CMS proposes keeping Medicare payment rates steady

CMS on Monday proposed increasing payments to Medicare insurers in 2027 by an estimated 0.09%, marking roughly flat rates for Medicare insurers and an update that falls short of Wall Street expectations.

Chris Klomp, CMS deputy administrator and director of Medicare, said the proposal aims to improve payment accuracy and ensure Medicare insurers have stable reimbursement, adding that the agency wants to focus on bolstering the billing system's simplicity, competition, and accuracy.

According to the Wall Street Journal, a 0.09% increase in payment rates is worth around $700 million to the Medicare Advantage (MA) industry. However, analysts predicted that CMS would propose a 2027 rate increase in the range of 4% to 6%. In 2026, insurers received a 5.06% increase.

One of the main reasons proposed rates fell short of analysts' expectations is a result of the federal staff actuaries' calculation of spending growth, with is tied to costs in traditional Medicare, the Journal reports. Analysts had projected this growth rate would end up higher than the 4.97% that was ultimately used in the calculation of proposed insurer rates.

Based on underlying trends in billing, overall payments should go up by an additional 2.45%, which would raise the 2027 increase to 2.54% with the proposed changes added in, Medicare officials said.

The agency is also proposing the elimination of an industry billing practice that has raised concerns with government watchdogs like HHS' Office of Inspector General. This practice is insurers' use of certain medical chart reviews to document diagnoses for enrollees. Payments within the MA program increase when patients have specific medical conditions, a setup that's called risk adjustment.

"We do not want risk adjustment to be a source of competitive advantage for health plans," Klomp said.

As part of the proposal, insurers won't get paid for medical chart-derived diagnoses that aren't linked to a specific medical service like a doctor's visit. The proposal would not affect payments for diagnoses discovered through chart reviews if they're tied to medical encounters.

This adjustment brought the projected 2027 payment rate down by 1.53 percentage points, the Journal reports.

A spokesperson for America's Health Insurance Plans, an insurance industry group, said the proposal "could result in benefit cuts and higher costs for 35 million seniors and people with disabilities."

Jeremiah Reuter, a VP at Optum Advisory*, said, "while early industry responses focus on the modest 0.09% rate increase and the associated funding pressure on MA plans, a more detailed evaluation of the 2027 Advance Notice will likely reveal a more differentiated impact. Plans that have already reduced their dependence on unlinked chart review records and that have invested in real‑time, technology‑enabled care management, including advanced analytics and AI, will have strategic advantages. As a result, the 2027 environment may create both winners and losers, depending on operational maturity and technological readiness."

*Advisory Board is a subsidiary of Optum. All Advisory Board research, expert perspectives, and recommendations remain independent.

(Mathews/Weaver, Wall Street Journal, 1/26)

15 new drugs added to Medicare price negotiations

CMS on Tuesday released the list of the next 15 drugs that will be subject to Medicare price negotiations in 2028, including treatments administered in doctor offices.

The listed drugs treat a variety of conditions, including cancer, psoriatic arthritis, and human immunodeficiency virus type 1 infection.

The drugs included on the list are:

• Anoro Ellipta, for chronic obstructive pulmonary disease
• Biktarvy, for HIV
• Botox and Botox Cosmetic, for several cosmetic and therapeutic uses, including chronic migraines
• Cimzia, for rheumatoid arthritis, Crohn's disease, and other autoimmune conditions
• Cosentyx, for autoimmune conditions include plaque psoriasis
• Entyvio, for active ulcerative colitis and Crohn's disease
• Erleada, for prostate cancer
• Kisqali, for breast cancer
• Lenvima, for advanced cancers
• Orencia, for rheumatoid arthritis and psoriatic arthritis
• Rexulti, for schizophrenia
• Trulicity, for cardiovascular disease
• Verzenio, for breast cancer
• Xeljanz and Xeljanz XR, for rheumatoid arthritis and other inflammatory conditions
• Xolair, for asthma and other allergic reactions

According to CMS, the selected drugs accounted for $27 billion of Medicare spending between November 2024 and October 2025.

Drugmakers now have to decide by Feb. 28 if they plan to participate in negotiations with the government. Those that choose not to will either have to pay an excise tax of up to 95% of their U.S. sales or withdraw their drugs from Medicare and Medicaid coverage.

"Under President Trump's leadership, CMS is taking strong action to target the most expensive drugs in Medicare, negotiate fair prices, and make sure the system works for patients — not special interests," said CMS Administrator Mehmet Oz.

(Wilkerson, STAT, 1/27; Fortinsky, The Hill, 1/27; Goldman, Axios, 1/28)

Earlier this month, CDC changed its recommended vaccination schedule, saying that vaccines for meningitis, hepatitis A and B, dengue, and RSV would only be recommended for "high-risk groups," and that parents could choose to vaccinate their children against rotavirus, COVID-19, flu, meningitis, and hepatitis A and B under "shared clinical decision-making."

Meanwhile, a coalition of medical groups have expanded an ongoing lawsuit against HHS Secretary Robert F. Kennedy Jr. to challenge and reverse the changes CDC made to the vaccine schedule.

A group of plaintiffs that includes AAP as well as the American College of Physicians and the American Public Health Association expanded their current lawsuit, which is suing Kennedy for HHS' decision to no longer recommend all pregnant women and healthy children receive COVID-19 vaccination, to include challenges to CDC's changed vaccine schedule.

The plaintiffs argued the decision is the "most egregious, reckless, and dangerous of the actions Defendants have taken to date," in their amended complaint which was filed last week.

(Henderson, MedPage Today, 1/26; Petersen, Wall Street Journal, 1/26; Choi, The Hill, 1/20)

US officially withdraws from WHO as California joins WHO disease network

The United States officially withdrew from the World Health Organization (WHO) last week, as last Thursday marked the one-year anniversary of President Donald Trump informing WHO that the U.S. would terminate its membership with the organization. According to a joint congressional resolution passed in 1948 allowing the United States to join WHO, the country had to provide a year's notice before withdrawing.

In January 2025, Trump signed an executive order withdrawing the United States from WHO, saying that it mishandled the COVID-19 pandemic and failed to act independently from the "inappropriate political influence of WHO member states."

On Thursday, the Trump administration said all U.S. government funding to WHO had been terminated and that all assigned employees and contractors had been recalled from WHO's headquarters in Geneva, Switzerland and its worldwide offices.

Meanwhile, California Gov. Gavin Newsom (D) announced on Friday that his state would become the first to join WHO's Global Outbreak Alert and Response Network.

(Branswell/Merelli, STAT, 1/22; Stolberg, New York Times, 1/22; Choi, The Hill, 1/23)

Head of CDC vaccine committee say shots for polio and other diseases should be optional

Kirk Milhoan, a pediatric cardiologist and chair of CDC's Advisory Committee on Immunization Practices, said that he believes shots against polio and measles, and potentially all diseases, should be optional and only offered in consultation with a clinician.

Milhoan added that he does have "concerns" that some children might die of measles or become paralyzed with polio because of a choice to not vaccinate but added that he's also "saddened when people die of alcoholic diseases … Freedom of choice and bad health outcomes."

Regarding an infectious disease, a personal decision to decline a vaccine could affect others, including infants who are too young to be vaccinated or people who are immunocompromised, but a person's right to a reject a vaccine supersedes those risks, Milhoan said.

"If there is no choice, then informed consent is an illusion," he said. "Without consent it is medical battery."

Milhoan said that making vaccines optional, rather than requiring them for entry into public schools nationwide as is currently the case, would ultimately restore trust in public health.

Sean O'Leary, chair of the infectious disease committee at AAP, said that Milhoan "has no idea what he's talking about."

"These vaccines protect children and save lives," O'Leary said. "It's very frustrating for those of us who spend our careers trying to do what we can to improve the health of children to see harm coming to children because of an ideological agenda not grounded in science."

(Mandavilli, New York Times, 1/23)