wellness

With v28, coding intensity has come down, now there is the debate on favorable selection For years MedPAC and opponents of Medicare Advantage (MA) have been touting studies that say MA rates are entirely too high. The healthcare and mainstream press have picked up on the claims. The same is true for Capitol Hill. But at least some of the winds will be taken out of the sails of MedPAC and MA opponents due to a new risk model that has been implemented. The realignment Much to MA plans’ chagrin, back in 2024 the Centers for Medicare and Medicaid Services (CMS) began implementing v28 of the risk adjustment model. The model essentially reforms the risk adjustment process by changing how diagnosis codes map to risk-adjusted payments. CMS removed a large number of previously payable diagnosis codes and changed how some conditions are weighted, aiming to better reflect true health cost

Major activity on PBM front that will help redefine drug pricing and costs There have been major headlines recently about impending pharmacy benefits manager (PBM) reforms. Many are asking: “What changes have occurred and what are the impacts?” Frankly, so much is going on that it was hard to make any sense of it. So, I sat down to take my best shot at cataloguing and explaining the recent developments. Here is my quick take of the major developments broken up in these buckets (I like to talk about buckets to keep it all straight) – (1) FFY 2026 Bill; (2) Future Capitol Hill Reforms; (3) The FTC Settlement; (4) Express Scripts’ Net Price Announcement; and (5) Drug Price Reform Proposals. The FFY 2026 Appropriations Bill The recent compromise to fund FFY 2026 had major PBM reforms. It was the first major bill on PBM changes in several years –

While enrollment growth slowed, results show the staying power of Medicare Advantage After a long delay, the Centers for Medicare and Medicaid Services (CMS) finally published results for January and February for Medicare Advantage (MA). While many predicted that the program would contract, I had said that enrollment would be flat or one of the lowest growths we had seen recently. Some analysts suggested that there would be a decline because of the mass exodus of large plans from certain markets and efforts by them to shed huge amounts of enrollment. The idea was that other plans could not pick up the slack and exits in certain counties would have left few opportunities for plans to find alternatives in MA. But despite the huge challenges in the program, MA showed some resiliency. Yes, enrollment growth was way down, but it did not contract as some had predicted. It very much

Critics question the changes, but doesn’t something have to be done to tackle affordability It is hard to digest all the ramifications of the Trump administration’s proposed 2027 Affordable Care Act (ACA) Exchange rule. The proposal was issued just this week and the rule is voluminous – it is 195 pages in small font PDF form! But here goes my best take on some of the changes proposed by the Trump administration on the benefit and coverage front under the Affordable Care Act (ACA) on and off the Exchanges. These changes are seminal and mark a major change from the philosophy of the Obama and Biden administrations. They build on changes under regulations during Trump 45, regulations finalized by Trump 47 in 2025, as well as in the One Big Beautiful Bill Act (OBBBA). Hopelessly devoted to generous benefits and subsidies As some background on the Obama and Biden years,

Detractors say no, but at maturity VBC/VBP offers hope in concert with other reforms A recent Health Affairs Forefront Blog challenged popular wisdom on the potential of value-based care (VBC) and value-based payments (VBP). According to the authors of the January 23 blog, value-based payments (VBP) and managed care will not solve the ongoing affordability crisis in healthcare. While some of the authors’ points are not wrong (including other root causes to high costs), I feel like they failed to consider the transformational journey we are on. So, let’s dig into the topic. What is VBC/VBP? VBC payments are meant to move from the fee-for-service (FFS) transactional payment system to one driven by efficiency and quality. What do I mean by transaction payments? For the past many decades, most payments in our healthcare system were made as a fee for each service transacted in the healthcare system. That can be

NOTE: Co-published in partnership with Lilac Software. See more on Lilac at the end of the blog. More changes could be slated in the future by CMS and Congress Just as the Centers for Medicare and Medicaid Services (CMS) published its proposed 2027 Medicare Advantage (MA) and Part D rule with major Star Ratings restructuring, there is now even more chatter about further changes. This has to be giving MA plans huge anxiety. Right now, more than $12.7 billion in quality bonuses flow to about 40% of all contracts in MA. A summary of the regulatory changes proposed in the 2027 MA and Part D rule In addition to cancelling out the EHO4all health equity reward and introducing a new depression measure, CMS proposed to eliminate 12 (14 if you count overlap between Part C and D) operational and other measures that did not show variability in performance. Eliminating these

NOTE: Co-published in partnership with Lilac Software. See more on Lilac at the end of the blog. The Stars road map just got even denser with some proposed changes in the 2027 Advance Notice. The Stars road map is anything but simple right now. We have a major proposed regulatory reform from the 2027 Medicare Advantage (MA) and Part D proposes rule from November. Much or all of it is expected to be implemented when the final rule comes out in April. We also have the major electronic ECDS measure conversion inflight as well as a push to get all quality programs to a Universal Foundation of measures. But it is important to track the subtle changes along the way, and these are often buried in the text of the Advance Notices and Final Announcements published each year. While much of the 150-plus page memos are dry rate stuff (but

Huge shock to MA plans with near zero rate hike in Advance Notice The Trump administration issued the 2027 Advance Notice for Medicare Advantage (MA) and Part D rates and other policy changes this week. I have reviewed the 169-page Advance Notice, the Centers for Medicare and Medicaid Services (CMS) Fact Sheet, and CMS Press Release. Below are the key highlights. The advance notice will be finalized by early April. I will publish updates on the Stars roadmap front from the Advance Notice on Monday in conjunction with Lilac Software. This will detail all the proposed Star measure changes, updates, and information discussed in the Advance Notice. MA rate proposal The Trump administration threw Medicare Advantage (MA) for a loop when it issued the 2027 Advance Notice recently. MA plans just weathered a three-year phase-in (2024 to 2026) of the new v28 model. By my calculation, that took 7.62% out

2024 saw another major surge in healthcare spending coming out of the COVID pandemic One of my Christmas traditions is to write about the release of the Centers for Medicare and Medicaid Services (CMS) Actuary’s National Healthcare Expenditure Data (NHED) for a given calendar year. This usually is released in the middle of December each year for the prior year, but alas the government shutdown meant the data were published in January. It literally takes CMS about a year to capture, calculate, and categorize all the data for a year given the size and labyrinthine complexity of our healthcare system. Each year as well, usually in the first half of June, the CMS Actuary updates healthcare spending projections for ten outyears. Why is this so important? First, it is the main comprehensive source of data for calculating the history and future of healthcare spending. Most other studies rely in some

Trump delivers on MFN with far-reaching Medicare and Medicaid models President Donald Trump issued an executive order early on in Trump 47 that set the course for most-favored-nation (MFN) pricing for drugs in America. He tried to do this in a small way in Trump 45, but the Biden administration pulled back on it. In part, it was not well thought out, and it came out at the tail end of his first administration. Since the executive order, Trump notched drug price deals with 16 of the 17 top brand drug makers. The drug makers said they would grant MFN pricing in Medicaid for all drugs and would introduce new drugs at MFN prices in America. He also got lower self-pay prices. Now, with an announcement just before Christmas, he has delivered further on his promise by announcing three new models that officially move toward MFN pricing in America. The