Weekly Health Tech Reads 4/12/26

👋 Welcome to my Sunday recap of healthcare news. Welcome back after a week off! I spent a lot of time thinking this week about the journey to the 2027 Final Notice rate — including a fun interview with Chris Klomp — and what that implies for the industry ahead. It was interesting to read the downcoding lawsuit that Jefferson brought against Aetna this week against that backdrop. I’ll discuss all of that, along with Minnesotans’ affinity for Life Time memberships, and much more below. Enjoy!

- Kevin

Jefferson Health filed a lawsuit against Aetna earlier this week, frustrated with Aetna’s new-ish payment policy change related to the Two Midnight rule. Aetna is now “downcoding” care it deems to be of lower severity. Jefferson argues that Aetna is changing the terms of its contract and shouldn’t be able to do so. To make the point, Jefferson presents the case below of a patient who was deemed low severity, which seems like a bad look for Aetna.

Yet while the case seems to me that it may have merit, it doesn’t explain why Aetna decided to implement this policy in the first place. Let’s assume for a second that Aetna was acting rationally in implementing this policy. Why put in place a policy like this? I’d be willing to wager it is because Aetna has data showing providers were perhaps taking advantage of the Two Midnight rule to get paid at inpatient rates for care that might otherwise have been paid at a lower rate. The only good reason I can think of for implementing a policy like this and risking provider abrasion is if it is a response to meaningful spending increases.

Stepping back from the specific merits of the case at hand, it strikes me as a good case study of how the tit-for-tat battle between payors and providers increases overall waste in the system. Both sides are capable of making good cases that the other is at fault and they are in the right, which IMO is largely a result of how you frame the specifics of the argument at hand.

As I shared in the Slack thread on Friday, I when I think about a case like this in the context of the broader discussion above about getting medical cost trend in line with GDP, I can’t help but feel like this is a bit like two children arguing over who gets the TV remote to pick what to watch next, not realizing their parent is coming over to take the remote away.

Teladoc finds itself in an interesting strategic situation given its current valuation on the public markets. Last week, it received a letter from an activist shareholder arguing it is undervalued at the moment, largely due to a series of strategic mistakes over the last few years that have eroded investor confidence in the business. The investor is concerned that the current depressed valuation could encourage a takeover offer, and existing shareholders would miss out on the upside embedded in the business. Namely, it suggests a share buyback, cost-cutting, and a strategic review of BetterHelp as key exercises moving forward.

Then this week, Saki Georgiadis penned a great read on Substack, diving into the financial opportunity embedded within BetterHelp. It makes the case that BetterHelp is worth ~$1 billion today based on its insurance business, making a very similar point about Teladoc's valuation. He also suggests that if Teladoc sells BetterHelp for $1 billion, the remaining business should be worth ~$3.6 billion in total, versus the $1.24 billion the entire business is worth today:

At these valuations, it seems like the logical conclusion is that BetterHelp will likely be a standalone business in the near future. As Georgiadis’s article notes, it’ll be worth keeping an eye on Q1 earnings and if the insurance business revenue is tracking to expectations.

71%

Humana released its latest annual report on the state of VBC. Kudos to them for keeping up with this report, even if it is not quite what it once was at peak-global cap. Humana reported that 71% of its individual MA membership is in VBC contracts (per its definition of VBC, which ranges from global cap to quality bonuses with no shared savings). The percentage membership in VBC contracts is up slightly from 68% in the 2022 report and 66% in the 2017 report. I find it fascinating to think about the types of contracts that make up this number over time, and how the global cap, in particular, has likely trended in recent years.

An interesting note on the opportunity in rural VBC: Humana noted that 75% of its urban members are aligned with a VBC PCP, while only 54% of its rural members are aligned with a VBC PCP. And that rural number is apparently up 19% since 2020 per the report.

He Was an Insurance Executive. She’s a Doctor. They’re Divided. by Elisabeth Potter and Troyen Brennan
I thought this was a well-done conversation in the New York Times, bringing together Elisabeth Potter, the Texas-based doctor famous for her issues with insurance companies, and Troyen Brennan, formerly the CMO at CVS. As we discussed in Slack this week, while I think Potter makes a number of reasonable points that tend to win over the average listener, I think Brennan makes a much more coherent, nuanced set of points that grapples more directly with the challenges facing the system. Read more

The Most Responsible Path in Healthcare AI Is Also the Deadliest by Giovanni Colella
Colella highlights the story of shuttered mental health AI startup Kintsugi and the issues it faced in trying to build healthcare AI by the book. Ultimately, Kintsugi spent 7 years and $30 million before winding down and, unfortunately, becoming a really good case study in the challenges of healthcare AI. As folks in DC think about creating a level playing field for insurgents to disrupt the industry, a journey like this poses some good, and challenging, questions to grapple with. Read more

The MEDVi Files by Brendan Keeler
The MEDVi story obviously caught the attention of social media this week. I thought this analysis by Brendan Keeler was the most interesting I read, highlighting how the story seems like a sign of the times for a part of the industry that feels a bit like a gold rush at the moment. It’s fascinating to juxtapose the MEDVi story with the Kintsugi story above when contemplating the behaviors we want to support from a regulatory perspective. It all feels backward to me at the moment, personally, but it's worth keeping in mind that innovators are always out in front of regulatory change.
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Why Are People Injecting Themselves with Peptides? by Dhruv Khullar
On the topic of gold rushes, I thought this read on the peptide craze was excellent. The example of the Charleston doctor making tens of millions of dollars a year running a longevity clinic is great, particularly the discussion of how the doctor evaluates anecdotal data on peptide shots versus studies of COVID-19 vaccines. Read more

The CEO of UnitedHealthcare on Fixing What Frustrates Customers Most by Tim Noel
An HBR article by UHC’s CEO, Tim Noel, discusses how UHC has built a Consumer Resolution Center that combines AI and human expertise to resolve issues for members in distress. The results cited are really impressive — serving 150,000+ members and raising their satisfaction scores from 0 out of 10 to 8.8 out of 10, with a spillover effect in which solving the root causes of those members' issues has improved the experience for 10% of UHC’s overall customer base. Well worth a read. Read more

UnitedHealth Group is making a $3 billion bet on AI. What does it mean for patients? by Casey Ross
This Stat article examines how UHG is working to deploy AI across the organization, highlighting the potential risks that AI could pose to patient safety. I find it interesting to read an article like this on the same week that the HBR article above was published. My personal answer to the question posed in the Stat headline is that UHG's use of AI actually seems like a good thing for patients! UHC’s CRC seems like a very tangible example of that. Read more

Positioning for Leadership in Medicare Advantage Brokerage by Patrick Keavy, Rebecca Springer, and Collin Anderson
A Bailey & Co. report on the MA brokerage market highlights the potential for consolidation ahead. It’s fascinating to think about the role brokerages will play going forward in an MA market that is seeing margin compression. While that could lead to compression in commissions, it could also create more opportunities for brokers who drive improved engagement and retention for plans. Read more

Blues Plans Are Consolidating From Within. Your Pipeline May Not Reflect It Yet. by Ryan Peterson
An interesting look at the current state of Blues plan consolidation. It makes the point that the Second Blue Bid process is going to speed up consolidation in this market, which is an angle I hadn’t thought through previously, but makes a ton of sense to me. Read more

The great unbundling by Neel Shah
A good perspective on how maternity care will be paid for differently starting January 1st, 2027, as changes to CPT Codes will unbundle maternity care into a series of separate charges. Unsurprisingly, lots of potential downstream implications to think through.
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