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CMS Stays the Course with Proposed Payment Updates for Medicare Advantage and Part D Services in 2026

Trump Administration will Issue Final Policies

This week, our In Focus section examines the Centers for Medicare & Medicaid Services (CMS) calendar year (CY) 2026 Advance Notice for the Medicare Advantage (MA) and Medicare Part D programs, published January 10, 2025. That same day, CMS also released draft CY 2026 Part D Redesign Program Instructions. This regulatory guidance includes CY 2026 payment updates as well as additional technical and methodological changes to MA and Part D for the coming plan year.

The release of the CY 2026 Advance Notice—along with the complementary CMS policy and technical proposed rule released in November 2024—represent the last major Medicare regulations of the Biden Administration, and these annual payment and policy updates will be finalized under the incoming Trump Administration. As a result, the proposed MA and Part D payment policies could be modified before finalization in April 2025.

Comments on the Advance Notice are due by February 10, 2025, leaving a tight timeline for MA plans and other stakeholders to provide formal feedback and written comments to CMS. Following are brief summaries of the major proposals in the Advance Notice and key considerations for stakeholders as they analyze the proposals.

Payment Impact on Medicare Advantage Organizations

In the Advance Notice, CMS projects that federal payments to MA plans will increase by 4.33 percent from 2025 to 2026—which represents a $21 billion increase in expected payments to MA plans next year. CMS estimates that federal payments to MA plans in 2026 will total $590.9 billion.

The proposed increase in payments accounts for several factors, including growth rates in underlying costs, changes to MA Star Ratings, continued implementation of the new risk adjustment model, and MA risk score trends. The estimated growth rate considers demographic changes in MA enrollment, including projected increases in the number of enrollees.

The Advance Notice estimates represent the average increase in payments to MA plans and actual payments will vary from plan to plan. Below, Table 1 provides estimates of the impact of proposed policy changes on net MA plan payments.

MA Risk Adjustment Changes

CMS intends to complete the three-year phase-in of the MA risk adjustment model that was first published in the CY 2024 Rate Announcement. Specifically, CMS proposes to calculate 100 percent of the risk scores using the new MA risk adjustment model, referred to as the 2024 hierarchical condition categories (CMS-HCC) framework. CMS maintains that the changes to the methodology for calculating risk have improved the predictive accuracy of the model while ensuring risk-adjusted payments to MA plans are accurate.

In addition, CMS has been working to calibrate the risk adjustment model based on MA encounter data, and CMS proposes to begin phasing in an encounter-based MA risk adjustment model as soon as CY 2027.

CMS also proposes to apply the statutory minimum MA coding pattern difference adjustment factor of 5.90 percent for CY 2026.

Technical Adjustment to Cost Calculations Related to Medical Education Costs

Similar to changes in the MA risk adjustment model, CMS plans to complete the three-year phase-in of technical adjustments to the per capita cost calculations related to indirect and direct medical education costs associated with services delivered to MA beneficiaries. This technical adjustment—finalized in the CY 2024 Rate Announcement—has reduced growth rates for MA plans because of the removal of MA-related medical education costs from the benchmarks.

MA Star Ratings

CMS reiterates its continued focus on moving toward a “Universal Foundation” of measures with the goal of creating metrics that center on clinical care, patient outcomes, and improved patient experiences and are aligned across CMS programs. In addition, CMS is soliciting initial feedback on both substantive measure specification updates as well as comments on new measure concepts. CMS also is seeking stakeholder feedback on modifications to the Health Equity Index, including adding social risk factors and geography (urban or rural) to the reward factor. Any specific changes to MA Star Ratings measures, including modifications to the Health Equity Index, would occur through the formal rulemaking process.

Medicare Part D Provisions

The CY 2026 Advance Notice and the CY 2026 Draft Part D Redesign Program Instructions include several payment and benefit updates as required in the Inflation Reduction Act (IRA) of 2022. The CY 2026 updates include:

The CY 2026 annual out-of-pocket cost threshold for Part D covered drugs is $2,100, which is the original out-of-pocket cap of $2,000 adjusted for the annual percentage increase in average expenditures for Part D covered drugs
Establishment of the selected drug subsidy program
Changes to the liability of enrollees, plan sponsors, drug manufacturers, and CMS in the standard Part D benefit design, specifically to account for the start of the Medicare Drug Price Negotiation Program in 2026
Guidance on the successor regulation exception to the IRA’s formulary inclusion requirement for selected drugs under the Medicare Drug Price Negotiation Program

Other previously implemented IRA reforms will continue in CY 2026, including no cost sharing for Medicare beneficiaries for Part D covered drugs in the catastrophic phase, which begins after the annual out-of-pocket threshold of $2,100 is reached; a $35 monthly cap on enrollee cost sharing for insulin; no cost sharing for adult vaccines recommended by the Centers for Disease Control and Prevention’s (CDC’s) Advisory Commission on Immunization Practices and covered under Part D; and the requirement for Part D plans to offer the Medicare Prescription Payment Plan to beneficiaries.

What to Expect

The CY 2026 Advance Notice includes important technical, programmatic changes and payment updates for MA and Part D plans, which will be finalized when CMS publishes the final CY 2026 Rate Announcement on or before April 7, 2025. MA plans and other stakeholders have a rigid timeframe to provide formal input and written comments to CMS before the February 10 deadline.

Like the policy and technical changes included in the MA proposed rule, the CMS Advance Notice payment updates will be finalized under the incoming Trump Administration. MA plans and other stakeholder can anticipate that the new leadership at the US Department of Health and Human Services and CMS will closely examine and take a fresh look at the proposed payment and policy changes. Though the current CMS leadership maintains that payment updates included in the Advance Notice are sufficient to support stability in MA premiums and benefits, proposed payment policies can be modified or delayed as the new leadership takes shape.

For example, officials in the Trump Administration could seek to delay the phase in of the risk adjustment changes as well as the technical adjustment regarding medical education costs, which CMS estimates would result in an additional $10.4 billion in payments to MA plans.

Connect With Us

Medicare experts at Health Management Associates, will continue to assess and analyze the policy and political landscape, which will determine the final policies included in the CY 2026 Rate Announcement. HMA experts have the depth of knowledge, experience, and subject matter expertise to assist organizations that engage in the rulemaking process and to support implementation of final policies, including policy development, tailored analysis, and modeling capabilities.

For details about the CY 2026 MA Advance Notice and its impact on MA and Part D plans, providers, and beneficiaries, contact our featured experts below.

Federal election impacts on Ohio Medicaid

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Ohio Medicaid is no stranger to change. Over the last several years, there have been several broad policy changes, from a new managed care system, to new programs like OhioRISE, to an expansion of MyCare Ohio. And, during this time, there have been complicating factors like the covid-19 public health emergency and the resultant impact of inflation on the basic delivery of services and care. Now, as the Trump administration comes in for the second time, questions arise as to what to expect in Medicaid policy and how it may impact Ohio.

While it’s often overlooked, federal rule making has a significant impact on the operations of states. Just in the last couple of years, the Biden Administration has implemented policies including:

The Access rule, such as the 80/20 policy, implementation timelines, and other questions regarding Home and Community Based Services waivers that states and certain stakeholders elevate to the Centers for Medicare & Medicaid Services (CMS).
The Managed Care rule, which addresses Medicaid managed care access, financing, and quality, including strengthening standards for timely access to care and states’ monitoring and enforcement efforts.
The Long-Term Care Facility (LTC) Staffing rule requires minimum staffing standards for nursing facilities.
Two rules streamline Medicaid enrollment and renewal processes for the Medicare Savings Program (MSP) and for Medicaid, CHIP and the Basic Health Program. Each rule is expected to increase Medicaid enrollment by about one million people.

These rules are set to be implemented over several years. The Trump Administration could delay implementation of certain provisions, which would eliminate regulations while rolling back enrollee protections, payment transparency, and improved access. Alternatively, the Trump Administration could adjust their enforcement strategy or issue new regulations that would undo or augment these final regulations.

Beyond regulation, there is still the potential for fundamental policy change to the program’s financing. Notably, the concept of block grants or per-capita caps has reemerged as a potential option, where states would no longer receive federal “match”, but rather a fixed amount based on historical averages. In fact, Energy and Commerce Chair Brett Guthrie has already identified per capita caps as an area of active conversation in the House Republican Caucus.

Making a fundamental, national change in the financing arrangement of Medicaid would require an act of Congress. Many think this movement away from a traditional reimbursement structure was one of the main reasons for the failure to repeal the Affordable Care Act during the first Trump administration. Notably, as Ohio is a “recipient” state, meaning it receives more in federal taxes than it provides for the Medicaid program, this could significantly impact the long-term financial stability in future state budgets. Often, this challenge is why block granting is usually associated with additional state powers around curbing enrollment, services and coverage, so states may more easily cut the program to accommodate tighter financing.

Depending on how all of these changes would unfold, Medicaid programs, including Ohio’s may have to adopt their systems to accommodate. However, the Trump administration may also pursue greater flexibility for states to design and innovate in Medicaid in ways that are consistent with their goals. This could include greater flexibility to limit covered services, raise cost-sharing requirements, limit enrollment or require more frequent determination of eligibility. There may also be programmatic refocusing away from initiatives which center health equity and expanded coverage, including alternatives to “Medicaid expansion”, as well as a fundamental reorientation of the use of waivers.

Speaking of waivers, there is likely going to be a dramatic change in the way waivers are applied and executed. This can include, but is not limited to, waivers that test new policies the prioritize cost-cutting measures over access and coverage, including waivers which change how the Medicaid expansion group is managed in states. Included in this are “Work Requirement” waivers, something Ohio is currently in the process of submitting. While examples from other states have shown that such waivers are often costly to operate and ultimately have the impact of decreasing coverage, the Trump administration and many policymakers see these requirements as a way to ensure labor force participation. Though there is evidence to suggest coverage, alone, increases economic mobility,

As Ohio providers, plans and policymakers gear up for the next state budget, the landscape of Medicaid policy will be something to pay attention to. While Medicaid represents nearly 48% of the total state budget, half of that is from the federal government. What’s more, nearly 1 in 3 Ohioans rely on the program, disproportionately in rural communities, and it supports Ohio’s second largest industry in healthcare. Make sure you stay on top of the latest updates to the program in Ohio and beyond and sign up for HMAs Weekly Roundup.

Ohio Health Policy Snapshots

CMS Announces 15 States Participating in the Transforming Maternal Health Model

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The Centers for Medicare & Medicaid Services (CMS) on January 6, 2025, announced that 15 states have been selected to participate in the agency’s new Transforming Maternal Health (TMaH) Model. They are: Alabama, Arkansas, California, the District of Columbia, Illinois, Kansas, Louisiana, Maine, Minnesota, Mississippi, New Jersey, Oklahoma, South Carolina, West Virginia, and Wisconsin. This week, our In Focus section reviews this initiative and the need for improved maternal healthcare for Medicaid and Children’s Health Insurance Plan (CHIP) enrollees.

Adverse Maternal Health Outcomes Among Medicaid and CHIP Enrollees

Medicaid and CHIP programs cover a large portion of all births in the United States. According to a CMS data brief published in December 2024, Prematurity and Severe Maternal Morbidity Among Medicaid- and CHIP-covered Live Births in 2021, the public health programs covered 41 percent of all births that year. In some states, Medicaid and CHIP-covered healthcare accounted for up to 67 percent of births.

The data brief examines the trends of premature births and severe maternal morbidity (SMM) events—including blood transfusion, acute respiratory distress syndrome, sepsis, acute renal failure, ventilation, and other conditions—in Medicaid and CHIP-covered births for people ages 15 to 49 between 2019 and 2021. During this period, the percentage of preterm live births increased from 10.5 percent to 10.8 percent, and SMM rates increased from 209.6 per 10,000 live births to 252.7 per 10,000 live births.

Some demographic groups had higher rates of preterm births and SMM than others. Enrollees who were Medicaid-eligible because of disability had more than 1.5 times the percentage of preterm births, and nearly double the rate of SMM than enrollees in other eligibility categories. In addition, non-Hispanic Black enrollees and non-Hispanic Native American enrollees had the highest rates of preterm births and SMM compared with all other racial and ethnic groups.

With the increasing adverse maternal health outcomes facing Medicaid and CHIP enrollees, as well as people with private insurance, state leaders and their partners are looking toward different initiatives to help improve outcomes. As governors prepare for their 2025 State of the State Addresses, several are expected to identify maternal health as a key priority. Their priorities will initiate and build on policy changes and other actions in development since 2022, such as expanding Medicaid coverage to 12 months postpartum, collecting and publishing actionable data on pregnancy-associated and pregnancy-related mortality and causes, and directing funding to expand targeted high-quality care provided by doulas and community health workers (CHWs), for example.

TMaH Model

The TMaH Model, which CMS introduced in December 2023, is designed to improve maternal healthcare, improve health outcomes for Medicaid and CHIP-covered births, and lower healthcare expenditures. The model centers on three main pillars described in Table 1.

Notably, the model is intended to facilitate design and implementation of a value-based alternative payment model for maternity care services. It also includes a health equity strategy to address disparities among racial and ethnic minorities, as well as people who live in rural and underserved areas.

The 10-year TMaH Model has an initial three-year implementation period that began January 1, 2025. During that time, states will receive targeted technical assistance to develop and implement elements of the model while achieving pre-implementation milestones. Moreover, participating states will receive up to $17 million in cooperative agreement funding to support planning and implementation over 10 years.

Obstetrical Quality Measures and Standards

To further support the goals of the TMaH Model, CMS has finalized new national health and safety standards, known as conditions of participation (CoPs), for hospitals and critical access hospitals that offer obstetrical services. These CoPs represent a significant step in advancing maternal health outcomes by requiring maternal quality assessment and performance improvement programs, setting baseline standards for the organization, staffing, and delivery of obstetrical care, and mandating staff training in evidence-based maternal health practices.

By establishing a consistent standard of high-quality maternity care for all Medicaid participating facilities, the CoPs complement the TMaH Model’s pillars of quality improvement and safety, as well as whole-person care. Together, these initiatives are intended to produce a unified framework for reducing maternal morbidity and mortality, addressing health disparities, and fostering equitable, patient-centered care across participating states.

Key Considerations

The new TMaH Model provides participating state Medicaid agencies (SMA) with an opportunity to accelerate their efforts to improve maternal health outcomes for a large percentage of their maternal population. State TMaH planning initiatives will need to consider the model requirements and include:

Strengthening partnerships. The model provides states with an opportunity to strengthen collaboration with and build capacity among key partners, including Perinatal Quality Collaboratives, hospitals, birth centers, healthcare centers and rural health clinics, maternity care providers, and CBOs, to successfully implement the model. Specifically, states can work with providers to use provider infrastructure payments to support their engagement with CBOs that can address the HRSNs and behavioral health needs of beneficiaries and integrate them into screening, referral, and follow-up activities.

Defining the role for managed care organizations (MCOs). Agencies will need to work with MCOs and stakeholder groups to support the model. SMAs may designate some of their Cooperative Agreement funding to MCOs to support infrastructure and capacity building for the TMaH Model.

Integrating TMaH with existing and other planned initiatives. Optimizing the TMaH Model requires states and their partners to consider how the framework complements and may be incorporated into other state initiatives. Specifically, the TMaH Model will require reporting on screening for three domains of HRSNs: food insecurity, housing instability, and transportation. The TMaH Model will require use of a validated health IT-encoded HRSN screening instrument, such as the Accountable Health Communities HRSN screening tool. States and their partners can integrate existing HRSN tools and Medicaid section 1115 demonstration initiatives with efforts carried out using the TMaH Model.

Connect With Us

Join Health Management Associates (HMA) experts Michelle Hurst, Marilyn Johnson, and Zipatly V. Mendoza for the Improving Maternal Health Outcomes: Navigating CMS Guidance for Better Care webinar on January 28, 2025. They will dive deeper into recent CMS regulations and other federal developments that affect maternal health, actionable strategies to implement regulations, and approaches to reduce maternal health disparities and ensure equitable care.

HMA’s Strategy & Transformation Practice collaborates with Stanford University to drive public health innovation

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Through a new collaboration with Stanford University’s Emergence Program, HMA’s Strategy & Transformation practice aims to foster innovation in Medicaid and public healthcare. This collaboration seeks to support a new generation of public health innovators, focusing on transformative approaches to healthcare payment, policy, and delivery.

Kyle Murphy and R.J. Briscione presenting.

Kyle Murphy and R.J. Briscione of HMA’s Strategy & Transformation Practice will mentor early-stage companies, deliver guest lectures on the U.S. public healthcare system, and co-develop thought leadership pieces with Stanford faculty and students at Stanford Emergence Program.

This multi-faceted collaboration is designed to provide real-world insights to aspiring healthcare entrepreneurs aiming to improve public health outcomes and equity.

Prof. Narges Baniasadi, who is the founder and executive director of Emergence program says: “We are excited about our growing collaboration with HMA team to catalyze the translation of academic research to impactful innovations for public health and to educate budding entrepreneurs on ways they can scale their impact through working with the public sector.”

Dr. Narges Baniasadi oversees this new initiative that strives to 1) catalyze impact entrepreneurship to address systemic challenges in the health of our society and planet and 2) shift the culture of the innovation ecosystem to be more mission-driven and inclusive. At the core of Emergence is its mission to inspire, educate, and support the next generation of innovators to improve societal and planetary health through impact entrepreneurship.

Early in January, HMA’s Strategy & Transformation Practice will also participate in the Stanford Mussallem Center for Biodesign’s implementation bootcamp for its 2024-25 cohort of Innovation Fellows. Murphy and Briscione will focus on expanding the Innovation Fellows’ understanding of Medicaid and assessing its viability as a go-to-market strategy for innovative solutions. Since 2001, Stanford Biodesign has educated and empowered aspiring and experienced innovators interested in improving healthcare with technology innovation through fellowships, graduate and undergraduate courses, faculty training, and executive education.

To date, the center has trained 219 Innovation Fellows through a 10-month program where they learn to identify and screen important unmet health needs, invent technology-based solutions to address the most promising ones (including medical devices, diagnostics, digital health, drug delivery, and biotechnology solutions), and prepare to implement them into patient care. The Strategy & Transformation Practice brings valuable experience to this collaboration, having previously worked with companies that have emerged from Biodesign trainee projects.

This collaboration elevates HMA’s position within the innovation ecosystem and prepares founders to build and scale products designed for Medicaid populations. By bridging the gap between evidence-based research and practical implementation, this effort has the potential to drive changes in public healthcare policy and delivery, generate the development of cost-effective healthcare solutions, and improve healthcare access for vulnerable populations. As HMA continues to lead in healthcare consulting,supporting the Emergence Program and Stanford Biodesign reinforces its commitment to fostering innovation and improving public health outcomes across the country.

MyCare Ohio: The Next Generation’s Impact on the Ohio Medicare and Medicaid Landscape

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This week, our In Focus section also reviews the significant efforts under way in Ohio to transform how the state provides healthcare services to its Medicare and Medicaid dual-eligible population. Effective January 1, 2026, MyCare Ohio will transition to the Next Generation of its program for people who are dually eligible for both programs.

Overview of Ohio’s Transition to Next Generation MyCare Ohio

This evolution moves Ohio to a fully integrated dual-eligible special needs plan (FIDE-SNP) model that seeks to achieve several key goals through a population-based health approach designed to address inequities and disparities in care for dual-eligible individuals. Examples include:

Improved Care Coordination: Strengthening integration between Medicare and Medicaid services to provide seamless, holistic care for individuals, thereby reducing fragmentation and ensuring comprehensive management of medical, behavioral, and social needs
Personalized Care: Applying data analytics and technology to create more tailored care plans, with a focus on proactive care to address the unique health needs of each individual, especially people with chronic conditions
Expanded Access to Services: Increasing accessibility, particularly through telehealth and digital tools, to reach underserved populations and improve accessibility, particularly for people living in rural or remote regions
Enhanced Quality of Care: Shifting focus from service volume to outcomes, encouraging providers to deliver high-quality care and improve patient satisfaction, while incentivizing preventive care to reduce hospital admissions and other high-cost interventions
Technology Integration: Leveraging advanced technologies like mobile apps, predictive analytics, and telemedicine to monitor patient health, improve communication between patients and providers, and deliver care more efficiently

The MyCare program currently is offered in 29 counties across Ohio but will transition to a statewide program as a part of the Next Generation changes. In addition, coordination only dual-eligible special needs plans (CO-DSNP) will no longer be permitted.

After the Ohio Department of Medicaid (ODM) publicly released the request for applications and evaluated submitted proposals, the agency selected four managed care organizations (MCOs), which will become the Next Generation MyCare plans. The ODM awarded contracts to the following MCOs that will serve MyCare members beginning in January 2026: Anthem Blue Cross and Blue Shield, Buckeye Health Plan, CareSource, and Molina HealthCare of Ohio.

Considerations for the Market

The shift to the FIDE-SNP model and selection of four participating health plans will have a considerable impact on the competitive landscape for Medicare and Medicaid managed care in Ohio. The resulting changes may affect both selected and non-selected participants in different ways, including:

Increased competition among MyCare MCOs: MCOs will need to focus on enhancing their care coordination systems, adopting new technologies, and developing personalized care plans to compete not just in terms of the volume of services provided, but also to the quality and effectiveness of healthcare delivery. Those plans that can best integrate services, offer proactive care management, and improve patient outcomes through value-based care and advanced technology initiatives will gain the competitive advantage, potentially attracting more beneficiaries.
Strategic responses of nonparticipating MCOs to counter potential membership and financial losses: MCOs that lose members because they were not selected or are unable to offer CO-DSNPs moving forward, will likely strategize to gain membership through other product lines or benefit design to offset losses. Strategies may vary but might include tactics such as: enhancing benefits or decreasing member cost sharing to entice member movement across carriers for non-D-SNP plans; finding innovative ways to further reach different segments of the Medicare population, such as Special Supplemental Benefits for the Chronically Ill (SSBCI) packages or Chronic Condition SNP plans; or shifting their focus to product lines outside of Medicare Advantage and Medicaid.

Connect with Us

Ohio is one of many states transitioning to a FIDE model beginning January 2026. Health Management Associates, Inc. (HMA), has successfully supported participating and nonparticipating carriers throughout the transition process and continues to be a dedicated partner to organizations navigating Medicare and Medicaid changes across the country.

Contact our featured experts below, to learn more about the Ohio FIDE-SNP initiative and HMA’s capabilities and expertise to support states, carriers, and other key partners with these transitions.

CMS Announces Medicare Advantage Value-Based Insurance Design Model Will End After 2025

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The Centers for Medicare & Medicaid Services (CMS) announced on December 16, 2024, that it will be terminating the Medicare Advantage Value-Based Insurance Design (VBID) model at the end of 2025 because of the model’s “substantial and unmitigable costs to the Medicare Trust Funds.” This In Focus article delves into the factors driving CMS’s decision and considerations for policymakers, Medicare Advantage Organizations and other interested stakeholders.

VBID Outcomes

VBID, run by the CMS Innovation Center, is not a permanent part of the Medicare Advantage (MA) program. Innovation Center models are required to be modified or terminated if they are a cost to the program.

CMS found that costs for the VBID model totaled $2.3 billion in calendar year (CY) 2021 and $2.2 billion in CY 2022, an unprecedent amount for an Innovation Center model. CMS concluded that these substantial expenses—driven by increased risk score growth and Part D expenditures—were unmitigable through policy modifications. Therefore, consistent with statutory requirements, CMS took action to terminate the model by the end of 2025. Earlier this year, CMS announced it would discontinue the part of VBID that allowed MA plans to offer hospice services.

Next year, the VBID model will have 62 participating MA plans and is projected to offer 7 million Medicare beneficiaries additional benefits and/or rewards, including those designed to address social determinants of health and reduce cost-sharing for prescription drugs used to treat and manage chronic conditions. As part of the announcement, CMS pledged to support a stable transition for all enrollees in MA plans participating in the MA-VBID model and emphasized that key benefits available under the model will continue to be widely available, including supplemental benefits that address the whole-person healthcare needs of beneficiaries. In addition, CMS noted beneficiary cost-sharing for prescription drugs will be reduced as the result of the expansion of the low-income subsidy program under the Inflation Reduction Act and the CMS Innovation Center’s Medicare $2 Drug List Model, which is slated to begin in 2027.

As part of the announcement, CMS released an executive summary of a forthcoming evaluation report, with the full report expected to be released in early 2025.

Key Considerations

Since the MA-VBID model’s launch in 2017, the program has experienced significant growth through a series of legislative and model changes, including requirements in the Bipartisan Budget Act of 2018 that expanded eligibility to MA plans in all 50 states and allowing all types of MA special needs plans to participate in MA-VBID. Previous CMS evaluations found that the MA-VBID model led to improvements in the quality of care for beneficiaries and promoted greater adherence to prescription drugs used to treat and manage chronic conditions. Though CMS has concluded that excess costs require the termination of MA-VBID by the end of 2025, the incoming Trump Administration can be expected to closely examine this decision and look at the entire Innovation Center portfolio.

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Health Management Associates, Inc. (HMA), Medicare experts will continue to assess and analyze the response to CMS’s announcement, including the incoming administration’s views on the decision and potential alternatives. HMA’s experts have the depth of knowledge, experience, and subject matter expertise to assist MA organizations and interested stakeholders in analyzing and adapting to the marketplace as the MA-VBID program ends.

For further analysis of the MA-VBID decision and its impact on the market, contact our experts below.

Congress Continues Negotiations on 2025 Spending and End-of-Year Package

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This week, our In Focus section reviews the year-end legislative package congressional leaders announced as part of the stopgap funding to prevent a government shutdown. The package, which was unveiled December 18, 2024, would extend expiring Medicaid and Medicare policies, reauthorize health and human services programs, and extend federal funding for discretionary programs through March 14, 2025. The existing temporary funding measure expires December 20, 2024.

Following is a summary of several major healthcare policies that, if approved, will inform the shifting federal policy landscape and state and local programs in 2025.

Pharmacy Benefit Managers

The healthcare package includes policies that reflect several years of increased scrutiny on pharmacy benefit managers (PBMs), including:

Prohibiting PBMs from charging a Medicaid managed care organization more for a drug than the amount that a PBM pays a pharmacy (i.e., spread pricing)
Requiring consistency and additional transparency in contracts between Part D plans and PBMs
Prohibiting Medicare Part D plans from linking payments to drug list prices
Adding report requirements for PBMs

Medicaid Policies and Programs

The legislative text includes 13 separate sections that address Medicaid policies, including extensions on expiring policies, establishment of new programs, and plans to codify certain other policies related to Medicaid eligibility and renewals. These policy changes include:

Medicaid Disproportionate Share Hospital (DSH) allotment: Eliminates reductions for fiscal year (FY) 2025; delays the effective date of the two remaining years of Medicaid DSH allotment reductions until January 1, 2027; and changes the definition of the Medicaid shortfall component of the Medicaid DSH cap to include costs and payments for patients who have Medicaid as their primary source of coverage and for patients who are dually eligible for Medicare and Medicaid.
Home and community-based services (HCBS) waiver: Establishes a three-year, five-state Medicaid HCBS waiver program, which would allow states to cover these services for individuals who need them but do not meet the current statutory requirement of needing “institutional level of care.” States will have an opportunity to apply for planning grants.
Services for juveniles leaving public institutions: Delays by 12 months the requirement that state Medicaid programs provide screenings, diagnostic services, and targeted case management services for eligible juveniles within 30 days of their scheduled date of release from a public institution following adjudication.

Medicare Payments

The compromise package also increases the Medicare Physician Fee Schedule conversion factor by 2.5 percent in 2025 to partially offset a 2.83 percent cut that the Centers for Medicare & Medicaid Services (CMS) finalized in November. Providers consider this a short-term fix, however, and Congress, provider advocates, and other interested parties are engaged in discussions about making broader changes to Medicare physician pay in 2025.

Notably, the agreement includes a payment policy consistent with a bill that the House of Representatives passed earlier this year—the Lower Cost More Transparency Act—to provide enhanced information about payment differentials between off‐campus outpatient departments and other outpatient facilities. The provision requires each off-campus outpatient department to obtain and bill for services under a unique national provider identifier.

Other notable Medicare policies include:

Telehealth: Extends Medicare telehealth flexibilities through December 31, 2026; establishes special rules for telehealth services provided by Federally Qualified Health Centers and Rural Health Clinics for prospective payment and all-inclusive rates; adds modifiers for telehealth services provided incident-to other services and those offered via contracts with virtual platform vendors; expands services that can be provided via telehealth; and enhances tracking of telehealth use
Payment extensions: Extends the Medicare low-volume hospital payment adjustment and Medicare-dependent hospital program through December 31, 2025; Medicare ground ambulance add-on payments through December 31, 2026; incentive payments for advanced alternative payment models through payment year 2027 at an adjusted amount of 3.53 percent; and Qualifying Participant eligibility thresholds in effect for performance year 2023 through payment year 2027
Hospital at-home program: Extends the Acute Hospital Care at Home initiative through December 31, 2029
Part D: Prohibits cost sharing for generic drugs for Part D beneficiaries who are eligible for the low-income subsidy
Provider directories: Requires Medicare Advantage plans to maintain accurate provider directories on a public website beginning in plan year 2027
Screening: Adds multi-cancer early detection screening tests as a covered benefit beginning in 2029
Home infusion: Allows coverage of home infusion treatments by classifying certain approved infusion treatments as Durable Medical Equipment (DME)

Other Notable Provisions

Reauthorizes and revises the Second Chance Reauthorization Act of 2024, including allowing substance use disorder (SUD) services to be provided through the State and Local Reentry Demonstration Projects program
Reauthorizes and modernizes several aspects of child welfare programs
Provides mandatory funding for community health centers and the National Health Service Corps through FY2026, the Teaching Health Center Graduate Medical Education Program through FY2029, and the Special Diabetes Programs (SDP) for Type I diabetes and the SDP for Indians through FY2026
Reauthorizes through FY 2029 the SUPPORT for Patients and Communities Act, which includes a range of mental health and SUD prevention, treatment, and recovery programs
Reauthorizes Older Americans Act programs
Reauthorizes several programs and authorities related to preparedness and response through FY2026, including the Public Health Emergency Preparedness Program and the Hospital Preparedness Program

What’s Next

Funding for the federal government expires December 20, 2024. Congress will need to approve another temporary measure to avert a government shutdown. The length and scope of such an extension remains under discussion, though the current continuing resolution would push the funding deadline into the first few months of the incoming Trump Administration and new Congress. Healthcare stakeholders, including payers, state and local governments, providers, and community organizations, should continue to monitor the congressional negotiations and be prepared to analyze the impact of legislation that Congress ultimately approves.

Connect with Us

Health Management Associates, Inc. (HMA) experts will continue analyzing the implications of the funding and policy updates in the December 18 package and ongoing congressional discussions to reach an agreement. HMA’s experts have the depth of knowledge, experience, and subject matter expertise to assist organizations with navigating these changes and the impact for health and health adjacent sectors. Please contact Laura Pence and Andrea Maresca to connect with our experts.

The Medicaid Section 1115 demonstration landscape: past trends and anticipated shifts

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This week’s In Focus section summarizes states’ Medicaid Section 1115 demonstration priorities over the last four years and highlights predicted changes coming with a new presidential administration. In the waning days of any presidency, regardless of party, reviewing and approving pending Section 1115 applications that reflect the current administration’s key policy initiatives is a priority for officials at the Centers for Medicare & Medicaid Services (CMS).

Each administration has discretion over which Section 1115 demonstrations to encourage and approve. Though specific Medicaid priorities under the upcoming Trump Administration are still nascent, Health Management Associates, Inc. (HMA), federal, and state experts are monitoring these developments. This article describes a subset of the signature initiatives the Biden Administration permitted states to pursue in their Medicaid Section 1115 demonstrations and how the new administration could focus on different priorities, rescind existing guidance, or potentially withdraw already approved waivers.

Overview of Biden-Era Section 1115 Demonstration Initiatives

CMS-approved Section 1115 demonstrations permit alternative methods to improve the accessibility, coverage, financing, and delivery of healthcare services under joint federal-state funded programs, specifically Medicaid and the Children’s Health Insurance Program (CHIP).

Addressing health disparities and promoting integrated care in Medicaid became a primary focus of the Biden Administration. In November 2023, CMS introduced a Medicaid and CHIP Health-Related Social Needs (HRSN) Framework, giving state Medicaid agencies the opportunity to address the broader social determinants of health (SDOH) that affect their enrollees, leading to better health outcomes. The new initiatives were not intended to replace other federal, state, and local social service programs, but rather to coordinate with those efforts. HRSN demonstration approvals to date include coverage of rent/temporary housing and utilities for up to six months and nutrition support (up to three meals per day), departing from longstanding prohibitions on payment of room and board in Medicaid.

During the present administration, CMS also has provided novel opportunities for states to adopt strategies that promote continuity of Medicaid coverage, mainly through bolstering Section 1115 demonstrations to provide multiyear continuous eligibility for children. In addition, CMS released guidance in April 2023 so states could apply for a new Section 1115 demonstration opportunity to test transition-related strategies that support community reentry for incarcerated people who would otherwise be eligible for Medicaid or CHIP.

The table and map below show the types of demonstrations approved and pending to date. We anticipate that incoming administration officials will closely examine the four demonstration initiatives outlined as they determine their own Medicaid policy agenda and priorities. Under President Biden’s Administration, nine states received federal approval for HRSN demonstrations under the new framework. Another 10 states have applications pending.

Rescissions and renewals. Incoming Trump Administration officials technically could attempt to rescind some of the Section 1115 demonstrations approved during the Biden Administration. The Biden Administration unsuccessfully pursued with, a similar strategy for certain 1115 demonstration components approved during President-Elect Trump’s first term. Like the Biden Administration, the incoming Trump officials may choose not to renew demonstrations, even if the courts prevent them from rescinding approvals.

Any signature Section 1115 policy is unlikely to emerge until the new administration’s policy officials are in place. There are, however, important insights to consider based on the first Trump Administration’s priorities and areas of common ground across the Biden and first Trump administrations.

Signature 1115 initiatives. During President Trump’s first term, one signature Medicaid Section 1115 initiative allowed states to apply work requirements to some eligibility groups. CMS officials at that time also approved capped allotments for certain components of a state’s Medicaid program. Some states might consider revisiting these options with incoming administration officials. Two other key policy areas to watch following the transition include:

The first Trump Administration approved a pilot program to test interventions addressing HRSNs in  North Carolina’s Medicaid 1115 demonstration program. Though the approved HRSNs were less expansive than the HRSN 1115 interventions later announced by the Biden Administration, this could be an area of common ground where the policy evolves and can be incorporated into discussions on other nascent initiatives.
Multiple administrations, including the first Trump Administration, have prioritized Medicaid policies and demonstration initiatives to address substance use disorders (SUD) and, separately, reentry. The intersection of these issues can provide another area of common ground and opportunity to continue work on state reentry initiatives, though likely with new and modified parameters.

Implementation Considerations

Federal approval of Medicaid Section 1115 demonstration proposals is a critical milestone for states. Demonstration implementation also requires significant and ongoing leadership, resources, and collaboration between states and CMS and states and their partners.

The type of state demonstration activity is expected to shift dramatically over the course of the new administration. For example, proposals may shift from expansions in coverage and benefits to reflect the new administration’s other priorities. States, too, may consider alternative approaches to Section 1115 demonstrations, such as state plan authorities like in lieu of services (ILOS), to pursue certain innovative approaches that they might otherwise have implemented with demonstration authority.

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HMA empowers states, providers, and other stakeholders to thrive in an ever-changing healthcare landscape. With deep expertise at every level, HMA teams support state Medicaid programs and stakeholder partners nationally to address a range of operational challenges, including designing innovative healthcare approaches to address urgent healthcare challenges, expanding coverage opportunities, and optimizing integration to address program efficiencies and improved “whole person” care.

We have expertise in all of the components critical to developing Section 1115 programs—from the policy knowledge, to actuarial/budgeting talent, to communications and project management skills, as well as the necessary IT infrastructure.

Contact our featured experts below to learn more about HMA’s capabilities and expertise.

MyCare Ohio: The Next Generation’s impact on the Ohio Medicare & Medicaid landscape

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The transition of MyCare Ohio to the Next Generation of its program on January 1, 2026, marks a significant evolution in the way Ohio provides healthcare services to its dual-eligible population – those who qualify for both Medicaid and Medicare services. This evolution moves Ohio to a Fully Integrated Dual Eligible Special Needs Plan model (FIDE SNP) that aims to achieve several key goals through a population health approach, designed to address inequities and disparities in care for dual-eligible individuals. These goals include:

Improved Care Coordination. Strengthening integration between Medicare and Medicaid services to provide seamless, holistic care for individuals, reducing fragmentation and ensuring comprehensive management of medical, behavioral, and social needs.
Personalized Care. Utilizing data analytics and technology to create more tailored care plans, with a focus on proactive care to address the unique health needs of each individual, especially those with chronic conditions.
Expanded Access to Services. Increasing accessibility, particularly through telehealth and digital tools, to reach underserved populations and improve convenience for patients, particularly those in rural or remote areas.
Enhanced Quality of Care. Shifting focus from service volume to outcomes, encouraging providers to deliver high-quality care and improve patient satisfaction, while incentivizing preventive care to reduce hospital admissions and other high-cost interventions.
Technology Integration. Leveraging advanced technologies like mobile apps, predictive analytics, and telemedicine to monitor patient health, improve communication between patients and providers, and enable more efficient care delivery.

The current MyCare program is offered in 29 counties across Ohio but will transition to a statewide program as a part of the Next Generation changes. Additionally, Coordination Only Dual Eligible Special Needs Plans (CO DSNP) will no longer be permitted.

After the Ohio Department of Medicaid (ODM) publicly released the request for applications (RFA) and evaluated submitted proposals, they selected four Managed Care Organization (MCOs) that will become the Next Generation MyCare plans. The ODM awarded the following MCOs to serve MyCare members beginning in January 2026: Anthem Blue Cross and Blue Shield, Buckeye Health Plan, CareSource, and Molina HealthCare of Ohio.

The shift to the FIDE SNP model and selection of four participating health plans will have a considerable impact on the competitive landscape for Medicare and Medicaid managed care in Ohio. The resulting changes can affect both selected and non-selected participants in different ways, including:

Increased competition among chosen MyCare MCOs. MCOs will need to focus on enhancing their care coordination systems, adopting new technologies, and developing personalized care plans to compete not just on the volume of services provided but also on the quality and effectiveness of care. Those who can best integrate services, offer proactive care management, and improve patient outcomes through value-based care and advanced technology initiatives will gain the competitive advantage, potentially attracting more beneficiaries.
Strategic responses of nonparticipating MCOs to counter potential membership and financial losses. MCOs that lose membership by not being selected, or are unable to offer CO DSNPs moving forward, will likely strategize how to gain membership through other product lines or benefit design to offset losses. Strategies may vary but could include tactics such as enhancing benefits or decreasing member cost shares to entice member movement across carriers for non-DSNP plans; finding innovative ways to further reach different segments within the Medicare population, such as Value Based Insurance Design (VBID) packages or Chronic SNP plays; or shifting focus to product lines outside of Medicare Advantage and Medicaid.

Ohio is one of many states transitioning to a FIDE model beginning January 2026. Health Management Associates (HMA) has successfully supported participating and non-participating carriers throughout the transition process and continues to be a dedicated partner to organizations navigating Medicare and Medicaid changes across the country. Contact one of HMA’s many experts for more details on how to navigate this evolution in health care.

Major changes to Medicare Advantage and Part D proposed by CMS for 2026

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This week’s In Focus section examines a comprehensive proposed rule that the Centers for Medicare & Medicaid Services (CMS) released on November 26, 2024. These highly anticipated regulations—which represent the last major Medicare regulations from the Biden Administration—include several significant and far-reaching proposals designed to strengthen plan oversight and enhance beneficiary protections for millions of Medicare beneficiaries who have coverage through Medicare Advantage and Medicare Part D plans beginning in contract year 2026. The rule also comprises proposals with fiscal and policy implications for state Medicaid programs.

Comments on the proposed rule are due by January 27, 2025, and the incoming Trump Administration could make significant changes before finalization. New administration officials may choose to delay certain provisions, scale back, or eliminate certain proposed policy changes when they finalize the regulations next year.

This article explains several of the proposed policies, considerations for healthcare stakeholders, and developments that Health Management Associates (HMA) experts will be tracking in the coming weeks.

Coverage of Anti-Obesity Medications Under Medicare Part D and Medicaid

In the proposed regulations, CMS seeks to expand coverage of anti-obesity medications (AOMs) under the Medicare Part D and Medicaid programs. Under current Medicare Part D coverage rules, medications used exclusively for weight loss are excluded from the definition of a Part D covered drug. Through the proposed change, CMS is seeking to align Medicare and Medicaid coverage policy with the prevailing medical consensus that recognizes obesity as a chronic disease.

Under the proposed reinterpretation, CMS would expand eligibility for Part D coverage of AOMs for Medicare beneficiaries with obesity. AOMs used for weight loss or chronic weight management would continue to be excluded from Part D coverage under the proposed regulation.

As it relates to Medicaid, CMS’s proposed reinterpretation would require Medicaid coverage for anti-obesity medications when used for weight loss or chronic weight management for the treatment of obesity. State Medicaid programs would continue to have discretion to use preferred drug lists and prior authorization (PA) to establish certain limitations on the coverage of these drugs, consistent with existing statutory requirements.

CMS estimates the proposal would increase federal costs by $24.8 billion as the result of expanded Part D coverage and $14.8 billion because of expanded Medicaid coverage over a 10-year period.

Key considerations: Though expanded access to innovative medications may improve access and outcomes for obese patients, these considerations may need to be balanced against the proposal’s considerable fiscal costs. In addition, key health nominees put forth by President-Elect Donald J. Trump have different views about how best to prevent and treat chronic disease, creating additional uncertainty about whether this proposed expansion will go forward.

Strengthening Prior Authorization and Utilization Management Guardrails

The proposed rule includes a series of recommendations for reforming Medicare Advantage PA, utilization management (UM), and coverage decisions, which include:

Defining the meaning of internal coverage criteria to clarify when MA plans may apply UM
Ensuring MA plans’ internal coverage policies are transparent and readily available to the public
Requiring plans to inform beneficiaries of their appeal rights
Revising the current metrics for the annual health equity analysis on the use of PA to require more detailed and granular reporting to allow CMS to determine whether MA plans disproportionately deny certain services

Key considerations: Continued scrutiny of MA plans’ PA practices and strong bipartisan support for reforms increase the likelihood that certain changes will be made to these policies within the next year.

Enhancing Medicare Plan Finder to Include Information on Plan Provider Directories

Another notable proposal would require MA plans to make provider directory data available to CMS for inclusion in Medicare Plan Finder (MPF), the online tool that allows beneficiaries to compare coverage options, including Medicare Advantage and Part D plans. At present, provider directories must be accessible on MA plans websites.

CMS seeks to enhance MPF with searchable provider information for all MA plans while requiring plans to attest to the accuracy of the provider directory data, including updating data within 30 days of receiving notification that provider information has changed. CMS would ensure compliance with this expectation by requiring plans to meet data compliance and quality checks, which will be detailed in upcoming technical guidance.

Improving Access to Behavioral Health Care

The proposed rule furthers federal policymakers’ initiatives to address the nation’s behavioral health crisis. CMS proposes to establish the following three standards to ensure that beneficiary cost sharing in Medicare Advantage is no greater than in Traditional Medicare:

A 20 percent coinsurance or an actuarially equivalent copayment rate for mental health specialty services, psychiatric services, partial hospitalization, and outpatient substance abuse services
No cost sharing for opioid treatment programs
All (100 percent) of the estimated Traditional Medicare cost sharing for inpatient psychiatric services

Improve Oversight and Administration of Supplemental Benefits

MA plans may offer a variety of supplemental benefits such as vision, dental, and gym memberships, which have come under increasing scrutiny by CMS. CMS proposed several actions to reduce misuse of these benefits, including:

Outlining proper usage by MA organizations and enrollees
Adding disclosure rules for transparency
Ensuring enrollees can access covered services through alternative methods
Requiring real-time electronic links between debit cards and covered services
Defining acceptable over-the-counter products.

Key Considerations: CMS officials in President-Elect Trump’s first administration expanded flexibility for plans to offer supplemental benefits. Incoming policy officials may seek an opportunity to fully review the Biden Administration’s proposals. Data and experience-informed comments from MA plans and stakeholders can support such discussions.

Improve Care Experience for Dual Eligibles

CMS proposed the following two new federal requirements for Dual Eligible Special Needs Plans (D-SNPs) that are applicable integrated plans (AIPs):

AIP D-SNPs will need to have integrated member ID cards for their Medicare and Medicaid plans.
D-SNPs will be required to conduct an integrated health risk assessment for Medicare and Medicaid, rather than separate ones for each program.

Key Considerations: These proposals further CMS’s multi-year work to advance integrated care by applying Medicare-Medicaid Plan features into D-SNP requirements. States and MA and Medicaid plans should plan for operational and policy changes if the proposals are finalized.

Formulary Inclusion and Placement of Generics and Biosimilars

CMS proposes to require Part D formularies to provide beneficiaries with broad access to generic, biosimilar, and other low-cost drugs while also ensuring that tier placement and UM practices do not limit access to these drugs as compared with more expensive brand name and reference products.

Key considerations: If finalized, the proposal would require MA-PD and Part D plans to update their approach and considerations for plan formulary development. Consumer groups and other stakeholders should consider the possibility that the proposal will improve access to lower cost products.

Other Topics in the Proposed Rule

In addition, the proposed rule calls for the following:

Guardrails for artificial intelligence to protect access to health services, such as requiring that MA plans ensure services are provided equitably, regardless of delivery method or origin (i.e., human or automated systems)
Changes to MA and Part D medical loss ratio (MLR) reporting to improve the meaningfulness and comparability of MLR across plan contracts
Expanded Part D medication therapy management eligibility criteria
Adding and updating measures addressed in this proposed rule, beginning with the 2028 Star Ratings
Promoting community-based services and enhancing transparency of in-home service providers, including new definitions and standards for community-based organizations
Codifying existing guidance related to implementation of the Medicare Prescription Payment Plan, which is part of the Inflation Reduction Act (IRA)

What to Watch

During the lame duck session, Congress could advance legislation related to some proposals in this rule. Specifically, PA has been an area of significant bipartisan interest, along with access to and cost of GLP-1 products. CMS will need to ensure the final MA and Part D policy and technical rule for contract year 2026 reflects approved statutory changes.

In addition, HMA is watching key appointments within the US Department of Health and Human Services, including individuals selected to lead CMS’ Medicare and Medicaid centers. These appointments will provide valuable insights on the emerging policy agenda of the incoming administration.

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HMA’s Medicare and Medicaid experts will continue to assess and analyze the policy and political landscape, which will determine the final policies in the MA and Part D policy and technical rule for contract year 2026. HMA’s experts have the depth of knowledge, experience, and subject matter expertise to assist organizations that engage in the rulemaking process and to support implementation of final policies, including policy development, tailored analysis, and modeling capabilities, as well as quality improvement initiatives and plan benefit design.

For further analysis of the MA and Part D proposed rule and potential impact on MA and Part D plans, Medicaid programs, providers, and beneficiaries, contact our featured experts below.

HMA webinars offer insights into big changes expected after the 2024 election

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Following the 2024 election, incoming federal officials have begun to lay the groundwork for significant changes in the federal policy landscape and agency operations. In 2025, Republicans will control the executive branch and both chambers of Congress, a trifecta of power that affords more opportunity for advancing their federal healthcare agenda over the next two years. HMA consultants are available to help organizations understand, inform, and plan for future federal policy initiatives and the impact for publicly funded programs and the healthcare sector.

Experts from HMA and from Wakely and Leavitt Partners, both HMA companies, collaborated to host three webinars that examine key issues and considerations for different parts of the healthcare sector.

2024 Political Checkpoint webinar

This webinar explored insights on the election results, discussed both confirmed outcomes and remaining uncertainties, along with the mandate for change that has emerged. Panelists from HMA and Leavitt Partners provided an overview of what to expect from Congress and the Administration, focusing on key legislative priorities and executive actions, and shared their prediction for what to watch over the first 100 days.

With a Republican majority in Congress and presidency, healthcare priorities are expected to include revisiting ACA tax subsidies, addressing Medicaid allotments, and reexamining Medicare’s system for reimbursing providers. Powerful tools like budget reconciliation could drive major changes in tax and healthcare entitlement programs, however, this tool can be limited by parameters of the Senate’s procedural rules, known as the Byrd Rule.

Panelists also addressed the regulatory policy landscape which could include reinstating Trump-era policies like the 1332 waivers, allowing non-ACA plans, and altering Medicare and Medicaid policies to emphasize transparency and fiscal responsibility.

The Future of Medicare Advantage: How the Election Results Impact the Program

With Medicare Advantage (MA) a key area of focus for incoming federal agency leaders, experts from HMA, Leavitt Partners, and Wakely discussed how the election results will impact what policy changes could be considered in the coming year.

As the MA program expands, conversations about its future reveal a mix of partisan priorities and bipartisan opportunities. Partisan changes are likely to include moderation of regulatory oversight, and the possibility of easing the audit process and restrictions on payment models. Other strategies and policies may shift the emphasis away from health equity initiatives and revise the federal approach to competitive prescription drug pricing negotiations.

There are, however, certain reforms that are likely to garner bipartisan support, such as the expansion of telehealth services and increased access to behavioral healthcare. Ongoing discussions about health plans’ approaches to prior authorization and management of prescription drug will likely remain a bipartisan priority.

Electoral Consequences: Impact on the ACA Marketplace

The 2024 elections may lead to significant changes in the ACA Marketplace. Enhanced ACA subsidies available during the COVID-19 pandemic are set to expire in 2025, and the new CMS administrator will shape policy and regulatory components that affect marketplace and consumer dynamics.

Key insights highlight anticipated changes to the Meaningful Difference Rules for non-standard plans, an increase in Marketplace user fees, and a proposal to codify silver loading into regulation. Additionally, it’s important to monitor policy areas focused on improving compliance among agents and brokers in the Marketplace the unveiling of a new Risk Adjustment model and coefficients to reflect costs that are not related to active medical conditions.

Our consultants are ready to meet with you to discuss any projects or ideas to help you navigate the evolving landscape in 2025.

Insights into federal approval of Medicaid-covered traditional healing to improve culturally relevant care for AI/AN populations

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This week’s In Focus section reviews new state initiatives to cover traditional healing services through Medicaid for American Indian/Alaska Native (AI/AN) individuals and communities.

Overview

In October 2024, The Centers for Medicare & Medicaid Services (CMS) approved Medicaid Section 1115 demonstration amendments for Arizona, California, New Mexico, and Oregon, allowing Medicaid and Children’s Health Insurance Program (CHIP) coverage of traditional healing services delivered at or through Indian Health Service facilities, Tribal facilities, and urban Indian organizations (I/T/U facilities).

This demonstration approval enables state Medicaid agencies to acknowledge traditional healthcare practices as important components of the wellness continuum of care for Native American populations. Medicaid funding will help strengthen and expand access to these services and support integration of these services into primary care, substance use disorder (SUD) treatment, and other behavioral health care in a way that I/T/U providers have designed and developed to meet the unique needs of their community.

Demonstrations for Arizona and Oregon are approved through September 30, 2027, New Mexico’s demonstration is authorized through December 31, 2029, and California’s through December 31, 2026.

Traditional Health Services: Providing Culturally Relevant Care

AI/AN populations generally experience worse health disparities compared with non-AI/AN populations, particularly in terms of obesity, diabetes, tobacco addiction, and cancer. AI/AN populations also face higher rates of mental health disorders, SUDs, and suicide.

Using Transformed Medicaid Statistical Information System (T-MSIS) claims and demographics data, Health Management Associates, Inc. (HMA), staff assessed the incidence of specific chronic diseases in the Native American and non-Native American population in the four states approved to cover traditional healing services through their Medicaid program. For example, in these states, the prevalence of diabetes in AI/AN populations ranged from 27 percent to 87 percent higher than among non-AI/AN groups. Figure 1 shows the percentage of three chronic conditions among these groups in the four states.

Figure 1. Percentage of AI/AN vs. Non-AI/AN Medicaid Beneficiaries Living with Chronic Conditions in AZ, CA, NM, and OR (2022)

*Source: HMA analysis of 2022 T-MSIS (Transformed Medicaid Statistical Information System)*

The demonstration approval is expected to improve access to culturally appropriate healthcare to address these disparities in chronic conditions for Tribal communities. Traditional healthcare practices vary widely across the 574 federally recognized Tribes in the United States, and many see traditional healthcare practices as a fundamental element of well-being that can help patients with specific physical and behavioral health conditions. For example, commonly offered traditional practices in Native American communities include talking circles, sweat lodges, and smudging. Studies show that incorporating traditional healthcare practices may improve mental health symptoms, outcomes, and quality of life, including among individuals with SUD.

Considerations for Key Partners

AZ, CA, NM, and OR are the first states to receive federal approval and will lay the groundwork for integrating time-honored healing practices into their Medicaid systems. They also could serve as a model for other states that choose to pursue this demonstration. I/T/Us were integral to shaping the demonstration design and are poised to continue shaping the program details and implementation of traditional approaches to care into their Medicaid systems.

HMA experts identified some key considerations for partners, such as states and Medicaid managed care organizations (MCOs), to follow as these services are incorporated into Medicaid:

Collaborate with I/T/U facilities and communities. Traditional healing practices are sacred and ceremonial, so flexibility will be essential in determining how Medicaid funding can be best allocated to support providers who offer traditional practices. Communities will be critical in helping identify the specific traditional healing practices that are needed.
Support operational changes needed in I/T/U facilities. Compliant and efficient billing practices will be essential to the success of the demonstrations. States can support I/T/U facilities to develop necessary trainings, workflows, and administrative processes. For example, the provider qualification criteria and implementation is central to meeting federal compliance and reporting requirements. Facilities also will need to meet Medicaid billing requirements to collect 100 percent of the federal medical assistance percentage (FMAP).
Partner with I/T/U facilities. To facilitate proper care coordination, states, health plans, and non-I/T/U providers should partner with I/T/U facilities to ensure patients experience the best health outcomes.

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HMA has learned the value and importance of working with Native American and Alaska Native populations and respecting their unique approaches to improving healthcare. HMA has expertise on healthcare issues that uniquely affect AI/AN populations and is experienced in addressing these challenges through AI/AN leadership and engagement that is culturally sensitive and respectful. Our experience working directly with Tribes encompasses extensive and applicable knowledge of healthcare operations in rural and urban settings to support infrastructure needs, including data management, IT, staffing, policies and procedures, training, and eligibility and enrollment processes.

Contact our featured expert below to learn more about HMA’s work to support Native American and Alaska Native communities.

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