Welcome to another edition of the Gist Weekly. Please feel free to forward this edition to friends and colleagues, and encourage them to subscribe as well.
In the News
What happened in healthcare recently—and what we think about it.
- Biden administration finalizes mental health parity rule. On Monday, the White House announced a final rule that strengthens mental or behavioral health insurance coverage. These regulations build on the Mental Health Parity and Addiction Equity Act (MHPAEA), first passed in 2008 and updated in 2020, which required private insurers to cover behavioral health at same level as physical health benefits. The rule, issued by the Health and Human Services, Labor, and Treasury departments, clarifies that health plans cannot impose stricter prior authorizations, narrower networks, or different out-of-network payment factors for behavioral health. It also closes loopholes that exempted non-federal governmental health plans from compliance, and it compels insurers to act on comparative analyses required by the MHPAEA to ensure behavioral and physical health services are equally accessible for their beneficiaries.
- The Gist: Behavioral health parity has been a federal policy priority since the 1990s, but disparities have proven persistent, as people with insurance are still about four times as likely to go out of network for behavioral health as physical health. Although this rule offers more clarity and imposes new administrative requirements (which insurers are protesting), it does not add new enforcement mechanisms to ensure compliance. If parity were to be achieved, health systems would be better positioned to offer robust behavioral health services, as reimbursement levels for inpatient behavioral care typically fall well below the cost of providing these services.
- CMS notifies almost 1M Medicare beneficiaries of data breach exposure. Last Friday, the Centers for Medicare & Medicaid Services (CMS) shared that more than 946K Medicare beneficiaries will receive written notification informing them that their personal information and health data may have been exposed by a vulnerability in a third-party software program. Progress Software, maker of the compromised MOVEit program, patched the vulnerability shortly after it was discovered in May 2023. However, in July 2024, the Wisconsin Physician Services Insurance Corporation, a Medicare contractor, informed CMS that it had conducted an additional review and discovered an unauthorized third party had accessed and copied its files before the patch was implemented. This is only the latest round of notifications stemming from the MOVEit breach, as CMS had already informed more than 900K Medicare beneficiaries of potential exposure from a different federal contractor in 2023.
- The Gist: Hackers have significantly ramped up their attacks on the healthcare sector in recent years, pursuing sensitive, valuable data in breaches that cost affected healthcare parties almost twice as much to contain as the next-most-expensive industry. The MOVEit hack exemplifies why this issue is so difficult for providers to manage: the myriad third-party contractors and software programs used at all levels of healthcare each present a point of vulnerability, and the full extent of breaches may not be known for months if not years.
- Humana exiting 13 Medicare Advantage markets. At a healthcare conference last week, Humana CFO Susan Diamond revealed that the payer will cut the number of Medicare Advantage (MA) plans it offers in 2025, exiting 13 markets and reducing the choice of plans in others. Humana estimates that 560K members, about 10% of its individual MA enrollment, will be impacted by these changes, but it projects that about half of those affected will be retained on other plans. The plans in markets Humana is exiting were not expected to be profitable in 2025, so Diamond framed the exits as “positive” for Humana’s bottom line. Humana is also reducing supplemental benefits for some plans, which it anticipates will lead to “an even higher level of utilization” for these services through the end of the year.
- The Gist: Buoyed by the strong growth of the MA market, Humana announced the gradual closure of its commercial employer business in early 2023 in order to double down on MA. Since then, MA payers have run into significant headwinds that have slowed growth and reduced profitability, including diminished CMS reimbursements and increasingly contentious negotiations with providers. As a number of payers, not just Humana, are recalibrating their MA footprints in 2025 to focus on profitability, many providers will be left with fewer potential partners in their markets, which may further raise the temperature for their already heated MA negotiations.
Plus—what we’ve been reading.
- The unexpected consequences of online portals in healthcare. Published recently in the Washington Post, this piece illustrates challenges faced by patients amid new medical record transparency rules. Under the 21st Century Cures Act, medical test results must be released to patients immediately in order for patients to make the most informed decisions about their health. However, context and expertise from providers at the time of receipt is not guaranteed, leaving some patients to interpret critical results from an online portal on their own. This is not only devastating for patients receiving life-changing diagnoses without the support of their trusted physician, but also unnecessarily scares patients who receive results that could “appear alarming but are mundane when interpreted by a medical professional.” The author highlights that there is a fine line between “a data dump” and transparency, and further action is warranted to better serve patients in these delicate situations.
- The Gist: Although transparency better enables patients to engage with their health, managing the large volume of patient inquiries from online portals can be a tedious task for providers and may further exacerbate burnout. Health systems should be ready to offer support to physicians, who are increasingly overwhelmed by patients’ questions, and to provide coverage for physicians during their time off. This article provides evidence that integrating patient advocates into care teams could be the most effective way for these regulations to best serve all stakeholders in practice. Advocates can be a crucial intermediary in helping patients and providers achieve shared goals of transparency and quality care.
Graphic of the Week
A key insight illustrated in infographic form.
The state of health system nursing talent retention
This week’s graphic highlights data from NSI Nursing Solutions, Inc., and details the current state of hospital turnover and nursing talent retention. Elevated hospital turnover rates have abated at most hospitals. The average hospital’s registered nurse (RN) and all-employee turnover rates have almost returned to 2019 levels, at 18% and 21% respectively. This is quite notable because staffing turnover substantially increased during the pandemic, with many nurses accrediting their departures to dissatisfaction with management, and better pay and more flexible hours elsewhere. This left many hospitals in a labor crisis, with soaring contract labor costs and persistent staffing shortages. Thankfully, these shortages are also improving, with RN vacancy rates nearly returning to pre-pandemic levels. 40% of hospitals had a RN vacancy rate under 7.5% in 2024, a remarkable recovery when more than half of hospitals reported RN vacancy rates greater than 15% in 2023. Health systems have made significant investments in workforce retention in recent years and the fruits of their labor are starting to pay off. Although this meant increasing labor expenses and has led to a “rebasing” of wages, retaining and investing in employees is a more sustainable long-term strategy compared to expensive contract labor and turnover costs.
Kaufman Hall Insights
What our experts are saying about key issues in healthcare.
Health systems nationwide are evaluating growth opportunities, which encompass traditional fully integrated partnerships and alternative partnership strategies. In recent years, we have seen an acceleration in less than fully integrated partnership models. As many organizations continue to face resource constraints, these partnership models can offer opportunities to redeploy capital while partnering with best-in-class operators to drive efficiency and growth, particularly in non-acute business units.
One area of opportunity is in the ambulatory arena. In a recent Kaufman Hall article, Courtney Midanek, Adnan Qureshi and Matt Santulli describe how increasing competition among ambulatory surgery center (ASC) management services companies is introducing more flexibility in key partnership terms, including equity levels, consolidation rights, governance, the scope of management services and management fees. A controlled, competitive request-for-proposal (RFP) process that capitalizes on the new competitive dynamics in the ASC management services marketplace can help unlock a health system’s full range of opportunities in partnership negotiations.
On Our Podcast
Gist Healthcare Daily—all the headlines in healthcare policy, business, and more, in ten minutes or less every weekday morning.
In addition to the news discussed above, our Gist Healthcare Daily podcast covered many of the week’s other big stories, including:
- Pfizer unveils direct-to-consumer pharmaceutical service
- A shareholder sues Walgreens executives as stock price drops
- A study finds the active ingredient in Ozempic may reduce COVID risks
To stay up to date, be sure to tune in each weekday morning. Subscribe on Apple, Spotify, Google, or wherever fine podcasts are available.
Thanks for reading! We’ll see you next Friday with a new edition. In the meantime, 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
