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.
- Department of Health and Human Services (HHS) Rescinds Longstanding Transparency Policy. HHS has limited transparency in its rulemaking process. On Monday, HHS Secretary Robert F. Kennedy Jr. filed a notice in the Federal Register to rescind its policy on Public Participation in Rule Making, also known as the Richardson Waiver, and instead realign its procedures with the Administrative Procedure Act (APA). The Richardson Waiver policy, adopted in 1971, opened “matters relating to agency management or personnel or to public property, loans, grants, benefits, or contracts” to public notice and comment periods. Secretary Kennedy stated that “the extra-statutory obligations of the Richardson Waiver impose costs on the Department and the public, are contrary to the efficient operation of the Department, and impede the Department's flexibility to adapt quickly to legal and policy mandates.” The change took effect immediately.
- The Gist: This break from tradition will make it harder for researchers, advocates and the public to weigh in on policy. The move appears to be a backtrack for Kennedy, who declared a commitment to “radical transparency” during his confirmation hearings in January. Some important processes under the HHS’ purview, such as the Medicare Physician Fee Schedule and Outpatient Prospective Payment System, will not be affected by the change. However, the change would make it easier to change Medicaid eligibility criteria and HHS grantmaking processes, which may be or already have been targets for massive changes. The reversal is aligned with the Trump Administration’s goal of easing regulations and could make it easier to continue its “flood the zone” strategy.
- Fitch Report Details Potential Impact of Federal Policy on Not-for-Profit Hospitals’ Credit Ratings. A new report from Fitch Ratings finds that not-for-profit hospitals would bear the brunt of potential Medicaid cuts. The report, released Tuesday, details how potential cuts would affect not-for-profit hospitals’ margins and credit ratings. The report finds that the degree of cuts called for in the House of Representatives’ recent budget resolution will likely to lead to Medicaid eligibility changes or Medicaid funding cuts. The effect would vary given on local payer mix and state Medicaid policies, the report said. This report comes on the heels of another analysis from Fitch Ratings last week detailing how further cuts to the federal bureaucracy and tariff threats could impact stakeholders across the care continuum.
- The Gist: Additional threats to not-for-profit hospitals’ outlooks, just as their prospects were looking up, could torpedo their nascent recovery. With just a week until current federal government funding expires, a variety of outcomes still appears to be on the table, contributing to a national political environment plagued by uncertainty. Medicaid is a prominent payer for many providers, leaving many anxious at a time when charity care rates are already elevated. While tariffs might hurt pharmaceutical, medical device and diagnostics companies more than providers, as the pandemic taught many providers, evaluating supply chains in an ever-changing environment is rarely a bad idea.
- UnitedHealthcare to Eliminate 10% of Prior Authorizations. On Saturday, UnitedHealthcare (UHC) announced it would no longer require prior authorization for some home health services. The change applies to services managed by Optum’s Home & Community for UHC Medicare Advantage (MA) plans in 36 states and the District of Columbia. Ending the prior authorization requirements represents about a 10% cut to the company’s prior authorization volume. This change will take effect on April 1.
- The Gist: Prior authorizations have long drawn the ire of patients and providers, especially in Medicare Advantage, making this move meaningful. While UHC has reported a below average number of prior authorizations per MA enrollee in 2023, its market share is the largest and its denial rate was higher than average. Coupled with its gold card program last year and code removals in 2023, UHC appears to be responding to public outcry against prior authorization that has strengthened in recent months. Regardless of the external environment, easing tensions and administrative hurdles between business units within UnitedHealth Group (UHG) is a savvy business decision that better leverages UHG’s varied assets. It will be worthwhile to watch if the move spurs action from UnitedHealthcare’s competitors.
Plus—what we’ve been reading.
- Fighting the battle against chronic disease—and losing. Published earlier this week in The New York Times, this piece profiles a nurse who makes home visits in rural West Virginia. All 31 of Sam Runyon’s patients are under age 65; yet each suffers from at least one chronic disease. Compounding their health problems are social determinants such as searing poverty and lack of access to fresh foods; stores selling cheap liquor and sugary and salty snacks outnumber proper grocery stores. “Every business is either trying to kill you or selling a cure,” Runyon says. The nurse’s own family reflects the health challenges she treats: heart and liver failure, diabetes, opioid addiction. Her workload is the American chronic disease crisis in microcosm: death rates are up 25 percent nationally in the past 2 decades from diabetes, 40 percent from liver disease, 60 percent from kidney disease, 80 percent from hypertension and more than 95 percent from obesity. Despite the immense impact her work has on her patients’ lives, she does sadly reflect that “this job is like fighting gravity.”
- The Gist: HHS Secretary Kennedy calls chronic disease a “national crisis,” and he’s right. Americans spend more years living with chronic disease than people in 183 other countries in the World Health Organization, while life expectancy in Mingo County, WV—where Runyon works—has been steadily dropping for a decade and now is just 67 years old. Anticipated Medicaid cuts could make chronic disease patients’ lives even more difficult, while proposals to ban “junk food” from federal assistance plans, while politically popular, often run into the harsh reality that healthy food isn’t readily available or affordable in many urban and rural impoverished areas. It all falls back on underpaid, overburdened nurses like Sam Runyon, who are the last line of defense against chronic disease in neglected communities.
Graphic of the Week
A key insight illustrated in infographic form.
Providing health insurance was less lucrative in 2024
This week’s graphic takes stock of the 2024 financial performance of four leading insurers: Humana, Cigna, CVS and UHG. These healthcare giants, especially CVS and UHG, continue to show the benefits of their strategies to become full-stack healthcare platforms. All four payers reported some degree of intercompany eliminations, an accounting process to ensure revenues are not double counted, enabling them to keep a higher share of the premium dollars within the parent company. UHG reported $151 billion in intercompany eliminations, more than half of what Optum, UHG’s non-insurance arm, reported in consolidated revenues. Despite the high revenues, payers were not immune to industry headwinds. All four grew their consolidated revenue last year, but all reported higher medical cost ratios and lower operating margins in 2024 compared with 2023, an outcome largely attributed to higher utilization among MA beneficiaries. Ancillary business lines are bolstering bottom-line numbers for each of the payers, but persisting uncertainty around potential health insurance reform could hamper their growth.
This Week at Kaufman Hall
What our experts are saying about key issues in healthcare.
As healthcare looks to another period of uncertainty among a wave of potential federal policy changes — including the impact of potential tariffs — it’s important to remain vigilant, keep informed and be purposeful about next steps.
A new article by Scott Eber and Bonnie Lai addresses concerns among hospital and health system supply chain leaders, providing “no regrets” actions that can be taken now, as well as actions that may make sense down the road.
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 America’s Essential Hospitals’ President and CEO Bruce Siegel, MD, MPH about how anticipated Medicaid cuts could impact safety net hospitals.
This Monday, we'll have a newscast episode where we learn more about the ongoing measles outbreak in West Texas and the response from the Centers for Disease Control and Prevention.
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 a new edition. In the meantime, check out our Gist Weekly archive if you’d like to peruse past editions. We also have all of our recent “Graphics of the Week” available here.
Best regards,
The Gist Weekly team at Kaufman Hall
