In the News
What happened in healthcare recently—and what we think about it.
- CMS publishes proposed IPPS rate. Last Friday, the Centers for Medicare & Medicaid Services (CMS) published its proposed FY 2026 rates for the Hospital Inpatient Prospective Payment System (IPPS). The effective reimbursement increase for inpatient hospital care would be 2.4%, a 3.2% increase with a 0.8% productivity adjustment. The proposed rule also presented a 2.6% pay increase for long-term care facilities and 2.4% increase to inpatient psychiatric facilities. The comment period for the proposed rule ends June 10.
- The Gist: The proposed rule comes on the heels of the finalized Medicare Advantage (MA) payment rate increase of 5.1% which was more than double the proposed rate and, unlike the IPPS rule, is considered quite generous. The proposed rule makes clear the Trump administration’s partiality toward MA. While the IPPS rate affects payment for both MA and traditional Medicare beneficiaries, hospitals are getting the short end of the stick as the administration seeks to rein in government spending. Should the proposed rate be finalized, a new pressure point for hospitals’ finances would emerge as likely Medicaid cuts and the potential expiration of enhanced marketplace subsidies still loom.
- HHS’ Kennedy sets September deadline to identify the cause of autism. At a Cabinet meeting last Thursday, Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. declared that his department will identify the cause of autism by September. He said HHS has launched an extensive testing and research effort and that very soon “we will know what has caused the autism epidemic and we’ll be able to eliminate those exposures.” Per a new Centers for Disease Control and Prevention report, in 2022, 1 in 31 children in the United States were diagnosed with autism by the time they turned 8.
- The Gist: Researchers have been trying to identify the cause of autism for decades, so this accelerated timeline is quite optimistic—and particularly ambitious given the staffing cuts that have heavily impacted HHS’ capacity to carry out its normal responsibilities and the measles outbreak that continues to threaten the nation’s measles elimination status. This remarkable shift of focus is an example of Secretary Kennedy’s goal of reorienting HHS toward chronic diseases. Kennedy is a longtime vaccine skeptic but has recently tried to walk back his stance. He said that the measles, mumps and rubella vaccine was “the most effective way to prevent the spread of measles” earlier this month, after previously having advocated for a cod liver oil remedy to treat the disease. A link between vaccines and autism has long been debunked, but HHS recently hired controversial researcher David Geier to study whether vaccines cause autism. This work could further muddy the waters on vaccine safety and efficacy.
- Trump signs executive order adjusting Medicare Drug Price Negotiation. On Tuesday, President Trump signed an executive order directing HHS to work with Congress to make a change to the Medicare Drug Price Negotiation program. Before this order, biologics, often injectable drugs, could be selected 11 years after their Food and Drug Administration (FDA) approval or licensure date. Meanwhile, small molecule drugs, or drugs often taken as pills or capsules, could be selected 7 years after approval. Under the executive order, President Trump directs HHS to align the treatment of small molecule drugs with biologics, ending the “pill penalty.” The Trump administration is currently negotiating the second round of drugs that were selected under the program.
- The Gist: Even though pharmaceutical companies secured a concession, the executive order is disappointing for them, as it confirms that President Trump is committed to the Medicare Drug Price Negotiation program. Even though President Trump voiced support for Medicare negotiating the price of drugs before he became president, many drugmakers thought President Trump may repeal the Medicare Drug Price Negotiation program, partly because it was a cornerstone achievement for former President Biden. Still, drugmakers can celebrate this small win and consumers can hope that the change will encourage innovation in small molecule drug development. The negotiations still face legal challenges from drugmakers, but the program can dramatically reduce costs for the government and seniors which is a positive step forward for consumers.
Plus—what we’ve been reading.
- The spotlight shines on a healthcare union. It’s not pretty. Published earlier this month in Politico, this investigative piece reveals apparent financial mismanagement at the nation’s largest healthcare labor union. The article centers on financial dealings of 1199SEIU United Healthcare Workers East, which represents 450,000 healthcare workers including nurses, nursing home employees, certified nursing assistants and home health aides, across five East Coast states. After more than 20 interviews and reviewing thousands of pages of financial documents, reporters allege that union president George Gresham used union funds for personal and familial benefits. The report details expenditures such as covering medical bills for civil rights leader Jesse Jackson, funding travel and events coinciding with Gresham's family reunions and employing union staff as personal drivers. Gresham and his supporters deny wrongdoing, asserting that expenditures were authorized and benefited the union's mission.
- The Gist: The investigation comes amid the union's first contested leadership election in decades, with some members citing concerns over financial mismanagement as a reason for seeking new leadership. Labor relations in hospitals have never been easy, in some regions more than others. Already beleaguered hospitals in some markets have had a challenging negotiating partner, especially during and immediately following the Covid-19 pandemic. 1199SEIU United Healthcare Workers East is known for its political clout, especially in New York, where it has been a major player in shaping healthcare policy and supporting progressive political candidates. It has long advocated for workers’ rights and improved wages and benefits. Yet unions are struggling as membership has hit a record low and President Trump has signaled his intention to limit collective bargaining rights. Gresham’s allies say he is the best leader to take on Trump’s healthcare policies on behalf of the union’s members and the institutions, including hospitals, that employ them. In an environment of heightened anxiety and healthcare labor shortages, this investigation demonstrates the importance of maintaining a healthy work culture.
Graphic of the Week
A key insight illustrated in infographic form.
Addressing climate change a prominent goal for clinicians
In honor of Earth Day this Tuesday, this week’s graphic demonstrates the importance for hospitals to address climate change. A 2023 survey found that healthcare workers overwhelmingly support efforts to mitigate the effects of climate change. About 4 in 5 clinicians feel it is very important for their employer to address climate change and 3 in 4 clinicians want to directly be a part of these efforts at work. This passion also affects their employment decisions. More than half of clinicians said their organization's sustainability efforts have informed or could inform their decision to stay with their employer. Many health systems have integrated environmental sustainability into their strategies; the highlighted examples are only a few of the many creative ways health systems have helped prevent further climate change and responded to present threats to climate change. These projects illustrate that addressing climate change does not need to be arduous and can often be a smart business decision.
This Week at Kaufman Hall
What our experts are saying about key issues in healthcare.
Some hospitals are successfully managing through difficult, uncertain operating circumstances, while other organizations are struggling—a conundrum that comes up frequently in our conversations with hospital boards and C-Suite leaders.
In a new blog, Kaufman Hall Managing Director and Founder Ken Kaufman and Senior Vice President Jordan Cloch explore where leadership that can direct a hospital to the right operational answers for their most pressing questions comes from. The authors draw on the research of Stanford Business School professor Charles O’Reilly, which suggests that different strategic contexts benefit from different leadership styles. Critically, this exploration is not about replacing leadership, but asking a more productive question: “How do we build leadership teams that complement one another and align with the necessary strategy ahead?”
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Coming up on the Gist Healthcare podcast, we look at a new study examining the efficacy of remote patient monitoring. We'll get that story and other business and policy news on Monday.
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Thanks for reading! We’ll see you next Friday with our next edition. Check out our Gist Weekly archive if you’d like to peruse past editions. We also have all of our recent “Graphics of the Week” available here.
Best regards,
The Gist Weekly team at Kaufman Hall
