Background

Currently, federal law limits coverage for obesity drugs in Medicare and Medicaid, which means that millions of people in these programs who could benefit from GLP-1s are unable to access them unless they pay out of pocket. Medicare is prohibited by law from covering medications specifically for weight loss while state Medicaid programs have more flexibility about coverage. As of January 2026, only 13 states cover GLP-1 drugs in their Medicaid programs, down from 16 states in 2025.

Over the last year, the Trump administration has introduced several new initiatives aimed at lowering prescription drug costs, including for GLP-1 medications. In November, President Donald Trump announced  "most favored nation" deals with major GLP-1 manufacturers Novo Nordisk and Eli Lilly to offer the medications at discounted prices through TrumpRx, which launched earlier this year.

In December, CMS proposed a two-step approach to expand coverage of GLP-1 medications for weight loss in Medicare: a temporary payment demonstration known as the Medicare GLP-1 Bridge and a new Center for Medicare and Medicaid Innovation (CMMI) model called the BALANCE model. The Medicare GLP-1 Bridge will launch in July 2026 while the BALANCE model will launch in January 2027 for Part D plans.

Inside CMS' new BALANCE model

Participation in the BALANCE model is voluntary for drug manufacturers, state Medicaid agencies, and Medicare Part D plans. The deadline for notifying CMS about interest in participating was Jan. 8 for drug manufacturers and is April 20 for Medicare Part D plans and July 31 for state Medicaid programs.

Earlier this year, CMS negotiated with Novo Nordisk and Eli Lilly about key parameters of the BALANCE model, including pricing, cost sharing, access policies, and the length of the agreement. Both drugmakers have agreed to participate in the model, offering a $245 net price per 30-day supply of all GLP-1 drugs included in the model for 2027.

To be eligible for either the Medicare GLP-1 Bridge or the BALANCE model, patients will need to meet certain clinical criteria, which are shown in the table below.

Between July 1, 2026, and Dec. 31, 2026, Medicare beneficiaries will be able to gain temporary access to GLP-1 medications through the Medicare GLP-1 Bridge. The Medicare GLP-1 Bridge is a short-term demonstration that is separate from regular Part D coverage.

The BALANCE model will officially launch on Jan. 1, 2027, and is planned to run through Dec. 31, 2031. Notably, the model will only go into effect if a "critical mass," or at least 80% of Part D sponsors, choose to participate in the program. The agency will notify Part D plan sponsor applicants if the threshold is met by April 30, 2026. So far, it's not clear how the Medicare GLP-1 Bridge will be affected if the participation threshold is not met.

"The BALANCE model will empower more Americans to live healthier lives by expanding access to GLP-1s that have shown to be a powerful tool against the development of diseases, such as diabetes, cardiovascular disease, and other metabolic conditions, which can negatively affect a person’s long-term health," said CMMI Director Abe Sutton. "Through this model, CMS will make GLP-1s more accessible for people with Medicare and Medicaid."

Aside from offering beneficiaries lower prices for GLP-1s, the model will also provide access to lifestyle support programs at no cost. These programs are designed to support medication adherence and increase the effectiveness of GLP-1 medications. Details about these programs are not yet available but will be provided by participating manufacturers.

KFF also noted that CMS documentation does not include any potential impacts to either federal or state budgets from the Medicare GLP-1 Bridge or the BALANCE model. Even with lower net prices for the medications under the model, spending on GLP-1 drugs could continue to grow substantially due to expanded coverage.

"Evaluations will also determine whether improvements in health related to the use of these drugs and associated reductions in healthcare utilization are significant enough to maintain or reduce healthcare costs in the Medicaid and Medicare programs, after taking into account expanded use and coverage of GLP-1s for the treatment of obesity," KFF wrote. However, "[e]ven with lower prices, there is little evidence to date to suggest that the expanded use of GLP-1s will be offset by lower spending on other healthcare services in the short term, even though the drugs do provide significant health benefits to users."

Overall, the BALANCE Model "is an interesting attempt to get the private industry to opt into a new benefit offering (e.g., GLP-1 for obesity only indications) as opposed to Congress or CMS directing the change in benefit offering," Balmes said.

Patients

For patients, the BALANCE Model could significantly expand access to GLP-1 medications depending on the level of participation from drug manufacturers, state Medicaid agencies, and Part D plans, KFF writes. 

Under the model, beneficiaries would be able to access GLP-1 medications at lower out-of-pocket costs than the direct-to-consumer prices offered by manufacturers. Medicare Part D enrollees who already have coverage for GLP-1s for a different indication could also see lower out-of-pocket costs if their current cost-sharing amounts are higher than the cost-sharing limits set by the model ($50 a month for enhanced plans or $125 a month for basic plans).

However, KFF also highlighted potential limiting factors. For example, if relatively few state Medicaid agencies participate in the model, Medicaid recipients will likely not see much of an impact. State Medicaid agencies may also choose to participate in the model for one year and drop out later, which could lead to disruptions in coverage.

Since it's not clear whether participation by Part D plan sponsors will meet the required 80% threshold for the model to go forward, Medicare beneficiaries who gained coverage for GLP-1s under the Medicare GLP-1 Bridge in 2026 could potentially lose access in 2027 if the BALANCE model is not implemented. Beneficiaries may also need to switch their plans to those participating in the BALANCE model to continue their coverage.

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