Insights^

On April 7, 2025, the Centers for Medicare and Medicaid (CMS) released its final Calendar Year (CY) 2026 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (the CY 2026 Rate Announcement). The Press Release can be found here. The fact sheet can be found here. The final Part D Redesign program instructions can be found here. (No changes were made to the redesign program, but CMS answered comments on pages 3-20). Below you will find a summary of major provisions.

MEDICARE ADVANTAGE PROVISIONS

Payment Updates

The Advanced Notice proposes to increase MA payments by 5.06%, a large update from the 3.7% last year, or $25 billion, from CY 2025-2026. This takes into account a growth rate of 9.04%, a negative adjustment for fee-for-service (FFS) normalization of -3.01%, a -0.69% decline for changes in star ratings, and other changes. The growth rate is based off Medicare FFS per capita costs as estimated by the Office of the Actuary.

In 2024, CMS initiated a three-year, phased-in approach for removing the medical education costs (related to services MA enrollees receive) from the historical and projected expenditures supporting the FFS costs that are included in the growth rate calculations. For 2026, CMS will complete the phasein of the technical adjustment by applying 100% of the adjustment for MA-related medical education costs.

Risk Adjustment Model Updates

In this notice, CMS finalized their 3-year phase-in of a new risk adjustment model. For CY2026, CMS will be calculating Hierarchical Condition Category (HCC risk) scores only through the new model. This update includes restructured condition categories using ICD-10 with updates for the underlying data years (this year, using data from 2022 and 2023). They have also updated the denominator year to determine the average per capita predicted expenditures. The overall impact of this new risk score model is -3.01%. CMS published a list of risk adjustment coefficients and predicted ratio tables for all factors starting on page 123 of the final notice.

The update will be different for Programs of All-Inclusive Care for the Elderly (PACE). CMS does not have complete encounter data for PACE and, as such, has not tied their risk score update to the standard MA risk score update. CMS hopes to have more encounter data starting from service dates in 2025 that they will be able to use in the future. For now, CMS is proposing to use a blend of the PACE HCC model and the MA HCC model over the next 5 years. While CMS did receive some comments asking for a longer timeline, CMS indicated they will be staying with the 5-year phase in.

CMS will also continue to consider frailty scores for the PACE population and certain D-SNPs (Fully Integrated Dual Eligible Special Needs Plans [FIDE SNPs]) when calculating payments.

PART D PLAN UPDATES

Standard Benefit Revisions

Below are the changes to the newly defined standard Part D drug benefit for CY 2026:

• Annual deductible. The enrollee pays 100 percent of their gross covered prescription drug costs (GCPDC) until the deductible of $615 for CY 2025 ($590 in 2025) is met.
• Initial coverage. The enrollee pays 25 percent coinsurance for covered Part D drugs. The sponsor typically pays 65 percent of the cost of applicable drugs and 75 percent of the cost of all other covered Part D drugs. The manufacturer, through the Discount Program, typically covers 10 percent of the cost of applicable drugs. In the initial coverage phase, CMS will pay a 10 percent subsidy for selected drugs during a price applicability period. This phase ends when the enrollee has reached the annual out-of-pocket (OOP) spending threshold of $2,100 for CY 2026 ($2,000 in 2025).
• Catastrophic. The enrollee pays no cost sharing for covered Part D drugs. Part D plan sponsors typically pay 60 percent of the costs of all covered Part D drugs. The manufacturer pays a discount, typically equal to 20 percent, for applicable drugs. CMS pays a reinsurance subsidy equal to 20 percent of the costs of applicable drugs, and equivalent to 40 percent of the costs of all other covered Part D drugs that are not applicable drugs. In the catastrophic phase, CMS will provide 40 percent reinsurance for selected drugs during a price applicability period.

Part D Risk Adjustment

CMS is proposing updates to the Part D risk adjustment model to reflect the Inflation Reduction Act’s (IRA’s) changes to the Part D benefit for CY 2026 – the continued implementation of the Manufacturer Discount Program and the updated OOP threshold ($2100 this year, compared to $2000 last year), as well as the new Medicare Drug Price Negotiation Program – as well as calibrating the model using more recent data years (2022 diagnoses and 2023 costs). These updates to the Part D risk adjustment model are designed to help plan sponsors develop accurate bids for CY 2026.

For the risk adjustment models for Part D (RxHCC), CMS is proposing the following changes (more details can be found starting on page 123 of the notice):

• Adjusting the annual OOP thresholds for pre-IRA data years to estimate what the threshold would have been in the prior year if the IRA were in place at the time. (P. 94 of the proposed notice – no changes in final)
• Increasing manufacturer discounts for specified manufacturers and specified small manufacturers according to the phase-in schedules under sections 1860D-14C(g)(4)(B) and (C) of the IRA. (P. 95 of the proposed notice – no changes in final)
• Adjusting gross drug costs to account for the Maximum Fair Prices (MFPs) of the selected drugs for 2026 as part of the Medicare Drug Price Negotiation Program. (P. 79)
• Updating the underlying data used in the model calibration to more recent years, specifically using diagnoses from 2022 FFS claims and MA encounter data records and gross drug costs from 2023 PDEs (the RxHCC model being proposed solely for PACE organizations will continue to use 2018 diagnoses and 2019 costs) (P. 97 of the proposed notice – no changes in final)
• Updating the denominator year from 2022 to 2023 (the RxHCC model being proposed solely for PACE organization will continue to use a 2020 denominator) (P. 98 of the proposed notice – no changes in f inal). As in MA, the PACE-only model is being phased out over time.
• For the risk sharing corridors, CMS examined plan risk sharing amounts and found significant variation year to year and among plan sponsors, so CMS is choosing to keep the risk sharing corridors unchanged. So, the risk percentages for the first and second thresholds remain at +/- 5 percent and +/-10 percent of the target amount, respectively, for CY 2026. The payment adjustments for the first and second corridors are 50 percent and 80 percent, respectively.

MA and Part D Star Ratings

Star Ratings updates include providing the list of eligible disasters for adjustment, non-substantive measure specification updates, and the list of measures included in the Part C and D improvement measures and Categorical Adjustment Index for the 2026 Star Ratings. CMS is adding one new measure to the 2026 Star Ratings – Kidney Health Evaluation for Patients with Diabetes. There are also two measures (Improving or Maintaining Physical Health and Improving or Maintaining Mental Health) returning to the 2026 Star Ratings after substantive specification changes. The list of total star ratings measures begins on page 112 of the advanced notice.

For 2026 star ratings, the deadlines for plans to review their complaints tracking model (CTM) data is May 30, 2025, and to June 30, 2025, to request a review of 2024 appeals data. (March 31, 2026, to review CTM data for 2027 Star Ratings)

CMS is also adjusting star ratings in 2026 for plans in disaster areas. For those contracts with at least 25 percent of enrollees in a FEMA-designated Individual Assistance area in 2024, contracts will receive the higher of either their current ratings or the prior year ratings.

See page 104 of the rule for a list of individual counties. The final notice also added Los Angeles county and the state of California to this list due to their recent wildfires.

On April 4, 2025, the Centers for Medicare and Medicaid Services (CMS) released their final rule with technical changes to Medicare Advantage (MA) and Medicare Part D Prescription Drug plans. This rule creates policy changes based on last year’s final MA payment rule and the Inflation Reduction Act (IRA). The CMS fact sheet can be found here. As this rule was proposed under President Biden and finalized under President Trump, there are, as expected, substantive changes in this final, much smaller rule.

Some of the larger changes from the proposed rule include:

• MA plans are no longer being required to cover GLP-1 type medications.
• CMS is halting creating guardrails around the use of AI within MA (although CMS did say they want to look at this in the future).
• CMS is scrapping the Annual Health Equity Analysis.
• CMS removed propose changes to MA and Part D Medical Loss Ratio (MLR) requirements
• CMS is removing mandates for MA plans to cover behavioral health at a maximum 20% copayment level and cover opioid treatments with zero copayments.
• CMS removed all draft requirements around debit card use in MA plans.

Please see below for more detail on this and other provisions.

MEDICARE ADVANTAGE PROVISIONS

Prior Authorization/Appeals

Despite concerns about reports of high rates of prior authorization requirements from MA plans to providers, CMS pulled back significantly on implemented proposals related to these concerns. The final rule restricts plans’ ability to reopen and modify previously approved inpatient hospital decisions – plans will now only be able to reopen determinations for obvious error or fraud. n addition, CMS is codifying existing guidance that requires plans to give a provider notice of a coverage decision, in addition to the enrollee, whenever the provider submits a request on behalf of an enrollee. CMS is also ensuring that a patient will not have to pay for services until the MA organization has made a claims payment.

Proposals deleted in the final rule:

• defining the meaning of “internal coverage criteria” to clarify when MA plans can apply utilization management.
• ensuring plan internal coverage policies are transparent and readily available to the public (i.e. posted on websites).
• ensuring plans are making enrollees aware of appeals rights, and addressing after-the-fact overturns that can impact payment, including for rural hospitals.
• For internal coverage criteria, regulatory language closing any loopholes being used to create prior authorizations that CMS did not intend.

Promoting Informed Choice

CMS has deleted all language in the “informed choice” selection of the proposed rule. Language was removed that would have required plans to submit their MA provider directory data to CMS for population in the Medicare Plan Finder. CMS also deleted new requirements for plans to discuss alternative funding solutions with beneficiaries such as the Part D Low-Income Subsidy Medicare Savings Programs.CMS also deleted language to expand its oversight of MA and Part D marketing and communication materials.

Dual Eligibles Provisions

To reach its goal of reducing fragmentation for dual-eligible beneficiaries , CMS is proposing that Dual Eligible Special Needs Plans (D-SNPs) be required to do the following:

• Have integrated member identification (ID) cards that serve as the ID cards for both the Medicare and Medicaid plans in which an enrollee is enrolled.
• Conduct an integrated health risk assessment (HRA) for Medicare and Medicaid rather than separate HRAs for each program.
• Codify timeframes for all SNPs to conduct HRAs and individualized care plans (ICPs) and prioritize the involvement of the enrollee or the enrollee’s representative, as applicable, in the development of the ICPs.

There are no changes in this section between the proposed and final rules.

Non-allowable Special Supplemental Benefits for the Chronically Ill (SSBCI)

SSBCI are benefits that can be offered non-uniformly to qualifying MA enrollees with chronic conditions. These supplemental benefits may be non-primarily health-related; however, the benefit must have a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee. This rule establishes guardrails for these benefits by codifying a list of non-allowable examples (e.g., non-healthy food, alcohol, tobacco, cosmetic surgery, life insurance). These provisions were in the proposed rule and have been finalized – so they are not directly tied to the “Make America Health Again” program.

Program of All-Inclusive Care for the Elderly (PACE) and Cost Plans

This rule codifies requirements for PACE organizations and cost plans to submit risk adjustment data to CMS. These entities already do this, for the most part, but this provision puts it into regulation.

MEDICARE PART D PROVISIONS

Vaccine Cost-Sharing

This provision implements section 11401 of the IRA requiring that the Part D deductible will not apply to, nor is there any cost-sharing for, adult vaccines recommended by the Advisory Committee on Immunization Practices (ACIP). This includes common vaccines like flu, HPV, COVID-19, Shingles, and other vaccines for more rare occurrences like anthrax and Dengue Fever.1 No change from the proposed rule.

Insulin Cost-Sharing Changes

This proposal implements section 11406 of the IRA requiring that the Medicare Part D deductible will not apply to covered insulin products and that the Part D cost-sharing amount for a one-month supply of each covered insulin product must not exceed the statutorily defined “applicable copayment amount” for all enrollees. The applicable copayment amount for 2023, 2024, and 2025 is $35. From 2026 on, a decision tree will be used for the copayment based on drug prices for that year. No change from the proposed rule.

Medicare Prescription Payment Plan

The rule continues the existing provisions of the Medicare Prescription Payment Plan, which allows Part D enrollees to spread out-of-pocket costs out throughout the year, through 2026 – but adds two new features. First, CMS created an automatic renewal process for the beneficiary for the next calendar year unless the enrollee opts out. Second, CMS finalized a requirement for Part D sponsors to effectuate election requests received via phone or web in real time for 2026 or future years. The final rule does make one change which is to exempt D-SNPs from having to provide beneficiaries with hard copy mailing materials for plan election or education information.

Pharmacy Network Transparency for Pharmacies and Beneficiaries

CMS is now requiring Part D plans to provide contracted pharmacies with information about which Part D plans they are in-network for before open enrollment and afterward on request. However, CMS removed a provision that would have allowed pharmacies to terminate their network contracts without cause after the same notice period that the sponsor is allowed to terminate pharmacy network contracts without cause.

Biosimilar and Generic Drugs

CMS clarifies existing law that drug plans must provide beneficiaries with broad access to generics, biosimilars, and other lower-cost drugs. CMS is making this statement because of reports from external entities that pharmacy benefit managers (PBMs) and Part D plans have been favoring more expensive brand drugs and reference biological products over generics, biosimilars, and other lowercost drugs in terms of formulary placement decisions. In one change, the final rule removes a provision that would have had CMS reviewing formularies for generic and biosimilar drug inclusion. However, CMS does state that they “may consider codifying additional requirements regarding formularies in future rulemaking if necessary.”

On April 1, the Centers for Medicare and Medicaid Services (CMS) released their proposed Inpatient Hospital Prospect Payment System rule for FY 2026. The proposed changes are a mixed bag for the nation’s inpatient hospitals. Under the proposed rule, the hospital market basket percentage would increase by 3.2% (with a 0.8% reduction for productivity). The update is in line with last year’s update of 2.6%, although it is much lower than MedPAC’s recommendation of 4.2%. The American Hospital Association and the Federation of American Hospitals have both declared that this increase is insufficient due to hospital cost inflation and labor shortages

Comments on the rule are due June 10, 2025.

LOW-WAGE HOSPITAL POLICY

The proposed rule discontinues the low wage index hospitals policy for FY 2026 and subsequent years. This policy, put in place in 2020, makes upward adjustments to the wage indices of hospitals with a wage index value below the 25th percentile. CMS referenced the court decision of Bridgeport Hosp. v. Becerra, 108 F.4th 882, 887–91 & n.6 (D.C. Cir. 2024) as a reason for discontinuing the policy.

To partially offset this change, CMS is capping any hospitals’ wage index deduction by a maximum of 5% for FY 2026.

UPDATED WAGE INDEX AREAS

As CMS does every year, the agency is recalculating all hospital wage index areas to incorporate data from cost reporting periods beginning in FY 2022. The table of changes can be found here.

Hospital Inpatient Quality Reporting (IQR) Program

CMS is removing four reporting measures beginning with the CY 2024 reporting period/FY 2026 payment determination:

• Hospital Commitment to Health Equity
• COVID-19 Vaccination Coverage among Health Care Personnel measure
• Screening for Social Drivers of Health
• Screen Positive Rate for Social Drivers of Health

CMS is modifying four current measures:

• Hospital-Level, Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) – CMS is adding Medicare Advantage patients to the current cohort of patients, shortening the performance period from three to two years, and changing the risk adjustment methodology.
• Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Acute Ischemic Stroke Hospitalization – CMS is adding Medicare Advantage patients to the current cohort of patients, shortening the performance period from three to two years, and making changes to the risk adjustment methodology.
• Hybrid Hospital-Wide Readmission (HWR) and Hybrid Hospital-Wide Mortality (HWM) – CMS is lowering the submission requirements to allow for up to two missing laboratory results and up to two missing vital signs, reducing the core clinical data elements (CCDEs) submission requirement to 70% or more of discharges, and reducing the submission requirement of linking variables to 70% or more of discharges.

Hospital Readmissions Reduction Program

As CMS is doing for all quality measures, CMS is modifying readmission measures to add Medicare Advantage data, for both the measures and the calculation of aggregate payments. The agency is also shortening the applicable period of measuring performance from 3 to 2 years. CMS is also removing the COVID-19 exclusions and risk-adjustment covariates from the six readmission measures. These changes will be implemented for FY 2027.

Hospital Value-Based Purchasing Program

CMS is making a few changes to the VBP. First, the agency is adding MA data to most measures. Second, CMS is removing the Health Equity Adjustment from the scoring methodology. The agency is also adding COBID-19 patients back INTO the measures’ denominators (they had been removed during the pandemic and for a few subsequent years). In the same vein, CMS is adding patients with a diagnosis of COVID-19 back into the THA/TKA complication measures numerator and denominator. CMS will also be updating the CDC’s National Healthcare Safety Network (NHSN) healthcare-associated infections (HAI) chart-abstracted measures with the new 2022 baseline.

CMS has estimated that $1.7 billion is available in FY 2026 for value-based incentive payments.

DRG GROUPER CHANGES

CMS made several grouper coding changes based on feedback. See details here. In addition, CMS made many changes to severity levels in codes – those changes can be found here. This file also includes the 50 new procedure codes that CMS added as well.

New Transforming Episode Accountability (TEAM) Model

Last year, CMS proposed a new 5-year mandatory bundled payment program for all acute-care hospitals in a yet-as-unnamed CBSA. The model begins January 1, 2026, and ends December 31, 2030. Under this model, CMS would begin by focusing on lower extremity joint replacement, surgical hip femur fracture treatment, spin al fusion, coronary artery bypass graft, and major bowel procedures. Providers would bill as normal (MS-DRGs for inpatient, HCPCs for physician, etc.) for their procedures – but would receive target prices for episodes prior to each performance year. Performance for providers would be measured by spending as well as performance on three quality measures.

For this year, CMS has added a limited deferment period for certain hospitals, quality measure performance using patient-reported outcomes in the outpatient setting, improved target price construction, and expand the three-day Skilled Nursing Facility Rule waiver.

POST-ACUTE TRANSFER POLICY

CMS is proposing to add and remove MS-DRGs from post-acute transfer payment treatment in this rule. CMS is proposing to add MS-DRGs 209, 213, 318, 359, 360, 321, 322, 403, 404, 463, 464, and 465. CMS is proposing to remove MS-DRG 294, 295, and 509.

FEEDBACK

CMS is also asking for input on many aspects of the rule from stakeholders. Below we highlight some of their requests for feedback:

• For the overall Medicare program, CMS is putting out an RFI asking stakeholders to identify areas that are redundant or burdensome in Medicare regulations, including in conditions of participation, value-based purchasing, quality and safety reporting, telehealth and digital health. The deadline for comments is June 10, 2025.
• For quality reporting, CMS is issuing a second RFI on creating a digital quality measurement. Specifically, CMS wants to hear about:
• The anticipated approach to FHIR-based electronic clinical quality measure (eCQM) reporting in quality reporting programs.
• The potential use of FHIR-based patient assessment instrument reporting for inpatient psychiatric facilities.
• For quality reporting, CMS is requesting comments regarding how to measure well-being and nutrition in future years.
• For quality reporting, CMS is seeking input on future modifications to the Query of Prescription Drug Monitoring Program (PDMP) measure, including seeking public input on changing the Query of PDMP measure from an attestation-based measure (“Yes” or “No”) to a performance-based measure (numerator and denominator), and expanding the types of drugs to which the Query of PDMP measure applies.
• For quality reporting, CMS is requesting information on the Medicare Promoting Interoperability Program’s objectives and measures moving toward performance-based reporting.
• For quality reporting, CMS is requesting information on improvements in the quality and completeness of the health information eligible hospitals and CAHs are exchanging across systems.

On April 1, CMS released the proposed rule for skilled nursing facility (SNF) payments for FY 2026. Under the proposed rule, SNF payments would increase by 2.8% for FY 2026. This includes hospital market basket percentage would increase by 3.0%, with a 0.8% reduction for productivity, and 0.6% increase for a market basket forecast error adjustment. The update is lower than last year’s update of 4.6%. The American Health Care Association lauded the increase while also warning Congress that this increase wouldn’t make up for proposed Medicaid reform this year. CMS estimates that the overall economic impact of this proposed rule is an estimated increase of $997 million in payments to SNFs for FY 2026. Comments on the rule are due June 10, 2025.

PAYMENT UPDATES

The final case-mix adjusted rates (pp. 21-22 of the rule) can be found here.

CMS also released new wage index tables for FY2026 – they can be found here.

PROPOSED CHANGES IN PATIENT-DRIVEN PAYMENT MODEL (PDPM) ICD-10 CODE MAPPINGS

In FY 2020, CMS implemented the Patient-Driven Payment Model (PDPM) to focus on the needs of the whole patient, rather than focusing on the volume of services provided. CMS is proposing several changes to the PDPM ICD-10 code mappings

Interestingly, a large portion of these codes are for behavioral/mental health disorders – that have been moved off the primary diagnosis list because “treatment for these diagnoses would typically occur on an outpatient basis and not require an inpatient SNF stay in and of themselves. as reasons for a SNF admission.

SNF VALUE-BASED PURCHASING (VBP) PROGRAM

As CMS has done in all other payment rules, CMS is proposing to remove the SNF VBP Program’s Health Equity Adjustment from the VBP methodology beginning in FY 2027.

CMS also released the performance standards for the remaining VBP measures for FY 2028.

SNF QUALITY REPORTING PROGRAM (QRP)

Aligning with changes the new Administration is making on equity and social determinants of health in all proposed rules, CMS is proposing to remove four standardized patient assessment data elements beginning in FY 2027, including: one item for Living Situation (R0310); two items for Food (R0320A and R0320B); and one item for Utilities (R0330). CMS has stated that removing these reporting requirements will save SNFs $2,228,563.12 annually. SNFs will not be required to collect this data beginning with patients admitted on or after October 1, 2025.

CMS also seeks input on several RFIs, specifically: 1) future measure concepts on the topics of delirium, interoperability, nutrition, and well-being; 2) revisions to the current data submission deadlines for assessment data from 4.5 months to 45 days; and 3) advancing digital quality measurement and the use of Fast Healthcare Interoperability Resources® in the SNF QRP. For the latter, a detailed list of questions starts on page 59 of the rule.

FEEDBACK

CMS is also asking for input on many aspects of the rule from stakeholders. Below we highlight some of their requests for feedback:

• For the overall Medicare program, CMS is putting out an RFI asking stakeholders to identify areas that are redundant or burdensome in Medicare regulations, including in conditions of participation, value-based purchasing, quality and safety reporting, telehealth and digital health. The deadline for comments is June 10, 2025.
• For SNF quality, CMS would like feedback on RFIs on:
  • Future measure concepts for the SNF QRP;
  • Potential revisions to the data submission deadlines for assessment data collected for the SNF QRP; and
  • Advancing digital quality measurement in SNFs.

On March 14, 2025, the Senate Finance Committee held a hearing to consider the nomination of Dr. Mehmet Oz to be the Administrator of the Centers for Medicare and Medicaid Services (CMS). There was bipartisan agreement about certain topics, such as the need to address the high cost of health care, concerns about rural health, the benefits of telehealth, and the need to address concerns about the Medicare Advantage (MA) program. The biggest partisan difference on display was on the topic of how Republican reconciliation legislation would impact Medicaid funding. Democratic Senators argued that the proposal would lead to losses in coverage for those who needed it, and Republican Senators countered that Medicaid reform was about protecting coverage for those who really needed it.

OPENING STATEMENTS

• Committee Chair Mike Crapo (R-ID)
• Committee Ranking Member Ron Wyden (D-OR)

WITNESS TESTIMONY

•  Dr. Mehmet Oz

MEMBER QUESTIONS

Medicaid

Democratic Senators expressed concerns that the proposed Republican reconciliation legislation, as passed by the House of Representatives, would lead to Medicaid cuts that would hurt families, mothers, children, and providers (especially rural providers). In response to questions as to his thoughts about these potential cuts, he said he had not seen legislation that would cut Medicaid funding but said protecting Medicaid means making sure it is stable over the long term. When asked about his thoughts on work requirements from Sen. Raphael Warnock (D-GA), Dr. Oz said he supported them because of his support for the dignity of work but did not think they should be a barrier to coverage. Other Democratic Senators brought up the Medicaid expansion population. Sen. Maggie Hassan (D-NH) expressed her concerns that Medicaid budget cuts could lead some states to drop coverage for the expansion population. When asked directly about his thoughts on Medicaid expansion by Sen. Maria Cantwell (D-WA), Dr. Oz said it works for some states, but other states may try other ways to provide coverage to the uninsured.

In contrast, Republican Senators who spoke about Medicaid funding tended to talk about the need to ensure the program was stable for those whom it was initially intended to help, that is, the poor, mothers, children, and people with disabilities. Sen. Ron Johnson (R-WI) said there was a need to distinguish between Medicaid before and after the Affordable Care Act (ACA). Specifically, he argued that Medicaid expansion has been expensive, threatens the program’s ability to provide care for individuals such as people with disabilities, and has allowed certain states to game the system through the use of tools such as provider taxes. Dr. Oz agreed that by expanding the number of people on Medicaid without providing more resources to providers, you do stretch resources in a way that could impact those Medicaid was originally designed to help. Both Sens. Johnson and Marsha Blackburn (R-TN) cited concerns about Medicaid coverage for undocumented immigrants and foreign nationals. Dr. Oz said he would ensure that both Medicaid and Medicare eligibility are calculated accurately. He specifically cited an article about California’s effort to use federal dollars to pay for Medicaid coverage for undocumented immigrants. On another Medicaid-related topic, Committee Ranking Member Ron Wyden (D-OR) defended the nursing home staffing rule promulgated by the Biden administration. Sen. James Lankford (R-OK) countered that the rule may sound good but would lead to widespread closures, especially in rural areas. Dr. Oz said that examining this rule is something he wants to do early on if confirmed.

Medicare Advantage

Today’s hearing demonstrated that Senators on both sides of the aisle have concerns about the MA program. Specifically, Senators expressed concerns about charges that plans are upcoding to make patients appear sicker than they are, that they improperly deny coverage, that they engage in deceptive marketing, and that the program costs the government more than traditional Medicare. Even though Dr. Oz at one point proposed transitioning all Medicare patients to MA, he acknowledged these concerns and pledged to work with Senators on both sides of the aisle to address them. Notably, when asked by Ranking Member Wyden about what he saw as the biggest area of abuse in the private insurance market, he responded with MA sales practices. In answer to other Senators’ concerns about improper denials, he said he thinks there are too many procedures that require prior authorization and that standardization is needed when it comes to what does and what does not require prior authorization.

Chronic Health and Nutrition

Several Senators expressed concerns about the rate of chronic disease in America and asked Dr. Oz how CMS might address this concern. In answer to a question about this from Sen. Roger Marshall (R-KS), Dr. Oz said that incentivizing beneficiaries to make healthy choices was a worthy goal and said he had conversations with Ranking Member Wyden about this. Sen. Todd Young (R-IN) asked what reforms could be made in CMS to promote prevention efforts for chronic diseases. Dr. Oz gave the example of how, in MA, some plans provide a food allowance, but there is no guidance on how to eat healthy. Sen. John Cornyn (R-TX) argued that the Supplemental Nutrition Assistance Program (SNAP) subsidizes unhealthy foods.

Rural Health

Senators on both sides of the aisle expressed concerns about rural health. Sens. Blackburn and Tina Smith (D-MN) highlighted their concerns about the closures of rural hospitals. In answer to a question from Sen. Blackburn about the low wage index, Dr. Oz committed to working with Congress. Senator Chuck Grassley (R-IA) brought up his concerns about the placement of graduate medical education (GME) slots in rural areas. Additionally, Senators such as Steve Daines (R-MT) and Cortez Masto (D-NV) expressed their support for telehealth. Dr. Oz also shared his support for telehealth and noted how larger institutions in specific areas can serve their regions.

Prescription Drugs

Senators on both sides of the aisle mentioned concerns about the cost of prescription drugs. Sens. Lankford and Chuck Grassley (R-IA) expressed their support for pharmacy benefit manager (PBM) reform. Dr. OZ said that while he believes PBMs do play a role, there needs to be reforms to increase transparency. Democratic Senators such as Ben Ray Luján (D-NM) and Peter Welch (D-VT) asked Dr. Oz about his position on solutions such as Medicare price negotiation and international reference pricing. Dr. Oz says he wanted to use all available tools to lower prescription drug costs.

Other Issues

•  Sen. Steve Daines (R-MT) expressed his concerns about restrictions on Medicare beneficiaries’ access to innovative medical devices. Dr. Oz said the gap between when the Food and Drug Administration (FDA) approves a product and when Medicare and Medicaid patients can access it needs to be shortened.
• Sen. Cantwell asked Dr. Oz if he would support bundling patients at or below 150% of the poverty line to ensure affordable access to care, especially if ACA tax subsidies expire. He said he would commit to looking at it as a solution.