Becker's Hospital Review

6 CFO / FINANCE needs as we work through this significant body of transformation work, we do have significant cash and investments in dry powder and short- term borrowing to bridge that gap." Unsurprisingly, technology is also central to the plan. CommonSpirit has generated $100 million in combined annual value from AI applications and its teams have identified about $250 million in AI- driven value enhancements to date, against a goal of $500 million by June 2026. e system operates a proprietary AI tool called Insightli, which keeps data within CommonSpirit's network to manage privacy risk. Since launching two years ago, Insightli has logged roughly 1 million project submissions and generated more than 230 scalable AI interventions across the enterprise, CIO Daniel Barchi told Becker's. AI will play a leading role in the future of CommonSpirit's revenue cycle. "We believe AI can help reduce cost, improve outcomes, and give us better insight into which function should be in source and which should be supported externally," Mr. Browning said. "While we will use offshore vendors, that work would be limited to back office functions, not patient-facing activity." is revenue cycle work ties directly to CommonSpirit's broader payer strategy. "We cannot continue to provide high-quality care at reimbursement levels that do not reflect the true cost of care," Mr. Browning said. "Strengthening payer relationships, improving reimbursement and reducing the cost to collect are all part of building a more sustainable operating level." On that note, one of the largest single moves under the transformation umbrella is also underway: CommonSpirit is insourcing revenue cycle operations currently managed by Conifer, a subsidiary of Dallas-based Tenet Healthcare. e system entered into a termination agreement with Conifer in January — recording a $2.2 billion special charge — and leaving a substantial dent in its finances. e transition is expected to be complete by January 2027. e move is expected to reduce CommonSpirit's "cost to collect to close to industry average," Mr. Browning said. "From where we currently reside, we've caught up between 5.5% and 6% down to 3% and will generate more than $1 billion of operational cost savings on an annual basis — a 1% revenue realization improvement also adds $400 million in revenue." n CMS puts Medicaid demonstration waivers on a tighter leash: 5 notes By Elizabeth Casolo C MS issued guidance June 11 outlining plans to update its assessment of Medicaid section 1115 demonstration projects. Section 1115 demonstration projects allow states to test approaches for delivering and paying for Medicaid care. The June guidance stems from an HR 1 requirement. Beginning Jan. 1, 2027, CMS will not be able to approve, renew or amend demonstrations without independent certification from CMS' chief actuary that confirms the demonstration will not increase federal spending to state Medicaid programs. CMS is planning rulemaking on the topic, but it will provisionally apply its revised approach in 2027 if there is no final rule in place by then. "The budget neutrality requirements we plan to propose are designed to ensure that testing new ideas doesn't cost taxpayers more than current approaches, while improving health outcomes for the people we serve. We're committed to making this transition smooth for states," CMS Administrator Mehmet Oz, MD, said in a June 11 news release. Here are five things to know about the guidance: 1. Currently, CMS evaluates budget neutrality by comparing "without waiver" and "with waiver" projected expenditures based on state data. In 2027, states would have to submit actuarial, economic, statistical or another form of rigorous analysis to show projected financial impacts of individual demonstration activities, according to a CMS letter sent to state Medicaid directors. 2. States should categorize demonstration activities as section 1115-only activities, which could not be implemented under standard Medicaid authority, and Medicaid Authorizable Populations and Services, activities that states could otherwise implement. MAPS includes care that Medicaid would otherwise cover but is delivered at a non-standard site, as well. 3. Under the changes, there would be no spending limits or budget neutrality caps, but demonstrations that would increase federal Medicaid expenditures would not move forward. 4. States would need to monitor programs based on CMS parameters, which have not yet been defined, and they would face corrective actions if expenditures do not closely align with projections. 5. If a demonstration generates savings, only savings from that demonstration period (or its most recent five years) could roll over to the next — but not to any future ones — to offset costs. Following a state's first renewal after Jan. 1, 2027, CMS would replace the old methodology for calculating savings. However, CMS would cut the 15% cap on rollover savings for the upcoming transition. n

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