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Budget Reconciliation Saga

House Freedom Caucus members could sink the budget reconciliation bill coming out of the Budget Committee for lack of enough reductions and weak Medicaid policy changes. Conservatives are pushing for an acceleration of work requirements from the current plan targeted for 2029.

At the same time, moderates are upset with the scope of Medicaid reductions.

House Speaker Mike Johnson also said that the proposed bill would be changed to enhance state and local tax deductions as well as increase Medicaid savings. But the latter could further upset moderates.

The current reductions fall disproportionately on states, which will have to make up hundreds of millions of reimbursement reductions, as well as enrollees, who could lose coverage.

Another controversy is ambiguous language regarding provider taxes. While new provider taxes are barred, it is unclear how long existing taxes would be grandfathered or whether renewing current provider taxes would be permissible.

To refresh on major Medicaid reductions in the bill, the following are in the current proposal:

• Work requirements (starting in 2029)
• Repealing Biden eligibility rules
• Eligibility checks twice a year
• Cost-sharing for Medicaid beneficiaries above 100% of poverty
• Reimbursement penalties for states that provide coverage for undocumented immigrants
• Limits on new provider taxes
• Codify Program Integrity Rule

Affordable Care Act (ACA) changes include:

• Barring most legal immigrants from premium tax credits
• Rescission of the cap on premium repayment

On the positive side, Medicare docs get a rate fix.

Not talked about much is the budget reconciliation bill’s efforts to rebrand Trump’s earlier push to promote individual coverage subsidies known as IHCRA, and expand Health Savings Accounts (HSAs) and High Deductible Health Plans (HDHPs).

In other news, a good Health Affairs blog explains the rationale behind the Trump administration’s proposed rule to reform the provider tax. I have to say, after reading through it, I do think some reform is needed.

Additional articles: https://www.modernhealthcare.com/politics-policy/medicaid-cuts-provider-taxes-state-budgets and https://www.healthaffairs.org/content/forefront/cms-proposes-limit-provider-taxes and https://thehill.com/homenews/house/5302339-trump-mega-bill-changes/ and https://thehill.com/homenews/5302765-gop-medicaid-work-requirements/?tbref=hp and https://www.beckerspayer.com/policy-updates/an-ichra-rebrand-3-things-to-know/ and https://www.beckerspayer.com/policy-updates/house-gop-pushes-for-big-changes-to-hdhps-hsas/

(Some articles may require a subscription.)

#budgetreconciliation #trump #congress #spending #medicaid #aca #obamacare #medicare

https://thehill.com/homenews/house/5302554-trump-gop-tax-thin-ice-budget-committee

Medicaid Cuts Advance In House

After a marathon overnight hearing where lawmakers literally fell asleep in their chairs, the House Energy & Commerce Committee advanced on a party-line vote deep Medicaid spending reductions in the budget reconciliation process. The cuts amount to $624 billion in Medicaid over 10 years. New provider tax bans, cost-sharing for certain populations, and work requirements are some of the largest reductions. Democrats proposed to tackle Medicare Advantage (MA) overpayments instead. They, too, wanted to use savings from President Trump’s recent executive order to reduce drug pricing.

While the reductions advanced, a deep divide is quickly emerging. Moderates and conservatives are still at odds in the House. Conservatives claimed that the reductions are not deep enough, while many moderates could be off the bill due to the existing Medicaid cuts. Some moderates and pragmatic conservatives in the Senate are also concerned about the Medicaid cuts. In the House, enough conservatives and/or moderates exist to tank the bill. The same could be true in the Senate as well. The Senate GOP generally also has taken issue with the broad scope of the entire reconciliation process and could craft its own bill.

In other news, healthcare policy group KFF discusses the impediments to passing deep Medicaid cuts and how that task has only gotten harder with a major expansion of Medicaid, the popularity of the program, and the more-easily-definable fallout on coverage.

As well, the Senate Judiciary Committee appears poised to back major pharmacy benefits manager (PBM) reform after a hearing where major issues were discussed, including the role of the Big 3 PBMs.

Additional articles: https://kffhealthnews.org/news/article/house-budget-bill-medicaid-deja-vu-2017-republican-cuts/ and https://www.healthcaredive.com/news/senate-judiciary-backs-pbm-reform-hearing/747989/ and https://www.modernhealthcare.com/politics-policy/reconciliation-bill-medicaid-cuts-energy-commerce and https://thehill.com/policy/healthcare/5299154-republicans-advance-medicaid-bill-trump-agenda/ and https://thehill.com/homenews/senate/5298819-senate-gop-house-trump-package-medicaid/

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#medicaid #coverage #budgetreconciliation #medicareadvantage #drugpricing #trump #congress

https://thehill.com/homenews/house/5300149-trump-meditaid-reforms-gop-fight

Providers React To Medicaid Cuts

Protests broke out at the Capitol and providers and advocates reacted to Medicaid reductions in a draft framework of the budget reconciliation bill. Provider taxes are especially getting attention. The bill proposes to freeze all new provider taxes, while a proposed administration rule would rein in what the administration calls provider-tax waivers that violate the spirit of the law. Limits on state directed payments, often funded by provider taxes, would occur as well in the reconciliation bill.

In other news, the Trump administration says it plans on revisiting the mental health parity rule.

In addition, doctors appear to be on the verge of some relief in terms of a Medicare physician rate fix. While no relief will be granted in 2025, in 2026 rates would increase by about 2.25% and future increases would be linked to the Medicare Economic Index, which generally rises faster than overall inflation.

Further, a good article in The Hill on the coming friction between President Trump and GOP leaders in the House on the president’s efforts to reduce drug prices. As I note, lawmakers have always been in the hip pocket of Big Pharma, while Trump has made an honest effort to lower prices in a system that is by no means a free market. GOP lawmakers (my party) have spent their life repeating Big Pharma talking points.

Last, healthcare policy group KFF lays out all the provisions in the current House Energy & Commerce Committee draft of healthcare cuts. I laid most of these out yesterday, but visit the links below for a very good summary and analysis of the impacts.

Additional articles: https://www.fiercehealthcare.com/payers/health-plans-advocacy-groups-descend-dc-ahead-medicaid-hearing and https://www.fiercehealthcare.com/regulatory/cms-proposes-tighter-guardrails-medicaid-provider-taxes-funding-state-directed-payments and https://www.healthcaredive.com/news/cms-proposed-rule-provider-taxes-medicaid-state-supplemental-payments/747966/ and https://www.fiercehealthcare.com/regulatory/trump-administration-reconsider-mental-health-parity-rule and https://www.modernhealthcare.com/politics-policy/house-budget-doctor-medicare-pay and https://thehill.com/homenews/house/5296446-trump-executive-order-pharmaceutical-costs/ and https://www.kff.org/policy-watch/how-will-the-2025-budget-reconciliation-affect-the-aca-medicaid-and-the-uninsured-rate/

(Some articles may require a subscription.)

#budgetreconciliation #congress #trump #healthcare #coverage #medicaid #physicians #medicare #rates

https://www.kff.org/tracking-the-medicaid-provisions-in-the-2025-budget-bill/

Trump Backs MFN Drug Pricing

President Donald Trump expanded his drug reform proposals today by announcing an executive order that seeks to implement the strictest form of international reference pricing (IRP) known as most favored nation (MFN) status pricing. Americans would receive the lowest price for a drug offered anywhere in the world. It appears that the proposal would be for all Americans – across Medicaid, Medicare, and commercial products. Trump said in a social media post that savings would be 30% to 80%. Another report narrowed the number to 59%. Trump said that the most expensive drugs would perhaps be attacked first.

His MFN proposal builds on a rule he attempted to implement for Medicare Part B medical drugs back in Trump 45. It was eventually rescinded by the Biden administration after being struck in court. While the idea was good, it did have many implementation challenges. At the time, Trump said he wanted to do the same for Part D retail drugs.

First, the order says that the administration will report on the MFN prices for drugs within 30 days.

Second, it expects significant progress over the next few months in terms of concessions from drug makers and that they will pay the MFN price of each drug.

Third, if that does not occur, the government will take a number of steps, including issuing a rule implementing MFN and taking other aggressive measures to significantly reduce the cost of prescription drugs and end anti-competitive practices. This would include expanding importation and reimportation to begin to reduce costs.

Fourth, the order also raises the prospect that trade officials will investigate and take enforcement steps againts other nations undercutting market prices and thereby driving up prices in America.

Additional articles: https://www.healthcaredive.com/news/trump-most-favored-nations-drug-pricing-plan/747761/ and https://thehill.com/homenews/5295603-trump-executive-order-prescription-drug-prices/ and https://insidehealthpolicy.com/daily-news/trump-threatens-mfn-if-drugmakers-don-t-cut-prices-seeks-hike-foreign-prices and https://insidehealthpolicy.com/inside-drug-pricing-daily-news/experts-see-problems-most-favored-nation-policy

(Some articles may require a subscription.)

#ira #drugpricing #trump #irp #mfn #branddrugmakers

https://www.fiercehealthcare.com/regulatory/trump-executive-order-impose-prescription-drug-price-reductions-across-all-markets

Medicare and Medicaid Cover GLP-1s For Disease States Other Than Obesity

The Hill has a good article explaining what the coverage of GLP-1s is in Medicare and Medicaid.

Generally, GLP-1s are covered for disease states such as diabetes and cardiovascular diseases, but not for obesity alone. In the commercial world, some employers cover the drugs for obesity alone.

In addition, drugmakers Eli Lilly and Novo Nordisk market their GLP-1 drugs under different names. Here is the skinny so to speak. The brand drug makers are looking to expand these drugs to other disease states.

Novo Nordisk:

Ozempic – for treatment of diabetes

Wegovy – for weight loss and cardiovascular disease

Eli Lilly:

Mounjaro – for treatment of diabetes

Zepbound – for weight loss and certain sleep apnea.

#branddrugmakers #drugpricing #glp1s #weightlossdrugs

https://thehill.com/policy/healthcare/5290997-medicare-medicaid-coverage-weight-loss-drugs

Drugs: Trump May Propose MFN; PBMs Using Various Ways To Control GLP-1 Costs

Politico reports exclusively that Donald Trump is on the verge of proposing most-favored nation (MFN) pricing, the strictest form of international reference pricing, to lower drug costs. The executive order would cover the Medicare program for now, but recently the president urged MFN for Medicaid as well. The move would be a major confrontation with the brand drug industry. I have argued Trump’s populism would win out here and he would propose something like this. My blog on the topic: https://www.healthcarelabyrinth.com/expect-big-things-from-donald-trump-on-drug-prices/ .

In other news, pharmacy benefits managers (PBMs) are using various and disparate ways to reduce GLP-1 weight-loss drug trends. CVS has dropped Zepbound in favor of Wegovy in the commercial world. It is also using NovoCare, Novo Nordisk’s direct-to-consumer platform for GLP-1s. Humana will also use NovoCare.

In 2024, Cigna launched EncircleRx, a program that controls the cost of GLP-1 medications for employers. The program has grown to 9 million enrollees in a year. 

Given high costs, many employers are dropping coverage for weight loss.

Additionally, The Wall Street Journal attacked Donald Trump for proposing drug price reforms. Of course, Trump is right on this one and I have written about it. What was once a great editorial page, The WSJ has increasingly abandoned their economic principles in favor of shilling for big business no matter what. What the Journal misses is that the drug market is not a free market and reforms need to occur.

As well, Health Affairs Forefront has a blog detailing the so-called small molecule drug “pill penalty.” Trump wants to make a concession here by perhaps moving the Medicare drug price negotiation period out four years for these drugs to match other drugs. The authors argue there will be major lost savings. Perhaps some drugs should be reduced by two years and small molecules moved out two years. That would throw Big Pharma even more.

Additional articles: https://www.beckerspayer.com/payer/payers-split-on-glp-1-strategy/ and https://thehill.com/homenews/media/5289600-wall-street-journal-donald-trump-executive-order-drug-prices/ and https://www.healthaffairs.org/content/forefront/costs-extending-small-molecule-exemption-period-medicare-drug-price-negotiation

(Some articles may require a subscription.)

#employercoverage #medicareadvantage #partd #humana #cvshealth #aetna #cigna #glp1s #weightlossdrugs #drugpricing #ira #brandrugmakers #medicaid #commercial #medicareadvantage #partd

https://www.politico.com/news/2025/05/07/trump-sweeping-medicare-drug-price-plan-00334167

Trump Says Drug Tariffs Coming

President Donald Trump announced that he plans to impose tariffs on pharmaceutical products within the next two weeks. In addition, he issued an executive order directing the Food and Drug Administration (FDA), the Environmental Protection Agency (EPA), and other agencies to facilitate domestic pharmaceutical production and to raise fees for inspecting foreign drug plants.

Health plans and pharmacy benefits managers (PBMs) have had a mixed reaction to the imposition of tariffs. CVS Health and Centene see impact that they are studying now, while United Healthcare said it has less concern. Over time, prices will be passed through the supply chain and ultimately to health plans, which will have to pass on costs to employer groups. Government programs would over time recognize cost hikes as well. At the same time, tariffs costs could end up in diminished formularies and higher cost-sharing.

The Pharmaceutical Research and Manufacturers of America (PhRMA) the brand lobby, submitted comments to the tariff investigation, arguing tariffs will backfire.

See my blog on healthcare tariffs: https://www.healthcarelabyrinth.com/tariffs-impact-on-healthcare-costs/ .

Additional articles: https://www.modernhealthcare.com/insurance/drug-tariffs-unitedhealth-cvs-health-centene and https://insidehealthpolicy.com/daily-news/phrma-warns-tariffs-won-t-boost-us-drug-manufacturing-cites-global-trade-benefits

(Articles may require a subscription.)

#tariffs #drugpricing #healthcare #coverage

https://insidehealthpolicy.com/daily-news/trump-says-pharma-tariffs-coming-two-weeks-drug-makers-cite-inventory-confidence

Budget Reconciliation Could Slip Into The Summer

A prominent GOP lawmaker told hospital stakeholders today that action on budget reconciliation spending cuts could slip into the summer. Rep. Buddy Carter, R-GA, who chairs a key health subcommittee, indicated the possible slowdown. In addition, hospital leaders exhorted lawmakers to avoid sweeping cuts, which could include work requirements, reduced state matches for the expansion population, fraud reduction, and a per capita cap funding mechanism. They also want the Exchange enhanced subsidies to continue.

Insiders say Medicaid per-capita caps and other major structural reforms to the program were being put on the back burner due to moderates’ concerns, but budget hawk conservatives revolted. The committee was readying about $621 billion in Medicaid cuts over ten years. The package included numerous eligibility reforms and restrictions, a reduction in Medicaid expansion match, work requirements, and reducing provider tax allowable rates to 5%. Medicaid spread pricing was also being banned.

In other news, Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz said that he supports reduction of the enhanced match in Medicaid for expansion populations. This shows the power of the Paragon Health Institute within the administration. Paragon has been campaigning on reducing the expansion population match rates for some time now.

Additional articles: https://www.modernhealthcare.com/politics-policy/cms-mehmet-oz-medicaid-expansion and https://www.modernhealthcare.com/politics-policy/medicaid-cuts-budget-buddy-carter and https://insidehealthpolicy.com/health-insider/providers-patient-advocates-continue-medicaid-lobbying-blitz-house-gop-crossroads and https://insidehealthpolicy.com/inside-drug-pricing-daily-news/carter-medicaid-pbm-spread-pricing-ban-expected-reconciliation

(Articles may require a subscription.)

#budgetreconciliation #trump #congress #spending #medicaid #exchanges

https://www.modernhealthcare.com/politics-policy/aha-annual-meeting-medicaid-cuts

International Reference Pricing Bill To Lower Drug Prices Unveiled

Two senators, conservative Josh Hawley, R-MO, and progressive Peter Welch, D-VT, have introduced legislation to lower prescription drug prices. The bill would prohibit pharmaceutical companies from selling drugs in the U.S. at prices higher than the international average. This is a form of international reference pricing (IRP).

Trump proposed IRP for Medicare Part B drugs under Trump 45 and said he wanted to do so in Medicare Part D as well. The proposal was later pulled back by the Biden administration. Trump has now called for most-favored nation (MFN) pricing for Medicaid. MFN is a form of IRP. 

Trump also unveiled a master executive order to reduce drug prices in America. This bill is an important development as it includes a conservative senator. It appears that populism is winning over the GOP, which is usually very friendly to Big Pharma. I can see Trump and the GOP in Congress getting together on major drug price reform.

#drugpricing #branddrugmakers #medicare #employercoverage #medicaid

https://thehill.com/policy/healthcare/5283776-bipartisan-senators-offer-new-bill-aimed-at-lowering-drug-prices

Cigna Reports Good Financial News

The Cigna Group reported $1.3 billion in profit for the first quarter of 2025, bucking the trends that have hurt other companies in the insurance industry. Its earnings surpassed Wall Street’s expectations. The company posted a $277 million loss in the prior year quarter. Cigna reported $65.5 billion. That’s up from $57.3 billion for Q1 2024.

Cigna faced less pressure around medical costs, reporting a medical loss ratio of 82.2% – up from 79.9% a year ago.

Cigna just sold its Medicare assets to Health Care Service Corporation (HCSC).

It also announced two new GLP-1 programs.

In other news, insurtech Alignment Healthcare exceeded its high-end guidance for the first quarter. The company posted $926.9 million in revenue, up 47.5% year over year. Adjusted gross profit came in at $107.2 million. Alignment still posted a net loss for the quarter at $9.4 million.

Additional articles: https://www.fiercehealthcare.com/payers/cigna-bucks-medical-cost-trend-posts-13b-q1-profit and https://www.fiercehealthcare.com/payers/alignment-healthcare-revenue-grows-927m-hires-former-multiplan-cfo and https://www.healthcaredive.com/news/cigna-evernorth-glp1-support-programs-enreachrx-enguide-q1-2025/746967/

#alignmenthealthcare #cigna #healthplans #medicareadvantage #employergroup #commercial #margins

https://www.forbes.com/sites/brucejapsen/2025/05/02/cigna-profits-hit-13-billion-as-health-insurer-gets-handle-on-costs