3% |
| APP Percent of Total Provider FTE | 40.6% | +1.7% | +4.0% |
| Net Patient Revenue per Provider FTE | $403,733 | +5.0% | +7.0% |
| Net Patient Revenue per Provider wRVU | $76.57 | -1.0% | -2.0% |
| Provider wRVU per FTE | 4983 | +5.0% | +8.0% |
| Total Direct Expense per Provider FTE | $653,094 | +5% | +8% |
| Labor Percent of Total Expense | 84.0% | 0.0% | 0.3% |
| Provider Compensation per FTE | $309,786 | +3.0% | +6% |
| Physician Compensation per FTE | $375,138 | +3% | +7% |
| Provider Compensation per wRVU | 62.83 | -1.0% | 0.0% |
| Support Staff per 10k Provider wRVUs | 3.00 | -4.0% | -7.0% |
PK note: The Kaufman Hall Physician Flash report is based on “data from more than 200,000 employed providers—physicians and advanced practice providers (APPs)—from more than 100 different specialties” but information about its sampling methodology and data sourcing is not provided. Since its Flash reports are limited to employed physicians, one in four physicians in independent/non-employed settings is not represented, and indirect subsidies provided by physician employers might not be reflected in its data (since each employer might account for/report these differently). Notably, the mechanisms wherein private equity or insurer employed physicians and providers are compensated might differ dramatically from hospital employed arrangements, and equity participation and/or non-production-based bonuses/shared savings might also not be captured. And, the roles, responsibilities and financial arrangements with APPs and other non-physician providers vary greatly across employer types. Certainly, more granular data is afforded Kaufman Halls’s consulting clients. Thus, while providing useful insight about physicians and providers, the Physician Flash Reports might not be a complete picture applicable in every setting and best used for broader longitudinal trending analyses.
Physician Flash Report | Kaufman Hall
Charge comparisons 2023: Retail Clinics, Offices and Urgent Care Centers: Median Charge Amounts for new patient E&M codes
| CPT Code* | Retail Clinic | Office | Urgent Care |
| 99202 (15-29 minutes) | $104 | $150 | $210 |
| 99203 (30-44 minutes) | $139 | $240 | $255 |
| 99204 (45-59 minutes) | $250 | $363 | $357 |
| 99205 (60-74 minutes) | $350 | $485 | $434 |
FAIR Health White Paper, March 2025
Study: Physician fees in Medicaid: “Medicaid plays a critical role in the US health insurance system, but a history of low physician fees has limited physicians’ participation in the program. Recent Centers for Medicare and Medicaid Services rules have sought to encourage states to increase their Medicaid physician fees to at least 80% of Medicare fees, based on the methods used in the Urban Institute’s periodic surveys of Medicaid physician fees… between 2019 and 2024, Medicaid fees increased slightly, from 72% of Medicare fees to 75% of Medicare fees for a basket of 27 common physician services. In addition, because the current Medicaid population includes far more nonelderly, nondisabled adults than when the original basket of services was chosen, we present an updated index that better reflects current patterns of spending and service use. We found that, based on this updated index, Medicaid physician fees were approximately 71% of Medicare physician fees in 2024, including 69% for office visits, 68% for hospital and emergency department visits, 87% for obstetric care, and 79% for other services under our updated approach.”
MedPage: Role of AMA in health system reforms: “In recent months, scientific research, medical expertise, public health, human rights, and care for medically vulnerable communities have come under attack from the federal government. Some scientific , public health, and medical professional associations have spoken out. But the American Medical Association (AMA) — the most powerful and influential medical professional group — has been almost entirely silent, focusing instead on seeking a fix to the broken Medicare payment formula.
In one sense, this is not surprising. The AMA works with both parties and every administration, has a lot of possible priorities, and often shifts focus with new administrations. Malpractice reform was a top AMA priority during the George W. Bush administration , but expanding access to health insurance abruptly became a top priority once Barack Obama was elected. It also made sense for the AMA to focus on a Medicare payment fix in January. This has been an AMA priority for years and it seemed feasible to achieve under the new administration.
Yet, under prior administrations, the AMA could work with them where there was common ground while still speaking up when government policies were contrary to medical ethics. The AMA argued repeatedly against force feeding detainees at Guantanamo Bay, for example, while still working productively with both the Bush and Obama administrations on other issues.
AMA leaders today appear concerned that speaking against the government on issues unrelated to Medicare payments might not only kill Medicare payment reform, but might also prompt severe retaliatory federal actions.
Should ‘No Margin, No Mission’ Apply to the AMA? | MedPage Today
Polling
Vanderbilt poll: Spring 2025: Highlights from VU survey of 1223 registered voters conducted April 17-27, 2025:
Job approvals: U.S. Congress Spring 2025: 36% approval vs. 60% disapprove (vs. 27%/66% when asked first in 2012)
Top priority for legislature: Economy (19%), Education (18%), Infrastructure (15%) Healthcare (13%)
Condition of US economy these days: Very Good/Good (39%) vs. Fairly Bad/Very Bad (61%); Most Positive: May 2019: 83% vs. 16%; Most Negative: May 2012: 23% vs.76%
Agree/Disagree: to reduce the federal deficit:
- Cut/limit social security benefits: 6%/94%
- Cut/limit healthcare for the poor: 10%/89%
- Cut/limit healthcare for the elderly: 2%/97%
- Cut/limit support for veterans: 5%/94%
How worried are you about…
- Not having enough money for medical care, car repairs in the aftermath of an accident: Very (29%) Moderately (32%), Not Much/None (39%)
- Not having enough to pay your normal monthly bills, like housing, food and transportation: Very (17%) Moderately (30%), Not Much/None (53%)
- Not having enough in savings for things like retirement or your or your child’s education: Very (34%) Moderately (30%), Not Much/None (36%)
Vanderbilt Poll Snapshot | Center for the Study of Democratic Institutions | Vanderbilt University
Employee Benefits Research (EBRI) analysis: Employee opinions about long term care: The EBRI Survey conducted in late 2024 is based on 2,445 workers ages 20–74. Highlights:
“Four in 10 workers reported a belief that they will likely need long-term care as they age, but a substantial portion remained unsure (32%) or did not think they will need it (24%). Awareness of an employee’s personal long-term care needs appeared to be concentrated among two groups:
- Workers with personal experience receiving care, with a disability, or who have filed a short-term disability claim are significantly more likely to believe they will need LTC in the future.
- Employees with higher incomes and education levels are more likely to anticipate needing LTC.
There are gaps in knowledge about access to local long-term care, sometimes also referred to more broadly as long-term services and supports (LTSS). 37% of employees reported low or no knowledge of how to access LTC services in their community.
Only 24% of benefits-eligible employees said their employer offers long-term care insurance, and just 9 percent of employees were enrolled. Even among those anticipating LTC needs, take-up remains low.”
Employee Perspectives on Long-Term Care
Altman on trust in CDC, FDA: “Levels of trust in the nation’s scientific agencies that affect people’s everyday lives—the CDC and the FDA—are abysmally low, driven in part by polarization and partisanship. It’s a danger to the nation if another epidemic hits and the country needs public health leadership or a new drug or vaccine to get through it…
Fewer than half of the public say they have confidence in the FDA and CDC to carry out their core responsibilities… just three in 10 say the agencies can act independently without being influenced by outside groups…
Overall levels of trust are simply very low. 39% of Democrats currently have “a lot” or “some” confidence in the ability of the CDC and FDA to deal with infectious disease outbreaks like measles and bird flu; 46% of Republicans do. There are only a couple of measures for which the agencies break 50%: 52% of Democrats have confidence in their ability to ensure vaccine safety and effectiveness and 50% of Republicans have a lot or some confidence that they will ensure the safety and effectiveness of prescription drugs (the FDA’s job).
Similar gaps driven by partisan viewpoints can be seen at the state and local level where 83% of Democrats trust their local health department to provide reliable vaccine information compared with 51% of Republicans who do. We don’t know from our polling whether trust in state health departments shifts with changes in governorships or not, but we do know that state and county health departments have been taking a lot of heat since Covid.
There’s one particularly revealing finding from the survey: The same percentage of Republicans (74%) trust President Trump and Secretary Kennedy (73%) to provide “reliable information about vaccines” as their pediatrician (also 73%) …”
The Sad State of Trust in the CDC and FDA
Poll: Less Than Half of the Public Is Confident That the CDC and FDA Can Carry Out Core Functions
Population Health
NCHS Report: NICU Admissions: Data from the National Vital Statistics
- The percentage of infants admitted to a neonatal intensive care unit (NICU) in the United States rose from 8.7% in 2016 to 9.8% in 2023.
- NICU rates rose for all maternal age groups from 2016 to 2023.
- NICU rates increased for each race and Hispanic-origin group from 2016 to 2023, with the largest increases for infants born to American Indian and Alaska Native non-Hispanic, White non-Hispanic, and Black non-Hispanic mothers.
- The percentage of infants admitted to a NICU increased among all gestational age and birthweight categories from 2016 to 2023.
- From 2016 to 2023, NICU rates increased in most states.
Increases in Neonatal Intensive Care Admissions in the United States, 2016–2023 NCHS Data Brief No. 525, March 2025 Products – Data Briefs – Number 525 – March 2025
NIH Report: Cancer Incidence 2010-2019: “… from 2010 through 2019, the incidence of 14 cancer types increased among people under age 50. Of these cancer types, 9—including several common cancers, such as breast cancer and colorectal cancer—also increased in some groups of people aged 50 and older. However, the incidence of 19 other cancer types—including lung cancer and prostate cancer—decreased among people under age 50, so the total rate of all cancers diagnosed in both younger and older age groups did not increase, nor did the rate of cancer death.
Incidence of 14 of the 33 cancer types increased in at least one of the younger age groups. Incidence of nine of these 14 types also increased in at least one of the older age groups: female breast, colorectal, kidney, testicular, uterine, pancreatic, and three types of lymphoma. Although death rates did not increase in early-onset age groups for most of these cancers, researchers did observe concerning increases in rates of colorectal and uterine cancers deaths at younger ages.
Only five cancer types increased in incidence among one of the younger age groups but not among any of the older age groups: melanoma, cervical cancer, stomach cancer, myeloma, and cancers of the bones and joints.”
Prescription Drugs
New Executive Order targets Drug manufacturers: Last Monday, the Trump administration issued its XX Executive Order designed to lower regulatory hurdles and make it faster for drug companies to manufacture their products in the US. The EO seeks to put pressure on foreign drugmakers to comply with quality control inspections. Included are mandates for the Food and Drug Administration (FDA) to reduce the amount of time it takes to approve domestic pharmaceutical manufacturing plants and the Environmental Protection Agency (EPA) to accelerate its approval of construction of facilities for manufacturing medicines, active pharmaceutical ingredients and related raw materials.
Regulators and Legislators
Report: State and federal actions to address substance use disorders (SUD): “…drug overdose deaths plummeted by nearly 24% from 2023 to 2024 and is lower now than it was at any point since June 2020. North Carolina, Virginia, Delaware, West Virginia, and Ohio had the largest percentage reductions in overdose deaths…
Declines in overdose deaths have coincided with rapid growth in coverage by Medicaid for substance use disorder treatment. Estimated Medicaid spending for opioid use disorder services was $29 billion in 2023, 3 times higher than spending in 2013 and 9 times higher than the total of all other U.S. Department of Health and Human Services opioid-related spending in 2023. Overall, 4.9 million or 7.9% of Medicaid enrollees were treated for a SUD in 2021, with the highest % of enrollees receiving treatment in Ohio, Louisiana, Maine, Vermont, and New Hampshire.
In 2021, more non-elderly adult Medicaid enrollees had a substance use disorder diagnosis than had diabetes or asthma diagnoses… Medicaid enrollees clinically-identified with a substance use disorder are more likely to be male, White, and qualify for Medicaid based on a disability or through Medicaid expansion than other enrollees. Medicaid expansion refers to the eligibility category created by the Affordable Care Act that enables states to expand coverage to individuals with incomes at or below 138 percent of the federal poverty level.”
States file suit against HHS cuts: “19 Democratic-led states plus the District of Columbia sued HHS Secretary Robert F. Kennedy Jr. on Monday, saying his ongoing reorganization of the federal health bureaucracy incapacitated core functions and deprived the states of federal funds and expertise. The lawsuit in U.S. District Court in Rhode Island alleges that Kennedy’s structural changes stopped health agencies from carrying out legally required functions, including health hazard evaluations at workplaces, food safety inspections and infectious disease prevention.
The complaint was filed by New York, Washington, Rhode Island, Arizona, California, Colorado, Connecticut, Delaware, Hawai’i, Illinois, Maine, Maryland, Michigan, Minnesota, New Jersey, New Mexico, Oregon, Wisconsin, Vermont and the District of Columbia.
Context: Kennedy in late March announced that he’d consolidate 28 HHS divisions into 15 offices, including a new office called the Administration for a Healthy America.”
Trump Admin faces another lawsuit from states over DOGE cuts to HHS
Senators proposed price limits on prescription drugs: Sens. Josh Hawley (R-Mo.) and Peter Welch (D-Vt.) unveiled legislation aimed at lowering drug costs by preventing drug companies in the United States from charging higher prices than the international average. The bill would not only prohibit drug companies from selling drugs in the United States at a higher price than the international average but would also impose a penalty if companies violate the prohibition.
POLITICO, May 5, 2025
