On the Margins — 2026-03-12
On the Margins
Your daily health economics & actuarial brief
Thursday, March 12, 2026
What's happening today
| ■ | Gov. Walz proposed shifting Minnesota Medicaid to an ASO model to phase out eight managed care organizations. |
| ■ | A study found insurer-PBM acquisitions can raise Medicare premiums when integrated plans disadvantage rival insurers. |
| ■ | Aetna agreed to pay $117.7M to settle DOJ claims over Medicare Advantage risk score coding and diagnosis submissions. |
| ■ | Yale launched a hospital concentration tracker to quantify market power changes from mergers and acquisitions. |
| ■ | A judge ordered broad UnitedHealth discovery in the nH Predict Medicare Advantage denial lawsuit. |
Key Stories
Walz floats Minnesota Medicaid ASO plan to phase out eight MCOs
On March 10, Gov. Tim Walz proposed eliminating Minnesota Medicaid MCOs and replacing them with one statewide administrative services organization. About 45% of Medicaid spending and nearly 80% of basic care run through eight plans; eligibility would move from counties to the state by mid-2028. Axios estimates $72 million of transition cost over four years, as Minnesota sues CMS over a $243 million Medicaid deferral inside a $259 million freeze. Standardized networks, rates, and billing rules shift contracting leverage and trend assumptions, even if the 'ASO' label makes it sound like admin.
Study flags higher Medicare premiums when insurers buy PBMs, squeeze rivals
A January study in the American Economic Journal: Applied Economics found Medicare premiums may rise when rival insurers acquire pharmacy benefit managers. The authors said an acquired PBM can disadvantage rival insurers by passing through fewer rebates or charging higher administrative fees. Separately, MedCity News reported the Break Up Big Medicine Act, targeting vertical integration, is viewed as a long-shot despite recent PBM reforms. Modern Healthcare also reported PBMs are pivoting toward fee models as clients and regulators shun rebate-driven economics.
Aetna pays $117.7M as DOJ keeps tightening the MA coding vise
Aetna agreed to pay $117.7M to settle DOJ allegations it submitted false or inaccurate diagnoses to inflate Medicare Advantage payments. The case spotlights risk-adjustment coding, and tightens scrutiny of chart reviews and vendor-driven diagnosis capture. Separately, HHS OIG flagged 121,454 ED procedures in 2021-2022 as possibly misbilled, driving $15.1M in improper or potentially improper Medicare payments. That combo shifts margin from bid revenue and fee schedules into legal, audit, and repayment risk, which belongs in reserves and pricing.
Yale rolls out hospital concentration tracker to quantify deal-driven market power
Yale University's newly launched Health Care Affordability Lab unveiled a market analysis tool mapping where hospital markets are most concentrated. The tool provides historical visualizations of hospital market concentration and the competitive impact of dealmaking, old and new. For payers and employers, it is basically a pricing power early-warning system disguised as a dashboard. Expect more pointed antitrust narratives in contracting fights where the map shows a market tipping from competition to leverage.
Judge orders broad UnitedHealth discovery in nH Predict MA denial suit
On March 9, 2026, Magistrate Judge Shannon G. Elkins ordered UnitedHealth to turn over broad discovery in the Lokken MA post-acute denial suit. UnitedHealth must produce nH Predict materials, post-acute policies back to Jan. 1, 2017, and records on naviHealth acquisition cost-savings and regulator probes within 21 days. The order rejected requests for the algorithm's source code, data, and medical guidelines, and it limited broad valuation and revenue discovery. If incentives and NOMNC workflows show systematic early SNF cutoffs, expect utilization and reserves assumptions to shift from admin-savings to MLR and litigation risk.
Significant Digit
MedPAC says freestanding SNFs cleared a 24.4% Medicare FFS margin in 2024, which is why payment cuts and site-of-care battles keep coming.
MedPAC estimates freestanding skilled nursing facilities earned a 24.4% fee-for-service Medicare margin in 2024, and it projects a 25% margin in 2026. That is less "payment adequacy" and more "the incentive is working as designed." If you are pricing post-acute trend or steering, assume Medicare will keep pushing back on this spread.
Other Relevant Headlines
Policy & Regulation
| Stryker cyberattack wipes systems, stalls orders as Handala claims credit | Fierce Healthcare |
| Judge orders Leapfrog to pull safety grades for five Tenet hospitals | Healthcare Dive |
| Joint Economic Committee report: Medicare Advantage overpayments drive up Part B premiums | Fierce Healthcare |
| Elevance 'surprised and disappointed' by CMS Medicare Advantage sanction threat: CFO | Becker's Payer |
| Iowa bill would require insurers to honor out-of-network primary care referrals | Becker's Payer |
Payer Operations
| Centene expects 40% ACA membership decline by end of year | Becker's Payer |
| 'Non-network' health plans see opportunity in ACA proposal | Modern Healthcare |
Provider Economics
| AHA: Hospitals' total expenses rose by 7.5% in 2025 | Fierce Healthcare |
| Tenet Healthcare is securing healthy commercial rates through 2027 | Fierce Healthcare |
| Providence CFO to step down | Healthcare Dive |
Pharmacy & Drug Pricing
| Key Facts About Medicare Drug Price Negotiation | KFF |
| Public Citizen to push compulsory licensing if Pfizer withholds drugs from France | Inside Health Policy |
ICYMI (Recent Key Stories)
- Idaho H 850 targets 2028 Medicaid expansion repeal, enrollment near 80,000 -- An Idaho bill would set up a 2028 vote to repeal Medicaid expansion as enrollment nears 80,000. (2026-03-11)
- CMS launches BALANCE: voluntary GLP-1 price talks for Part D and Medicaid -- CMS introduced BALANCE, a voluntary program to negotiate GLP-1 pricing for Part D plans and Medicaid. (2026-03-10)
- Florida pushes Medicaid work requirements despite not expanding Medicaid -- Florida is pursuing Medicaid work requirements even though the state has not adopted Medicaid expansion. (2026-03-09)
- Clover says it is first payer live on CMS-aligned network -- Clover Health reports it is the first insurer operating on a CMS-aligned provider network model. (2026-03-06)
- West Virginia probe hits Express Scripts with $1.5M penalty, pharmacy repayments -- A West Virginia investigation led to a $1.5M penalty for Express Scripts and required repayments to pharmacies. (2026-03-05)