Health plan regulatory changes happening ‘fast and furious’

Legislative and regulatory changes affecting health plans are happening fast and furious as a new administration reaches its six-month mark.

That was the word from Kevin Coonan, principal of health care consulting with Baker Tilly, in a recent webinar on key trends and policy impacts affecting health plans in 2025.

The new administration has influenced health care policy and regulatory frameworks across the industry. This will potentially affect costs and access to care, said Heather Herc, director of health care consulting with Baker Tilly.

“The biggest theme we’re seeing here is increasing oversight and focus fraud, waste and abuse” with Medicare Advantage, she said. The administration is heightening its scrutiny of MA billing practices and focusing on reducing overpayments.

Medicaid continues to be in the news as the budget bill calls for Medicaid reform that the Congressional Budget Office estimates could result in up to 7.8 million recipients losing coverage by 2034.

In addition, Herc said, the individual health insurance marketplace also could be impacted by proposed legislation. Enhanced federal subsidies that enabled more people to buy coverage on the Affordable Care Act exchanges are due to expire, a move that CBO estimates could result in 3 million people losing coverage by 2034. Final rules issued by the Centers for Medicare and Medicaid Services shortened the ACA open enrollment period and tightened other requirements for enrollment, which could also result in fewer people having coverage.

Rapid policy shifts are resulting in overall market uncertainty and challenges for health plans, Herc said. Other legislative and regulatory changes affecting health plans include:

• The impact of tariffs on health care and health insurance premiums.
• Continued growth of value-based care models as a way to transform health care delivery.
• Prior authorization reform.
• Support for transparency in coverage, a requirement for health insurance plans to publicly disclose information about their negotiated rates with in-network providers and the amounts allowed for out-of-network care.

No Surprises update

The No Surprises Act took effect in January 2022. Since then, “we have seen a massive increase in the number of disputes and some questions about how to manage them,” Coonan said.

From the first quarter of 2023 to the fourth quarter of 2024, the number of disputes filed under the act increased from 100,000 to about 950,000, CMS reported.

Payors and providers have increased staff to manage the skyrocketing number of disputes, Coonan said. Independent dispute resolution may take up to six months, and some disputes may remain unresolved even longer, due to questions over whether they fall under the requirements of the No Surprises Act.

Federal agents report that providers, facilities or air ambulance providers won about 77% of resolved cases. The reward for a win was substantial. The median amount accepted in arbitration in the second quarter of 2023, when payors won, was the same as what they typically pay in network. By contrast, when providers won, they received triple their typical in-network rate.

AI widely adopted in health care

Artificial intelligence has become widely adopted in health care, but there is still much discussion surrounding its use, Herc said. AI can be transformative, especially when supporting administrative functions.

A 2025 report by the National Association of Insurance Commissioners revealed that 84% of health insurers said they currently use AI in some capacity. Top functions reported for AI use include: implementing disease management programs, prior authorization processes, fraud claim detection, and sales and marketing functions. Nearly 92% of health insurers have AI governance principles in place that model NAIC’s AI principles.

Data breaches continue to be a growing threat to health insurers, Herc said. Cybersecurity remains a top priority in 2025.

She recommended organizations remain diligent in preparing to respond to a breach before one occurs, and to continue to track evolving regulations.

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].