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In this week’s edition, we reckon with the prospect of site-neutral payment reform, share a graphic on declining trust in the US healthcare system, and consider the legal minefields around telemedicine across state lines. But first, the news: |
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Behind the Headlines
Unpacking the forces driving healthcare's biggest stories
1. Cigna closes Medicare businesses sale to HCSC.
- Cigna announced last Wednesday the final $3.7B sale of its Medicare businesses to Health Care Service Corporation (HCSC), which signed an agreement in January 2024.
- HCSC is acquiring Cigna’s Medicare Advantage (MA) footprint, representing about 2 percent of the national market, as well as its supplemental benefits and Medicare Part D offerings.
- Cigna will continue to work with Medicare through its Evernorth health services division, which will serve as pharmacy benefit manager for legacy-Cigna MA plans for an agreed upon period post-closing.
TrustWorks Take: Several major payers are in the midst of a serious reorganization, with Cigna divesting its Medicare businesses, Humana (briefly rumored to be merging with Cigna last year) exiting the commercial market, and CVS reportedly considering a breakup with Aetna. Cigna can point to MA headwinds to justify its decision, but Humana’s simultaneous doubling down on MA illustrates the broader trend: payers want concentrated scale in a given business. United Healthcare has managed to achieve that in both the MA and commercial markets, but smaller national payers like Cigna and Humana have struggled. Focusing on national market share can also obscure what regional payers (and health systems) have learned to embrace: it’s better to dominate a few local markets than be the fourth-best option nationwide.
2. Home healthcare companies DispatchHealth, Medically Home to merge.
- Medically Home, a platform company supporting at-home care delivery, will become part of DispatchHealth, a provider organization focused on acute care at home, the two companies announced last Tuesday.
- Both companies received significant funding infusions in response to the Acute Hospital Care at Home (AHCAH) waiver program, which has repeatedly been temporarily extended, most recently through Sep. 30, 2025.
TrustWorks Take: The AHCAH waiver program, with its 332 participating hospitals, brought the long-dormant promise of hospital-at-home care into the mainstream, but the movement has yet to reach its full potential. How to operate hospital-at-home services profitably at scale, what kinds of organizations should provide these services, and which services are best suited for that setting are still being determined. Dispatch Health and Medically Home, two for-profit operators, are merging to form a stronger company in a niche that is both complementary to and competitive with health system services. For example, Kaiser Permanente and Mayo Clinic invested in and partnered with Medically Home to expand its model, while Humana worked with DispatchHealth to provide for its members hospital-at-home care without a participating hospital. Nonprofit systems may benefit from partnering with these companies rather than develop hospital-at-home capabilities internally. However, offloading traditionally inpatient and nonprofit services to for-profit companies can come at its own price for care quality and accessibility.
3. CMMI cancels several payment models early.
- The Center for Medicare and Medicaid Innovation (CMMI) shared earlier this month that four payment models—the Maryland Total Cost of Care model, two primary care pilots promoting value-based payments, and a program to encourage home dialysis—are now slated to end by Dec. 31, 2025.
- Two previously announced but not implemented models—the Medicare $2 Drug List and Accelerating Clinical Evidence, both of which target drug spending—will also no longer be pursued.
- The agency projects total savings of $750M by ending these programs early, although it did not provide specifics behind this figure.
TrustWorks Take: In its first decade of existence, CMMI evaluated 49 models, six of which generated significant savings, and only four of which were certified for expansion. Initially expected to save $2.8B over that period, it instead increased Medicare spending by $5.4B, or 0.1 percent of Medicare’s budget. In other words, CMMI’s performance to date makes it both an unsurprising target for government efficiency reforms and a paltry source of federal savings. Three of the cancelled models were near completion already, but the Medicare $2 Drug List model, which will no longer be implemented, was projected to reduce Medicare Part D enrollees’ collective out-of-pocket spending by up to $2B a year. Instead of improving traditional Medicare through CMMI models, the Trump administration sees MA expansion as its preferred path to promoting value in healthcare and lowering enrollee out-of-pocket spending. Whatever form the federal push for value takes, providers will need to further develop their care-coordination and data-analytics capabilities to keep up with the evolving payment models.
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Dialing In
Sharing insights from our work with clients
Adapting to Site-Neutral Payment Reforms
I visited a long-standing heath system client in Florida last week, where the CEO resumed a conversation we’ve been having for the past five years: how long, if ever, before site-neutral payments take hold? Our previous conversations had been more theoretical, but this time he was preparing to brief his board on the strategies needed to be ready for this shift, not as an eventuality but instead as a near inevitability.
His primary focus with the board was on service lines. Which low-acuity outpatient services could they transition to lower-cost settings, such as free-standing ambulatory surgery centers or office-based facilities? What are the regulatory considerations around converting operating rooms into leased areas for aligned surgeons? Could they rework infusion centers to be multi-specialty or jointly owned and partially leased? He saw the expansion of non-hospital-based options as an opportunity to adjust and strengthen physician alignment, on top of being a necessary response to shifting reimbursements.
We also tried to quantify the monetary stakes of site-neutral payments. If 20 percent of a system’s revenue faced a 30 percent reimbursement cut, then a $1.5B-revenue system would see a $90M revenue loss, negating a 6 percent margin. If Congress cuts Medicare spending in this way, health systems will need to innovate in response to reduced revenues. Deploying new care models, diversifying revenue streams, and embracing alternative payment strategies will be essential strategies for success in this new landscape. Rather than a temporary policy shift, site-neutral payment reform represents a broader push toward cost containment and care decentralization that necessitates careful planning from health systems.
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Beyond the Whiteboard
Visualizing key trends from the healthcare industry
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Of the many ways our healthcare system is still feeling the effects of COVID, the loss of trust in healthcare, public health, and scientific leaders looms as a systemic threat undermining the entire system. After an initial surge in support for scientists and healthcare workers in the early days of the pandemic, dissatisfaction with lockdown policies metastasized into a general mistrust of healthcare and public health authorities, a growing skepticism toward vaccines, and a burgeoning interest in alternative medicines. Good-faith concerns around the profit motives and quality of healthcare services have been coopted by a movement to discredit the authority of the scientific community altogether. Medical mistrust has also become a partisan issue—Democratic voters continue to trust scientists and public health officials (although the latter less than they used to), while Republican voters now place greater faith in healthcare leaders in the Trump administration, like Robert F. Kennedy Jr. and Dr. Mehmet Oz. Even though most healthcare practitioners are not responsible for this loss of trust, they serve on the frontlines of the effort to rebuild it.
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Weighing In
Offering our thoughts on a notable topic
The Legal Minefield of Telemedicine Across State Lines
In February, Louisiana Attorney General Liz Murrill signed an extradition order for Dr. Margaret Carpenter, a New York-based physician indicted for prescribing and mailing abortion pills to a minor in Louisiana via telemedicine. While Louisiana authorities argue she violated state law, New York Gov. Kathy Hochul has refused to honor the extradition request, citing New York’s shield laws designed to protect providers offering abortion care to patients in restricted states. This marks the first known instance of criminal charges against a physician for prescribing abortion medication across state lines.
This case could be seen as more of an abortion story than a telemedicine one, but both topics are subject to an evolving legal landscape with wide variation in state-specific laws. While most uses of telemedicine are not as politically charged as abortion, high-profile instances of providers being charged or sanctioned could have a chilling effect on cross-state virtual care of all kinds. Health systems and physician enterprises must carefully track licensure rules and compliance measures to avoid potential criminal liability and protect their providers. Not only is this compliance expensive, but the flurry of recent legal changes and a lack of established precedent make these efforts increasingly difficult. Organizations practicing across state lines may choose to play it safe, but that choice risks leaving vulnerable patients without access to care, infusing the dilemma with not just legal but moral considerations.
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