More than halfway through 2025, how good were our predictions?
When we published our 2025 Managed Care Trends and Predictions report, we called out six high-impact trends we believed would define the year. Now, just past the halfway point, it’s clear: our read of the market was pretty much on point. Soon we’ll explore what’s next for the rest of 2025 and 2026.
From site neutral payments to payors’ AI oversight, consolidation strategy to Medicare Advantage contract walkaways, nearly every prediction we made has come to pass — or is well on its way. Let’s take a closer look at where things stand, what’s changed, and what providers should be preparing for next.
1. Site-neutral payments are expanding…just like we said they would
We predicted that CMS would push forward with site neutral payments and that commercial carriers wouldn’t be far behind. That’s exactly what we’re seeing in 2025.
CMS finalized its expanded site-neutral payment rule for on-campus outpatient departments early this year, and several major payors, including Cigna and Elevance, have begun implementing similar methodologies in commercial contracts. The idea that “a service should cost the same regardless of setting” continues to dominate policy discussions, despite provider pushback and the very real complexity of clinical decision-making and infrastructure costs. Sadly, it’s one of those policies that seems logical until you consider all the nuances and details — and then you realize it’s a disaster for providers.
2. M&A activity paused then picked back up, with a twist
We anticipated a continued wave of consolidation with limited federal resistance. That’s mostly held true, with an asterisk.
Merger and acquisition (M&A) activity slowed significantly in Q1 2025. There were just five hospital and health system transactions. That’s the lowest quarterly total since Q3 2021.
Yet in Q2, activity rebounded. Deal volume across healthcare sectors held steady at 811 deals, and capital investment surged — up 79.4% quarter-over-quarter, reaching $62.8 billion. The activity reflects more selective, high-value moves, especially in outpatient services, behavioral health, and pharma-tech platforms.
Now there’s a new accelerant: on August 13, the administration revoked Executive Order 14036, eliminating a key Biden-era directive that had amplified antitrust scrutiny in hospital M&A. While other tools remain in place, including the 2023 Merger Guidelines and revised HSR thresholds, the executive signal here is clear: less oversight, more dealmaking.
Hospital consolidation remains slower and more scrutinized. Yet the structural forces we highlighted, particularly around payor behavior and financial pressure, are continuing to drive consolidation strategy. Many hospitals and physician groups will only survive the payor onslaught by joining with larger organizations.
3. AI is outpacing regulation — and triggering lawsuits
Our 2025 prediction was blunt: artificial intelligence will keep expanding, and oversight won’t keep pace. That’s already proving true, especially when you consider how payors are using AI to deny and delay.
Cigna’s PXDX algorithm, flagged in our report, is now under congressional investigation after evidence surfaced that hundreds of thousands of claims were denied in less than two seconds, each without clinical review. UnitedHealth is defending a similar model in court amid allegations that it led to wrongful denial of coverage for thousands of elderly patients.
California passed legislation this year to prohibit insurers from denying claims solely based on AI-generated decisions. Other states are expected to follow.
4. Administrative burdens are still rising
We expected 2025 to bring more, not less, administrative burden. That trend is holding. Denials, prior authorization requirements, network adequacy issues, and delayed payments continue to strain providers. Ghost networks remain prevalent, especially in mental health. We took a look at a 2023 report from the New York Attorney General that found 86% of listed in-network mental health providers were either unreachable, not in-network, or not accepting patients. Nothing in 2025 has meaningfully changed that.
Despite CMS attention, enforcement remains light and consumer frustration continues to grow.
5. Medicare Advantage enrollment is growing…and so are provider exits
We said Medicare Advantage (MA) enrollment would keep climbing and that more health systems would begin walking away from contracts that no longer make financial sense.
That’s exactly what’s happening. MA projections are holding at 60% by 2030. At the same time, 27 health systems have dropped some or all of their MA contracts so far in 2025. More are coming — some of them, our clients. It’s a perverse combination. More and more seniors have MA coverage, meanwhile networks are becoming narrower and narrower. Fewer providers are willing to take this business that loses them money while generating substantial profits for the payors.
Contract terminations are being driven by rising denial rates, administrative friction, and below-cost reimbursements. These are conditions we flagged months ago, and they continue to worsen.
6. More contract disputes are going public
As predicted, payor/provider contract disputes are rising and going increasingly public.
There were 133 public disputes covered in the media in 2024. Based on first-half trends, 2025 is on track to exceed that. Providers are more willing to terminate, communicate, and escalate. And they’re often getting public support in the process.
This trend has changed how renewal cycles work. Many providers are now planning negotiations a year in advance and bringing communications strategy into those early conversations.
What’s next?
We don’t expect 2025 to be the year of sweeping reform. Yet this is absolutely the year when the pressure demands a response. Watch for additional benefit cuts from retirement plans, cost savings measures from state employee plans — like North Carolina where the state is forcing bundles via a third party — and more cost share shifting to members. Members who will likely qualify for your financial support policy…where you waive more cost share.
If you’re a provider, the stakes have never been higher — and the margin for passive negotiation has never been thinner.
It’s more important than ever to:
- Push back on unsustainable contracts
- Scrutinize administrative requirements
- Negotiate with clarity, leverage, and alignment
- Bring communications strategy into renewal discussions early
- Get crystal clear on which payors are worth your time…and which aren’t
Because health systems don’t just need better rates. They need better terms. Better partners. And better tools to fight the next round of bad behavior.
At Unlock, we’re here to help. Not just with the strategy — but with the storytelling that changes outcomes.
