🏥 The Coming ACA Tsunami

Oscar's Q2 revision, Fortuna's Raise, Medicare Advantage's highly concentrated markets, new 340B legislation introduced, and more healthcare news from the week

PARTNERED WITH Happy Wednesday, Hospitalogists!   I've got a plethora of interesting resources for you in the ACA, MA, and risk space today along with the usual roundup. My Tenet Q2 analysis drops later this week (spoiler: they crushed). Enjoy!  Was this email forwarded to you? Subscribe Here SPONSORED BY TURQUOISE HEALTH Get straight talk about AI in managed care contracts straight from the co-founders of Turquoise Health! Chris Severn, CEO, and Adam Geitgey, CTO, of Turquoise Health, will be hosting a webinar, Lessons from Building an AI-Driven Contracting Platform, on August 27 at 9 AM PST. Two years ago, Chris and Adam were talking about the possibilities of how AI could improve managed care contracting. Fast forward to today and the AI-driven contracting platform they've built is being used by some of the nation's largest health systems.  What worked along the way? What didn't? What's next? In this webinar, Chris and Adam will share lessons learned and what they now know about using AI to fix the messiest part of healthcare administration. Don't miss it! Register Now BIG HEALTHCARE STORIES The most important news from the week A Tsunami is Brewing in Deep Waters under Oscar's Pirate Ship: Q2 Revision Shows Exposure to Current ACA Headwinds Less than a year after hitting profitability and promising future profitable growth, and on the heels of material ACA weakness - along with potential enrollment fraud in the form of duplicative membership (as noted by Centene and independent analysts), Oscar revised its Q2 and full year 2025 guidance. The rising insurtech isn't immune to pressures facing the traditional health insurance model and is facing tumultuous winds in 2025 with its pirate ship on the open sea.   Oscar now expects a ~$230M operating loss for Q2 and 2025 loss of ($200M) - $300M). Why the face-plant? Higher individual-market risk scores, an 86 - 87% MLR, and the same red-hot utilization that's singeing bigger carriers. Price hikes are coming for 2026 (the largest in 5 years!), but the reset shows just how fragile ACA-only models remain when risk adjustment or premium subsidies wobble. The analysis of the 2Q Risk Adjustment Reports, covering nearly 100% of Oscar's geographic footprint, shows that overall ACA Marketplace risk scores, a measure of the average morbidity of the market, have increased by more than the Company's prior estimates. Based on the reports, the Company now expects a medical loss ratio of 86.0% to 87.0% for full year 2025. Utilization by Oscar's members remained elevated in the second quarter of 2025; however, cost trends moderated as compared to the first quarter of 2025…The Company expects to resubmit rate filings for 2026 in states covering approximately 98% of current membership to reflect the higher market risk scores in the ACA Marketplace. Medicare Advantage Markets are Highly Concentration…with Lots of Choice? What competition? KFF published an Arnolds Venture funded report finding that 90% of beneficiaries live in counties where one or two insurers dominate, with UHC and Humana leading in two-thirds of markets.  But what I struggle to understand - and maybe I'm missing something - is that KFF also notes the average beneficiary has more than 50 MA plans available where they live. Take Pennsylvania, Ohio, Florida, and Georgia between the two graphics, for instance. The average beneficiary has access to 50+ plans in each of these states - statewide, yet those markets are still considered highly concentrated. So I guess that means beneficiaries are all picking the same plans, or insurers are offering multiple types of plans? It's an odd phenomenon - the presence of consumer choice in a highly concentrated market. Unless I'm missing something obvious. Some related links to all of the health insurer drama happening in 2025: KFF also published an overview of the Part D program in 2025 here. Trilliant released a retrospective analysis on Medicare Advantage utilization from 2022 to 2023, noting that overall volumes were flat, but utilization by care setting found increases in hospital IP/OP volumes and ASCs. Health insurers are denying more drug claims, per the NY Times - Komodo Health data show private insurers' prescription-drug denial rates grew from 18.3% in 2016 to 22.9% in 2023. As the WSJ noted last week related to ACA premiums, KFF is following up that report with its own analysis stating that individual market insurers are requesting the largest premium increases in more than 5 years, obviously because of the expiring subsidies and shifting risk pools. Humana refiles its MA star ratings lawsuit with a narrower complaint attacking CMS' math after a judge tossed out the original suit. ****Humana also announced plans to eliminate one-third of outpatient prior auths and launch a physician gold-card program in 2026. Rising medical spend, tougher regs and AI adoption are forcing payers to rethink claim-scrubbing strategies, per Optum's market president. Translation: expect ever-tighter denial management in 2026 contracting. Twenty states filed suit against HHS and CMS over a final rule tightening ACA eligibility checks and shortening enrollment windows. Republican and Democratic negotiators are reviving a stalled health-care package, with Democrats insisting on extending ACA premium subsidies, according to Politico. Finally, and most interestingly, Health-system ownership of Medicare Advantage plans has risen every year since 2016 per Health Affairs. It'll be interesting to see how this trends in 2025 and beyond especially when looking at recent results from organizations like Sentara, which saw a massive drop in margin based on provider sponsored plan woes. Fortuna Health Raises $18M Series A to Modernize Medicaid With Medicaid eligibility increasing in complexity (ESPECIALLY in very recent memory - didn't something big just get passed here?), Fortuna Health is finding itself at the right time and the right place to help modernize Medicaid and make it incredibly easy to enroll in Medicaid. a16z's overview on why they invested in Fortuna was a great look at how the company plans to fix this big hairy problem from the ground up. (I'm also in the middle of working with Fortuna leadership on a deeper piece so be on the lookout for that in the near future!) Congrats to the Fortuna Team and definitely one to keep in eye on. Oh yeah, and they're hiring. The Weekly Executive Summary Notable moves, policies, and strategies from around healthcare.  Lawmakers introduce bill to end drugmaker limits on 340B discounts.   Community Health Systems agreed to sell its ambulatory outreach lab assets in 13 states to Labcorp for $195 million in cash, with closing expected in Q4 2025. Williamson Health released a note saying its long-term financial viability is in question, and it is undergoing strategic review to figure out next steps for the health system.   After Athelas announced the launch of its EHR will fully integrated ambient documentation, Lattimore Physical Therapy rolled out Athelas Air's unified EHR and revenue tools across 35 New York sites.   Innovaccer launched an AI-powered Readmissions Management Solution that uses predictive analytics and integrated workflows to curb avoidable readmissions.   Regard debuted a platform that merges EHR chart data with real-time patient-physician conversations to recommend diagnoses.   States are introducing laws to scrutinize or block private-equity hospital acquisitions after recent PE-backed system failures, Quartz reported.   Steward Health Care sued former CEO Ralph de la Torre for allegedly misappropriating nearly $1.4 billion before the system's bankruptcy, according to Healthcare Dive. Healthcare Dive   Centerstone and Brightli agreed to merge in November, creating a nonprofit behavioral-health provider with about $1 billion in annual revenue, Behavioral Health Business reported.   Athenahealth expanded athenaOne with new marketplace partners and data-exchange tools to aid independent practices with value-based care.   Carlsmed filed for a Nasdaq IPO seeking more than $100 million to scale its AI-based, patient-specific spine implants, Fierce Biotech reported. Fierce Biotech   Oregon is considering revisions to the state's corporate practice of medicine laws. TOP READS & RESOURCES My favorite reads & resources from the week This was a great overview from PwC on the numbers behind medical cost trends. Read it here.  The Steward Adversary Complaint: A Case Study in Corporate Looting Disguised as Healthcare Leadership How the One Big Beautiful Bill affects employee benefits Early onset GI cancers: A review MISCELLANEOUS MADDENINGS Random personal anecdotes and musings from me What a boring yet just utterly dominant win for Scottie once again. You just have to respect the absolute greatness we're witnessing but at the same time it's absolutely nothing like the crowds, atmosphere, dominance, and emotion from the Tiger era. Either way he's well on his way to completing the grand slam if he can get it done someday at the U.S. Open!   I played Waterchase Golf Club in Arlington over the weekend and had a fantastic round, shooting 78 with a double on the first hole.  Thanks for the read! Let me know what you thought by replying back to this email.   — Blake   Get your brand in front of 46,000+ executives and healthcare decision-makers. 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