TrustWorks On Call: WakeMed Up When September Ends

Behind the Headlines

Unpacking the forces driving healthcare's biggest stories.

1. County approves WakeMed-Atrium deal.

The Wake County Board of Commissioners voted on Monday to approve the combination of WakeMed, a three-hospital nonprofit system based in Raleigh, NC, and Atrium Health, a legacy brand of the 69-hospital nonprofit system Advocate Health based in Charlotte, NC.
The vote was interrupted by protesters, concerned with both rising healthcare prices and the oversight process—the original vote in May was delayed due to public outcry over having only learned about the deal one business day before it was to be approved.
Since May, negotiations secured protections meant to assuage local concerns: WakeMed’s prices cannot increase more than 1.5 times faster than Medicare prices for five years; WakeMed has promised to spend more on indigent care and local socioeconomic and mental health issues; and Atrium committed to stronger language that it would spend $2B from outside the community on improving WakeMed facilities.
The WakeMed-Atrium combination is still subject regulatory approval from North Carolina and federal agencies

TrustWorks Take: The initial public outcry, sparked by the original deal’s secrecy, ultimately led to WakeMed and Wake County negotiating a far better deal for their community. Had that consent agenda in May passed, Wake County would have deprived itself of important governance protections, millions in public health spending, and potentially billions in outside investment, given that WakeMed was initially on the hook for its own improvements, with Atrium acting as an insurance policy for capital investment. North Carolina Governor Josh Stein also pushed successfully for commercial price growth caps of about 4.5 percent annually, assuming a 3 percent growth rate for Medicare prices. Questions remain around how some provisions will be executed, but the deal promotes accountability by allowing WakeMed’s board to find Atrium in violation of its terms, and also by putting some of the major commitments in a separate, legally binding Member Addition Agreement.

Wake County’s oversight of WakeMed is uniquely strong because the system started as a public hospital and was owned by the county until 1997, when it became a traditional nonprofit. Still, many state attorney general offices have the power to deny hospital mergers, allowing them to extract concessions. A vocal slice of Wake County residents opposed this deal even after the concessions, but there should be room for health system mergers that benefit both parties and the local public. A more transparent and deliberate version of the process, in which the systems clearly lay out their public commitments and rationale for merging, agree to binding terms, and allow time for public discussion, seems like a good model for future health system deals.

2. CMS ejects 760K from ACA rolls.

In coordination with an anti-fraud White House task force, the Centers for Medicare and Medicaid Services (CMS) is canceling approximately 315K unauthorized Affordable Care Act (ACA) marketplace enrollments covering more than 760K enrollees, which the agency claims will result in a return of roughly $2.2B in taxpayer-funded subsidies.
The White House task force determined these coverage cancellations, which amount to about four percent of ACA enrollment, by identifying which enrollees were receiving full premium subsidies, had been signed up by a broker, and had not filed any insurance claims; these flagged enrollees were given 30 days to respond before their coverage was cancelled.
CMS also announced a six-month moratorium on the registration of new ACA exchange brokers and agents.

TrustWorks Take: Enrollment fraud exists and is worth rooting out. The central question revolves around who these 760K people were. How many were in fact legitimate enrollees? How many of them even existed? If the administration’s claims are true that all these people were ineligible for subsidies, and that none of them had accessed care this year, then the brokers and payers improperly profiting off their enrollment are the only losers of this fraud inquisition. However, because this process lacked transparency, we do not know how the government can distinguish fraudulent enrollment from legitimate coverage that happens to fall within its screening criteria.

The administration says these cancellations will save taxpayers $2.2B. At this scale, even a relatively small false-positive rate could leave thousands of legitimately eligible people without coverage, potentially without the now-uninsured individual realizing. Anyone unfairly removed from their ACA coverage—someone by definition in a vulnerable category given they are fully subsidized—will be in for a rude surprise when they eventually seek healthcare services and learn of their disenrollment. Providers, likewise, will bear even more uncompensated care costs as the uninsured population continues to grow.

3. All 50 states applied for Medicaid pricing deal.

President Trump announced that every state Medicaid program has applied to participate in an initiative which provides most-favored-nation (MFN) pricing for certain prescription drugs to people with Medicaid.
The GENErating cost Reductions fOr [sic] U.S. Medicaid (GENEROUS) Model relies on deals the White House struck with pharmaceutical companies to align drug prices with other countries, but the details of these arrangements have not been made public.

TrustWorks Take: Medicaid beneficiaries already tend to pay only nominal copays on drugs, so the benefits of this model would come from easing the pressure on state Medicaid budgets, which are under severe strain thanks to the One Big Beautiful Bill Act. The primary challenge in quantifying these benefits is that we do not know the actual prices agreed to in these MFN deals, which the administration says are protected trade secrets. There may also be hidden costs, as some drugmakers have indicated that their participation in this Medicaid program has exempted them from two similar Medicare models meant to peg drug prices to reference countries. Finally, any benefits projected beyond 2028 come with an asterisk, as there is no guarantee that deals struck between pharma companies and this White House will carry on into the next administration.

Beyond the Whiteboard

Visualizing key trends from the healthcare industry

Another Worrying Medical Debt Survey
A new study from the Commonwealth Fund produced one of the most concerning statistics yet about the US medical debt crisis: about one in three working-age (19-64), privately insured adults are paying off medical debt. When we talk about medical debt, our lack of universal coverage and the risks of being un- or under-insured are often top of mind (and rightly so, given that 62 percent of uninsured adults carry medical debt). However, rising deductibles and cost-sharing rates have eroded the financial protections offered by commercial insurance—the supposed safety blanket within our flawed system.

Medical debtholders blame insurance companies the most, but the story is of course much more complicated. On top of ever-escalating healthcare prices, Americans’ savings have been depleted by inflation, leaving half of privately insured adults unsure or unable to pay a surprise $1K medical bill, and one quarter of all adults without any emergency savings at all. Relatedly, US household debt reached an all-time high earlier this year. Many surveys have found healthcare to be voters’ number one financial concern heading into the midterms, but neither party has coalesced around a comprehensive proposal to tackle this issue. It is a difficult problem to solve while healthcare spending continues to grow unchecked. Whether through premiums, out-of-pocket costs, taxes, suppressed wage growth, or avoided care, Americans ultimately bear the cost of the healthcare system one way or another.

Dialing In

Sharing insights from our work with clients

An Alternative to APP Ratios
A large multispecialty group brought us in to revamp their workforce composition because they knew they were underutilizing advanced practice providers (APPs). Their CFO asked for a market scan to help them determine, in coordination with their specialty leaders, the appropriate group-wide physician-to-APP ratio. “What these guys need is a benchmark I can hold them to.” When pushed on why there should be one ratio across different specialties, each with their own care models, he admitted his thinking was more managerial than medical: “I can’t be holding different specialties to different standards, because whoever has a stricter target is going to wonder why other specialties got off easy.”

Physician-to-APP ratios should be an outcome of shared criteria determining optimal labor composition, not the starting point. Instead of a simple benchmark, workforce redesign should reflect the work being done, which can still be quantified. For example, the group could evaluate its specialties by the standard of “percent of care delivered at top of license,” measuring whether physicians are doing work that could be performed by APPs, registered nurses, medical assistants, or even technology, based on legal and operational constraints. Of course, there is an art to the calculation, but the principle behind it is to match the work to the right resource, allowing everyone to operate closer to the top of their capabilities, while preserving scarce physician capacity for where it creates the greatest value. If your physician leaders cannot get behind that, your apparent workforce problems are likely masking a different issue altogether.

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WakeMed Up When September Ends