TrustWorks On Call: File Two Lawsuits, Get One Free

Behind the Headlines

Unpacking the forces driving healthcare's biggest stories.

1. DOJ sues NewYork-Presbyterian over anticompetitive contracting.

The Department of Justice (DOJ) last week filed a civil antitrust lawsuit against NewYork-Presbyterian (NYP), New York City’s largest health system, alleging that NYP imposes plan restrictions in its contracts with payers that unlawfully insulate NYP from price competition.
According to the suit, NYP has allegedly prevented payers from offering budget-conscious insurance plans by requiring all of a payer’s plans to include NYP in-network and forbidding plans from offering lower copays to see rival providers.
The DOJ has been investigating NYP's contracting practices since last year, and the agency filed a similar suit against OhioHealth last month.

TrustWorks Take: The lawsuit’s introduction begins: “Healthcare costs weigh heavily on the minds and budgets of American families and businesses.” It goes without saying that these matters are also on the minds of politicians, as the Trump administration is trying to demonstrate to American voters its commitment to affordability in advance of the 2026 midterms. A survey in January found healthcare costs to be the top household expense families worried about affording, with 75 percent of voters saying it will impact their vote. Looking for levers to contain healthcare cost growth, the DOJ is using NYP and OhioHealth as examples to discourage certain health system contracting practices that allegedly make it harder for insurers to steer patients to lower-cost providers.

The political angle of these lawsuits does not mean they are without merit. The opaque nature of contracts struck between prominent or market-dominant health systems and insurers creates an opportunity and permission structure for collusion. Market consolidation often correlates with higher prices, and health systems have become increasingly concentrated. Researchers have estimated that a ten-percent increase in a health system’s market share correlates with about a $1,000 increase in charges per admission. Some of those price increases could reflect improved quality, but likely not all. Previous instances of federal antitrust suits against hospitals have ended with large settlements and contract changes, albeit no admission of wrongdoing.

Market-dominant health systems looking to avoid the DOJ’s eye should be finding ways to prove that health system consolidation can provide patients real value, not just higher prices. Regulators, for their part, should try to identify which systems are wielding their market share for anticompetitive means, versus those using that market power to launch a comprehensive, value-forward solution.

2. CVS, Cigna settle with FTC over insulin pricing.

Last week, the Federal Trade Commission (FTC) and CVS Health, on behalf of its pharmacy benefit manager (PBM) Caremark, filed a joint motion to dismiss the FTC’s antitrust case against CVS, as the two sides have reached a tentative settlement.
In September 2024, the FTC sued the three largest PBMs—CVS’s Caremark, Cigna’s Express Scripts, and UnitedHealth’s OptumRx—alleging that their rebating practices were anticompetitive and artificially inflating the list prices of insulin, resulting in higher costs for patients.
Cigna reached a settlement with the FTC in February, agreeing to delink its compensation from the rebates it negotiates with drugmakers, and change its drug benefit designs to no longer prefer higher-priced drugs, without having to admit wrongdoing or pay any monetary penalties.
The final terms on CVS’s settlement are still pending, but they are expected to closely match Cigna’s deal; UnitedHealth is the only party from the original lawsuit that has not announced a settlement agreement.

TrustWorks Take: The FTC expects its settlement with Cigna will “drive down patients’ out-of-pocket costs for drugs like insulin by up to $7B over 10 years.” Despite this, Cigna executives told investors that the settlement will not affect the company’s future earnings. Cigna has already been moving its employer clients from a post-sale rebate model to a point-of-sale net-discount model, which delinks Cigna’s compensation from drug prices and rebates. CVS has been making similar changes at Caremark, meaning it can also assure its investors that the settlement’s potential reforms are only expected to have a “nominal impact on company earnings.” If the FTC’s $700M in annual savings for patients ever materialize, the PBMs do not expect it to come from their earnings.

The predicted savings of delinking PBM compensation from list prices are supposed to come from all three intermediaries between drugmakers and patients: PBMs, wholesalers, and pharmacies. However, pharmacies are already complaining that Express Scripts’ revised contracts are significantly worse following the settlement, which has “a lot of loopholes” and fails to sufficiently protect community pharmacies. Rather than stomach losses in their own bottom lines, PBMs have proven very capable at flexing their market share to pass along margin hits to other parties. In light of such tactics, more carefully targeted regulations that go beyond the PBM reforms Congress passed in January may be needed to reduce the sway PBMs hold over the drug supply chain.

3. Meta, YouTube found liable for mental health damages.

Last Wednesday, a jury in California Superior Court found Meta, the parent company that owns Facebook and Instagram, and YouTube, the video streaming platform owned by Google, were negligent in designing their platforms and liable for the harm they caused the plaintiff, a partially anonymous 20-year-old woman identified as K.G.M.
Meta and YouTube owe the plaintiff about $4M and $2M respectively for compensatory and punitive damages, on the grounds that the platforms themselves, rather than the content hosted on them, were designed to addict young users and contributed to the plaintiff’s anxiety and depression.
TikTok and Snap, which owns Snapchat, were included in the original lawsuit but settled out of court.
Tech watch dog groups are celebrating that “[t]he era of Big Tech invincibility is over,” but have cautioned that this is only the beginning of a longer battle, including appeals proceedings for this case and the fate of many others working through the courts.

TrustWorks Take: Every discussion of Gen Z's relationship with healthcare (including ours) starts with declining mental health and reliance on social media. The prosecution in this trial attempted to connect these traits by painting social media companies as responsible for addicting and harming their users, in a deliberate parallel to the legal arguments that curtailed Big Tobacco in the 1990s. Unlike TikTok and Snap who settled, Meta and Google took this case to court because they expected to win and nip this problem in the bud. The $6M of damages are not even a rounding error to the tech giants, but the precedent set by this victory could snowball into class-action lawsuits and cases filed by state and federal attorneys general. Holding social media companies liable would also only be a first step toward restitution. To prevent further harms, these companies will have to make internal policy changes, from imposing age minimums to rolling back addictive features, or else wait for regulators to impose these changes on them.

Beyond the Whiteboard

Visualizing key trends from the healthcare industry

Uninsured Rate About to Rise Sharply
Last month, the Congressional Budget Office (CBO) updated its baseline projections of health insurance coverage by source for the first time since June 2024. In the intervening time, Congress reduced federal health insurance payments by roughly $1.5T over the next decade, including $1T in Medicaid cuts from last year’s budget reconciliation package, and the $350B in Affordable Care Act (ACA) enhanced subsidies that Congress opted not to renew. Taking these massive policy changes into account, the CBO projects that by 2036 Medicaid enrollment will drop by 11.5M (14 percent of the current level), ACA exchange enrollment will fall by 7.5M (33 percent of the current level), and the uninsured population will grow by 10.8M (41 percent higher than the current level). These changes will not be spread evenly over the next ten years, as the ACA cuts are already taking effect and will hit an enrollment low in 2028, before gradually improving under stabilized market conditions, while the Medicaid cuts begin to phase in next year. About half of the people losing Medicaid or ACA coverage are expected to become uninsured after not finding coverage elsewhere. Even if the next presidential administration makes it a day-one priority in 2029 to reverse these cuts and restore federal healthcare funding, 10M people will have already lost their health insurance.

Dialing In

Sharing insights from our work with clients

Three Questions on Executive Recruitment with Rosie Saenz
Rosie Saenz is an Executive Search Consultant with Morgan Consulting Resources. MCR works with health plans, medical groups, and health systems to recruit leaders from Directors through the C-suite. We have gotten to know Rosie through our partnership with MCR on Interim Executive Management and Executive Search and Recruitment services, so we interviewed her to shed some light on the state of her field.

1. What has changed about the executive search field these days?
The current administration’s cuts to Medicaid funding and tightening of eligibility have really shifted things to prioritize operational excellence under difficult conditions. Organizations are under serious pressure to optimize operations and protect financial performance, so they’re looking for a different profile than they were two or three years ago. There’s strong demand for leaders with deep expertise in value-based care, reimbursement strategy, and financial resilience. CFOs with experience in state funding models and cost containment are particularly sought after. Health plans dealing with tighter margins from lower enrollment also need leaders who can work effectively with state regulators. That’s become a real priority.

2. What are the main challenges in filling these roles?
Two situations make our job harder than usual. One is when an organization is heading into rough waters, financially. If a health plan just lost a Medicaid contract and is fighting it, you’re recruiting into a difficult situation. You need someone who can keep the team engaged even when things look uncertain, and who has the external skills to deal with attorneys and state governments. The other is replacing a CEO who’s been there 20 or 30 years. That kind of tenure leaves a real cultural gap, and the institutional knowledge and trust they built up does not just transfer to whoever comes next.

3. How do you identify the best candidate for a role?
For candidates that meet the baseline requirements of experience and education, what distinguishes the top five percent in a highly competitive search are the less-tangible qualities: strong cultural alignment, demonstrated energy and drive, genuine enthusiasm for the organization’s mission, and a proven track record of achieving outcomes similar to those the organization is striving to accomplish. Mutual fit is often the deciding factor. Because we have relationships with the candidates in our system, we know which ones have the right motivation and communication style to lead a mission-driven organization, for example. It does not matter how talented and qualified a potential leader is if they are a bad fit with the organization’s culture.

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File Two Lawsuits, Get One Free