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OptumRx Rolls Out Transparent Reimbursement OptumRx says it is rolling out a new cost-based reimbursement model for pharmacies. It says it expects the change to be a positive one for the more than 24,000 independent and community pharmacies as well as members. Optum said it will begin to roll out the updated models now and intends to have a full implementation in place by January 2028.  The model will reimburse pharmacies more for dispensing brand-name medicines to address longstanding complaints that expensive prescriptions are losing money for drugstores. The model recognizes that with the penetration of generics, some work must be done to deal with the brand reimbursement problem. This will help stocking of brand drugs. Pharmacists are skeptical and feel this is an effort to forestall passage of pharmacy benefits manager (PBM) reform. Additional articles: https://www.modernhealthcare.com/insurance/unitedhealth-optumrx-brand-name-drugs and https://insidehealthpolicy.com/inside-drug-pricing-daily-news/new-optum-rx-pharmacy-pay-model-met-skepticism (Some articles may require a subscription.) #drugpricing #pbms https://www.fiercehealthcare.com/payers/optum-rx-overhaul-pharmacy-reimbursement-models C-SNPs Growth

Cigna Closes $3.3 Billion Deal To Sell MA Business Cigna officially closed its $3.3 billion sale of its Medicare line of business to Health Care Service Corporation (HCSC). The deal includes Medicare Advantage (MA) lives, Medicare Part D lives, its Medicare supplement business, and its CareAllies physician ownership. HCSC jumps to 950,000 members from about 240,000 members. Cigna actually grew MA from about 600,000 to 700,000 in the past year. Cigna CEO David Cordani was known to be frustrated with the lack of profitability in the MA line and wants to focus on services entity Evernorth and the commercial insurance line. In other news, United’s Optum Rx pharmacy benefits manager (PBM) said it would eliminate up to 25% of reauthorizations, initially focusing on 80 drugs. This amounts to 10% of overall prior authorizations. Additional articles: https://www.fiercehealthcare.com/payers/cigna-closes-33b-sale-medicare-plans-hcsc and https://www.beckerspayer.com/m-and-a/cigna-hcsc-close-3-3b-medicare-advantage-sale/ and https://www.fiercehealthcare.com/payers/optum-rx-reduce-reauthorizations-80-drugs and https://www.modernhealthcare.com/insurance/optumrx-drug-prior-authorization and https://www.healthcaredive.com/news/optum-rx-eliminate-prior-authorizations/742910/ and https://www.beckerspayer.com/payer/optum-rx-to-eliminate-prior-authorization-for-80-drugs/ (Some articles may require

Trump Administration Sides With Hospitals Over Drug Makers in 340B Lawsuit The Department of Health and Human Services (HHS) has filed for summary judgment in its favor regarding lawsuits on the 340B program, siding with hospitals over drug makers. This is consistent with the Biden administration. While I am not a fan of brand drug makers, it is clear that hospitals and some other providers are abusing the intent of the program. Trump is on the wrong side of this policy issue. #340b #drugpricing #branddrugmakers https://www.fiercehealthcare.com/ai-and-machine-learning/rfk-jrs-hhs-picks-biden-admins-legal-fight-against-340b-rebates Rising Hospital Margins Hospitals across the nation logged a monthly median operating margin of 4.4%, up from 3.7% in December and 2.1% reported for all of 2024. #hospitals #margins https://www.fiercehealthcare.com/providers/hospitals-kick-2025-modest-operating-margin-gains-high-inpatient-revenue MedPAC Wants Medicare Provider Rate Hikes MedPAC, the congressional policy arm, has recommended tying the rate of physician and other health professionals’ payment increases in 2026 to the Medicare Economic Index minus 1 percentage

Major Medicare Advantage Advocacy Group Launches Ad Campaign Better Medical Alliance (BMA), a prominent Medicare Advantage (MA) advocacy group, has launched a seven-figure digital ad campaign in an effort to avoid MA cuts and boost the proposed 2026 rate increase. Not counting risk score trends, MA rates saw a decline in 2024 and 2025. The Biden administration proposed just a 2.3% hike for 2026. This would lead to a third year of benefit cutbacks and geographic footprint reductions. The reductions have been caused by a new risk model that takes about 7% out of rates overall (it is being phased in over three years through 2026) as well as reductions in medical education funding. BMA notes that both Milliman and PwC estimated medical cost trends in MA increased by 8% from 2023 to 2024. The trend continues into 2025 with the return of utilization. Plans are also facing higher costs

Oz Dodges Medicaid Cuts But Signals Openness On MA Reductions Dr. Mehmet Oz, nominee to be administrator of the Centers for Medicare and Medicaid Services (CMS), seems well placed to be confirmed. In a hearing, he dodged most questions on Medicaid cuts but signaled that he might favor reductions to Medicare Advantage (MA) overpayments. I have been saying this for some time now. Oz said he is in favor of work requirements for Medicaid and removing undocumented individuals. He did not defend the Affordable Care Act (ACA) enhanced premium tax credits set to expire in 2025. Oz appeared to agree with Sen. Elizabeth Warren, D-MA, and others at several points in the hearing that the MA program needs better reform and oversight, especially on payments. Even Sen. HELP Chairman Bill Cassidy, R-LA, appeared to agree and also raised denial of care by plans, on which Oz concurred. Oz also said

MedPAC Repeats Dubious Overpayment Number In Report MedPAC, the congressional policy arm for Medicare, again has published a dubious overpayment number in a report to Congress. It says the federal government will spend $84 billion more in 2025 on Medicare Advantage (MA) enrollees than if they were enrolled in the traditional fee-for-service (FFS) program. This is about 20% more. This is slightly lower than MedPAC reported in 2024.  MedPAC says two factors accounting for the majority of overpayments to MA plans are risk score coding intensity and favorable selection. It says risk scores for MA enrollees will be around 16% higher in MA vs. FFS, which accounts for $40 billion. It says that $44 billion is favorable selection. Many MA proponents and I do not buy the favorable selection number or all of the risk score coding number. But I have admitted that some plans take advantage of risk adjustment and

Government Shutdown Could Occur Senate Democrats came out today and said they do not plan to vote for the House GOP-passed continuing resolution (CR) to fund the rest of this federal fiscal year (through September), instead demanding a 30-day CR to allow for additional negotiations. But there is some buzz that many Democratic senators could change their minds if the Senate GOP majority calls for a cloture vote later this week. The GOP is very unlikely to opt for a 30-day option. One GOP senator, Rand Paul of Kentucky, is against any CR. That means eight Democrats would be needed to invoke cloture to end debate and pass the bill. Several senators have commented they are worried about the political fallout if they vote no. Others feel a government shutdown further empowers Elon Musk and his cost-cutting commission and efforts. A CR must be passed by Friday or there would

House Passes the FFY 2025 CR The House passed the FFY 2025 continuing resolution (CR) today by a vote of 217 to 213. One Republican voted no and one Democrat voted yes. The bill’s passage came together when House Speaker Mike Johnson, R-LA, and Senate Majority Leader Jon Thune, R-SD, committed that a Medicare physician rate fix would be in the budget reconciliation bill slated for May. The commitment was made to Rep. Greg Murphy, M.D., R-N.C., co-chair of the House Doctors Caucus. He and others threatened to vote no, which might have sunk the bill. Murphy says how far-reaching the fix is – overturning this year’s reduction, adding to it for this year, or a permanent fix – is unspecified at this time. The bill next goes to the Senate. Democrats want to vote en masse against the bill, which would deprive the CR of 60 votes and sink

House CR Unveiled With No Doc Fix House Speaker Mike Johnson, R-LA, unveiled the FFY 2025 continuing resolution (CR) through the end of the fiscal year in September. If the bill passes the House, it goes to the Senate. At least one House GOP member has announced opposition, but the lack of a Medicare physician rate fix could mean others drop off. Passage in the Senate is unknown because 60 votes are needed and Democrats appear to be lining up against it. But moderate Democrats could have a change of heart. The bill also extends some critical healthcare programs that would expire on March 31. The House may vote on the bill Tuesday. In other news, a bipartisan proposal to further extend telehealth, reform pharmacy benefits managers (PBMs), reverse Medicare physician pay cuts, and address the opioid crisis has failed to be called up in the Senate. Additional articles: https://insidehealthpolicy.com/daily-news/providers-furious-house-continuing-resolution-omits-doc-pay-fix

Trump May Support Changes To Medicare Drug Negotiations Big Pharma says that President Donald Trump and Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. are sympathetic to the drug lobby’s concerns regarding the Inflation Reduction Act’s (IRA) “pill penalty” provision within the Medicare drug price negotiations. Drug makers say the law discourages research into small molecule drugs. Small-molecule drugs are exempt from Medicare drug price setting for nine years after FDA approval, while biologics are exempt for 13 years. Big Pharma has been lobbying to extend the small-molecule drug exclusivity period to 13 years. Some congressional bills would extend the period before price negotiation can begin for small molecule drugs to match biologics. (Article may require a subscription.) #ira #drugpricing #branddrugmakers https://insidehealthpolicy.com/daily-news/pfizer-ceo-trump-kennedy-sympathetic-pill-penalty-concerns Makary Backs Swifter Approval of Generics President Donald Trump’s nominee to lead the Food and Drug Administration (FDA), Dr. Marty Makary, pledged to accelerate the approval of