Hello, and welcome back to this week’s edition of the Gist Weekly. As always, we appreciate your continued readership and invite you to forward this email to friends and colleagues—please encourage them to subscribe as well!
In the News
What happened in healthcare recently—and what we think about it.
- House passes budget plan, mixed messaging on Medicaid cuts persists. On Tuesday, the House of Representatives passed a budget resolution, a critical step in the reconciliation process. The House’s outline is different than the one passed by the Senate last Friday, kicking off potentially challenging negotiations between the chambers and the Trump administration as they seek to reconcile the two plans. The House’s framework calls for $4.5 trillion in tax cuts and a $2 trillion reduction in federal spending over a decade, with $880 billion of cuts to come from programs under the Energy and Commerce (E&C) Committee’s purview. The E&C Committee’s plan for making such significant cuts remains murky, with President Trump opposing Medicare and Medicaid cuts and Speaker Mike Johnson opposing Medicaid cuts that would deliver the most substantial savings. The continuing resolution currently funding the federal government is set to expire on March 14.
- The Gist: This reconciliation process is exposing a division within the Republican Party on its commitment to Medicaid. Some Republicans see Medicaid cuts as both a way to find the significant savings needed to fund President Trump’s legislative agenda and weaken a program they traditionally criticized. However, a sizeable number of House Republicans represent districts with a high share of Medicaid enrollees, making the decision to weaken Medicaid politically risky. Without cuts to Medicare or Medicaid, the E&C Committee faces a fundamental math problem. Only about $200 billion in spending that is under its purview is not somehow tied to either of these programs. Substantial cuts to Medicaid would represent a huge loss to care access and coverage, especially in states in which Medicaid expansion is tied to current federal matching levels. Bad debt and charity care are already up, likely due to Medicaid redeterminations, leaving providers anxious as they await further developments.
- President Trump signs executive order to improve price transparency. On Tuesday, President Trump signed an executive order to improve price transparency in healthcare. This directive instructs the Treasury, Health and Human Services (HHS) and Labor departments to ensure that “hospitals and insurers disclose actual prices, not estimates” so consumers can shop more easily for services. President Trump also ordered these departments to update enforcement policies. The order seeks to strengthen efforts Trump began during his first term that former President Biden subsequently supported.
- The Gist: Price transparency in healthcare is an issue that enjoys rare bipartisan support, and this unsurprising move reaffirms that it remains important to President Trump. Since the initial price transparency rule went into effect in 2021, compliance has been a challenge. A November report from Patient Rights Advocate found that only 21.1% of hospitals were fully compliant with the existing price transparency rules, a decrease from the previous year. The Centers for Medicare & Medicaid Services has issued civil penalty notices to 18 hospitals. Healthcare remains a very fragmented marketplace with competing incentives, complicating how free-market rules play out in practice. The out-of-pocket cost to a consumer, not the actual price of the service, often is a more powerful financial motivator for patients, limiting their incentive to shop around. Employers have a stronger incentive to utilize this data; they could, over time, steer patients to lower-cost providers. Access to healthcare prices is a positive development for patients, but there is still a way to go until cost data becomes understandable, useful information.
- Texas measles outbreak claims first victim. On Wednesday, the Texas Department of State Health Services announced that an unvaccinated child had died of measles. The death is connected to the ongoing measles outbreak that began in West Texas in late January that has since spread to New Mexico. As of February 28, 146 cases of measles were confirmed. At least 116 of the cases were diagnosed in children. Vaccination rates in Gaines County, the epicenter of the outbreak, are below average; roughly 1-in-5 children there are not vaccinated against measles. This is the first death from measles in the United States since 2015.
- The Gist: This devastating outbreak illustrates the havoc associated with the erosion of herd immunity. Despite the effectiveness of the measles-mumps-rubella (MMR) vaccine, this outcome is not surprising. Vaccination exemption rates in children are increasing, with MMR vaccination rates varying greatly by state. Vaccination rates are also lower in rural areas, where residents may have a harder time accessing care. HHS Secretary Robert F. Kennedy Jr. downplayed the outbreak at the Trump administration’s first Cabinet meeting, calling measles outbreaks “not unusual.” The disease was declared eliminated in the United States in 2000. The apparent return of measles brings a unique challenge to providers who may have to reacquaint themselves with diagnosis guidelines and treatment protocols. As the most trusted health professional in many people’s lives, providers will continue to play a key role in combatting misinformation surrounding vaccine safety.
Plus—what we’ve been reading.
- The AI ‘doctor’ will ‘see’ you now. Published in The New York Times this week, this piece takes a look at AI chatbots posing as therapists delivering mental health advice. The American Psychological Association is warning that chatbots that utilize generative AI, which are unregulated and largely unmonitored, may dispense dangerous or even deadly guidance. The reason: chatbots typically are designed to reinforce, not challenge, their users’ thinking. AI companies point to their guardrails and disclaimers, but others are sounding the alarm that protections for users are insufficient. As the technology and capabilities supporting generative AI-based “psychology” continue to improve, experts find themselves in a delicate situation of “speedily discern[ing] the possible destination (for better or worse) of the AI-therapist as it may have already left the station.”
- The Gist: Generative AI-based chatbots are designed to form strong emotional bonds with their users, which can lead to unpredictable results when used for counseling. The dangers that psychologists cite in their request for the Federal Trade Commission to investigate these chatbots are real: in one instance, a 14-year-old boy died by suicide after developing a “relationship” with a chatbot that claimed to be a licensed therapist. AI companies say their products were never designed to replace therapists, and some chatbots have been suspended after giving advice contrary to professional guidelines. But some advocates say that properly supervised chatbots can help overcome the nation’s shortage of mental health professionals. Providers already utilize artificial intelligence to augment their productivity, so their widespread application in mental health may be inevitable. Protecting patient safety remains a paramount concern when integrating AI-based therapy into behavioral healthcare, a goal that may be harder to achieve now that an executive order designed to develop a framework for safe AI use in healthcare has been rescinded.
Graphic of the Week
A key insight illustrated in infographic form.
The state of hospital volumes
The graphic below highlights the most recent data from software and analytics firm Strata Decision Technology comparing 2024 hospital volumes by admission types with 2023 and 2022 volumes. Volumes across all hospital admission types increased in 2024. When compared with 2023, inpatient volumes growth led the way at 5%, signaling that inpatient volumes are returning despite the accelerated shift to outpatient care that occurred during the pandemic. Outpatient volumes rose by 4.9% compared with 2023, suggesting that hospitals’ investments in outpatient care appear to be paying off. There is some regional variability in the year-over-year volume changes. Hospitals in the West and South are outperforming hospitals nationally in outpatient and observation volumes growth respectively, and observation and emergency volumes in Northeast hospitals are behind the national trend. However, volume growth and continued recovery do not appear to be concentrated in a specific region, with all regions tracking above the national average in at least one admission type, an interesting development following vast regional differences in hospital volumes recovery in 2023.
This Week at Kaufman Hall
What our experts are saying about key issues in healthcare.
The proliferation of claims denials, especially by Medicare Advantage payers, has become a pressing issue for health system operations. In 2023, Medicare Advantage insurers fully or partially denied 3.2 million prior authorization requests—or 6.4% of all requests, according to a Kaiser Family Foundation (KFF) report.
In a recent article, Cedrial Moore, Barbara Vandegrift and Jarret Levine discuss strategies for optimizing pre-billing activities to avoid denials and improve and streamline the patient experience of care. The article also discusses how a robust post-bill appeals process can result in improved overturn rates and increased reimbursement.
On Our Podcast
The Gist Healthcare Podcast—all the headlines in healthcare policy, business, and more, in ten minutes or less every other weekday morning.
Last Monday, host J. Carlisle Larsen spoke with Matthew Fiedler, Senior Fellow at the Brookings Institution, about the recent charge from House Republicans to the Energy and Commerce Committee to find $880 billion in federal healthcare spending cuts, much of which could ultimately be cut from Medicaid.
This Monday, JC speaks with America’s Essential Hospitals’ President and CEO Bruce Siegel, MD, MPH about how those anticipated Medicaid cuts could impact safety net hospitals.
To stay up to date, be sure to tune in every Monday, Wednesday, and Friday morning. Subscribe on Apple, Spotify, Google, or wherever fine podcasts are available.
Thanks for reading! We’ll see you next Friday with our next edition. In the meantime, check out our Gist Weekly archive if you’d like to peruse past editions. We also have all of our “Graphics of the Week” available here.
Best regards,
The Gist Weekly team at Kaufman Hall
