2025 Healthcare Trends: Navigating Changes and Their Impact on Providers

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Daniel Marino:

Welcome to value-based care insights. I am your host, Daniel Marino. Well, happy New Year everyone as we are now into 2025, and preparing for this New year. It's gonna be interesting when you look at the potential changes that we're going to be faced within 2025. Obviously, with the new administration coming in there's going to be a lot of activity with CMS. I think we're continuing to see a lot of growth in artificial intelligence. And it's really going to impact hospitals, physician groups, and in particular, their operations. In one respect, I'm really excited about the potential and the changes that we see or are going to see. But in in next respect, you know, it's sort of the fear of the unknown right. What is the what is the next few months going to look like? Well, every year at this time we always spend a little bit of time talking about the potential trends that we anticipate seeing as a consulting firm moving into the next year. And we're very fortunate because we work with organizations all over the country and leading up to these conversations, I often reach out and have discussions with healthcare leaders all across the country to kind of get their thoughts on one, what’s keeping them up at night? What do they focus on in the New Year? And then what are the big trends or initiatives that we see emerging as we move into the next year. So to help me discuss this today, I'm really excited to have my close colleague partner in crime at Lumina, Lucy Zielinski. Lucy, welcome.

 

Lucy Zielinski:

Thank you, Dan. Happy to be here and happy 2025.

 

Daniel Marino:

Yes, thank you. Thank you. So let's talk a little bit about this. And you know, obviously, an area that you're very close to is medical group performance physician performance. You know, in your consulting practice you do quite a bit of work on helping medical groups improve, and in particular, around coding HCCs and so forth. So as we, we think about what we're going to be faced with in 2025, what are the couple of things that you believe that are really going to impact some of these either medical groups or the provider community as we start to think about some of these new, these new challenges.

 

Lucy Zielinski:

Yeah, Dan, so it's interesting. But we have definitely seen a focus on the expansion of ambulatory services and providing patients access in in communities and with value-based care, we continue to see these delivery models continue to evolve. It's interesting. The recent statistic is about 60% of health care payments are tied to value and quality. According to the American Hospital Association. And value based care has seen some great results, right? Decrease in hospital admissions, increased rates of preventative care, lower medical costs. As a matter of fact, even Medicare, advantage reported savings compared to traditional medicare.

 

Daniel Marino:

Yeah, and even the Aco. So you know, the 2023 performance ACO showed a significant improvement in in the amount of savings it continues to make to make some great strides in in that regard. So when you think about, then, how medical groups need to position themselves you're really talking about changing the care model right? Or continuing to evolve the care model. What would be a couple of things that you feel like medical groups should focus on?

 

Lucy Zielinski:

Yeah, I think one key area is definitely around care management. And that's evidenced by the 2025 Medicare fee schedule updates. If you take a look at those updates, we're seeing expansion of billing, reimbursement and coding around such things like care management services as well as caregiver training, which is really interesting.

 

Daniel Marino:

It's really interesting. And I'll tell you. I've said for the longest time that care management is the engine behind value-based care. If you're going to do a good job, you have to be able to have a good care management program. And I share your excitement. I'm really looking forward to these new codes in 2025, in support of the caregivers, in support of transitions of care. Things that haven't been appropriately coded, and physician groups haven't necessarily been reimbursed, for that's going to change in 2025.

 

Lucy Zielinski:

Yeah. And I mean, there, you're right. It's the advanced primary care management services around transitions. In addition to a focus on behavioral health and mental health. We even saw just recently published innovation project around behavioral health model, a new model. So definitely a focus on some of these areas that traditional medical groups have not focused on.

 

Daniel Marino:

Let's talk for a few minutes about Medicare Advantage. I believe that as we head into 2025 Medicare Advantage is going to continue to be a focus in the next few weeks we are going to see the new Enrollment numbers. Last year there was about 54% of Medicare beneficiaries were enrolled in Medicare Advantage. I would not be surprised at all, Lucy, if this approach is 60%. But it's interesting, because you're seeing again some of these smaller hospitals, some of the rural hospitals, they terminated their contract Medicare Advantage, yet the Government is, is still pushing it. When you, when we think about Medicare Advantage, What are the things that you believe are gonna continue to be a focus on?

 

Lucy Zielinski:

Yeah, I think you're right. Growth is definitely going to be there. But many providers are scratching their heads and wondering should they continue in these plans just because they're very burdened from an administrative standpoint. So I think the focus is really going to be about managing some of these claim denials. Which is really interesting, because in the last couple of years Medicare Advantage the denials have been quite higher than traditional Medicare, and many of them have focused around the prior off denials which really would have been avoided in traditional Medicare.

 

Daniel Marino:

Yeah, well, and so in 2025, there's been a lot of discussion around some legislative changes for Medicare advantage to handle these pro pre authorizations. And I'll tell you certainly over the last month, month and a half, the spotlight has been on these insurance companies and the carriers, and in particular, around Medicare advantage. I really believe that if we are going to succeed in shifting Medicare beneficiaries to Medicare Advantage if we're going to hit the goal that Medicare wants by 2030 of having Medicare beneficiaries, and either an ACO or Medicare Advantage, or some type of value-based performance structure. How we handle denials, how we handle pre certifications, how we handle just taking care of patients on a timely basis. All of that has to change. Without those changes. You're going to continue to see a lot of these providers just not accepting Medicare advantage.

 

Lucy Zielinski:

Yep, I think you're right.

 

Daniel Marino:

So let's talk a little bit about some of the financial pressures. In 2024, I think the hospital margins in general improved from prior years, but not really much right? You're talking, maybe a percent and a half. I think the last statistics that I've seen the average hospital margin was somewhere around, maybe 2 and a half to 4%, and for smaller independent hospitals they were lucky if they were able to operate at a break even. Most of them made money or covered their operations from a lot of their performance and their capital, their capital investments. But as we move into 2025, what do you see are some of the big drivers that organization providers should focus on to maybe either respond to some of these financial pressures, or to react to changes within their organization, to put themselves in a better financial position. Any thoughts?

 

Lucy Zielinski:

Yeah, I think definitely the pharmaceutical costs those are rising. And, as you know, Dan, the baby movers are aging we're seeing seniors. There was a recent statistic in 2023 majority of seniors are 75, and older, and then we see younger sicker population. Obesity rates are high, which is a trigger, right? A risk factor cancer strokes, heart failure and so forth. So definitely, there's this focus on a pharmaceutical costs.

 

Daniel Marino:

Yeah, I agree. You know, pharmaceutical costs. It's, I've spent a lot of time looking at different cost structures, particularly around Medicare advantage. And even some of the commercial contracts, as you know, we do a lot of managed care contracting on behalf of the provider groups with the plans, and oftentimes we'll dive into the total cost of care, and when you really separate that and you put them into 2 buckets, you look at the medical service costs. And you look at the pharmaceutical costs. The medical service costs the rise has actually slowed. Right? So we're seeing that rise in the medical service costs, probably being somewhere around 4 to 5%, a little higher than what the CPI or the inflation rate is, but not too far off. But when you look at the pharmaceutical costs, you know, it's somewhere around 8 to 10%. And some of these drugs have even gone up a couple 100%. I really feel like if we're going to get our arms around managing total cost of care, we have to figure out we have to come up with some solutions on how to better manage the pharmaceutical costs. And it's interesting. I don't know if it's with the drug companies, or if it's with the PBMs. You know. There's a lot of pressure on the PBMs right now, right? And is kind of the middleman. As we've heard soon to be, our elected President Donald Trump make mention. So, you know again, it's going to be interesting to see where that where that goes, any thoughts?

 

Lucy Zielinski:

Yeah, I agree. And even the form formularies, right? Certain medications are covered. Certain are, certain medications are not. So, I sense that there's definitely going to be a pressure on these PBMs to manage these costs better.

 

Daniel Marino:

If you're just tuning in, I'm Daniel Marino, and you're listening to value-based care insights. I'm here today with my colleague, Lucy Zielinski, and we are talking about the potential trends in 2025, and how it potentially will impact hospitals and medical groups. Lucy, you know some of the pharmaceutical costs as we begin to think about it, and how it's integrated with the PBMs. You know, we're seeing different types of contracting opportunities there. And as you mentioned the older population, you know, that's where a lot of the cost structures are in place. Any thoughts come to mind as to maybe what medical groups or physician groups can do as they think about you know, getting their arms around this? I mean, should they try to carve it out, should they? And you know, maybe try to manage it differently with the commercials. Any thoughts?

 

Lucy Zielinski:

So, Dan, I think some of the things that medical groups can do is to carve out those costs or out of their contracts out of their contracts with the commercial payers. Also, another option could be to do a direct contract with these PBM pharmacies.

 

Daniel Marino:

Yeah, I agree with you. I think you know the rise in these costs make it very vulnerable for the medical groups, and you know what I've often said to them is, look, you should only contract around those things that you can be responsible for. So if you can't be, if you can't have direct responsibility for influencing the cost of the pharmaceuticals, then you should really carve those out in some of your contracting. So we are seeing that, or, as you mentioned, and I think it's a great point contract differently. Right? So go through a PBM that's willing to work with you to begin to manage some of those costs. One of the areas that I'm watching closely is what Doctor Mehmet Oz is going to do as he starts to lead CMS. He's been fairly vocal about his stance with Medicare Advantage. He's a proponent of Medicare Advantage. He does understand that things need to change. I think, potentially, he's going to be the one who might push through this new legislation. And you know it was interesting. I was interviewed by another host not too long ago, and one of the questions that was asked of me is, who do you think is going to be a bigger influencer? Is it going to be Robert Kennedy, or is it going to be Mehmet Oz? And I really feel like for providers and for the physicians? I think it's going to be Dr. Oz. To tell you the truth, it's going to be really interesting, and to a certain extent, I think fun to watch what he does, because he's a very successful surgeon. He's been involved in value-based care for many, many years, and he gets it. So I'm looking forward to seeing where what he's going to be able to do and where this is going to go.

 

Lucy Zielinski:

Yeah. And Dan, I'll just say the obvious. He's a physician, right? He's a clinician. So he understands how the healthcare system has worked or hasn't worked, and I think he has some great insight on how to definitely improve things.

 

Daniel Marino:

Yeah, yeah, I agree. So I'm looking forward to that as a trend and just to begin to see. I know, you know, within Lumina we constantly watch where the market's going, and try to get out in front of it, so we'll I'll be publishing some blogs and some my thoughts going into 2025 as we start to interpret what direction we believe he's going to take, and that impact on medical groups and providers. The last topic that I want to spend a little bit of time on is the impact of artificial intelligence. Within our technology platforms and within the provider groups. You know, it's when you look at artificial intelligence, I sort of put it into 2 buckets, right? So I see AI impacting clinical outcomes and clinical performance. And then AI impacting administrative technology and operations. I believe and this is my opinion, I don't know if folks share the same. I think we're going to see a lot more quick, let's say, quicker advancement in the administrative side of AI supporting maybe revenue cycle management. Some of these digital health tools, care management performance and so forth. I think we're going to see quicker, quicker impact and rollouts related to that than we are in the clinical piece of it right? I think there's a lot of research being done as to how we can use AI to maybe do some advanced diagnosis coding. But I think there's a lot of detail that we need to work out there. What are your thoughts? I know you're probably a little closer to the administrative side than the clinical side, but any thoughts come to mind?

 

Lucy Zielinski:

Yes, I think on the administrative side, right? When we look at processes, AI could really support some of that. So when we're thinking about that entire revenue cycle from really the time that the patient schedules the appointment check, you know the office checking eligibility and then managing some of the denials and identifying some of the risk factors. Right? Those HCCs are so important now to manage patients. And I think that's where we're going to see more AI support in the EMRs. We're seeing it right now already.

 

Daniel Marino:

Well, I'll tell you the HCC capture that to me, seems like a no brainer, very natural for artificial intelligence. If you can create an algorithm that's able to look at past medical histories of visits. Consulting, you know consult notes if you will, lab pathology notes and you're able to proactively identify HCCs that providers could incorporate on their visits. I mean to me, that's going to create so much more efficiency and just support the visit. The value, I think is just unbelievable.

 

Lucy Zielinski:

Yeah, and Dan, it's not only the visit, right? So it definitely can be integrated with all sorts of population health management protocols, right? Or even around care management with the patients. So there are some digital tools out there that provide, based on those that risk assessment or those HCCs or the condition of the patient. There's on demand education, you can hold patients accountable to certain things. I mean, there's an app for that right? We hear that all the time, and I think we're going to see that more and more. Even insurers! We see insurers providing incentives to consumers for wellness, prevention behavioral health. There's credits, and we're starting to see the younger population, I think. Take advantage of a lot of that.

 

Daniel Marino:

Yeah, I think it's really going to evolve healthcare quite a bit and make our care and the delivery of that care much more efficient. What about for rejections and denials? Thoughts on how AI could potentially impact it? And do you see it happening within this year? Or are we still a year or so out?

 

Lucy Zielinski:

Yeah, that's a that's definitely a good question. You know, being in the revenue cycle denials, especially some of the complicated ones, take a lot of research and appeal and time research. And I think that's where AI can definitely support some of these denials is come quicker to a solution and update the claim, correct the claim, and then resubmit so it is accurate and then reimbursed.

 

Daniel Marino:

Yeah, I agree with you. I think it does have an impact. And you know the interesting part about AI related to rejection and denial management is, there's a direct return on investment that can be tracked. So if you go into this and you have an idea that, or you know that your denial rate is, let's say, even 5 or 7%. If you're able to incorporate new technology, you should be able to see a quick return in your revenue by the decrease of those denials. And you know, I agree, if we can do more with less and create these algorithms that allow us to either properly code the 1st time around or manage these denials once they do become denied, then I think it'll make it easier for all of us.

 

Lucy Zielinski:

Yeah, Dan, I would love to see that FTE count in that billing office, and with revenue cycle decrease, and the FTE count, with the care management, taking care of patients and managing patients, care helping them navigate the system, especially those with chronic conditions, increase. So kind of a shift of resources over to the clinical side, from the administrative side.

 

Daniel Marino:

Yeah, yeah, I agree. Well, Lucy, one thing I do want to make mention. And I think on behalf of our audience, it might be interesting just to spend a couple of minutes. The last couple of conversations that I've had with some of the leaders. One of them actually turned the table on me and said, What's Lumina doing to position itself to for some of these trends in 2025? And I thought it was a great question most time. I'm the one asking the questions. Right? So it was It was a great question really got me thinking that, well, maybe I should spend a couple of minutes talking about how we are evolving Lumina health partners, into 2025 to continue to support hospitals, medical groups, and you know, and the provider community. So we're going to be focusing on 3 things right? And I think you know, those 3 things are one enterprise strategy and included in that is value-based strategy. So how can organizations position themselves for continued success in 2025 and beyond, with some of their value, based contracts and their structures. The second area is medical group performance. And I know this is an area that's you know, you're very close to everything from revenue cycle to capturing HCCs and coding. We're doing a lot of education around HCC's code capture as well as clinical documentation improvement. That's a big area. And then, of course, payer contracting, we do a lot of payer contracting support. And then the 3rd area which we're really excited about is the expansion of supporting single specialty service lines as we move into value-based care and particularly position organizations for risk we have to do a better job of integrating specialists around the cost models, but it also has a fee for service component to it as well, so one of the areas that we are focused on is operational improvement of the operating rooms, integrating anesthesia, because not only does it help with value based performance, there is a direct ROI associated with it, so I would suggest to any of our of our listeners. If you're interested in finding a little bit more everything from just blogs and articles, or just information you could share with your teams, or if you just want to have a conversation, please feel free to reach out to either me or Lucy. My email, as you know, is dmarino@luminahp.com, or please visit luminahp.com/insights for more information. Lucy. Any final comments or thoughts?

 

Lucy Zielinski:

I think we're going to see Dan like we talked about today definitely, a shift in the healthcare industry. It's going to be a big year, I think, in 2025, with a more focus on quality and just really taking better care of our patients. And I'm really excited to see that come to fruition.

 

Daniel Marino:

Yeah, I share your excitement. I'm looking forward to seeing how we can put some of these things in place. Respond to some of the changes in healthcare and really see some of our providers and our provider community get back to really, you know, enjoying the care and providing good care to our patients. I'm looking forward to that as well.

Well, I want to thank all of our listeners for tuning in a very, very happy and prosperous 2025 as you enter into this new Year until the next insight. I am Daniel Marino, bringing you 30 min of value to your day. Take care.

About Value-Based Care Insights Podcast

Value-Based Care Insights is a podcast that explores how to optimize the performance of programs to meet the demands of an increasingly value-based care payment environment. Hosted by Daniel J. Marino, the VBCI podcast highlights recognized experts in the field and within Lumina Health Partners