TrustWorks On Call: A Pugnacious CMS

Behind the Headlines

Unpacking the forces driving healthcare's biggest stories.

1. Trump admin withholds additional $1B of CA, MN Medicaid funds.

The Centers for Medicare and Medicaid Services (CMS) shared on Tuesday that it deferred $867M of Medicaid payments to California and about $200M to Minnesota over concerns of fraud, highlighting in particular that California’s in-home care growth “far exceeded national trends.”
To release these payments, the states must provide documentation proving that the beneficiaries and providers flagged by CMS fraud-detection analytics were Medicaid-eligible.
Both states are still working through Medicaid payment deferrals from earlier this year: California was hit with a $1.3B freeze in May, and Minnesota received a $350M freeze in February.

TrustWorks Take: The Trump administration has decided to prosecute alleged Medicaid fraud proactively rather than reactively, knowing that this overzealous approach will only harm people in states it considers politically disfavored. Beyond its status as a white whale in conservative politics, California was targeted for suspicious spending growth because the state intentionally expanded Medicaid coverage of in-home care services in order to divert patients from more expensive, facility-based care. In the face of escalating budget cuts, state Medicaid programs should be encouraged, not punished, for finding cheaper ways to provide quality care.

Whether through administrative compliance or court order, providers can expect to receive these deferred payments eventually, but they could face serious cash-flow challenges in the meantime. Under Medi-Cal’s In-Home Support Services program, about three quarters of paid caregivers are relatives, who must comply with formal registration, training, and billing practices, while the rest of care is provided by in-home care businesses that tend to be small and highly reliant on Medicaid revenues. These are not people or institutions with significant amounts of cash-on-hand available to weather funding lapses. Patients’ needs will go unmet and in-home care businesses will risk closure if the funds stay frozen for too long.

2. Intermountain, AdventHealth to joint venture.

Intermountain Health, a 34-hospital nonprofit system based in Salt Lake City, UT, and AdventHealth, a 57-hospital nonprofit system based in Altamonte Springs, FL, announced a joint-venture partnership on Tuesday involving eight hospitals in the Denver, CO area.
Under the proposed agreement, AdventHealth would own a majority share in and manage the day-to-day operations of the joint venture, which would include five AdventHealth and three Intermountain hospitals, along with their associated clinics and medical practices.
Last year, Intermountain posted a 2.8 percent margin on over $18B of revenue, and AdventHealth recorded an 11.6 percent margin on over $21B of revenue.

TrustWorks Take: Both systems recognize the promise of the Denver market, which enjoys a healthy commercial volume cushion, and evidently see room for improvement in their own footprints there. The hospitals involved in this deal are legacy facilities of Centura Health, a joint-venture between AdventHealth and CommonSpirit that dissolved in 2023, and SCL Health, which Intermountain acquired in 2022. AdventHealth may have felt its presence in Colorado to be slightly subscale following the breakup with CommonSpirit and found a willing partner in Intermountain, which also has a relatively small hospital footprint in Denver.

The secret behind this deal would seem to be that it is a network play for Intermountain’s health plan, Select Health. Although not mentioned as an explicit justification in the press release, Intermountain will presumably add these five AdventHealth hospitals to its health plan networks, increasing their attractiveness to Denver-based employers. Amid the struggles of many other provider-sponsored health plans, Select Health continues to see strong enrollment and revenue growth, bolstered by Intermountain’s willingness to form strategic partnerships like this.

3. Delaware passes hospital price caps.

On Monday, Delaware Governor Matt Meyer signed three bills into law that target healthcare affordability by banning private equity purchases of hospitals, expanding mandatory charity care at hospitals, and, most notably, instituting a commercial price cap on hospital services.
Senate Bill 1 institutes hospital price caps for commercial coverage that use Medicare as a reference and are phased in over time, starting at 310 percent of Medicare rates in 2029 before ultimately reaching 250 percent of Medicare rates in 2033.

TrustWorks Take: In the absence of federal leadership or action on healthcare affordability, states are taking matters into their own hands. The effort is bipartisan, with Democratic Delaware’s hospital price caps following in the footsteps of Republican Indiana’s similar reform passed last year, and more state legislatures have their own versions under consideration. The Delaware Hospital Association ultimately supported the price-cap legislation, after opposing an initial stronger bill, perhaps because they saw the writing on the wall that Delaware legislators had no choice but to act on hospital pricing reform. While this feels like another cut among thousands contributing to the death of the hospital cross-subsidy business model, health system leaders should accept that state legislatures are either going to work with them or against them to protect their citizens from excessive healthcare costs.

Beyond the Whiteboard

Visualizing key trends from the healthcare industry

Why Prior Authorizations May Be Here to Stay
Prior authorizations may be the single least-popular aspect of our healthcare system, generating such consistent criticism from consumers and regulators that the nation’s health insurance companies voluntarily signed a pledge in June 2025 to scale back and streamline their utilization management policies over the next two years. Now just over one year into that pledge, insurers claim to have eliminated 11 percent of prior authorization requirements, but there is a growing sense of skepticism that these internal reform efforts will amount to deceptively little.

There’s plenty of accounts from providers and patients about how they are still facing the same prior authorization frustrations, but even more meaningful are the off-the-record conversations we have had with insurers. In 2024 and 2025, US health insurers collectively posted profit margins below one percent, while at the same time promising to roll back prior authorizations, one of their most important tools for limiting medical spending. Now, health plan leaders are privately giving us the sense that they no longer believe they can afford removing that tool from their toolkit, as public opinion must come second to profitability. Health system leaders should assume utilization management, along with payment reform and state affordability initiatives, will continue reshaping reimbursement over the next several years.

Dialing In

Sharing insights from our work with clients

CMS PFS vs. AMA’s CPTs
A primary-care-physician friend of ours excitedly alerted us to a particular hobby horse of his hidden within last week’s massive Physician Fee Schedule (PFS) proposed rule. CMS included a Request for Information (RFI) “regarding the influence of the CPT [Current Procedural Terminology] coding system and AMA [American Medical Association] process on physician payment policy.” For as long as we have known him, this friend has begrudged the AMA for underrepresenting primary care in its resource utilization committees that determine how—and, in coordination with CMS, how much—physicians get paid. He is no fan of CMS administrator Dr. Mehmet Oz, but “finally he’s getting something right.”

MedPAC has been calling for years to address the AMA’s undue influence over Medicare payment policies, and Members of Congress have recently taken interest as well. This RFI is only a first step toward reform, which we do not expect to result in a full-scale replacement of a system so engrained in US healthcare. But if for example, CMS takes the system in-house, it could have other significant knock-on effects. As we also learned from our physician friend, 61 percent of the AMA's revenue comes from royalties associated with CPT usage, and messing with that funding source could seriously disrupt our industry’s most influential trade group.

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A Pugnacious CMS