The ABIG Update by Santiago O’Neil

TL;DR - Federal policy is sprinting on AI for Medicare, MFN pricing, biosimilar streamlining, and non-network ACA plans, but keeps hitting structural walls. Meanwhile, the private sector is solving around what government can't regulate into existence through advocacy, settlements, and acquisitions.

AI in Medtech

⏹️ Ambition Meets (Trust) Reality

CMS wants to put AI agents in the hands of Medicare beneficiaries: navigating care, finding doctors, selecting MA plans…all by the end of this administration. The pitch from Administrator Oz at HIMSS was clearcut: other sectors went deflationary with tech; healthcare stayed inflationary, and AI closes that gap. There's just one problem: our seniors don't trust it. Only 31% of Medicare enrollees aged 65+ trust AI to access medical records and provide health advice, per KFF. As Oz put it: "No one has gotten to them with the use case of why it'll transform their life for the better."
But nowadays, where there’s a will, there is an AI application on the way. Amazon expanded its Health AI assistant nationally this week, moving beyond One Medical members to all U.S. consumers. The tool connects to regional health information exchanges, offers symptom guidance, and routes users to Amazon's pay-per-visit telehealth or One Medical's national network. But research on ChatGPT Health found it frequently under-triaged serious cases: respiratory failure flagged as "see a doctor in 24-48 hours" rather than "go to the ER now." Amazon claims extensive synthetic scenario testing and an "LLM-as-a-judge" oversight layer, but these are unproven at scale in live clinical contexts.

CMS, meanwhile, is deploying AI internally to detect fraud, using algorithms trained on past enforcement actions to screen new Medicare providers. OpenAI launched ChatGPT Health in January; Microsoft dropped Copilot Health about a week ago; and always ahead, Anthropic rolled out health data upload features. The market for dedicated health chatbots is consolidating around major AI players with encouragement, implicit and otherwise, from the federal government. And they’re all racing to own the consumer relationship.
As per usual, the tension is structural. Federal policy is accelerating AI adoption to bend the cost curve; patients, especially older ones, remain skeptical. The tools themselves are still catching up to the complexity of clinical triage and care navigation, where the cost of error is higher than a bad restaurant recommendation.

A QUICK FLAG: Doctors are all-in on AI even as patient safety concerns mount: 81% of physicians now use AI professionally, mostly for summarizing research and admin tasks, per new AMA survey. But ECRI just named "navigating the AI diagnostic dilemma" the #1 patient safety concern of 2026.

ICYMI: Dr. Adam Brown’s Webinar on Healthcare Today

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Government Affairs

🎬 Recap: Movements You Might’ve Missed

⭕ Medicaid autism therapy spending triggers state crackdown: Medicaid spending on applied behavioral analysis jumped 300% between 2019 and 2023, reaching $2.2 billion nationally. Federal audits in Colorado, Indiana, Wisconsin, and Maine found billing errors in every sampled claim, with some providers billing $640/hour for therapy delivered by workers with only high school diplomas. Nebraska's spending increased 1,760% in five years; North Carolina saw costs balloon 347% from 2022 to 2025. States are now imposing payment caps and dropping providers from networks, though families have filed suit in North Carolina arguing the cuts discriminate against children with disabilities.

⭕ FDA biologics chief Vinay Prasad departing in April: Prasad will leave the agency for the second time in under a year following controversial rare disease drug rejections including UniQure's Huntington's gene therapy, Replimune's cancer treatment, and Capricor's Duchenne therapy. Commissioner Marty Makary credited Prasad with implementing a 2-to-1 pivotal trial requirement and framework for ultra-rare diseases. Industry groups pushed for his removal; independent researchers called his departure "a setback for scientific rigor."

⭕ EPA proposes rollback of medical device sterilizer emissions standards: The agency proposed weakening 2024 limits on ethylene oxide, used to sterilize half of all U.S. medical devices, potentially saving industry $43 million annually. The move would give facilities flexibility on monitoring systems rather than requiring the full 90% emissions reduction originally planned. The American Lung Association warned communities near sterilization facilities face elevated lifetime cancer risk.

⭕ Trump administration proposes ACA plans without provider networks: CMS wants to allow non-network health plans on exchanges starting in 2027, where insurers announce payment rates and enrollees find providers willing to accept that amount or pay the difference out-of-pocket. The proposal aims to reduce administrative overhead and lower premiums, but could expose patients to surprise bills.

Market Movements

🪨 Rock, Paper, Scissors

A sizable bloc of midsized biotech executives are breaking from Big Pharma to publicly oppose congressional efforts to codify most-favored-nation pricing into law. "We need to have the courage of our convictions," said Ardelyx CEO Mike Raab, warning Trump's plan to peg U.S. drug prices to the lowest rates in wealthy countries would make it difficult to raise capital. While larger drugmakers signed voluntary MFN deals to avoid tariffs, smaller firms argue their survival depends on U.S. pricing premiums. Congressional Republicans remain skeptical of what they characterize as government price-fixing.

While rocky market dynamics on drug-pricing are emerging in one hand, fractures are being papered over in the other: Novo Nordisk ended its patent dispute with Hims & Hers and will now offer branded Ozempic and Wegovy, including the newly approved Wegovy pill, through the platform at the same self-pay prices as other telehealth providers. Hims will stop advertising compounded GLP-1s, a move FDA Commissioner Makary said would limit compounding to "rare (FDA-compliant) cases." The partnership gives Novo direct-to-consumer reach as it competes with Eli Lilly, while Hims gains FDA-approved products after the agency sent 30 warning letters to companies improperly promoting compounded obesity drugs.

SOME DEEPER CUTS:
The Trump administration is easing biosimilar approval requirements, eliminating some comparative clinical trials and allowing reference to non-U.S. products. The FDA estimates changes could cut development costs by $20 million and halve the typical five-to-eight-year approval timeline. Commissioner Makary said reforms could increase approvals from 76 over 10 years to "200 or 300."

Meanwhile, Universal Health Services will acquire virtual therapy platform Talkspace for $5.25 per share, bringing 6,000 licensed therapists into UHS's network. The deal addresses provider shortage bottlenecks while creating bi-directional referrals: Talkspace routes patients needing intensive care to UHS facilities; UHS offers virtual therapy to discharged patients. The transaction, expected to close Q3 2026, is slightly accretive in year one and positions UHS to deliver what the companies call the first nationally scaled behavioral health continuum.

Credentialing delays aren't administrative headaches: they're revenue killers that expose compliance gaps and lock patients out of care. On March 26, Dr. Adam Brown will provide expert insights into how credentialing bottlenecks cascade into real financial and operational damage, and what separates credentialing operations that actually work from the ones bleeding money and creating liability.

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