The winner is Aidoc, whose CARE Multi-Triage CT Body (commercially known as BriefCase-Triage) will receive a maximum Medicare add-on payment of $137.53 per eligible inpatient case, effective October 1, 2026. But the number, while historic, is almost secondary to the strategic context in which it arrived. Because at the same moment CMS handed Aidoc its prize, it quietly shut the door on the shortcut most competitors have been counting on.

The alternative NTAP pathway, the fast lane that allowed FDA Breakthrough Device designation to substitute for hard clinical evidence of substantial improvement, is gone. Starting with FY2028 applications, every radiology AI company that wants Medicare add-on payment will need to do it the hard way.

That changes everything.

What Just Happened: The Numbers

The $137.53 figure is the ceiling, not the floor. Under standard NTAP mechanics, CMS pays up to 65 percent of the amount by which a qualifying case's actual costs exceed the standard DRG payment. So the real payment any individual hospital receives depends on case-level cost accounting, how well Aidoc's solution is coded on the claim, and whether the hospital's costs genuinely exceed the base DRG.

Still, even a partial payment is transformative for hospital budgets. Aidoc's eligibility runs for three years, which is the standard NTAP window. Hospitals that deploy CARE Multi-Triage before October 1, 2026 are immediately eligible to bill for it on qualifying inpatient cases. For a mid-sized academic medical center running 5,000 or more inpatient chest and abdomen CTs per year, the financial math is worth doing carefully.

The approval appears in the FY2027 IPPS final rule alongside a broader payment landscape that includes a 2.3 percent overall payment update for hospitals, a $2.1 billion aggregate increase in inpatient payments, and $779 million specifically allocated to new technologies. Nineteen new NTAP approvals begin in FY2027, and 41 previously approved technologies continue. Aidoc's is the one that will define the radiology AI conversation.

How NTAP Works: A Primer for Radiology AI Leaders

NTAP was created in 2001 to solve a specific problem: when CMS bundles hospital payments by diagnosis-related group, hospitals have no financial incentive to use genuinely new, expensive technologies, because the incremental cost is absorbed in the fixed DRG rate. NTAP provides a temporary supplement to bridge that gap.

To qualify through the traditional route, a technology must meet three tests. First, it must be new, meaning it is not substantially similar to technologies already factored into DRG rates. Second, the case costs associated with using it must be high enough that the standard DRG payment is inadequate, typically defined by a cost-threshold formula. Third, and most consequentially, the technology must demonstrate substantial clinical improvement over existing options.

CMS has interpreted "substantial clinical improvement" broadly but not casually. Evidence that has historically satisfied the standard includes reduced mortality, fewer hospitalizations or readmissions, shorter inpatient length of stay, or meaningfully faster time-to-treatment for acute conditions. The bar is real, and the evidence requirements are specified in the application package.

Because the evidence bar was genuinely high, Congress created the alternative pathway in 2020, allowing technologies with FDA Breakthrough Device Designation to bypass the substantial clinical improvement test. The logic was that the FDA had already certified clinical promise, so CMS would defer to that finding.

The result was a surge in applications. In FY2020, before the pathway existed, CMS received 18 NTAP applications total. For FY2027, the agency received 47, with 32 arriving through the alternative pathway and only 15 through the traditional route. CMS looked at those numbers and concluded the alternative pathway had become a workaround, not a supplement.

The Technology: What CARE Multi-Triage Actually Does

Aidoc's CARE Multi-Triage CT Body is not a single-condition AI tool. It is a foundation model, a single underlying architecture that simultaneously triages 14 acute conditions across chest, abdomen, and pelvis CT scans, including both contrast and non-contrast studies.

The 14 indications include findings like liver injury, spleen injury, appendicitis, and a range of other time-sensitive abdominal and thoracic pathologies. Aidoc received FDA Breakthrough Device Designation for the platform in September 2025 and FDA clearance in January 2026.

The FDA-reviewed pivotal study is what made the clinical evidence argument possible. Across the 11 newly cleared indications, the tool achieved a mean sensitivity of 97 percent and mean specificity of 98 percent. In certain settings, sensitivity reached 98.5 percent and specificity reached 99.7 percent. Critically, Aidoc's internal data suggests the multi-condition foundation model approach achieves roughly an order-of-magnitude reduction in false alerts compared to best-in-class single-condition tools, which has historically been one of the most damaging adoption barriers for radiology AI.

The technology is delivered through Aidoc's aiOS enterprise platform, which handles data normalization, continuous performance monitoring, and governance across health system deployments. That infrastructure layer matters for NTAP purposes: CMS will be watching whether real-world performance during the three-year window matches the pivotal study. If it does not, the renewal conversation in FY2030 will be difficult.

The Bigger Story: The Alternative Pathway is Gone

Here is what Aidoc's NTAP win cannot obscure: the company is the last major beneficiary of a regulatory shortcut that no longer exists.

CMS finalized the repeal of the alternative NTAP pathway alongside Aidoc's approval. Starting with applications submitted for FY2028 consideration, every technology, regardless of FDA Breakthrough Device Designation or any other expedited FDA status, must demonstrate substantial clinical improvement to be eligible for Medicare add-on payment. There are no exceptions, no grandfather provisions for new applicants, and no alternative routes.

This is not a hypothetical risk. It is a policy fact with a defined implementation date. Companies that had been planning FY2028 or FY2029 NTAP applications on the assumption that a Breakthrough Device designation would carry them past the evidence bar need to fundamentally revise those plans right now.

CMS was transparent about its reasoning. The agency looked at 47 applications for FY2027, saw that 32 of them leaned on the alternative pathway rather than substantial clinical evidence, and concluded that the pathway was being used to subsidize technologies whose clinical value was unproven. The core bargain of NTAP, temporary taxpayer-funded support for genuinely superior technologies, was being diluted.

The FDA and CMS did offer something in exchange. In April 2026, the two agencies jointly announced the RAPID pathway (Regulatory Alignment for Predictable and Immediate Device), which is intended to create a more coordinated coverage review for breakthrough devices. But RAPID does not eliminate the evidence requirement. It changes the timing and coordination of the review, not the standards. Clinical evidence is still required.

For radiology AI specifically, this lands in a complicated moment. The FDA has cleared more than 1,000 AI applications for clinical use as of early 2025, with the large majority concentrated in radiology. Very few of those products have been subjected to the kind of prospective, controlled clinical studies that CMS's substantial clinical improvement standard demands. The industry built an enormous regulatory footprint on the back of retrospective validations, reader studies, and regulatory pathway optimization. That foundation is not what CMS is looking for.

Three Questions Every Radiology AI Leader Needs to Answer Before FY2028

The Aidoc decision clarifies the competitive landscape in ways that matter for every organization building, buying, or deploying radiology AI. Here are the three questions that should be on every strategic agenda right now.

Question 1: Can your technology demonstrate substantial clinical improvement, and do you have the evidence to prove it?

"Substantial clinical improvement" is not a marketing claim. CMS evaluates it against a defined set of criteria: reduced mortality, fewer hospitalizations, shorter length of stay, faster time-to-treatment, or other measurable clinical outcome improvements over existing alternatives. A technology that helps radiologists read faster is not the same thing as a technology that demonstrably reduces adverse outcomes.

If your product pipeline does not yet have prospective clinical data showing one of these outcome improvements, the window to design and execute that study is narrowing. FY2028 NTAP applications are submitted roughly 18 months before the fiscal year begins, meaning the relevant application cycle opens in early 2026 for October 2027 effective dates. If you are not already designing or running the study, you may be too late for FY2028 and working against the clock for FY2029.

Aidoc had pivotal study data with mean sensitivity of 97 percent and mean specificity of 98 percent across 11 indications, plus a clinical argument about time-to-treatment for acute findings. That combination, plus Breakthrough Device Designation, satisfied both the traditional NTAP standard and gave CMS the evidence base it needed. Companies planning future applications need a similarly concrete evidentiary package.

Question 2: Does your DRG cost structure make NTAP worth pursuing?

NTAP's 65-percent-of-excess-cost formula means the reimbursement amount is highly sensitive to your product's actual cost structure and how cases are coded. A tool that adds meaningful clinical value but carries a low per-case cost may not generate enough excess cost to make the NTAP calculation compelling, either for CMS at the application stage or for hospitals at the billing stage.

The $137.53 maximum for Aidoc's tool implies a cost structure that, in at least some cases, produces enough excess to trigger meaningful payment. Before you build an NTAP strategy, model the DRG cost math with your actual deployment costs, and model it across the full range of DRGs your product touches. A radiology AI tool used across a broad set of CT studies will have different cost-threshold dynamics than a single-condition tool used in a narrow subset of cases.

This analysis is also important for hospital purchasing conversations. Health systems evaluating AI tools increasingly understand that NTAP eligibility changes the ROI equation, but only if the hospital can actually capture the payment, which requires accurate coding and documentation of the technology's use on qualifying cases. The operational infrastructure to capture NTAP payment is not trivial, and hospitals that have not previously built it will need implementation support.

Question 3: What is your FY2028 strategy, given that the alternative pathway no longer exists?

This is the most urgent question for companies that had been counting on Breakthrough Device Designation to simplify the NTAP pathway. The answer requires an honest assessment of where your clinical evidence currently stands and how long it will take to generate what you actually need.

Three scenarios are possible. First, if you already have prospective clinical data meeting CMS's substantial clinical improvement criteria, you should be actively preparing a traditional-route NTAP application for FY2028 or FY2029. The application requirements are defined, the timeline is predictable, and the pathway now has a successful precedent. Second, if you have suggestive data but not a completed pivotal study, you need to prioritize study design and execution immediately. FY2029 may be your realistic target, which means applications submitted in late 2027. Third, if you do not have a clear path to the clinical evidence, NTAP may not be the right strategy, and you should evaluate whether the new RAPID pathway changes the calculus for your situation.

The companies that come out of this transition period in the strongest position will be the ones that treated clinical evidence as a core product development investment, not an afterthought, while their competitors were optimizing for regulatory pathway efficiency.

What This Means for Health Systems Buying AI Today

For hospital and health system leaders evaluating radiology AI investments, the Aidoc NTAP decision creates a practical filter. A product with NTAP eligibility is a product that has satisfied CMS's evidence standard, which is a meaningful quality signal independent of the payment. It also changes the budget conversation: a $137.53 per-case add-on payment, even if only partially realized in practice, converts what was an operational cost center into a partial revenue offset.

That does not mean every hospital should rush to deploy Aidoc's product specifically. It means every hospital should understand which AI tools in their current or prospective portfolio are on a credible path to NTAP eligibility, and structure vendor evaluations accordingly. As the FY2028 and FY2029 cycles play out, more products will either succeed or fail to clear the evidence bar, and the market will develop a clearer picture of which technologies have durable clinical value versus which ones were primarily regulatory positioning.

The three-year NTAP window also creates a practical timeline for health systems. The first wave of institutions to deploy CARE Multi-Triage before October 2026 will receive reimbursement support through approximately fiscal year 2029. Institutions that delay will eventually be paying full cost, which changes the implementation urgency calculation.

The Broader Picture: Medicare's Signal to the Market

CMS is not a passive observer of the AI economy in healthcare. The decision to simultaneously approve Aidoc's NTAP and eliminate the alternative pathway is a deliberate policy signal: Medicare will support AI technologies that demonstrate clinical value, and it will not subsidize technologies that have not.

That signal has downstream effects well beyond NTAP. Commercial insurers watch Medicare coverage decisions carefully. Hospitals evaluating capital expenditures weigh Medicare reimbursement status. Investors assessing radiology AI companies will increasingly distinguish between companies with a credible path to CMS reimbursement and companies that were optimizing for FDA clearance volumes. The evidentiary bar CMS has now reset will, over time, reshape investment allocation, clinical research priorities, and product development strategies across the entire sector.

For a sector that has sometimes prioritized regulatory momentum over clinical outcomes research, that is a significant adjustment. The companies that have been building evidence alongside their regulatory programs are about to find out that they were right to do so. The companies that treated clinical evidence as a downstream problem will be facing a harder conversation with their investors and their hospital customers than they had anticipated.

Aidoc's win is genuinely historic. The first NTAP for a radiology AI foundation model, with Medicare dollars flowing to hospitals for AI-assisted CT triage starting October 1, is a milestone the industry has been working toward for years. But the more consequential development is not the $137.53. It is the policy framework in which that number exists, and what it demands of everyone who wants to follow.

The alternative pathway is closed. The evidence bar is set. The clock is running.

Oatmeal Health covers the intersection of healthcare data, AI, and policy for health system and life sciences leaders. Subscribe for weekly analysis.

On August 11, 2026, the Centers for Medicare and Medicaid Services finalized a rule that has generated more heat than light. Social media called it a ban. Advocacy groups called it an attack. Opponents called it overdue. The actual 212-page document, published in the Federal Register on August 13, is considerably more specific than any of those descriptions.

Here is the one-sentence version: CMS has removed federal Medicaid and CHIP matching funds from gender-transition procedures for minors. The federal government will no longer pay its share of those costs. States that still want to cover these procedures can do so. They just have to use their own money.

That distinction matters enormously, and it is where most of the commentary has gone wrong. This is a funding rule, not a prohibition. The practical effects will vary enormously depending on which state a child lives in, what their state legislature decides to do next, and whether any of the anticipated legal challenges succeed before the rule takes effect on October 13, 2026.

Understanding the mechanics of Medicaid is essential to understanding this rule. The program is jointly funded by states and the federal government, with the federal share determined by the Federal Medical Assistance Percentage, or FMAP. For most services, states bill the federal government for their share automatically. This rule simply removes certain gender-transition procedures from the list of services eligible for that federal match.

What happens next depends on 50 different state legislatures making 50 different decisions.

1. What the Rule Actually Does

The CMS final rule amends 42 CFR parts 441 and 457, the regulatory sections governing Medicaid and CHIP benefits. The amendments add a categorical prohibition on federal matching funds for what the rule terms "sex-rejecting procedures" for individuals under 18 (Medicaid) or under 19 (CHIP).

The procedures covered by this prohibition include three categories: puberty suppression treatments, which include gonadotropin-releasing hormone agonists used to delay the onset of puberty; cross-sex hormone therapy, which includes estrogen for biological males and testosterone for biological females; and surgical procedures intended to alter a minor's physical characteristics to align with a gender identity different from their sex at birth.

The rule explicitly states that it does not prohibit providers from furnishing these procedures. It does not prevent states from covering them. It does not cut off access to mental health services, which remain fully eligible for federal matching funds. The scope is narrowly limited to these three categories of physical interventions.

📊 The rule amends 42 CFR parts 441 (Medicaid) and 457 (CHIP), effective 60 days after Federal Register publication on August 13, 2026.

The HHS evidence review underlying this rule was conducted in May 2025 and finalized in November 2025. CMS cited that review in justifying the funding change, concluding that the evidence base for pediatric gender transition was insufficient to justify continued federal expenditure. Medical organizations including the American Academy of Pediatrics have sharply disputed that characterization, describing the decision as "a baseless intrusion into the patient-physician relationship."

2. The Transition Window: Six Months for Existing Patients

The rule includes one significant accommodation for current patients: a six-month transition period for minors already receiving cross-sex hormone therapy.

State Medicaid and CHIP agencies may continue to claim federal matching funds for hormone therapy medications for beneficiaries already receiving that treatment at the time the rule takes effect. The window runs for six months from the effective date, which puts the cutoff around mid-April 2027.

This transition provision does not apply to puberty blockers or surgeries. It applies only to cross-sex hormone therapy and only to patients already enrolled in treatment before October 13, 2026.

The practical implication is that states which want to continue covering hormone therapy for existing patients will need to decide well before April 2027 whether to do so with state-only dollars. States that let the transition window expire without making that decision will effectively terminate federal-match-eligible coverage for those patients.

📊 Transition window: 6 months from October 13, 2026, for cross-sex hormone therapy patients already in treatment. Cutoff: approximately April 13, 2027.

3. The Map: 27 States Already There, 17 With Exposure

The rule's practical impact depends heavily on geography. By the time this rule was finalized, 27 states and one territory had already enacted laws restricting or banning gender-transition procedures for minors. For those states, this CMS rule changes very little: they were not covering these procedures under Medicaid anyway.

The states facing genuine exposure are the 17 that currently cover some degree of gender-affirming care for minors under their Medicaid and CHIP programs. Those states had been receiving federal matching funds for those services. As of October 13, 2026, that match disappears.

The financial math is not trivial. CMS projects the rule will reduce federal outlays by approximately $175 to $235 million over the next decade. That is the federal government's share of these costs. The states' share of those costs will not disappear from anyone's budget. States that choose to continue coverage will absorb the federal share themselves. States that drop coverage will shift those costs onto families.

For the 130,000 transgender youth currently enrolled in Medicaid or CHIP in states that have been covering gender care, this is a moment that will define their access to healthcare for the foreseeable future.

4. What States Will Actually Do

This is the question that matters most and is hardest to answer.

Some states will almost certainly drop coverage. States where legislatures have been seeking to restrict gender-transition care for years now have a straightforward path: simply do not appropriate state-only funds to replace the lost federal match. No new legislation required. Budget silence becomes policy.

Other states have already signaled the opposite. California, New York, Colorado, Washington, Oregon, and several other states that have positioned themselves as havens for transgender healthcare are unlikely to eliminate coverage just because the federal match disappears. The more likely outcome in those states is a state legislative or regulatory action to replace the lost federal dollars with state funds.

Some states will be genuinely uncertain. States with divided legislatures or moderate governors may face real political battles over whether to fund these services from state coffers. Those battles are likely to play out over the next 12 to 18 months.

The Medicaid equity dimension here is significant. Transgender youth with private insurance will generally continue to have access to these services through their plans, which are not affected by this rule. The population most affected is low-income transgender youth whose families rely on Medicaid or CHIP. The access gap between insured and Medicaid populations could widen substantially depending on state decisions.

5. The Legal Landscape

Legal challenges are expected before the rule takes effect in October 2026, and the coalitions are already forming.

A group of approximately 20 state attorneys general, including Oregon, Washington, New York, California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, Pennsylvania, Rhode Island, Vermont, and Wisconsin, are expected to challenge the rule in federal court. Washington Attorney General Nick Brown has described the rule as an attempt to "rob them of care that is lifesaving in some instances."

Legal challenges are expected to focus primarily on the Administrative Procedure Act, arguing that the HHS evidence review was procedurally deficient and that the rule is arbitrary and capricious. Constitutional challenges relating to equal protection are also anticipated.

Legal experts note that the administration's approach here, restricting the use of federal funds rather than directly prohibiting procedures, stands on relatively firmer legal ground than earlier executive actions that attempted to condition Medicare and Medicaid participation on hospitals refusing to perform these procedures. The Spending Clause gives Congress and the executive branch broad authority to attach conditions to federal funding. Spending Clause challenges are historically difficult to win.

That said, courts have enjoined multiple prior actions in this space. The outcome of any litigation is genuinely uncertain, and it is possible the rule will be blocked before its effective date.

📊 Legal note: Spending Clause challenges face a high bar. Courts have historically upheld broad federal discretion to define what Medicaid covers.

6. The Evidence Question

The rule's stated rationale is an evidence-based one: HHS conducted a systematic review of the clinical literature on pediatric gender-transition interventions and concluded that the evidence base was insufficient to justify continued federal expenditure.

This evidence review is contested. Major medical organizations, including the American Academy of Pediatrics, the American Medical Association, the Endocrine Society, and the American Psychological Association, have reached different conclusions from the same literature. They argue that the HHS review selectively weighted certain studies and ignored the substantial clinical experience of providers who work with this population.

The HHS review itself drew heavily on recent reviews from European countries, including Sweden, Finland, and the United Kingdom, that have tightened their own clinical protocols for youth gender care in recent years. Those countries have moved toward more cautious approaches for some patient subgroups, particularly prepubertal children, while continuing to offer treatment to older adolescents who meet stricter criteria.

The gap between the HHS interpretation and the mainstream medical organization position is not primarily factual. Both sides are looking at the same studies. The gap is methodological: what counts as sufficient evidence, what study designs are required, and how to weigh observational data against the absence of long-term randomized controlled trials. Those are genuinely contested questions in evidence-based medicine, not questions with obvious right answers.

What is clear is that the 212-page rule does not change what any provider is permitted to do. Physicians, hospitals, and clinics can continue offering these services. The question the rule answers is only: who pays.

Deep Dive: How Medicaid Financing Actually Works

Medicaid is an entitlement program jointly funded by states and the federal government. Every state operates its own Medicaid program under federal guidelines, and the federal government reimburses states for a share of covered medical services based on that state's per-capita income. Richer states get a lower federal match rate. Poorer states get a higher one. The match rates range from 50 percent to approximately 83 percent, meaning the federal government pays between half and four-fifths of the cost of every covered service.

The federal government defines a baseline of mandatory services that all Medicaid programs must cover and allows states to add optional services on top of that baseline, with federal matching funds available for the optional services too. Gender-transition procedures for minors were among those optional services in states that covered them.

This rule removes those procedures from the list of optional services eligible for federal matching funds. It does not touch mandatory services. It does not affect coverage for any other population or any other service.

The consequence is that states covering these services have been effectively receiving a federal subsidy. When that subsidy goes away, the full cost of coverage falls on state budgets. State health officials will have to make budget decisions about whether to absorb those costs, and those decisions will happen in the context of constrained state budgets, competing health priorities, and significant political pressure from both directions.

For children on Medicaid, the practical result is that their access to care will be determined by geography in a way that was not true before. A child in Massachusetts will likely have different access than a child in Texas, not because of anything that changed in clinical medicine, but because of where they happen to live and what their state legislature decides to do.

What This Means for You

For providers in states that will continue coverage: expect that your state Medicaid program will need to issue updated billing guidance before October 13, 2026. The administrative pathway for covering these services with state-only dollars may require new state plan amendments or legislative appropriations. Monitor your state Medicaid agency's communications closely.

For providers in politically contested states: prepare for coverage uncertainty. You may have patients currently receiving care whose coverage status will be unclear for months. Clinical decisions should not be deferred while coverage questions are resolved, but billing and authorization workflows may need to adapt rapidly.

For patients and families: the most important near-term question is what your state decides to do. If your child is currently receiving cross-sex hormone therapy, the six-month transition window provides some buffer. Contact your state Medicaid office and your provider before the October 13 effective date.

For payers and managed care organizations: if you operate Medicaid managed care plans in affected states, you will need to update your benefit structures by the effective date and understand how state funding decisions affect your capitation arrangements.

For policy analysts: the financial projections ($175 to $235 million over a decade) are modest relative to overall Medicaid spending. The political significance is far larger than the fiscal significance. Watch for states to use this rule as a catalyst for broader Medicaid restructuring.

The Bottom Line

The 212-page rule does one thing: it changes who pays. It does not close clinics, prohibit physicians, or force any provider to stop practicing. It shifts a financial obligation from the federal government to state governments and, potentially, to families.

The downstream effects of that shift will be real and consequential for the 130,000 children in Medicaid-enrolled households whose states have been covering these services. Whether those effects are predominantly negative or predominantly positive depends almost entirely on one's view of the underlying clinical evidence and the appropriate role of federal health spending.

What is not in dispute is the timeline. October 13, 2026, is less than two months away. Legal challenges may delay implementation. State decisions about replacement funding may take months to resolve. In the meantime, the most practical thing anyone connected to this issue can do is understand exactly what the rule says, read the document rather than the headlines, and make decisions based on what it actually changes.

The politics of this issue are loud. The rule itself is much more specific.

About the Author: Jonathan Govette covers healthcare policy, digital health, and the business of medicine at Oatmeal Health. Oatmeal Health tracks the intersection of federal health policy and AI-driven clinical tools.

Key References

CMS Press Release: CMS Ends Federal Medicaid and CHIP Funding for Sex-Rejecting Procedures

AJMC: CMS Final Rule Ends Federal Medicaid, CHIP Funding for Youth Gender-Affirming Care

STAT News: How will legal challenges fare against CMS rule?

Medical Daily: A New Federal Rule Cuts Medicaid Money for Gender Care in Minors

The Hill: Trump administration finalizes rule restricting trans healthcare for minors on Medicaid

Williams Institute UCLA: Public Comment on CMS Rule

Time: Donald Trump's New Medicaid Rule Targets Gender-Affirming Care for Minors

Photo: Pexels

Cancer is the leading cause of death among noncitizen residents of the United States. Not heart disease. Not diabetes. Cancer.

That fact should stop every health system leader in their tracks. A landmark study published this month in JAMA Network Open makes it more alarming: noncitizens are being screened for the three most preventable cancers at rates dramatically below their US-born neighbors — and the gap is almost entirely structural, not cultural.

This is not a story about patients who don't want screening. It is a story about a system not designed to reach them.

The Study

Researchers analyzed 131,501 respondents from the National Health Interview Survey (NHIS) spanning 2010 to 2023 — the largest citizenship-stratified cancer screening analysis in the peer-reviewed literature. The study was published August 3, 2026 in JAMA Network Open (PMID: 42574011). Findings are nationally representative and adjusted for demographics, socioeconomic status, insurance coverage, and healthcare access factors.

Colorectal cancer screening: 43.6% of noncitizens vs. 75.5% of US-born adults

The colorectal cancer screening disparity is the most striking finding. A 32-percentage-point gap separates noncitizen and US-born adults. The adjusted odds ratio of 0.35 means noncitizens are less than one-third as likely to be up to date on CRC screening after controlling for all measured confounders.

The Numbers

• Colorectal cancer: 43.6% noncitizens vs. 75.5% US-born (adjusted OR 0.35, 95% CI 0.32-0.38)

• Cervical cancer: 57.1% noncitizens vs. 71.6% US-born women (adjusted OR 0.41, 95% CI 0.38-0.44)

• Breast cancer: 73.0% noncitizens vs. 80.1% US-born women (adjusted OR 0.57, 95% CI 0.52-0.62)

Every one of these cancers is more detectable, more treatable, and less deadly when caught early. Every percentage point of that gap represents preventable mortality.

Cancer screening rates by citizenship status — three-cancer comparison

The Mediation Analysis: This Is a System Problem

The researchers did not stop at documenting the gap. They performed a formal mediation analysis to quantify how much of each disparity is explained by socioeconomic factors and healthcare access barriers: insurance status, usual care source, language barriers, financial hardship, and geography.

Results:

• Breast cancer: 97.1% of the disparity is explained by structural barriers

• Colorectal cancer: 56.6% of the disparity is explained by structural barriers

• Cervical cancer: 39.6% of the disparity is explained by structural barriers

97.1% of the breast cancer screening disparity is structural

Nearly the entire breast cancer screening gap between noncitizen and US-born women is explained by structural factors — not preferences, not culture, not anything inherent to the patient population. Insurance and access explain the gap. Insurance and access can close it.

For colorectal and cervical cancer, a meaningful residual remains unexplained by measured factors. This residual likely reflects unmeasured barriers: fear of immigration consequences, documentation concerns, distrust of the medical system. These require different interventions — community trust-building, promotora programs, and CHW integration.

What the mediation analysis rules out definitively is the comfortable narrative that noncitizens don't prioritize screening. The data does not support that story. The data supports one conclusion: the system is failing them.

Who Benefits When the Gap Closes?

This is not just an equity story. It is a business case.

Health system winners and losers when screening gaps close

Late-stage cancer diagnosis is expensive. Stage IV colorectal cancer costs four to five times more to treat than Stage I. When noncitizens fall through the screening gap, they present at emergency departments with advanced disease — and the cost is absorbed by safety-net hospitals, Medicaid, and the broader system.

Integrated health systems and payers with large immigrant-serving populations have a direct financial interest in closing this gap. Earlier detection drives better outcomes, reduces total cost of care, and improves the quality metrics that increasingly drive value-based reimbursement. The ROI on screening navigation for underserved populations is well-documented in the literature — the question is whether health systems have the operational infrastructure to capture it.

Cancer screening rate comparison — grouped bar chart

A 5-Step Playbook for FQHCs and Immigrant-Serving Providers

Federally Qualified Health Centers are on the front lines of this disparity. Here is a concrete operational framework:

5-step FQHC screening equity playbook

• 1. Screen for the screeners. Use SDOH tools (AHC-HRSN or equivalent) at every visit to document barriers: insurance, language, transportation, cost. Identify patients who need navigation, not just reminders.

• 2. Deploy culturally concordant navigation. Patient navigators who share language and cultural background improve screening uptake significantly. FIT completion for CRC responds especially well to structured navigation. Budget for dedicated FTE — this is not a volunteer program.

• 3. Address practical barriers. Transport vouchers. Evening and weekend hours. On-site FIT kit distribution rather than referral-dependent pathways. Sliding-scale pricing regardless of immigration status. These are operational decisions, not clinical ones.

• 4. Partner with CHWs and promotoras. Community health workers embedded in trusted institutions — churches, schools, community centers — reach patients before crisis. For communities where distrust of the medical system is documented, CHWs are the bridge that institutional outreach cannot replicate.

• 5. Track and report equity metrics. Almost no health system quality dashboard stratifies screening rates by citizenship or immigration status. They should. Aggregate rates meeting national benchmarks can mask catastrophic underperformance in specific subpopulations. What gets measured, gets managed.

Cancer-Specific Clinical Considerations

Colorectal cancer: FIT (fecal immunochemical test) is underutilized in this context. It is non-invasive, requires no bowel prep, is available in multiple languages, and can be completed at home. Practices defaulting to colonoscopy referral as the primary CRC screening pathway may be widening the gap through referral friction alone. FIT-first pathways are guideline-concordant and practically superior for this population.

Cervical cancer: The cervical screening gap is most strongly mediated by uninsurance and lack of a usual care source. Self-sampling HPV tests offer promise for reaching noncitizen women who avoid clinic settings. Integrating cervical screening into prenatal, WIC, and family planning visits increases opportunistic screening rates substantially.

Breast cancer: The 97.1% structural mediation means the clinical conversation is less about patient counseling and more about system design. Mobile mammography units, partnerships with employers in high-immigrant-workforce sectors, and insurance navigation services address the actual drivers of this disparity.

The Policy Dimension

The Affordable Care Act expanded coverage dramatically but explicitly excluded undocumented immigrants. Legal permanent residents face a 5-year Medicaid waiting period in most states. Until federal policy catches up, the burden falls on health systems and safety-net providers. The study's findings support a clear agenda:

• Enhanced federal FQHC reimbursement for immigrant-serving practices with documented navigation programs

• State-level Medicaid expansions to cover undocumented immigrants

• Mandating SDOH screening documentation in Medicaid managed care contracts

• Requiring citizenship-stratified screening rate reporting in HEDIS measures

The Bottom Line

This study moves the conversation from knowing that noncitizens have lower screening rates to understanding why — with enough precision to design targeted interventions.

For breast cancer, the near-total structural attribution is a mandate. The gap is not a mystery and it is not inevitable. It is the predictable output of a system designed without this population in mind.

For colorectal cancer, the 43% unexplained residual calls for deeper community-centered research and engagement. The structural half is addressable immediately.

Health systems that serve significant immigrant populations — in most major metropolitan areas, that means most health systems — need to ask one direct question: is our cancer screening infrastructure designed for the patients we actually serve?

Cancer doesn't check papers. The healthcare system's job is to make sure it doesn't need to.

Source: JAMA Network Open. 2026 Aug 3;9(8):e2628371. PMID: 42574011.

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The most dangerous regulatory proposals in healthcare are rarely the obvious ones. They arrive as footnotes inside 1,200-page payment rules, framed as technical corrections or beneficiary cost-sharing adjustments. The CMS CY 2027 OPPS proposed rule, released July 2, 2026, contains exactly this kind of proposal - a site-neutral payment expansion targeting noncontrast imaging that would slash reimbursement rates by approximately 60% for services furnished in excepted off-campus provider-based departments.

This is not a modest tweak. It is a structural challenge to how outpatient imaging has been financed for the past decade, affecting hospital outpatient departments, radiology group stipend arrangements, academic department budgets, and the financial viability of imaging programs that anchor community healthcare access in cities and suburbs alike.

The comment deadline is August 31, 2026. After that, the window closes and CMS moves toward a final rule. Every radiology practice leader, hospital CFO, and imaging center operator needs to understand what is in this proposal before they miss the opportunity to influence it.

📊 $260M in projected Medicare savings - $190M in Part B reductions, $70M in reduced patient premiums - all from cutting HOPD noncontrast imaging rates to PFS levels

1. What CMS Is Actually Proposing

The CY 2027 Outpatient Prospective Payment System (OPPS) proposed rule, published in July 2026, includes a significant expansion of CMS's site-neutral payment policy. The term "site-neutral" sounds innocuous - it simply means paying the same rate for the same service regardless of where it is delivered. The policy rationale is defensible on its face: if a patient gets an MRI without contrast in a physician's office, why should Medicare pay dramatically more for that same scan performed in a hospital-owned outpatient department down the street?

But the practical impact on radiology revenue is anything but neutral.

Under the proposal, CMS would apply Physician Fee Schedule (PFS) equivalent rates - roughly 40% of the otherwise applicable OPPS rate - to imaging without contrast services furnished in excepted off-campus provider-based departments (PBDs). These are the grandfathered hospital outpatient departments that have been operating under Section 603 of the Bipartisan Budget Act of 2015. They were carved out of earlier site-neutral reforms precisely because they existed before the legislation took effect. That carve-out is now being dismantled, service category by service category.

The specific Ambulatory Payment Classifications targeted include APCs 5521-5524 (covering various imaging without contrast categories) as well as three composite APCs: 8004 (Ultrasound Composite), 8005 (CT and CTA without Contrast Composite), and 8007 (MRI and MRA without Contrast Composite).

In plain terms: standard chest X-rays, abdominal ultrasounds, noncontrast brain MRIs, and CT scans without contrast dye - the bread-and-butter of outpatient radiology volume - would all face a payment reduction of approximately 60% at excepted off-campus HOPDs if this proposal becomes final.

Rural sole community hospitals are exempted from the policy, continuing a pattern CMS has followed in prior site-neutral expansions for clinic visits and drug administration services. Everything else is in scope.

2. The History Behind This Moment

Site-neutral payment reform did not begin with this rule. It has been building incrementally since 2015, and understanding that trajectory is essential for predicting where this ends.

Section 603 of the Bipartisan Budget Act of 2015 established that newly created off-campus provider-based departments would be paid under the Physician Fee Schedule rather than OPPS rates. Existing off-campus departments - those that were already operating before the legislation took effect - were "excepted" and allowed to continue billing under OPPS. This created a two-tier system: grandfathered HOPDs billing at higher rates, and new HOPDs billing at PFS rates.

Since 2015, CMS has been systematically chipping away at the grandfathered exception. Clinic visit services in excepted PBDs were moved to PFS rates beginning in 2019. Drug administration services followed. Each year's rulemaking has tested how much of the exception CMS can legally modify without triggering a successful legal challenge.

The ACR has noted that CMS is expected to expand site-neutral payment across radiology and other services over time. This is consistent with the agency's stated rationale: reduce Medicare spending, decrease beneficiary cost-sharing, and reduce consolidation incentives that push independent practices to sell to hospital systems in order to capture OPPS billing rates.

The pattern is clear. CMS is not proposing a one-time adjustment. It is executing a multi-year policy sequence designed to eliminate the OPPS rate premium for excepted off-campus departments, one service category at a time.

3. The Financial Stakes for Radiology

A 60% payment reduction sounds catastrophic. But to understand the actual financial exposure, you need to look at what drives revenue in a typical hospital outpatient radiology program.

Hospital outpatient radiology programs bill under a split-billing model. The hospital bills the technical component (TC) under OPPS for facility fees. The radiology group bills the professional component (PC) under MPFS for interpretation fees. The site-neutral proposal targets the technical component - the facility fee paid to the hospital. The professional component paid to radiologists is unaffected by the OPPS rule.

This matters enormously for stipend arrangements. Many hospital-employed and contracted radiology groups receive a stipend or support payment from the hospital to compensate for the fact that professional fees under MPFS alone do not cover the cost of providing coverage. These stipends are funded, in part, by the hospital's OPPS technical revenue from imaging. If the hospital's facility revenue on noncontrast imaging drops by 60%, the financial model supporting those stipend arrangements is directly threatened.

📊 [Key finding] At a 40% OPPS rate, many hospital outpatient imaging programs that were marginally profitable will shift to operating losses - and stipend renegotiations will follow.

Academic radiology departments face a distinct but equally serious version of this problem. Teaching hospitals use OPPS revenue from outpatient imaging to cross-subsidize residency training, research infrastructure, and complex case capacity that commercial payers and the Physician Fee Schedule do not fully reimburse. A 60% reduction in facility fees on noncontrast studies that constitute a large share of total outpatient imaging volume directly threatens these cross-subsidies.

Independent imaging centers are largely unaffected by this specific rule - they have always billed at PFS rates. But the downstream effect may work in their favor, creating a level playing field where the cost differential between a hospital outpatient department and an independent imaging center narrows or disappears on the Medicare side.

4. Who Wins and Who Loses

The site-neutral expansion creates distinct winners and losers across the imaging ecosystem.

For health system administrators, the calculation is straightforward but uncomfortable. A hospital with a significant outpatient imaging program in an off-campus HOPD faces a material and permanent reduction in Medicare revenue if this rule is finalized. The question is not whether to model this scenario - it is how quickly leadership can build the financial projections and decide on a strategic response.

Options on the table include relocating services to on-campus hospital departments (which remain subject to OPPS rates), renegotiating stipend structures with radiology groups, shifting volume toward contrast-enhanced studies where site-neutral payment has not yet been proposed, or converting off-campus HOPDs to independent imaging centers that operate under PFS rates regardless.

None of these options are cost-free or logistically simple. All of them take months to execute. The hospitals that start modeling now will have options. The ones that wait for the final rule will face a January 2027 payment reset with no runway.

5. The Regulatory and Legal Landscape

CMS is not operating in a legal vacuum. The site-neutral payment expansion has faced legal challenges since 2015, and the courts have generally upheld CMS's authority to implement these policies under the Social Security Act. However, the expansion into imaging via the excepted PBD exception represents a meaningful escalation, and industry groups are watching carefully.

The ACR has signaled it is preparing a formal comment letter in response to the 2027 OPPS proposed rule. The Radiology Business Management Association (RBMA) has stated it will review the proposal closely with members to understand its potential effects on patients, imaging capacity, and access to care.

The AHA has objected to the site-neutral expansion, arguing that hospital outpatient departments carry costs that freestanding imaging centers do not - emergency services standby capability, complex patient populations, higher regulatory burden, and 24/7 coverage requirements. These arguments did not succeed in reversing earlier site-neutral expansions, and there is no reason to expect a different outcome here, absent a significant legal challenge or Congressional intervention.

📊 Comment deadline: August 31, 2026. The ACR, RBMA, AHA, and GNYHA are all preparing formal responses. If your organization has not joined a coalition comment or filed independently, the window is closing.

6. The Bigger Pattern: Where Site-Neutral Goes from Here

The 2027 OPPS proposal is not the endpoint of CMS's site-neutral agenda. It is a checkpoint.

The KFF noted in a July 2026 analysis that the Trump administration is "advancing incremental site-neutral payment reforms" - a characterization that signals continued regulatory momentum regardless of which party controls the White House, because site-neutral payment reform has bipartisan support in principle among budget-focused legislators.

The Congressional Budget Office has estimated that a comprehensive, full site-neutral payment reform across all outpatient services would save Medicare over $100 billion over 10 years. Against that backdrop, the $260 million proposal for noncontrast imaging in 2027 looks like the beginning of a much longer sequence.

The services NOT yet included in the current proposal - contrast-enhanced CT, contrast-enhanced MRI, nuclear medicine, interventional radiology, and more complex imaging - remain at OPPS rates for now. But the ACR's framing that CMS is "expected to expand site-neutral payment across radiology and other services over time" should be taken at face value by health system planners building 5-year capital and revenue models.

Deep Dive: Financial Modeling for Radiology Programs

Health system financial officers and radiology practice leaders need to model this scenario now, before the final rule drops in late 2026. Here is the framework.

Scenario A: Current OPPS Rate (Baseline)

A hospital HOPD providing 10,000 noncontrast CT scans per year at an average OPPS facility rate of $350 per scan generates $3.5 million in annual Medicare technical revenue. Add ultrasound and MRI noncontrast volume and total HOPD imaging facility revenue from Medicare easily reaches $8-15 million annually for a mid-size program.

Scenario B: Post Site-Neutral Rate (2027 Proposed)

At 40% of the OPPS rate - the PFS equivalent - that $350 average facility payment falls to approximately $140 per scan. The same 10,000-scan CT program generates $1.4 million instead of $3.5 million. The $2.1 million revenue gap does not come back. It is a permanent structural reduction in Medicare reimbursement for that service category.

For an imaging program with $10 million in annual HOPD noncontrast imaging revenue, a 60% cut translates to $6 million in annual revenue loss - every year, indefinitely.

Scenario C: Mixed-Payer Environment

Medicare patients typically represent 40-60% of outpatient imaging volume at hospital HOPDs. The site-neutral proposal only affects Medicare payments. Commercial payers and Medicaid follow their own rate structures and are not directly impacted by this rule. This means the actual revenue hit is approximately 40-60% of the full theoretical impact, depending on the payer mix of the specific HOPD.

For a program where 50% of noncontrast imaging volume is Medicare, the effective revenue reduction is approximately 30% of total noncontrast imaging revenue - still a material hit, but not a full 60% collapse.

The Stipend Cascade

For radiology groups with hospital support arrangements, the financial model does not stop at the hospital balance sheet. If the hospital's HOPD imaging revenue drops by $2-6 million annually, the C-suite conversation about radiology group stipends will happen quickly. Groups that have relied on hospital technical revenue to support their professional service agreements need to anticipate these conversations and enter them with data, not just objections.

What This Means For You

• FQHC executives and community health leaders: FQHCs that operate under the FQHC prospective payment system are not directly affected by the OPPS proposal. However, hospital partners and referral networks that lose HOPD imaging revenue may reduce capacity, which can create access gaps for FQHC patients who depend on hospital-based imaging for complex cases.

• Health system administrators and CFOs: Model your HOPD noncontrast imaging volume by APC category now. Identify your Medicare payer percentage. Calculate the revenue exposure under a 60% facility fee reduction. Bring that number to your board before the final rule is published in late 2026. Then decide: comment, relocate, renegotiate stipends, or convert.

• Radiologists and radiology group leaders: The professional component is not targeted by this rule - your interpretation fees remain under MPFS. But stipend arrangements that depend on HOPD technical revenue are at risk. Review your hospital support agreements for language about revenue changes, and initiate conversations with hospital leadership before those conversations happen to you.

• Pulmonologists and referring clinicians: Noncontrast chest CT is the primary tool for lung cancer screening and many pulmonary diagnostic workups. If this rule reduces HOPD imaging capacity over time - because hospitals close programs that are no longer financially viable - access to timely imaging in outpatient settings could deteriorate, particularly in markets where HOPDs are the dominant imaging provider.

• Healthcare investors and founders: The site-neutral trend favors independent imaging center operators and ASC-integrated imaging programs. If HOPD rates converge toward PFS levels on Medicare, the rate differential that pushed hospital consolidation of imaging practices narrows. Freestanding imaging chains, AI-assisted imaging efficiency tools, and ASC imaging build-outs all become more attractive investments as HOPD economics deteriorate.

The August 31 comment deadline is not just a bureaucratic formality. It is the last credible opportunity to put an industry-wide data record in front of CMS before the final rule is written. The comments filed by the ACR, AHA, RBMA, and individual health systems in the next few weeks will shape the final rule's scope, potential exemptions, and implementation timeline.

Even if the final rule retains the site-neutral policy as proposed, a strong comment record creates the foundation for legal challenges, Congressional intervention, and future rulemaking modifications.

The radiology organizations that engage now will have standing in those future conversations. The ones that watch from the sidelines will not.

About the Author

Jonathan Govette is the Co-Founder and CEO of Oatmeal Health, an AI lung cancer diagnostic company catching cancers earlier in the communities that need it most. Oatmeal uses AI to identify unscreened high-risk patients, navigate them to care, and score every lung CT for malignancy risk - billed under CPT 0721T. Stage I survival is 77%. Stage IV is 9%. We work in FQHCs because that gap is largest there.

Jonathan writes daily about radiology, pulmonology, AI diagnostics, health policy, hospital operations, and healthcare startups.

Subscribe to stay ahead of healthcare's most important shifts. Weekly deep-dives on AI, radiology, health policy, FQHCs, and the business of healthcare - written for operators, clinicians, and investors who want the signal, not the noise. Subscribe at oatmealhealthjonathangovette.substack.com

Key References

• CMS CY 2027 OPPS/ASC Proposed Rule (released July 2, 2026) - https://www.cms.gov

• ACR Bulletin: Site-Neutral Imaging Payments: What Radiologists Need to Know (Aug. 6, 2026) - https://www.acr.org/Clinical-Resources/Publications-and-Research/ACR-Bulletin/2026/site-neutral-imaging-payments

• Radiology Business: CMS seeks to cut $260M in imaging spending through site-neutral reforms - https://radiologybusiness.com/topics/healthcare-management/healthcare-policy/cms-seeks-cut-260m-imaging-spending-through-site-neutral-reforms

• HFMA: CMS's 2027 OPPS proposed rule would cut 340B and imaging payments - https://www.hfma.org/payment-reimbursement-and-managed-care/cms-2027-opps-proposed-rule-340b-imaging-payments/

• KFF: The Trump Administration Continues to Advance Incremental Site-Neutral Payment Reforms - https://www.kff.org/quick-insights/the-trump-administration-continues-to-advance-incremental-site-neutral-payment-reforms/

The waiting room has never been this full.

During National Health Center Week 2026, HRSA released data that reframes how the entire U.S. healthcare system should be understood. HRSA-funded community health centers served 32.7 million patients in 2025 - a record high in the Health Center Program's 61-year history, up more than 350,000 from 2024. And when NACHC applies its broader methodology - counting all patients who receive care at CHC-affiliated sites - the number climbs to 52 million. That is 1 in 7 Americans. One year ago, the ratio was 1 in 10.

Those three words - 1 in 7 - are not a marketing stat. They are a structural fact about who delivers primary care in this country. Community health centers are not a supplement to the American healthcare system. For tens of millions of people, they are the system.

This milestone lands at exactly the wrong financial moment. The same week NACHC is celebrating record patient volume, it is also warning Congress that the funding model sustaining those 52 million patient relationships is operating at a negative margin, running short-term patches instead of long-term authorization, and about to absorb $911 billion in Medicaid reductions it had no hand in creating.

1. The Scale That Rewrites the Safety-Net Narrative

The 1 in 7 figure from NACHC is not a rounding error or a stretched definition. It is the result of 1,526 federally qualified health centers operating across 17,400 communities, staffed by 340,000 healthcare professionals, serving patients in every county type - urban, suburban, and rural.

The rural penetration is especially striking. One in 3 rural Americans receives care at a community health center. In many rural counties, the nearest alternative is a hospital emergency room that is 45 minutes away and does not do primary care. The CHC is not a backup plan. It is the plan.

The demographic reach mirrors the hardest-to-reach populations in the healthcare system. One in 8 American children receives care at a CHC. Migrant and seasonal farmworkers, people experiencing homelessness, and residents of public housing all have dedicated CHC programs funded under Section 330 of the Public Health Service Act. These are populations that the private market has consistently failed to serve at scale.

📊 52.3 million patients served in 2025 across HRSA and NACHC-affiliated sites - the highest total in the 61-year history of the Health Center Program.

What makes the scale remarkable is not just the patient count. It is what those encounters produce. In 2025 alone, community health centers provided cancer screenings to nearly 11 million patients, helped more than 4 million patients achieve controlled hypertension, and supported 2.5 million patients in achieving controlled diabetes. More than 713,000 patients received BMI screening and follow-up counseling. Nearly 200,000 children received weight assessment and nutrition counseling.

These are not marginal outcomes. These are the clinical metrics that Medicare Advantage plans spend billions of dollars chasing - and CHCs are producing them in the hardest patient populations, at a fraction of the per-visit cost.

2. The Funding Model That Has Never Caught Up

Understanding why this moment is precarious requires understanding how CHCs are paid.

Federal funding for community health centers flows through two buckets. The discretionary fund - Section 330 grants appropriated annually through the congressional budget process - covers roughly 30% of federal CHC dollars. The mandatory Community Health Center Fund, established in 2010 through the ACA, covers the remaining 70% and is supposed to provide the stability that annual appropriations cannot.

The problem is that neither bucket has been managed with the consistency the patient load demands.

The mandatory fund requires periodic reauthorization. Congress has repeatedly allowed it to lapse, then passed short-term continuing resolutions to keep centers open. This is not a new pattern, but it has grown more acute as the patient population has grown. Running a 340,000-person workforce on a series of rolling 3-month funding extensions is not operations. It is controlled crisis.

NACHC has asked Congress for a $300 million increase over FY2026 discretionary levels for FY2027. The request is not a stretch goal. It is specifically targeted at three operational priorities: expanding IT infrastructure (including AI adoption), growing behavioral health and nutrition services, and building new access points like mobile health units. A bipartisan letter supporting robust CHC funding in FY2027 was signed by 297 members of Congress - a record sign-on count - led by Representatives Gus Bilirakis (R-FL) and Diana DeGette (D-CO).

📊 297 bipartisan members of Congress signed NACHC's funding letter - the highest bipartisan support for CHC funding in the program's history.

The $300 million request is proportional to the load. In 2023, total CHC revenue was $46.7 billion. Federal grants accounted for approximately $7 billion of that. Medicaid reimbursements accounted for $23 billion - roughly 43% of total revenue. When that Medicaid revenue base shifts, centers do not have margin to absorb the shock. The average CHC operating margin in 2024 was -2.1%. These organizations are not sitting on reserves.

3. The Medicaid Collision Course

The OBBBA - the One Big Beautiful Bill Act signed in mid-2025 - contains $911 billion in Medicaid spending reductions over 10 years. CBO projects that more than 10.3 million people will lose Medicaid coverage as a result. The mechanism is layered: work requirements, more frequent eligibility redeterminations, reduced federal matching rates in certain categories, and a restructuring of the enhanced federal match for ACA expansion states.

For community health centers, this is not an abstract federal policy. Medicaid is their largest revenue source by a significant margin. When Medicaid patients lose coverage and become uninsured, two things happen simultaneously: the center loses the reimbursement, and the patient continues showing up - because they have nowhere else to go. CHCs are required by federal law to serve patients regardless of ability to pay. The uninsured get a sliding-fee discount. The center absorbs the difference.

This dynamic played out during the post-pandemic Medicaid redeterminations that began in 2023. NACHC reported that nearly 1 in 4 CHC patients who had been on Medicaid were disenrolled within the first year of redeterminations. Centers reported average Medicaid revenue losses of $600,000 per location. The patient volume did not drop. The revenue did.

The OBBBA cuts are structurally larger than the redetermination impact. The $911 billion in reductions is backloaded - nearly two-thirds of the cuts hit after FY2030. Congress included a $50 billion Rural Health Transformation Program to provide transition funding, but the RHTP is temporary and front-loaded, while the Medicaid cuts compound indefinitely. The math does not close.

Community health centers operate in the exact patient population most exposed to Medicaid coverage loss: low-income adults, working adults below 200% of the federal poverty level, and people in states that expanded Medicaid under the ACA. The OBBBA's work requirement provisions are projected to disenroll significant numbers of this population through paperwork failure and administrative churn - the same mechanism that produced $600,000-per-center losses during redeterminations.

4. The AI Divide Inside the Safety Net

NACHC's $300 million ask is not just about keeping the lights on. A specific portion of the funding request targets technology infrastructure - including AI adoption. This is the policy dimension that most coverage of the CHC milestone is missing.

There is an emerging AI adoption gap between well-resourced health systems and safety-net providers. The Commonwealth Fund documented in 2026 that CHC providers are beginning to use AI clinical decision support tools - software that synthesizes medical knowledge and generates treatment guidance at the point of care. The reception has been cautiously positive. Providers report that the tools are easy to use and can accelerate clinical reasoning, particularly for complex comorbidity management in the Medicaid population.

But CHC providers also flagged significant concerns: accuracy reliability, overreliance risk, and the potential for bias in underlying training data. These are legitimate concerns in any clinical setting. They are amplified in the CHC context because the patient populations served by community health centers - low-income, racially diverse, with high rates of chronic disease and behavioral health co-morbidities - are often underrepresented in the datasets that trained those AI models.

📊 CHC providers serve 1 in 4 Medicaid patients nationally, yet account for less than 3% of total Medicaid expenditures - a structural efficiency that AI-augmented care could extend further.

The behavioral health workforce shortage compounds the technology adoption challenge. The U.S. healthcare system faced a shortage of 14,600+ mental health counselors in 2025 according to workforce data, a gap that is particularly acute in the communities CHCs serve. Integrated behavioral health - the ability to treat mental health conditions alongside physical health in the same visit - is one of the services NACHC is specifically requesting $300 million to expand.

Technology that reduces administrative burden - documentation, prior auth, coding - could materially extend CHC workforce capacity without adding headcount. But building that infrastructure requires capital investment that organizations running -2.1% margins cannot self-fund.

5. The Workforce Behind the Numbers

The 340,000 healthcare professionals working in community health centers represent a clinical workforce that is often invisible in mainstream healthcare coverage. These are physicians, nurse practitioners, physician assistants, dentists, dental hygienists, behavioral health clinicians, pharmacists, and community health workers embedded in the communities they serve.

The workforce model is structurally different from hospital or private practice employment. CHC clinicians frequently operate under the National Health Service Corps loan repayment program, which offers student debt relief in exchange for service in Health Professional Shortage Areas. This is how many CHCs recruit in markets where they cannot compete on salary with health systems or private practices.

The model works - until the pipeline pressures compound. Clinical vacancy rates in CHC settings mirror the broader primary care shortage: the U.S. is projected to face a shortage of 68,000 primary care physicians by 2036 according to AAMC projections. CHCs operate primarily in primary care. They are recruiting from a shrinking pool, in the least resource-competitive position in the market.

NACHC's workforce development ask within the $300 million request includes funding for new training programs, expanded residency partnerships, and technology adoption that makes CHC practice more efficient. The goal is not just to fill current vacancies - it is to build a pipeline that can sustain 52 million patient relationships as the underlying physician supply contracts.

Deep Dive: The Financial Model Under Pressure

What the Numbers Actually Mean for CHC Viability

The -2.1% average operating margin deserves careful unpacking. An operating margin of -2.1% does not mean every CHC is losing money. The average conceals a distribution: some centers are well-managed, efficiently coded, and running positive margins. Others - particularly small rural centers, those in states with aggressive Medicaid managed care rate compression, and those serving high concentrations of uninsured patients - are running margins that put their long-term viability at serious risk.

Federal grant funding functions as a structural subsidy that allows CHCs to serve uninsured patients at the sliding-fee scale required by law. When operating margins compress, the first thing that gets squeezed is everything that is not clinically required: technology upgrades, administrative system investments, behavioral health expansion, mobile health units. All of the things the $300 million request is designed to fund.

The Three-Scenario Financial Model for 2027-2030

Scenario A: $300M Increase Approved, Medicaid Losses Contained

If Congress approves NACHC's full funding request and Medicaid coverage losses are limited to 3-4 million nationally (below CBO's 10.3 million projection through better implementation), CHC operating margins could stabilize near -1.0% to 0%. Centers could make targeted AI and behavioral health investments. Patient volume growth continues at 3-5% annually. This is the scenario the bipartisan 297-member coalition is working toward.

Scenario B: Flat Funding, Medicaid Losses Track CBO Projections

If CHC funding holds at current levels and Medicaid losses reach CBO's 10.3 million projection, centers absorb an estimated $3.2 billion annual revenue hit by 2028, growing to $6.8 billion by 2032 as backloaded cuts accelerate. Average operating margin falls to -4.5% to -6%. Center closures accelerate, particularly in rural markets. The 52 million patient relationship count begins to decline for the first time in the program's history.

Scenario C: Discretionary Cuts Plus Full OBBBA Implementation

If Congress reduces CHC discretionary funding and OBBBA Medicaid cuts are fully implemented, the math produces a structural crisis. A 10% cut in discretionary grants plus $6.8 billion in Medicaid revenue reduction would push average operating margins below -8% and trigger a wave of center closures, particularly in rural communities and states without supplemental state funding. Patients displaced from closed centers would shift to hospital emergency departments - the highest-cost and lowest-continuity care setting in the system.

What This Means For You

• FQHC executives and CEOs: The 297-member bipartisan letter is the strongest signal in years that Congress understands the stakes. Use it. Quantify your specific Medicaid exposure under the three OBBBA implementation scenarios and build a 3-year financial model showing your center's viability cliff. That model is your advocacy document with your state delegation and your board.

• Health system administrators and CMOs: If your hospital catchment area includes CHCs, model what happens to your ED when a CHC closes. The 52 million patient relationship count is not an abstraction - it is a buffer for your emergency department. Supporting CHC funding is not philanthropy. It is capacity management.

• Radiologists and pulmonologists: CHCs are running cancer screening at scale - 11 million screens in 2025. That generates downstream imaging volume. The question is whether your systems can handle the follow-up imaging referral flow from CHC-identified positives. If screening scales and imaging capacity does not, you have a bottleneck at the most consequential moment in the clinical pathway.

• Healthcare investors and founders: The AI digital divide between well-resourced health systems and CHCs is a real market gap, but the sales cycle is long and the capital position is constrained. The better play is building through HRSA's Health Center Controlled Networks and NACHC partnership channels rather than direct-to-center sales. Position for the $300 million technology infrastructure ask - if it passes, it is a procurement catalyst.

• Policy advocates: The mandatory CHC Fund reauthorization window is the near-term leverage point. A short-term extension is not acceptable when the patient population has grown to 1 in 7 Americans. Push for a 5-year mandatory authorization floor as the minimum acceptable outcome. Anything shorter is another round of controlled crisis.

The waiting room is full because community health centers have built something that works: accessible, affordable, comprehensive primary care for the populations the private market consistently underserves. The policy question for 2026 is not whether that system deserves to continue. It is whether Congress will fund it at the scale it is already operating.

A system that serves 1 in 7 Americans cannot be funded like a safety-net program serving 1 in 20.

The numbers have changed. The funding model has not. That gap is the story.

About the Author

Jonathan Govette is the Co-Founder and CEO of Oatmeal Health, an AI lung cancer diagnostic company catching cancers earlier in the communities that need it most. Oatmeal uses AI to identify unscreened high-risk patients, navigate them to care, and score every lung CT for malignancy risk - billed under CPT 0721T. Stage I survival is 77%. Stage IV is 9%. We work in FQHCs because that gap is largest there.

Jonathan writes daily about radiology, pulmonology, AI diagnostics, health policy, hospital operations, and healthcare startups.

Subscribe to stay ahead of healthcare's most important shifts. Weekly deep-dives on AI, radiology, health policy, FQHCs, and the business of healthcare - written for operators, clinicians, and investors who want the signal, not the noise. Subscribe at oatmealhealthjonathangovette.substack.com

Key References

• HRSA / HHS: "HRSA Health Centers Deliver Record-Breaking Care to More Than 32.7 Million Patients" (August 2026) - https://www.hhs.gov/press-room/hrsa-health-centers-serve-record-32-million-patients.html

• NACHC: "America's Health Centers: By the Numbers" (2026) - https://www.nachc.org/resource/americas-health-centers-by-the-numbers/

• Commonwealth Fund: "Digital Innovations at CHCs: AI Clinical Decision Support" (2026) - https://www.commonwealthfund.org/blog/2026/digital-innovations-community-health-centers-ai-clinical-decision-support-chc-providers

• NACHC: "Community Health Center Funding: Critical Updates and Future Outlook" (2026) - https://www.nachc.org/community-health-center-funding-critical-updates-and-future-outlook/

• TechTarget / xtelligent: "Community health centers provide care to 1 in 7 patients" (August 5, 2026) - https://www.techtarget.com/patientengagement/news/366647363/Community-health-centers-provide-care-to-1-in-7-patients

$8.049 billion. That is what CMS is distributing in uncompensated care payments in FY 2027 - a 2.9% increase from the $7.821 billion paid out in FY 2026.

That number tells you something important about the structural weight hospitals are already carrying before a single new mandate kicks in. And on July 31, 2026, CMS added several new mandates.

The FY 2027 Inpatient Prospective Payment System final rule - officially CMS-1849-F - was published in the Federal Register on August 4, 2026. It is effective October 1, 2026. If your organization has not worked through every major provision, here is the breakdown that matters.

1. The Rate Increase: 2.3% With a Catch

The headline number is a 2.3% net payment rate increase for hospitals that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful users of electronic health records.

That rate reflects a 3.2% market basket update, reduced by a 0.9 percentage point productivity adjustment. In total dollar terms, CMS projects the IPPS rate changes will increase hospital payments by approximately $2.1 billion in FY 2027.

On top of that, additional payments for inpatient cases involving new medical technologies are estimated to add approximately $779 million, driven primarily by new approvals for new technology add-on payments (NTAP). Combined, the estimated payment increase is roughly $2.9 billion across all IPPS-covered hospitals.

The catch is important. That 2.3% only applies if you are participating in IQR and demonstrating meaningful EHR use. Hospitals that are not will receive a smaller update. Quality program participation is no longer optional math.

📊 A 2.3% increase sounds strong. After accounting for the 9.1% projected uninsured rate in FY 2027 (up from 8.7% in FY 2026) and a $564 million decrease in total Medicare DSH payments year-over-year, the net picture for safety-net hospitals is far more complicated.

For long-term care hospitals (LTCHs), CMS finalized the same 2.3% net rate increase under the LTCH Prospective Payment System, aligning the two systems on market basket methodology.

2. The NTAP Fast Lane Is Closed

This is the provision most organizations are underestimating.

New Technology Add-on Payments (NTAP) have long had two pathways to qualification. The standard pathway requires applicants to meet three criteria: the technology must be new, the existing DRG payment must be inadequate, and the technology must demonstrate substantial clinical improvement over existing treatments.

The alternative pathway - established years ago to encourage innovation - allowed devices with FDA Breakthrough Device Designation or Qualified Infectious Disease Product (QIDP) status to skip the substantial clinical improvement requirement. FDA breakthrough designation, in effect, substituted for that third criterion.

CMS has now eliminated this alternative pathway for applications submitted on or after October 1, 2026, meaning the FY 2028 NTAP cycle and all subsequent cycles. All applicants - regardless of FDA breakthrough designation or QIDP status - must now demonstrate that their technology meets all three eligibility criteria.

Forty-one technologies already approved for NTAP will continue to receive add-on payments under the prior rules for FY 2027. Nineteen new NTAP applications were approved for FY 2027 under the existing framework. But the pipeline shifts immediately. Any device company planning to use FDA breakthrough designation as a payment shortcut after October 2026 will be denied that path.

This has significant downstream implications for health systems evaluating technology acquisitions. Devices that previously had a clear Medicare reimbursement path through NTAP will now face longer and less certain timelines. Hospital value analysis committees should revisit any vendor commitments that assumed a fast-track NTAP pathway.

The change also matters for investors and medical device companies building go-to-market strategies around breakthrough designation. The FDA designation remains clinically meaningful and speeds regulatory review. But it no longer guarantees Medicare payment momentum.

3. CJR-X: The Mandatory Episode Payment That Starts January 2028

The Comprehensive Care for Joint Replacement model - now called CJR-X - has been nationalized. CMS finalized mandatory participation beginning January 1, 2028.

This makes CJR-X the first nationwide mandatory episode-based payment model for most IPPS-paid acute care hospitals. The model covers lower-extremity joint replacement procedures, including hip, knee, and ankle replacements, performed in both inpatient and hospital outpatient settings.

The scope of each episode includes the anchor hospitalization or outpatient procedure, plus all related Medicare Parts A and B services during the following 90-day post-discharge period. That is 90 days of care - skilled nursing, physical therapy, readmissions, follow-up imaging - all bundled under one target price.

Hospitals in the Transforming Episode Accountability Model (TEAM), those in Maryland under the state's all-payer model, and those not paid under both IPPS and OPPS may be exempt. But for most community hospitals and health systems performing joint replacements, CJR-X is mandatory in 17 months.

📊 The predecessor CJR model - which ran from April 2016 through December 2024 - saved Medicare more than $100 million while holding quality steady. CMS is building on that track record with a mandatory national program.

The implementation timeline matters. January 1, 2028 is not far away. Hospitals need to establish episode cost tracking now, understand their post-acute network performance, and start building the internal infrastructure to succeed under a bundled payment structure. Organizations that waited to see if CJR-X became mandatory have run out of time.

4. The DSH Paradox: More Uninsured, Less Money

Here is the number that should be getting more attention.

CMS projects the national uninsured rate will increase from 8.7% in FY 2026 to 9.1% in FY 2027. More Americans will be uninsured. More patients will arrive at safety-net hospitals unable to pay. And yet CMS estimates that total Medicare DSH and uncompensated care payments will decrease by approximately $564 million compared with FY 2026.

This is not a rounding error. It is a structural outcome of how the uncompensated care payment methodology works. The $8.049 billion in uncompensated care payments is distributed based on hospital-specific data from prior fiscal years, and the formula does not automatically scale with real-time increases in the uninsured population.

For safety-net hospitals and academic medical centers with high DSH percentages, this is a meaningful squeeze. You are absorbing more uninsured patients in FY 2027 while receiving less DSH support on a total-system basis than the prior year.

The CMS uncompensated care Factor 2 for FY 2027 was finalized at 67.14%, an increase from the proposed 65.00%. That upward revision from the proposed rule shows CMS responded to some stakeholder pressure. But the aggregate $564 million decline in DSH-related payments still lands.

📊 FY 2027 uncompensated care fund: $8.049 billion. FY 2026: $7.821 billion. Net increase in that fund: $228 million. Decrease in total Medicare DSH-related payments overall: $564 million. Those two numbers are not in conflict - they reflect different components of the same broader DSH framework.

5. TEAM Model Expansion, New MS-DRGs, and LTCH Updates

Beyond the headline provisions, FY 2027 includes significant technical changes that affect specific service lines.

TEAM Model Updates

The Transforming Episode Accountability Model (TEAM) is a mandatory, five-year, episode-based payment model running from January 1, 2026 through December 31, 2030. It covers five surgical procedures at selected hospitals: lower extremity joint replacement, surgical hip femur fracture treatment, spinal fusion, coronary artery bypass graft, and major bowel procedures.

The FY 2027 final rule expands TEAM's eligible spinal fusion episodes, better aligns attribution and quality measures with other CMS programs, and refines pricing methodologies. For hospitals already in TEAM's spinal fusion track, this means broader episode scope and - in some cases - different target prices.

New MS-DRGs

CMS finalized three groups of new Medicare Severity Diagnosis-Related Groups (MS-DRGs) in this rule:

• Extensive and complex spinal fusion: MS-DRGs 523 through 525, capturing high-acuity spinal fusion cases that were previously bundled into lower-weighted DRGs

• Hip and knee procedures with principal diagnosis of periprosthetic joint infection: MS-DRGs 403 and 404, recognizing the higher resource use of treating infected joint implants

• Cardiac pacemaker revision and device replacement: MS-DRGs 210 and 211, separating pacemaker revision from initial implant procedures

Each of these DRG changes carries payment implications. Hospitals performing high volumes of complex spinal fusion or managing periprosthetic joint infections should model the case-level payment impact before October 1.

LTCH Updates

Long-term care hospitals receive the same 2.3% net market basket update. CMS also finalized policies for low-volume hospital payment adjustments and Medicare-dependent hospital programs through December 31, 2026, with separate policies applying after January 1, 2027, reflecting the congressional extension timelines.

Deep Dive

The Three Financial Pressure Points Every Hospital CFO Needs to Model

The FY 2027 IPPS final rule creates three distinct financial pressure points depending on hospital type. Here is how to model each one.

Scenario A: High-Volume Joint Replacement Hospital

If your hospital performs 300 or more lower-extremity joint replacement cases annually, CJR-X mandatory participation beginning January 1, 2028 is your most urgent priority. You have 17 months.

Start with a 90-day episode cost analysis. Pull your average episode spend - including post-acute care - for hip, knee, and ankle replacements from the past two fiscal years. Compare that against what CMS's target price will likely look like, based on the predecessor CJR model's historical benchmarks.

Key variables to model: skilled nursing facility utilization rates (post-acute care is typically 30-40% of total episode cost), readmission rates within 90 days, and whether your post-acute partners are capable of managing within a bundled cost structure.

Hospitals that ran the CJR pilot well - and that achieved shared savings - did so by shifting patients away from high-cost SNF stays toward home health and outpatient PT. That network infrastructure takes 12 to 18 months to build and validate.

Scenario B: Safety-Net Hospital With High DSH Percentage

The $564 million system-wide decrease in total Medicare DSH-related payments, combined with the projected 9.1% uninsured rate in FY 2027, creates a margin compression scenario that does not show up in the 2.3% rate headline.

Model your hospital's specific DSH adjustment under the new Factor 2 value of 67.14%. If your uncompensated care share dropped relative to peer institutions, your FY 2027 uncompensated care distribution will decline even if your actual uninsured volume increased.

Combine this with any OBBBA or Medicaid enrollment changes affecting your patient population. For hospitals in states with high Medicaid-to-uninsured conversion risk (patients losing Medicaid coverage and becoming uninsured rather than privately insured), FY 2027 and FY 2028 will test financial resilience in ways the IPPS rate increase does not offset.

Scenario C: Health System Evaluating Breakthrough Device Acquisitions

The NTAP alternative pathway closure is not an abstract policy change. It directly affects the payment infrastructure for devices that were cleared through FDA's breakthrough device program and were relying on NTAP reimbursement to drive hospital adoption.

Your value analysis committee should pull a list of every device under active evaluation that has FDA breakthrough designation. For each one, ask: what is the documented evidence of substantial clinical improvement? If the company's Medicare reimbursement strategy relied on the alternative NTAP pathway, that strategy is no longer viable for applications submitted after October 1, 2026.

This does not mean the devices are not valuable. It means the hospital payment timeline just got longer and less certain for an entire category of technology. Factor that into your acquisition decisions and vendor negotiation leverage.

What This Means For You

FQHC executives and community health center leaders: The $8.049 billion uncompensated care fund and the $564 million DSH decrease matter to you indirectly. When safety-net hospitals face tighter margins, they reduce outreach, close service lines, and pull back from the populations FQHCs serve. Model your referral network stability. The hospital closures and service-line cuts that follow margin pressure usually land on your patients first.

Health system administrators and CFOs: Start CJR-X episode modeling today. You have 17 months. Hospitals that built post-acute network infrastructure during the voluntary CJR pilot outperformed on shared savings. The mandatory model uses similar methodology. If you did not participate in voluntary CJR, you have no baseline data and no network - that is your most urgent gap to close.

Radiologists and pulmonologists: The new MS-DRGs for complex spinal fusion (MS-DRGs 523-525) and periprosthetic joint infection (MS-DRGs 403-404) have imaging implications. More accurately paid high-acuity cases create more demand for diagnostic workups. Understand how your facility is billing and crediting radiology and pulmonology services within these newly finalized DRG structures.

Healthcare investors and founders: The NTAP pathway closure is a market signal. Companies that were building go-to-market strategies around FDA breakthrough designation as a payment accelerator need to rebuild those strategies. Clinical evidence packages for NTAP applications now need to include robust substantial clinical improvement data - not just regulatory clearance. Fund accordingly.

Policy advocates: The DSH paradox - more uninsured patients, less total DSH support system-wide - is worth surfacing in comment letters and legislative advocacy. The FY 2027 comment period is closed, but the FY 2028 proposed rule will follow in spring 2027. That is your next window.

The rule is already in effect

The FY 2027 IPPS final rule is not a proposal. It is finalized and effective October 1, 2026. That means the payment rates, the NTAP pathway change, the new MS-DRGs, and the CJR-X nationalization timeline are all locked in.

What is not locked in is whether your organization is prepared. The CJR-X mandatory start is January 1, 2028. That date will arrive faster than your Q4 planning cycle expects.

The hospitals that succeed under these new rules will be the ones that modeled the episode costs, built the post-acute networks, audited their NTAP device portfolios, and verified their IQR participation status before October 1 - not after. The rule rewards preparation. It does not wait for it.

What is your organization's biggest compliance gap from this rule? Reply and let me know.

About the Author

Jonathan Govette is the Co-Founder and CEO of Oatmeal Health, an AI lung cancer diagnostic company catching cancers earlier in the communities that need it most. Oatmeal uses AI to identify unscreened high-risk patients, navigate them to care, and score every lung CT for malignancy risk - billed under CPT 0721T. Stage I survival is 77%. Stage IV is 9%. We work in FQHCs because that gap is largest there.

Jonathan writes daily about radiology, pulmonology, AI diagnostics, health policy, hospital operations, and healthcare startups.

Subscribe to stay ahead of healthcare's most important shifts. Weekly deep-dives on AI, radiology, health policy, FQHCs, and the business of healthcare - written for operators, clinicians, and investors who want the signal, not the noise. Subscribe at oatmealhealthjonathangovette.substack.com

Key References

• CMS FY 2027 IPPS Final Rule Fact Sheet (CMS-1849-F), July 31, 2026 - https://www.cms.gov/newsroom/fact-sheets/fy-2027-hospital-inpatient-prospective-payment-system-long-term-care-hospital-prospective-payment

• National Law Review: "CMS Releases FY 2027 IPPS Final Rule," August 5, 2026 - https://natlawreview.com/article/cms-releases-fy-2027-ipps-final-rule

• Holland & Knight: "CMS Releases Fiscal Year 2027 IPPS and LTCH Final Rule," August 2026 - https://www.hklaw.com/en/insights/publications/2026/08/cms-releases-fiscal-year-2027-ipps-and-ltch-final-rule

• Federal Register: CMS-1849-F, published August 4, 2026 - https://www.federalregister.gov/documents/2026/08/04/2026-15833/medicare-program-hospital-inpatient-prospective-payment-systems-for-acute-care-hospitals-ipps-and

• McDermott+: "CMS Releases FY 2027 IPPS Final Rule," August 2026 - https://www.mcdermottplus.com/insights/cms-releases-fy-2027-ipps-final-rule/

The evidence has been sitting in front of us for 21 years. Researchers just put the final number on it: 50.1 percent. That is how much colorectal cancer mortality fell in the Basque Country of Spain after the region launched a population-wide screening program in 2009. Not in a controlled trial. Not in a hand-selected cohort. In 2.2 million real people, tracked over two decades, through every disruption a real healthcare system encounters.

The tool that drove that result was not a colonoscopy machine or an AI algorithm. It was a mailed stool kit. A fecal immunochemical test - FIT - that detects trace blood in stool and costs roughly $24 to process. Offered every two years to adults aged 50 to 69. Followed by a colonoscopy for anyone who tested positive. That is the entire program.

The study, led by Dr. Luis Bujanda and published August 5, 2026, in JAMA Network Open, analyzed 16,298 cases linked to colorectal cancer from 2004 to 2024. Mortality in the 50-69 age group fell from 39.7 to 19.8 deaths per 100,000 people. Without the program, researchers estimated mortality in that group would have been 46.2 percent higher. And the decline did not take decades to show up: it started just three years after the program launched.

If you run a health system, an FQHC, or any population health program in the United States, this study is not academic. It is a direct comparison. Because the US has the same technology, the same test, and the same cancer. What the US does not have is the infrastructure discipline the Basque Country built around it.

1. The Basque Proof Point

The Basque Country colorectal cancer screening program launched in 2009. It targeted every asymptomatic adult aged 50 to 69 in the region - a population of roughly 2.2 million people. The mechanism was simple: send a FIT kit to eligible adults, ask them to return a stool sample, and build a colonoscopy follow-up pathway for anyone with a positive result.

Over 21 years, that program identified 4,892 colorectal cancer cases. The critical number is not the case count - it is where those cases were found. Seventy point eight percent of tumors were detected at stage I or II, when treatment is less aggressive, outcomes are better, and the healthcare system spends far less on care.

For comparison, the US stage-at-detection picture looks very different. Under current screening patterns, roughly 38 percent of colorectal cancers in the US are found at localized (stage I-II equivalent) stage. The rest are found regionally or after metastasis. That gap - 70.8 percent versus 38 percent - is not a gap in technology. The FIT test available to an FQHC patient in Phoenix today is the same test used in Bilbao in 2009. The gap is in whether the test gets offered, returned, and followed up.

The mortality trajectory of the Basque program tells you exactly when the infrastructure impact becomes visible. The mortality rate in the screened age group was 39.7 deaths per 100,000 in 2004, before screening began. It held relatively flat until the program launched in 2009. Then, within three years, the decline accelerated. By 2024, it had reached 19.8 deaths per 100,000. A 50.1 percent reduction, sustained and compounding.

📊 Without the Basque program, researchers estimate mortality in the 50-69 age group would have been 46.2% higher than what was observed by 2024.

The chart below visualizes how the mortality decline tracked against the program's launch and sustained operation over two decades.

2. What FIT Actually Does - and Why It Works

FIT is not a new technology. Fecal immunochemical testing has been available for decades. What makes the Basque program instructive is not the test itself - it is the delivery model built around the test, and the reason that model drives higher participation than alternatives.

The core barrier to colorectal cancer screening in the US has never been lack of colonoscopy capacity. It has been participation. A colonoscopy requires bowel preparation the night before, anesthesia, a procedure room, a driver home, and time off work. In studies comparing FIT to colonoscopy as a screening strategy, the FIT participation rate was 41.6 percent versus 21.9 percent for colonoscopy. When you double the participation rate of your screening program, you double the fraction of early-stage cancers you find - before symptoms appear, before the cancer spreads, and while treatment is still straightforward.

📊 FIT costs approximately $24 per test. A colonoscopy with facility fees typically reaches $635 or more, and charges in many markets run $1,000 to $2,000 before insurance adjustments.

The population-level evidence on FIT-based biennial screening now includes the Basque study and multiple prior analyses. Large-scale biennial FIT programs have demonstrated 34 percent reductions in advanced-stage colorectal cancers and 40 percent reductions in colorectal cancer death in prospective analyses. The Basque 21-year real-world data adds weight to that body of evidence that no controlled trial can replicate: sustained operational performance across two decades of a real health system.

Critically, FIT detection rates for colorectal cancer are comparable to colonoscopy. The trade-off is that FIT does not detect advanced adenomas as reliably as a one-time colonoscopy - but at a population level, the participation advantage more than compensates. You find fewer adenomas per patient, but you reach twice as many patients.

The follow-up colonoscopy is where many US programs stumble. The Basque model built explicit colonoscopy access into the program design. A positive FIT without a follow-up pathway produces worse outcomes than no screening at all - it creates anxiety without resolution and costs without benefit. Any US health system or FQHC attempting to replicate the Basque model must treat the colonoscopy access pipeline as a structural requirement of the program, not an afterthought.

3. The US Screening Gap

The United States will see an estimated 158,850 new colorectal cancer diagnoses in 2026 and 55,230 deaths from the disease, according to American Cancer Society projections. Colorectal cancer remains the second-leading cause of cancer death in the US when men and women are combined.

The national CRC screening rate for the general population is approximately 72.3 percent. That sounds close to the Healthy People 2030 target of 74.4 percent - but that national average conceals enormous disparities by insurance status, income, language, and geography.

Uninsured adults screen at 37 percent. The national FQHC screening average is 46 percent. Patients with limited English proficiency screen at 34 percent. In the populations that FQHCs serve - low-income adults, racial minorities, the uninsured, immigrants - colorectal cancer screening rates are roughly half the national average for the insured population.

📊 FQHC patients screen for colorectal cancer at 46% on average - versus a national goal of 80%. The gap costs lives at a scale the Basque data makes concrete.

Colonoscopy charges ranging from $1,000 to $2,000 are a meaningful barrier for an uninsured adult earning $28,000 a year. Even with ACA coverage, colonoscopy co-pays after an abnormal stool test remained a problem until 2023 policy changes required zero-cost follow-up colonoscopies after a positive noninvasive test. But policy changes only help people who are already in the screening pipeline.

The deeper barrier is initiation. An uninsured adult who has never been offered a screening option, never received a mailed kit, and associates colorectal cancer screening with the inconvenience of colonoscopy preparation - that patient is not going to seek out screening independently. The Basque model works precisely because it does not wait for patients to seek screening. It delivers screening to them.

4. The FQHC Opportunity

Federally Qualified Health Centers serve as the primary care backbone for 32 million Americans who are uninsured, low-income, or underserved. FQHCs are required by law to serve all patients regardless of ability to pay. They operate in the communities where colorectal cancer screening rates are lowest and where a 50 percent mortality reduction, if replicable, would save the most lives.

The challenge is structural. The revised USPSTF guidelines lowered the recommended screening age for colorectal cancer to 45, expanding the eligible population significantly - without a corresponding increase in resources. FQHCs are now being asked to screen a larger population with the same constrained capacity. Adding a colonoscopy-first strategy for that expanded population is not financially or operationally feasible for most community health centers.

This is exactly where FIT-first programs become a strategic fit rather than a compromise. FIT does not require a procedure room, anesthesia, or a GI physician. A mailed FIT kit program can be managed by medical assistants with patient navigation support. The Basque data is the strongest published evidence that this approach, implemented at scale and sustained over time, produces population-level mortality reductions that match or exceed what colonoscopy-first programs achieve at lower participation rates.

📊 At one FQHC that implemented structured FIT outreach with patient navigation support, colorectal cancer screening rates increased from 32% to 54% over 18 months without adding colonoscopy capacity.

The critical infrastructure requirements for an FQHC to execute a Basque-style program are: an electronic health record capable of identifying overdue patients by age and screening history, a mailed kit protocol with clear return instructions in the patient's primary language, a patient navigation team trained to follow up on unreturned kits, and a contracted GI pathway for patients with positive FIT results. None of these requirements are technologically novel. The bottleneck is operational discipline and sustained leadership commitment.

5. The Financial Case for Prevention Over Treatment

The case for FIT-based population screening is not only clinical - it is financial. And the Basque data makes the financial argument more compelling than any prior study because it demonstrates sustained cost avoidance at scale over two decades.

The stage-at-detection shift is the mechanism. When 70.8 percent of cancers are found at stage I or II instead of 38 percent, the distribution of treatment costs shifts dramatically. Stage I colon cancer treatment costs an average of $35,000 to $50,000 per patient in total care expenditure through the first year of treatment. Stage IV metastatic colorectal cancer costs $150,000 to $250,000 per patient in the first year alone, with ongoing maintenance therapy extending costs further.

At the system level, shifting even a fraction of stage IV diagnoses to stage I detection produces seven-figure cost avoidance per hundred patients screened. For a health system or insurer managing a large population over time, a FIT-first screening program is one of the highest-return prevention investments available.

The FQHC financial case is different but equally compelling. FQHCs operate on thin margins with Medicaid and uninsured patient panels. Every stage IV colorectal cancer in a Medicaid patient represents years of high-cost care that a $24 FIT test, returned every two years, might have prevented. The cost of building and running a FIT outreach program is measurable and bounded. The cost of not running one compounds silently in late-stage diagnoses, expensive treatment, and patient mortality.

6. Deep Dive: Building the Basque Framework in a US FQHC or Health System

The Basque program is not a plug-and-play template. The Basque Country operates under a nationalized healthcare system with universal enrollment, no cost barriers at point of care, and centralized population health registries. Replicating the outcomes in a US context requires translating the underlying structural logic into a framework that accounts for US health system fragmentation.

Here is what the Basque framework actually requires - and how to adapt each element.

Component 1: Population Identification

The Basque program identified every eligible adult in the region from a single database. In a US FQHC or health system, the equivalent is the EHR patient panel. The key metric is the "due for screening" list: every active patient aged 45-75 who has no documented colorectal cancer screening in the appropriate interval. This list should be generated automatically by your EHR and reviewed monthly.

Most FQHCs have this capability. The failure point is not identification - it is activation. Generating the list is step one. Acting on it systematically is the program.

Component 2: Default to FIT

The Basque program used FIT as the primary screening modality. In a US context, the equivalent choice is to default to FIT for all patients who have not had a colonoscopy in the past 10 years and are not high-risk (personal or family history of CRC or advanced adenomas).

This does not mean eliminating colonoscopy. It means reserving colonoscopy for high-risk patients, for positive FIT follow-up, and for patients who explicitly prefer it. The participation data is clear: when you offer FIT first, more patients screen.

Component 3: Mail-First Outreach

The Basque program mailed kits to eligible adults. In a US FQHC setting, mailed kits should be combined with phone outreach for patients with language or literacy barriers. The kit mailing should include instructions in the patient's primary language, a prepaid return envelope, and clear contact information for the navigation team.

Evidence from US programs that have implemented mail-first FIT outreach consistently shows participation rate increases of 15-25 percentage points compared to clinic-based screening orders alone.

Component 4: Closed-Loop Follow-Up

This is the step most US programs underperform. A returned FIT kit is not the end of the workflow. Positive results require a follow-up colonoscopy within 3 months to maintain clinical benefit. Unreturned kits require at least two follow-up contacts before the patient is marked as non-adherent.

The Basque program built this follow-up infrastructure into the program design from the start. US programs that treat follow-up as an afterthought, or that assume patients will self-navigate to colonoscopy, consistently underperform the Basque outcomes even when FIT participation is high.

Component 5: Track Stage-at-Detection

The metric that makes the Basque results legible is stage-at-detection, not just screening completion rate. A program that completes 70 percent of screens but still detects 80 percent of cancers at stage III-IV is not replicating the Basque model - it is running an inefficient program with a misleading completion metric.

Track stage at detection for every cancer found through your screening program. That is the outcome metric that matters. Completion rate is a leading indicator. Stage at detection is the result.

7. What This Means For You

The Basque data is the most powerful published argument for population-level FIT-first colorectal cancer screening. Here is what it means for specific stakeholders.

• FQHC executives and community health center leaders: Your patient population has CRC screening rates between 34% and 46%. The Basque framework is directly applicable. Start with your EHR panel, implement a mailed FIT protocol, and build a GI follow-up contract before you launch. The program does not require new technology - it requires operational discipline and a leadership commitment to track stage-at-detection as your primary outcome.

• Health system administrators and CMOs: A 50% mortality reduction sustained over 21 years is the strongest evidence base in population health. If your system is still defaulting to colonoscopy-first outreach, the participation data is working against you. Evaluate a FIT-first approach for your average-risk adult population. The cost-per-screen math and the stage-shift outcomes both support it.

• Radiologists and pulmonologists: Colorectal cancer diagnosed at stage III-IV frequently involves imaging-intensive staging workups, oncologic imaging, and complex multidisciplinary management. Every stage I-II diagnosis that would have been a stage IV under the current system is a case removed from your high-complexity care queue. The Basque data has a downstream effect on radiology workload composition.

• Healthcare investors and founders: The infrastructure gap between the Basque outcome and US FQHC performance is a product market. Patient navigation software, FIT mail fulfillment platforms, multilingual screening outreach tools, and colonoscopy access scheduling solutions all have a direct line to the numbers in this study. The addressable market is defined by the gap between a 46% FQHC screening rate and an 80% national goal.

• Policy advocates: The Basque study is peer-reviewed, published in JAMA Network Open, and directly comparable to the US context. It is the strongest argument for Medicaid coverage of FIT mail programs and for FQHC operational grants tied to FIT-first outreach infrastructure. Use it.

Closing

The Basque Country had a cancer problem. They built a $24-per-test, mail-first infrastructure around a test that already existed, sustained it for 21 years, and cut colorectal cancer deaths in half.

The United States has the same test, the same cancer, and a significantly larger population of adults who are not currently screened. The gap between a 46 percent FQHC screening rate and the 50 percent mortality reduction demonstrated in the Basque data is not a technology gap. It is a delivery infrastructure gap.

The question for every health system leader, FQHC CEO, and population health director reading this is not whether the Basque model works. Twenty-one years of JAMA Network Open-published data answers that. The question is whether your organization has the operational discipline to build the same infrastructure in your patient population.

What would it take for your system to close the gap between what the Basque Country achieved and what you are achieving today? I would genuinely like to hear your answer. Reply directly to this email.

About the Author

Jonathan Govette is the Co-Founder and CEO of Oatmeal Health, an AI lung cancer diagnostic company catching cancers earlier in the communities that need it most. Oatmeal uses AI to identify unscreened high-risk patients, navigate them to care, and score every lung CT for malignancy risk - billed under CPT 0721T. Stage I survival is 77%. Stage IV is 9%. We work in FQHCs because that gap is largest there.

Jonathan writes daily about radiology, pulmonology, AI diagnostics, health policy, hospital operations, and healthcare startups.

Subscribe to stay ahead of healthcare's most important shifts. Weekly deep-dives on AI, radiology, health policy, FQHCs, and the business of healthcare - written for operators, clinicians, and investors who want the signal, not the noise. Subscribe at oatmealhealthjonathangovette.substack.com

Key References

• Bujanda L et al. "Colorectal Cancer Mortality Following an Organized Fecal Immunochemical Test-Based Screening Program." JAMA Network Open, August 5, 2026. https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2852451

• Euronews Health: "Basque Country halves colon cancer deaths with screening programme," August 5, 2026. https://www.euronews.com/health/2026/08/05/basque-country-halves-colon-cancer-deaths-with-screening-programme

• American Cancer Society: "Colorectal Cancer Statistics, 2026." https://www.cancer.org/cancer/types/colon-rectal-cancer/about/key-statistics.html

• MD Anderson Cancer Center: "Cancer screening rates are significantly lower in US Federally Qualified Health Centers." https://www.mdanderson.org/newsroom/cancer-screening-rates-are-significantly-lower-in-u-s-federally-qualified-health-centers.h00-159696756.html

• Colon Cancer Foundation: "Fecal Immunochemical Tests Affordable and Effective for Colorectal Cancer Screening." https://coloncancerfoundation.org/fecal-immunochemical-tests-affordable-and-effective-for-colorectal-cancer-screening/

The numbers from last week in healthcare funding are striking not because of their scale - though $820 million in a single week is not nothing - but because of what they reveal about where capital is actually going.

One check, AdvanCell's $315 million Series D, accounts for 38% of everything raised. It is going to a radioligand therapy company advancing a Phase III-ready Lead-212 prostate cancer treatment. That is deep science, long timelines, and high capital requirements. The kind of bet that used to require a pharma partner.

The other seven deals - all Series A - went to companies doing things like automating provider credentialing, building AI operating systems for cardiovascular care, and creating in-home intensive care for children in psychiatric crisis. These are not moonshots. They are infrastructure plays for a healthcare system that is operationally broken in obvious and measurable ways.

This is the bifurcation worth understanding. Capital is flowing to both ends simultaneously…

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A scheduler in a busy imaging department is on her fourth call of the morning. Two of her CT techs called out, there is no per diem pool left to tap, and the MRI suite opens in 40 minutes.

This is not a bad week. This is Thursday.

According to the 2025 ASRT Radiologic Sciences Workplace and Staffing Survey, overall staffing pressure in medical imaging has reached historic levels across every major modality. The numbers are not directionally alarming. They are operationally disqualifying.

And yet the narrative most health system leaders carry is still the recruiting story: post more jobs, raise the sign-on bonus, call the travel agency. That frame is wrong. The data tells a different story entirely.

This is a production problem - not a recruitment problem. And the distinction has enormous consequences for how imaging departments budget, plan, and survive the next five years.

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On December 31, 2026, the Community Health Center Fund (CHCF) expires. That single date sits at the intersection of two simultaneous pressures squeezing the 1,400 Federally Qualified Health Centers (FQHCs) that serve 32.7 million Americans who otherwise have nowhere to go.

The CHCF is not a rounding error. It supplies roughly 70 percent of all Section 330 federal grant dollars and represents approximately 12 percent of total FQHC revenue nationally. It funds behavioral health integration, dental services, pharmacy access, and the capital costs that keep rural and underserved clinics open. Congress has not begun formal reauthorization debate.

At the same time, Medicaid now represents 42 percent of FQHC revenue on average, with further cuts possible under proposed federal budget reconciliation packages. NACHC data shows CHC net margins averaging negative 2.1 percent nationally. For many FQHCs, the financial deterioration is already reflected in FY2024 a…

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382,640 women will be diagnosed with breast cancer in 2026. 42,140 will die from it. And for decades, the core problem has been the same: breast ultrasound is one of the most operator-dependent procedures in all of radiology, with significant variability in how images are acquired, how lesions are characterized, and how reports are written. Different sonographers. Different reads. Different outcomes for the same patient.

On July 30, 2026, DeepHealth - a wholly owned subsidiary of RadNet (NASDAQ: RDNT) - received FDA 510(k) clearance for an AI-powered breast ultrasound platform that handles lesion detection, characterization, and report generation in a single automated workflow. The clinical validation numbers are not incremental. They are structural.

This is not a flagging tool that highlights areas of concern and hands the rest back to a radiologist. This is end-to-end AI automation of an entire imaging modality. And it cleared the FDA. It has reimbursement codes. It is going live acro…

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Colorectal cancer will kill more than 55,000 Americans this year. Ninety percent of those deaths are preventable. And roughly 45 to 48 million eligible adults are currently overdue for screening - a number that climbs toward 60 million when you add those due for rescreening.

On July 27, 2026, the FDA approved SimpleScreen CRC, Freenome's blood-based screening test for colorectal cancer in adults 45 and older at average risk. Abbott will exclusively commercialize it in the U.S. this fall. This is the second blood-based primary CRC screening test approved by the FDA, joining Guardant Health's Shield, which was approved in 2024.

The test is a genuine breakthrough. A simple blood draw. No bowel prep. No sedation. No need to arrange transportation home. But the approval is only half the equation. The other half - what happens when the test returns a positive result - is where most health systems and FQHCs are not ready.

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On July 31, 2026, the federal Medicaid work requirement rule took legal effect.

No court paused it. No judge issued an emergency order. A federal court in Massachusetts denied the states' request for a preliminary injunction the day before the effective date. The rule is now active law in 41 states plus the District of Columbia.

This is not a future risk. It is a present reality with a 90-day countdown to the moment families start getting termination notices.

Here is the number that stopped me when I read CMS's own projections: 2.3 million. That is how many people the agency itself estimates will lose Medicaid coverage in fiscal year 2027 under this rule. Not a think tank model. Not an advocacy group's estimate. The government's own math.

And here is the part buried in the fine print: CMS projects that of its estimated 15 percent disenrollment rate among affected adults, 9 percentage points come from people actually failing the work requirement - and 6 percentage points come from people l…

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A physician sits in a reading room in Cleveland. Before she touches a single chart, an AI agent has already triaged her queue, flagged a coronary risk from an incidental scan, and routed three patients to telemedicine. That is not a pilot. That is production in 2026.

This week in healthcare funding did not produce a single blockbuster clinical AI IPO or a moonshot drug delivery company. What it produced was something quieter and more important: five checks written to companies solving the operational gut-punches of healthcare. Revenue cycle waste. Agentic workflow gaps. Medicare payment infrastructure. Remote chronic care delivery. Pharmacy fill-rate failures.

$295 million total. Five deals. One very clear thesis.

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The headline number is $32.84. That is the proposed 2027 Medicare conversion factor for physicians not participating in an alternative payment model. It is down from $33.40 in 2026 - a $0.56 reduction, or -1.68%.

One point six eight percent. Written on paper, it sounds like a rounding error.

It is not a rounding error. It is the sixth consecutive year of effective physician payment erosion under Medicare.

The comment window closes September 14, 2026. That is six weeks away.

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The letter is real. The number is $867,465,287. And every community health executive in California needs to understand exactly what it means before drawing the wrong conclusion.

On July 21, 2026, CMS sent a formal deferral notice to California State Medicaid Director Tyler Sadwith, withholding $709,311,454 in federal medical assistance funds and $158,153,833 in administrative funds for Q2 FY2026. The mechanism: a negative grant award, structured as a temporary hold pending documentation review.

This is not a hypothetical. It is not a threat. It is money already spent by California on Medicaid services that the federal government is now refusing to reimburse until the state produces evidence those services were allowable.

And it comes four months into what is becoming a pattern: in May 2026, CMS issued what it called the largest single Medicaid deferral in its history - $1.34 billion from California in Round One. The July action is Round Two. The combined total: $2.21 billion in deferred …

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On July 14, 2026, two members of Congress from opposite parties did something the radiology AI industry has been waiting years for someone to do: they wrote a direct line-item appropriation for a specific category of FDA-cleared imaging software.

Not a research grant. Not a pilot buried in a continuing resolution. Not another CMS rulemaking cycle. A named bill with a named funding amount, directing a named federal agency to lease a named category of technology and deploy it for a named patient population.

H.R. 9666, the AIR CARE for Vets Act - Advanced Imaging for Respiratory Care, Assessment, and Research Excellence for Veterans - authorizes $5 million per year for fiscal years 2027 through 2031, a total of $25 million, for the Department of Veterans Affairs to run a five-year pilot using FDA-cleared four-dimensional functional lung imaging software at VA medical facilities.

The bill's sponsors are Rep. Juan Ciscomani (R-AZ) and Rep. Chris Pappas (D-NH), both members of the House Commit…

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The number that actually matters is 12.

That is how many of those clearances were Special 510(k)s - the pathway companies use when a product has already been cleared and something meaningful about it is changing. Deployment architecture. Model outputs. Patient population. Clinical workflow integration. These are not minor patches. These are product pivots executed under FDA oversight, and they tell you more about the state of radiology AI than any quarterly volume count ever will.

If you are a health system evaluating radiology AI, a radiologist advising your department on AI deployment, or an FQHC trying to understand where this technology is heading, this quarter's data is the clearest signal yet that the industry has left the "cleared or not" era behind. The new era is about what happe…

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Lung cancer kills more Americans than any other cancer. 229,410 new cases are projected in 2026. 124,990 people will die. And we have a screening test - low-dose CT - that catches it early, when Stage I survival is 77% and Stage IV survival is 9%.

So why are we still screening the wrong people?

A study published July 21, 2026 in JAMA Network Open answers that question with uncomfortable precision. Researchers at Seoul National University Bundang Hospital analyzed 89,860 patients diagnosed with lung cancer in South Korea between 2013 and 2018. Then they asked one question: how many of these actual lung cancer patients would have been eligible for screening under established guidelines from the USPSTF, ACS, and NCCN?

The answer: 35.4%.

Sixty-five percent of people who actually got lung cancer would not have been invited to the screening that might have saved them.

📊 This is not a data artifact. This is a structural failure in how we define risk.

1. What the Study Actually Found

The JAMA Netwo…

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On July 12, 2026, Marc Andreessen posted on X. The statement was brief, confident, and viral within hours: "AI is already a better doctor than 99.99% of human doctors. This is good news."

He was not wrong about capability. The evidence is mounting that large language models perform at or above median physician benchmarks on a range of diagnostic reasoning tasks. The technology is real. The capability gains are real.

Then Mark Cuban replied. And his reply cut straight to the thing nobody in Silicon Valley wants to talk about.

Cuban warned that AI could make healthcare worse - not because the tools are weak, but because of who else gets access to them. Insurers, he argued, will weaponize the same AI that helps doctors diagnose faster to deny claims faster. "For every future agent we give AI doctors to deal with this friction, the conglomerates will have multiple adversarial agents doing all they can to delay and deny," he wrote. He called it the agentic version of Spy vs. Spy.

Both men are …

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