Medicare Advantage plans to gain $13 billion under Trump changes to star ratings

By Bob Herman – Medicare Advantage insurers scored a Thanksgiving gift, as President Trump’s Medicare agency added back a bonus system that rewards health plans with consistently high marks. The Centers for Medicare and Medicaid Services also is proposing to eliminate a dozen star ratings measures that it deemed too administrative. Notably, one of those star ratings measures focuses on the performance of an insurance company’s call centers — the exact metric that Humana and UnitedHealth Group have sued over, alleging that CMS unfairly downgraded them because of missed phone calls. Read Full Article... ^{_{(Subscription required)}}

HVBA Article Summary

1. Reinstatement of the "Reward Factor" Could Shift Incentives Away from Health Equity: Medicare plans to reinstate the "reward factor" in its star rating system for Medicare Advantage plans, a method that boosts payments to insurers that consistently perform well across a broad range of quality measures. This replaces the previously proposed "health equity index," set to take effect in 2027, which aimed to reward insurers for serving vulnerable populations, including people of color, those with disabilities, and residents of rural areas. Experts suggest this change will disproportionately benefit insurers whose enrollee base does not include a high concentration of low-income or disabled beneficiaries, shifting incentives away from addressing healthcare disparities.

2. Policy Changes May Cost Taxpayers Billions, but Offer Larger Gains for Individual Insurers: The proposed updates to the Medicare Advantage star rating program are projected to cost $13.2 billion between 2028 and 2036, a relatively small portion of the program's overall spending—over $750 billion is expected in 2028 alone. While this cost is negligible from the broader Department of Health and Human Services (HHS) budget perspective, it represents potentially significant financial gains for individual insurers, many of whom rely on bonus payments to support tight Medicare margins. As more insurers qualify for four or more stars, they will become eligible for these lucrative bonuses.

3. Call Center Measures Removed Amid Legal Pressure and Performance Plateau: Among the 12 star rating measures CMS proposes to eliminate, the call center performance metrics are particularly noteworthy due to their link to high-profile litigation. Insurers like Humana, UnitedHealth, and Elevance Health have contested star rating downgrades tied to poor call center results, with several lawsuits either pending or resolved in favor of the insurers. While CMS had previously signaled interest in removing these metrics—citing generally high performance across plans—the legal challenges appear to have accelerated their removal. Experts view this as a long-anticipated move, but one that could disproportionately benefit insurers who faced penalties tied to large contracts and poor call center scores.

Benefits Think Realizing the promise of AI-powered benefits

By Steve Dempsey – Surging benefit costs are straining company budgets. Next year, employers are projected to pay nearly 9% more per employee for health benefits — for the exact same coverage. This increase comes just as workers are beginning to seek and expect quality benefits and personalization, due in part to the rapid and sweeping changes brought on by the pandemic. Today, 65% of workers worldwide are interested in better benefits and personalization, and nearly 40% are actively looking for a job with better benefits. Read Full Article...  ^{_{(Subscription required)}}

HVBA Article Summary

1. AI Enhances Personalization and Efficiency in Employee Benefits: With over 150 million Americans receiving health insurance through their employers, traditional one-size-fits-all benefits models are no longer sufficient. Artificial intelligence (AI) allows HR and benefits teams to automate routine tasks—like managing enrollments and responding to common queries—while also analyzing employee data to deliver more personalized and relevant benefits. This dual function increases operational efficiency and creates a more human-centered benefits experience.

2. Cost-Cutting Alone May Risk Long-Term Talent Retention: Currently, 73% of companies are looking to manage rising costs by switching to more cost-efficient vendors across health, retirement, and risk benefits. While this may yield short-term savings, it risks undermining benefit quality and weakening talent attraction and retention. AI offers a strategic alternative, helping organizations reduce administrative costs and save time—without sacrificing the quality and customization that employees value.

3. Data-Driven AI Tools Support Holistic and Inclusive Benefit Strategies: AI empowers HR teams and benefit brokers to design inclusive, comprehensive benefits tailored to a multigenerational workforce spanning five distinct generations. By leveraging AI-powered insights, companies can adjust communication styles, analyze employee demographics and behavior, and shape benefits that reflect modern realities like increasing costs of living. These tools help create compensation packages that go beyond health care—incorporating flexible schedules, remote work, development opportunities, and recognition programs—to better support employee well-being and engagement.

Why first-generation mental health apps cannot ignore next-gen AI chatbots

By O. Rose Broderick – Digital mental health companies raised record-breaking capital during the coronavirus pandemic, offering therapy and medication to people desperate for help during lockdown. Now, some of the largest providers in that space, including  Talkspace and Lyra Health, face a new challenge: integrating generative AI chatbots into their clinical portfolios. Read Full Article... ^{_{(Subscription required)}}

HVBA Article Summary

1. Rising Popularity and Utility of Therapy Chatbots: The integration of AI chatbots into mental health care is accelerating as demand for psychological support outpaces the availability of licensed therapists. Platforms like ChatGPT are being used by millions of people for emotional assistance, largely because they are accessible, fast, anonymous, and available 24/7. Digital health companies are responding by developing their own chatbots to provide sub-clinical support, such as stress management and emotional check-ins, while intentionally steering clear of diagnosing or treating mental illness.

2. Industry Hesitation and Safety Concerns: Despite the promise of chatbots to expand mental health access, industry leaders are approaching their deployment with caution. Many emphasize that AI should support — not replace — human therapists, especially in areas requiring clinical judgment. Concerns over safety risks, including AI-induced delusions or suicidal behaviors, have prompted companies to implement human oversight, limit the scope of chatbot functions, and develop internal benchmarks to monitor high-risk interactions and ensure user safety.

3. Regulatory and Ethical Challenges: The absence of clear federal regulations around generative AI in mental health has resulted in a fragmented oversight landscape, with some companies halting chatbot development and others struggling to comply with varying state laws. This regulatory vacuum has led to a patchwork of safety standards being created independently by companies and researchers. Experts warn that, without consistent guidance, the rapid deployment of therapy bots could pose serious risks, especially in situations involving vulnerable users or mental health crises.

The self-funding roadmap for employers battling rising health costs

By Charlene Zielinksi - Health care costs are outpacing both inflation and wage growth, and employers are feeling the pinch. Unfortunately, relief isn’t on the horizon. Benefit expenses climbed 4.5% in 2024 and are projected to rise another 5.8% in 2025, while specialty drug costs are projected to increase up to 24% annually over the next three years. Read Full Article… ^{_{(Subscription required)}}

HVBA Article Summary

1. Growing Employer Adoption of Self-Funding: A significant number of employers, especially larger ones (500+ employees), are transitioning to self-funded health plans due to rising healthcare costs and a desire for greater control. Over 80% of large employers now self-fund, and mid-sized employer adoption has more than doubled in the last decade. This shift enables organizations to tailor benefits and respond more strategically to healthcare trends. It also reflects a broader movement toward greater transparency and customization in employer-sponsored healthcare.

2. Success Requires Strategic Planning and Risk Management: Employers must assess their readiness by analyzing claims data, financial risk tolerance, and organizational needs. Critical steps include designing a customized plan, selecting appropriate stop-loss insurance to manage high-cost claims, and modeling various financial scenarios to prepare for potential volatility. Partnerships with reliable third-party administrators and advisors are also essential for operational success. Ultimately, self-funding demands a proactive, disciplined approach that aligns financial oversight with workforce health priorities.

3. Data and Employee Engagement Drive Value: Access to real-time claims data allows employers to identify cost drivers and implement targeted interventions, such as promoting telehealth or managing chronic conditions more effectively. Additionally, educating employees about how to navigate their benefits can lead to smarter usage, improved health outcomes, and more predictable spending—maximizing the effectiveness of the self-funded model. When data insights and employee engagement are combined, employers can shift from reactive cost control to strategic benefit leadership.

2026 healthcare trends: The growing role of addiction and recovery support

By Paola Peralta – As employers brace for rising healthcare prices next year, many are finding that better investments in behavioral health could be one of the most effective ways to curb costs. According to a recent survey from the Business Group on Health, employers should anticipate a 9% increase in healthcare costs for 2026. To manage those rising expenses without sacrificing much-needed support, benefit leaders should be sharpening their strategies to focus on the populations with the greatest health and wellness needs. Read Full Article... ^{_{(Subscription required)}}

HVBA Article Summary

1. Current Behavioral Health Services Fall Short for High-Need Populations: A significant portion of rising employer healthcare benefit costs is being driven by increased utilization of behavioral health services, particularly for individuals with mild to moderate conditions. However, these services often fail to address the needs of the most acute and costly segments of the population — such as those struggling with severe substance use disorders. According to Cooper Zelnick, CEO of Groups Recover Together, the current approach leaves a critical gap in care that, if unaddressed, can result in repeated emergency visits and long-term complications, further inflating healthcare expenditures.

2. Employer Investment in Addiction Treatment Remains Low Despite High Costs of Inaction: Untreated behavioral health issues, including mental health and substance use disorders, can significantly impact workplace productivity and healthcare spending. The Center for Prevention and Health Services reports that these untreated conditions can lead to $60,000 annually in absenteeism for a single organization and cost the U.S. economy approximately $105 billion per year. Despite these staggering figures, addiction services often receive less investment than other wellness programs, largely due to the high costs of inpatient care, time off required for treatment, and elevated relapse rates — all of which make employers hesitant to allocate budget toward these services, especially in an unstable economic environment.

3. Strategic Benefit Redesign and Provider Accountability Are Crucial: To effectively manage rising healthcare costs and better serve employees, benefit leaders are urged to rethink their strategies. This may involve shifting funds away from low-utilization, high-cost benefits to invest in more diverse behavioral health options that address a broader range of needs, including preventive and acute care. Cooper Zelnick emphasizes the importance of working closely with providers to tailor services, incorporate value-based care, and ensure quality outcomes. Implementing a plan design that holds insurers and network providers accountable, while also educating employees and reducing stigma, can help maximize the impact of these investments and contribute to long-term organizational stability.

Optum Rx: Why payers should be watching these 3 pipeline drugs

By Paige Minemyer – Three drugs treating chronic conditions are set for Food and Drug Administration review by the end of the year, and a new report from Optum Rx digs into why payers should be watching these decisions. According to the report, the FDA is set to review an oral formulation of Novo Nordisk's GLP-1 Wegovy as well as depemokimab, a drug that treats eosinophilic asthma, and remibrutinib, a therapy for chronic spontaneous urticaria under the brand name Rhapsido. Read Full Article...

HVBA Article Summary

1. Oral GLP-1 Treatments Could Shift Utilization Trends: Oral Wegovy may become the first pill approved for weight loss in the GLP-1 class, with similar safety and efficacy to the injectable version. Rybelsus, another oral GLP-1, is only approved for type 2 diabetes. Annual costs for these drugs hover around $16,000, so pricing for oral Wegovy is expected to be comparable. While a large influx of new users is unlikely, plan sponsors should prepare for existing patients possibly shifting from injectables to orals.

2. New Drugs Offer Alternative Dosing Benefits in Competitive Markets: Depemokimab, for eosinophilic asthma, could stand out by requiring injections only twice a year, compared to every 4–6 weeks for Dupixent and Nucala. While Dupixent can be self-administered at home, depemokimab's clinic-based dosing could reduce injection burden for some. Rhapsido (remibrutinib), approved in late September, offers an oral treatment for chronic spontaneous urticaria, affecting 1.7 million U.S. patients. Some patients may prefer the convenience of daily pills, while others might opt for less frequent injectable alternatives.

3. Cost and Coverage Implications Remain Central for Plan Sponsors: GLP-1 drugs remain costly, with injectable Wegovy priced at approximately $16,000 annually, similar to Ozempic and Rybelsus. To manage costs, Novo Nordisk and Eli Lilly have initiated direct-to-employer programs and negotiated price reductions with the Trump administration. These drugs target weight-related and inflammatory conditions—major cost drivers for payers. Employers and insurers must carefully weigh affordability, access, and evolving treatment preferences as new formulations enter the market.

Blue Shield of California, Magellan Health sued over alleged ‘ghost networks’

By Michael Popke – Another so-called “ghost network” class-action lawsuit was filed last week, this one in U.S. District Court in the Northern District of California against Blue Shield of California and Magellan Health. “Ghost networks” typically refer to directories of doctors and therapists who supposedly accept health insurance but in reality are out of network, don’t accept new patients or simply do not exist. Read Full Article... ^{_{(Subscription required)}}

HVBA Article Summary

1. Allegations of Deceptive Insurance Provider Listings: The lawsuit filed against Blue Shield and Magellan claims that many providers listed as in-network in their directories were unreachable, non-existent, or unavailable for extended periods. Plaintiffs described spending countless hours calling dozens of doctors, only to find that “an astounding number” of them did not accept the insurance or were not taking new patients. This allegedly forced some to either pay thousands of dollars for out-of-network care or abandon their search for treatment altogether.

2. Claims of Violating Consumer Protection Laws: The complaint asserts that these widespread inaccuracies may violate the No Surprises Act, which protects patients from unexpected bills due to inaccurate insurance information, along with other federal and state laws. Attorneys argue that knowingly publishing incorrect provider directories constitutes more than an inconvenience—it represents a systemic denial of care to individuals seeking necessary medical treatment.

3. Part of a Broader Trend of Ghost Network Litigation: This is the fifth ghost network lawsuit filed by the law firms Pollock Cohen LLP and Walden Macht Haran & Williams LLP since 2024. It follows similar high-profile cases, including one in October against Elevance Health on behalf of federal Anthem plan members in New York, and a recent $5.7 million settlement with Cigna over allegedly misleading directories in Illinois. These cases reflect growing legal and public scrutiny of inaccurate insurance network listings across the U.S.