TrustWorks On Call: Three Flip-Flops

Behind the Headlines

Unpacking the forces driving healthcare's biggest stories.

1. Judge vacates rule banning medical debt from credit reports.

On Friday, a district court judge in Texas ruled that the Consumer Financial Protection Bureau (CFPB) had exceeded its authority by barring the inclusion of medical debt on consumer credit reports.
The rule, originally set to go into effect at the end of July, would have erased an estimated $49B in medical debt from the credit reports of 15M Americans.
Under the Trump administration, the CFPB reversed its stance on the Biden-era rule and joined the plaintiffs, a group of consumer reporting companies, in their efforts to block it.

TrustWorks Take: For the four percent of Americans whose medical debt has reached collections, their credit scores can face downgrades that impact their ability to obtain mortgages and other personal loans. Given that large medical expenses often happen at random and billing errors are unfortunately common, CFPB research has shown that medical debt lacks predictive power for one’s ability to repay other loans. The now-vacated CFPB rule would have virtually eliminated medical debt’s impact on Americans’ credit scores, which was already in decline due to voluntary reporting changes by the big three consumer credit agencies. However, the credit impact of medical debt is only one of many downstream concerns stemming from the massive amounts of medical debt generated by our healthcare system. Last year, about 12 percent of Americans incurred an estimated $74B of debt to pay for their own or a family member’s medical expenses. Over the next decade, the $1.2T of cuts to federal health insurance included in the One Big Beautiful Bill Act will surely drive up the size and scope of medical debt. The reversal of this consumer protection rule will exacerbate that law’s deleterious impacts on affordability of healthcare and other goods, amid this administration’s politicized CFPB abandoning its mission to stand up for consumers.

2. Best Buy sells Current Health back to founder.

Late last month, Best Buy sold Current Health, a technology-focused at-home care company, back to its co-founder, Chris McGhee, four years after its $400M initial purchase.
Last week, Best Buy shared plans to lay off 161 employees from its healthcare division.
As recently as 2023, Best Buy was using Current Health’s platform to partner with prominent hospital systems, including Charlotte, NC-based Atrium Health and New York, NY-based Mount Sinai Health System, to expand their hospital-at-home and remote-patient-monitoring programs.

TrustWorks Take: To give Best Buy some credit, “Geek Squad for at-home healthcare technology” had as much potential as any recent retail healthcare disruptor’s value proposition. Still, this retrenchment reflects the same two lessons usually learned by other promising disruptors. First, healthcare is hard, and making money in healthcare is harder. Hundreds of millions of dollars in restructuring costs and goodwill impairment suggest that Best Buy overestimated its ability to deliver timely results at scale. But second, just because Best Buy (or Walmart, or Walgreens, or any other retail giant struggling to enter care delivery) didn’t succeed with their latest venture, it doesn’t mean that their idea was wholly wrong or that their healthcare ambitions will be sidelined for good. Best Buy’s hospital-at-home support programs would have benefited from Congress making the Hospital-at-Home Waiver Program permanent, and should that come to pass, a tech-enablement business could become a useful partner for many health systems. But next time, it may well be another capital-rich corporation’s turn to acquire the startup, infuse it with capital, and attempt to carve out a sustainable niche in the care delivery system.

3. CMMI testing prior authorizations in traditional Medicare.

Last month, the Center for Medicare and Medicaid Innovation (CMMI) unveiled the Wasteful and Inappropriate Service Reduction (WISeR) Model, which will test a new, AI-enabled process to apply prior authorization limits on certain Medicare Part B services.
The model participants will be technology companies that employ licensed clinicians and use AI technologies to manage prior authorization requests; participants will be rewarded with shared savings if they reduce spending on “medically unnecessary or non-covered services.”
The list of services, which excludes inpatient care to minimize patient risk, includes procedures associated with higher rates of improper use, such as certain neurostimulation devices, skin substitutes, and knee arthroscopies.
Providers in participating regions have the option to submit claims for selected procedures to prior authorization review or to bypass the model and continue submitting claims subject to post-payment medical review.
Beginning in 2026, the WISeR Model will run for six years in the following six states: New Jersey, Ohio, Oklahoma, Texas, Arizona, and Washington.

TrustWorks Take: As many, including the MGMA statement opposing this model, have pointed out, this expansion of prior authorization for traditional Medicare seemingly runs contrary to Centers for Medicare & Medicaid Services (CMS) Administrator Dr. Mehmet Oz recent advocacy for prior authorization reform in Medicare Advantage (MA) and commercial plans. However, last month’s industry roundtable on prior authorizations facilitated by Dr. Oz produced a voluntary pledge that effectively absolves CMS from pursuing regulatory action against payers. This business-friendly approach, prompted by public outcry against payers’ utilization management policies, stands in contrast to the administration’s healthcare agenda elsewhere. Prior authorizations resemble Medicaid work requirements in that they can be framed as ways to crack down on fraud and abuse, while actually adding unnecessary red tape that limits healthcare access. Talks are already underway for this fall’s budget bill, with rumors of further cuts to Medicaid and new cuts for Medicare, so soon we’ll have another chance to see where this administration’s priorities lie.

Beyond the Whiteboard

Visualizing key trends from the healthcare industry

Vertical Integration, as Told by UHG and CVS For years if not decades, UnitedHealth Group (UHG) and CVS Health have both pursued and exemplified the vertical integration model for healthcare. For UHG, that strategy best dates back to the launch of the unified Optum brand in 2011, while for CVS, its acquisitions of MinuteClinic in 2006, pharmacy benefit manager (PBM) Caremark in 2007, and insurer Aetna in 2018 serve as key milestones. However, an examination of UHG's and CVS's annual financial reports reveals how widely these two companies’ strategies have diverged. UHG has a bit (or a lot) of everything: it is the largest insurer, the third-largest PBM, and employs (or affiliates with) more physicians than anyone by a significant margin. Its revenue and net earnings are roughly evenly distributed between its UnitedHealthcare insurance arm and its Optum provider and PBM businesses. In contrast, CVS is largely a PBM and pharmacy services company, with a struggling insurance business and a surprisingly small care delivery arm. In 2024, Aetna posted a 0.2 percent operating margin (UnitedHealthcare had a 5.2 percent margin), and the non-pharmacy services portion of its Health Services Segment, which houses Oak Street Health and its other provider assets, generated just $11B in revenue.

Despite UHG’s seemingly excellent fundamentals, it’s now featured in headlines alongside words like "imploding," and its stock price is down about 40 percent YTD. Meanwhile, CVS’s stock is up over 40 percent YTD, with its fortunes changing ever since it elevated David Joyner from Caremark president to company CEO. As we’ll surely revisit in future weeks, fortunes can change in a blink, even in healthcare.

Dialing In

Sharing insights from our work with clients

Balancing Payments with a Foot in Two Boats Ever an optimist, I’ve never (fully) abandoned the position that value-based care (VBC) is here to stay. One day I’ll be speaking to a physician leader bemoaning VBC’s stagnancy in their market, and the next day I’ll talk to someone at a big system that’s still on course for 2026 transition to two-sided risk across a portion of their commercial and Medicare populations. Based on these experiences, I have updated my messaging in recent years. Yes, VBC is here to stay, but so is fee-for-service (FFS). Balancing both FFS and VBC, also known as having a “foot in two boats,” was originally supposed to be a temporary clinical and financial state for healthcare organizations shifting to value-based clinical and payment models. But the reality is that our current hybrid financial model is likely to be the norm for a long time to come. With that in mind, here are six ways to keep your balance:

Segment Populations by Payer and Contract Type: FFS populations are reimbursed for each unit of service, incentivizing volume. VBC populations (e.g., MA, MSSP, ACO REACH, commercial ACOs) are tied to quality, cost, or total cost of care metrics.
Align Clinical Workflows Without Duplicating Infrastructure: For FFS patients, focus may stay on throughput and coding accuracy. For VBC patients, workflows focus on preventive care, care coordination, closing quality gaps, and cost containment.
Evolve Incentives and Performance Management: Physician compensation should blend both productivity-based comp, emphasizing access over wRVUs, and performance-based comp, such as quality scores, panel health outcomes, savings.
Use Analytics to Manage Across Models: Monitor coding integrity and revenue cycle metrics, which relate more to FFS, while tracking hospitalization rates, ED visits, quality metrics, and risk scores, which are integral to VBC models.
Tailor Governance and Culture: Leadership should be focused on managing across both models, while supporting efficient deployment of VBC resources.
Innovate on Care Models Gradually: Pilot capitation or shared savings programs in primary care, and test procedural bundles with orthopedics, GI, and cardiology. Then, use these pilots to refine care delivery models, build internal confidence, and scale VBC capabilities without upending your entire FFS enterprise.

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Three Flip-Flops