Healthcare Politics: Ending 2024 and Starting 2025 | Physicians Hit with a 2.9% Pay Cut: What Positive Impact Will AI Have on Consumers?
We’re Still Here
Late on Friday night and very early on Saturday, December 21, 2024, the U.S. Congress passed a slimmed-down “spending bill” that kept the U.S. government open and funded some key programs. Since our focus is on healthcare, we’ll only discuss the provisions related to this area. The funding was described as “necessary to bridge the gap,” with a new Congress set to take control in a few days, and shortly after, the Trump administration returning to office.
The new law has winners and losers in healthcare, with both immediate and longer-term implications. The winners include new funding for diabetes programs, telehealth services, and community health centers. The bill also supports low-volume hospitals heavily dependent on Medicare payments and expands Medicare Part D, along with outreach programs for low-income individuals. Additionally, some scheduled cuts were deferred. However, Pharmacy Benefit Managers (PBMs) were spared any new regulations, which likely contributed to the failure of the original 1,500-page bill introduced earlier in the week.
The Biggest Losers: Physicians
What was notably absent from the bill was relief for physicians facing an automatic 2.9% cut in Medicare reimbursements, set to take effect on January 1, 2025. While there is still a chance this may be reversed, predicting a resolution is difficult given the many priorities facing the new administration. However, Medicare has the capacity to adjust payments retroactively, potentially addressing short-term payment issues in the future. It’s likely that these adjustments, along with other policy changes, will be addressed during the first 100 days of the Trump 2.0 administration.
In the meantime, reports are emerging of hospitals increasing prices by 2.9% while simultaneously cutting physician pay by 2.83%. Hospitals are seeking to update their reimbursement rates from insurance companies, which often pay less than Medicare rates. At one hospital, employee costs, including benefits and contracts, have risen by 13.3%.
One hospital CEO commented, “As our cost of doing business has escalated dramatically—from supply costs to employment costs—this has created an environment where costs are far exceeding revenues. When coupled with payer challenges impacting our revenue cycle, it creates an unsustainable situation. It’s critical we find ways to improve financial performance moving forward.”
Can Technology Help Hospitals?
As highlighted in Becker’s Hospital CFO Report, “A weaker balance sheet makes it more difficult for hospitals and systems to reinvest in the facilities and capital equipment needed to provide top-level care. Technology is essential for operating a safe and thriving hospital; however, it is expensive, and without the right IT infrastructure, access to care can be limited.”
Why Do We Care?
Having worked in healthcare delivery and technology for three decades, I’ve never seen the dynamics we’re experiencing today. My concern lies not only for my colleagues in the industry but also for patients who, in a system that is not just broken but literally breaking down, need to ensure they don’t become victims. We believe that today, patients must become their own advocates, starting with controlling and understanding their own medical information. While healthcare providers are working hard and doing their best, the system itself is failing. A $5 trillion industry doesn’t just stop, but warning signs—rising costs and declining quality compared to other developed countries—are undeniable.
AI’s Extended Future: @Miami AI Club
AI has generated a lot of excitement, and I recently attended a private event hosted by the Miami AI Club, where I learned a great deal. Much of the discussion was well beyond my immediate understanding, particularly around General Artificial Intelligence (GAI). I took extensive notes—does anyone still take handwritten notes these days?—as the main topic was not just AI, but the potential for GAI, with discussions about Artificial Super Intelligence (ASI), which is beyond our current comprehension.
AGI, according to OpenAI, could emerge in as little as five years or as long as 50 years. Dario Amodei, CEO of Anthropic, predicts some form of AGI by 2026, envisioning it as “a country of geniuses in a data center.” John Schulman, cofounder of OpenAI, believes AGI could come within two to three years, emphasizing the importance of establishing “reasonable limits” for its safe development. Demis Hassabis, CEO of DeepMind, expects AGI within the next decade. Surveys of AI researchers suggest a median estimate for high-level machine intelligence by 2061, which reflects a more conservative outlook. Of course, these predictions depend on various factors, including technological advancements, breakthroughs in research, and ethical considerations—and perhaps most importantly, government policies and regulations.
For a deep dive into this topic, I recommend watching the video: AGI Is Humanity’s Last Invention: How Close Are We? Full Timeline.
The challenges of implementing AI in healthcare, particularly in patient-facing applications, are well documented. While AI is undoubtedly changing healthcare, its impact on clinical practices has been slower than anticipated, which we have discussed in previous blogs.
The AI Empowered Consumer
One area where AI can make a real difference is in empowering consumers to take control of their healthcare. Patients need to review their own health information, prepare for visits with physicians, and advocate for themselves in a system that is increasingly overwhelmed. With the rise of denials for referrals, diagnostics, or medications, patients can no longer rely solely on their physicians to defend them. AI can help consumers navigate these challenges, even assisting in disputes with insurance companies using data-driven insights.
The Law
Claims of insurance denials or pre-authorization issues could, in some cases, lead to serious consequences for patients, including death. The so-called “Litigation Bar” that has impacted many industries is likely to take notice of this issue, especially in terms of how AI is used in such cases.
As a CEO of a medical group, I would never endorse or support the use of AI for taking doctor’s notes. I’ve personally heard from doctors who are cautious about what they write down—or leave out—because it could be used against them in a legal case. Many experienced doctors have received letters from legal firms requesting “Release of Information” or notice of intent to file a medical malpractice suit. In Florida, for example, Florida Statute 766.106 requires a 90-day notice for such actions. As someone who has managed doctors for many years, we never faced a court case, but we did receive a few such letters.
In future blogs, we will discuss our expectations for healthcare and the role of AI in healthcare in 2025.
– Noel J. Guillama, Chairman
About HealthScoreAI™
Healthcare is at a tipping point, and HealthScoreAI is positioning to revolutionize the industry by giving consumers control over their health data and unlocking its immense value. U.S. healthcare annual spending has reached $5 trillion with little improvement in outcomes. Despite advances, technology has failed to reduce costs or improve care. Meanwhile, 3,000 exabytes of consumer health data remain trapped in fragmented USA systems, leaving consumers and doctors without a complete picture of care.
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