Health Care Matters | April 4, 2025
Health Policy Tracker: Trump’s First 100 Days
HHS Reduction in Force in Full Effect
Employees impacted by the HHS reduction in force (RIF) were notified this week, impacting staff across HHS agencies, including the FDA, CDC, and NIH. While the full impact of these layoffs will come to light over time, read the following to learn what we know so far and the potential impact on key agencies.
Thousands laid off as Kennedy and Musk take aim at health agencies (Politico)
HHS reorganization raises questions for claims appeals process (Modern Healthcare)
Providers owe $1B for misused COVID-19 funds. DOGE just cut the office recouping them (Fierce Healthcare)
Trump's Deregulation Agenda
In addition to rolling out new health policy priorities and structural changes, President Trump and his administration have initiated a series of changes that could significantly reshape regulatory processes at HHS and beyond. For a summary of these actions, read the following:
Tracking The Trump Administration's Early Deregulation Agenda (Health Affairs)
Shared Savings Program ACOs Wary as CMS Halts Pay Models
Modern Healthcare reports that ACOs and health care providers are anxiously monitoring potential changes to Medicare's Shared Savings Program (MSSP) as the Trump administration begins implementing its health care policies. The conservative Heritage Foundation's Project 2025 explicitly recommends repealing MSSP, despite its record-breaking $2.1 billion in savings during 2023. Concerns intensified after CMS recently terminated four smaller Medicare payment models, fueling fears that MSSP may be scaled back or even phased out. Despite strong bipartisan support for ACOs in the past, experts fear that CMS could reduce the program's scope, impose stricter risk arrangements, or quietly let it diminish through inaction. Read here.
Why It Matters
While concerns about MSSP's future direction are valid, it's important to note that the program is established in statute under the Affordable Care Act, meaning CMS cannot simply terminate it without congressional action. This provides a baseline of stability despite potential policy shifts. Encouragingly, CMS has already released application cycle information for Performance Year 2026, with dates and processes largely aligning with previous years suggesting operational continuity in the near term. We expect the administration may pursue modifications that increase financial accountability requirements or adjust benchmarking formulas rather than seeking wholesale elimination. Organizations currently participating in MSSP or considering joining should continue their value-based care transformation efforts while closely monitoring any regulatory changes that could affect participation incentives or risk structures.
Health Insurers Slash Thousands of Jobs, More Cuts Ahead
The health insurance industry experienced a decline in jobs last year, breaking a pattern of growth that had been consistent since 2009 and contrasting with the overall increase in national employment. As Modern Healthcare and Becker’s report, at least ten major payers have announced cuts including UnitedHealth Group, Elevance Health, Humana, and Centene. UnitedHealth Group is implementing the most significant cuts by slashing 9% of its workforce. These companies cited financial pressures in Medicare Advantage and Medicaid businesses, higher-than-expected medical costs, and lower reimbursements as key factors driving workforce reductions. Read here and here.
Why It Matters
Industry experts suggest these cuts reflect a natural correction after years of expansion and represent a larger shift toward automation and digital solutions to reduce labor costs. Looking ahead, we expect this trend of workforce optimization to continue for at least the next two years as insurers navigate challenging market conditions. The industry will likely accelerate investment in technology while continuing to explore cost-saving measures such as outsourcing and the use of temporary workers. These changes may reshape the competitive landscape, with some insurers better positioned to weather these transitions than others. Health care providers, employers, and patients should prepare for shifts in how insurers operate, including changes to service levels, processing times, customer service models, and an increased reliance on automation and AI for claims handling, authorizations, member interactions, and clinical decision-making.
What We Are Reading
Social Risk and Acute Health Care Utilization Among Insured Adults
Authors of a recent JAMA article examine the association between exposure to social risk factors and emergency department (ED) visits and hospitalizations among a sample of insured adults. Read here.
Employer-Provider Direct Contracting: Practice And Policy
Health Affairs Forefront published an article discussing employer-provider direct contracting as a promising strategy for self-insured employers to bypass third-party administrators, negotiate transparent prices directly with healthcare providers, and reduce costs while improving quality. Read here.
What We Are Contributing to
Transforming Medicare in California: Pathways to Improvement
The California Medicare Collaborative’s new issue brief outlines strategies to improve care delivery for California’s rapidly growing Medicare population. Coral Health Advisors' Partner and Founder Melissa Cohen was a contributing author to the brief, which focuses on advancing actionable, system-level improvements for Medicare beneficiaries in California. Read here.
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