Category: CMS Data Highlights

Posted on in CMS Data Highlights, Data Stories

Medicaid Cuts vs. Rural Hospitals: Can a $50 Billion ‘Band-Aid’ Fund Close the Gap?

Rural hospitals are struggling with mounting financial pressure, and looming Medicaid cuts could deepen the crisis.

An analysis of hospital financing data from the National Academy for State Health Policy (2020–2023) reveals troubling trends. Among the 2,142 hospitals designated as rural based on Rural-Urban Commuting Area codes in 2023, 99 hospitals posted negative net profit margins for four consecutive years. In addition, 150 rural hospitals relied on Medicaid for more than 30% of their revenues, making them especially vulnerable to federal funding changes. Of those Medicaid-dependent providers, more than half (76) are non-profit hospitals, while 48 are government-owned.

The financial fragility is especially pronounced in New Mexico, California, Louisiana and Hawaii, where half of all rural hospitals either serve a high concentration of Medicaid patients or have experienced four straight years of negative net profit margins since 2020.

Among states with more than 10 rural hospitals, Oklahoma, Virginia, Tennessee, Indiana and South Carolina each reported that more than 10% of their rural hospitals have operated in the red since 2020.

In July, President Donald Trump signed the One Big Beautiful Bill into law, which includes a reduction of over $860 billion in federal Medicaid spending by 2023. According to estimates from the Congressional Budget Office, this could result in more than 7.8 million people losing health insurance coverage. Coupled with policies that limit states’ ability to raise Medicaid revenues through provider taxes, hospitals are likely to face deeper financial strain, particularly those in rural areas.

The Senate introduced a $50 billion Rural Health Transformation Program aimed at addressing the growing challenges rural providers face. While the White House described the initiative as “a historic investment in rural healthcare” in its memo, it only offset 37% of the estimated cuts to federal Medicaid spending in rural areas. And how the funds will be distributed across and within states remains unclear.

According to a Senate fact sheet, 50% of the $50 billion will be divided equally among states that apply to the Centers for Medicare & Medicaid Services (CMS). This approach raises equity concerns, as states with vastly different numbers of rural hospitals may receive the same amount of funding. Rhode Island, which has only one rural hospital, could receive the same funding as Texas, which has 148 rural providers.

The remaining $25 billion is set to be allocated based on a formula developed by CMS. According to the fact sheet, CMS needs to consider a state’s “rural population, proportion of health care facilities in rural areas and the situation of hospitals that serve a high proportion of low-income patients.” However, the law does not specify the exact formula, metrics, or methodology CMS must use, nor does it require the agency to publicly disclose how the funds are ultimately distributed.

Posted on in CMS Data Highlights, Data Stories

Providers Are Winning More Surprise Billing Disputes Than Ever

HaloMD, a third-party independent dispute resolution services provider, has emerged as the top “middleman” under the No Surprises Act. Its share of initiating disputes jumped from just 1% in 2023 to 18% by the fourth quarter of 2024, an analysis of new CMS data found.

The No Surprises Act, passed in 2021, banned the practice of billing patients for the difference between what their insurer pays and what a provider charges when patients unknowingly receive care from an out-of-network provider. The law also established a federal IDR process that out-of-network providers and insurers can use to determine the OON rate that providers should receive if the two parties fail in their own attempts to negotiate. 

In 2024, a total of 1,419,634 surprise billing disputes were initiated through the federal IDR process, a 116% increase from 2023. More than 86% of those cases were filed by provider groups, according to an analysis of CMS data on emergency and non-emergency services (excluding air ambulance services). Among resolved disputes, provider groups won the majority, with their win rate rising from 68% in the first quarter of 2023 to 86% in the fourth quarter of 2024.

During IDR, providers submit unresolved bills to an HHS-approved arbitrator, who then selects an amount submitted by either the payer or the provider using criteria laid out by HHS. The arbitrators are obliged to consider the qualifying payment amount (QPA) — based largely on median regional in-network rates for a service in a given area — in their decisions. 

The majority of surprise billing disputes were initiated by a small number of providers or their representatives, an analysis of CMS data shows. The top initiating parties over the past two years — Team Health, Radiology Partners and SCP Health — represent thousands of clinicians across multiple states and are all backed by private equity. 

Although HaloMD ranked fourth overall in volume, it became the top initiating party in the fourth quarter of 2024. The third-party IDR services provider, with a win rate of more than 85% in 2024, is now facing lawsuits alleging abuse of the system. In May, Elevance, Inc.’s Georgia subsidiary sued the company and three Georgia providers, accusing them of falsely attesting to claim eligibility, overwhelming the IDR process and inflating payment offers. A month later, Elevance’s Ohio subsidiary, Community Insurance Company, made similar allegations against HaloMD and five providers in Ohio. 

Neurology, surgery and radiology providers using the IDR system won at especially higher prevailing rates. In 2024, the median payment determination among disputes involving neurology and neuromuscular procedures was more than 11 times the QPA. For surgeries, the median prevailing offer reached nearly 870% of the QPA.

But why did providers win surprise billing disputes so often? A KFF analysis suggested that providers’ high win rate in IDR cases may stem from how decision-makers weigh insurer-submitted QPAs against providers’ evidence like prior contracted rates, especially since private equity-backed groups often had higher past rates and filed many disputes. The analysis also noted that the high win rate incentivizes well-resourced specialty providers to remain out-of-network, since they can absorb the costs and delays of the IDR process and recover expenses by setting higher prices.

Posted on in CMS Data Highlights, Medicare

Provision in Final Reconciliation Bill Could Exempt More Drugs from Medicare Price Negotiations

A reintroduced provision in the final version of the One Big Beautiful Bill Act could allow more medications to sidestep Medicare drug price negotiations under the Inflation Reduction Act.

The measure, known as the Orphan Cures Act, broadens the exemption criteria for orphan drugs. Currently, the exemption only applies to orphan drugs designated for only one rare condition and approved for an indication (or indications) only for that condition. The provision expands that exemption to drugs with multiple rare disease indications.

Had the Act been passed earlier, two drugs with high gross Medicare Part D spending would be exempted in the first two rounds of negotiation: Pharmacyclics LLC’s Imbruvica (ibrutinib) and Bristol Myers Squibb’s Pomalyst (pomalidomide).

Four medications with orphan designations granted by FDA are likely to be selected for Medicare negotiation in 2028, according to a study published in the Journal of Managed Care & Specialty Pharmacy. Together, those drugs generated more than $10.8 billion in Medicare spending in 2023, according to CMS data.

Among them are two high-cost Part B oncology drugs:

  • Merck’s Keytruda (pembrolizumab), the world’s best-selling cancer drug in 2024, has received 12 orphan designations and over 40 FDA approvals for various cancer types. Merck noted in its annual SEC filing that it expects U.S. sales of Keytruda to decline starting in 2028 due to the Medicare negotiation program.
  • Bristol Myers Squibb’s Opdivo (nivolumab), a top-selling immunotherapy drug.

Another two Part D drugs with orphan designations that might be included in the negotiation list are:

  • Gilead’s Biktarvy (bictegravir/emtricitabine/tenofovir alafenamide), a small-molecule HIV drug with $3.1 billion in Medicare Part D spending in 2023.
  • Mallinckrodt’s Acthar (corticotropin), often prescribed for a range of autoimmune and inflammatory conditions.

While a Trump-era executive order sought to extend the negotiation exemption for new small-molecule drugs — a move to adjust the so-called “pill penalty” — that provision was left out of the final act.

In its latest draft guidance for the third round of Medicare drug price negotiations, CMS said it will announce the 2028 negotiation list by Feb. 1, 2026, with negotiated prices taking effect on Jan. 1, 2028. The agency also signaled it may revisit pricing for drugs already negotiated for 2026 or 2027.

The Orphan Cures Act has received strong backing from the pharmaceutical industry, which argues that it will encourage more investment in rare disease treatments. According to OpenSecrets, 26 pharmaceutical companies and organizations have registered to lobby on the bill. After being omitted from an earlier version, the provision was reinstated in the final One Big Beautiful Bill Act package.

The Congressional Budget Office (CBO) estimates that the orphan drug exemption will yield $5 billion in industry savings over the next decade.

Meanwhile, pharmaceutical lobbying is surging. Industry giants like Sanofi, Pfizer, and Johnson & Johnson significantly boosted their lobbying expenditures in the first quarter of 2025. PhRMA, the industry’s main lobbying group, spent nearly $13 million, a 33% increase from the same quarter in 2024, making it the top lobbying spender in the drug industry and the second-largest overall.

Posted on in CMS Data Highlights, Medicare

Less Rural Areas See Sharpest Fall in Share of Medicare PDP Enrollment Since 2015

Less rural areas saw the largest decline in the share of Medicare Part D enrollees choosing stand-alone prescription drug plans (PDPs) over the past decade, according to an analysis of the Centers for Medicare & Medicaid Services Part D enrollment data from 2025 and 2015. 

Nationwide, rural residents continue to enroll in stand-alone PDPs at higher rates than those in urban or less rural areas. As of May 2025, nearly six in 10 rural Medicare Part D enrollees are in PDPs, down from more than eight in 10 in 2015. 

Meanwhile, less rural areas — defined as those adjacent to metro regions — saw the largest drop in share over the past decade. In 2015, approximately 76.4% of Part D enrollees in these areas chose stand-alone PDPs; by 2025, that share had fallen to 46.3%, a 30.1 percentage-point decrease.

In 2025, about four in 10 urban enrollees are in PDPs, compared with six in 10 in 2015. Greater availability of Medicare Advantage provider networks in urban settings may have accelerated the shift to Medicare Advantage Prescription Drug (MA-PD) plans.

Despite these declines, 19 states still have at least 60% of rural Part D enrollees in stand-alone PDPs in 2025. Nine states have 75% or more of Part D enrollees in PDPs: Nevada, Alaska, Massachusetts, California, Kansas, Nebraska, Wyoming, South Dakota and North Dakota.

Among less rural areas, PDPs cover over 60% of Medicare Part D enrollees in 13 states in 2025. While compared with a decade ago, the share of enrollees choosing PDPs dropped in all states with rural adjacent areas, eighteen states experienced a decline of more than 30 percentage points. 

In urban areas, only eight states have 60% or more of Part D enrollees choosing PDPs in 2025. Alabama, Maine and Michigan saw more than a 30 percentage-point drop in the percentage of enrollees choosing PDPs across all geographic areas over the past decade.

Stand-alone PDPs availability has declined in recent years, with the average number of PDPs available hitting a record low in 2025. The Medicare Payment Advisory Commission (MedPAC) highlighted this trend in its April meeting and June 2025 Report to Congress, calling for market stabilization in the coming years. The shift from PDPs to MA-PD plans is consistent with the move from traditional Medicare fee-for-service to Medicare Advantage in the broader Medicare program, as shown in Medicare Monthly Enrollment.

Methodology: 

This analysis uses Medicare Part D enrollment data from May 2015 and May 2025 to examine shifts in the share of beneficiaries enrolled in stand-alone prescription drug plans (PDPs) versus other Medicare Part D coverage options. The data sources include the Centers for Medicare & Medicaid Services’ Monthly Enrollment by CPSC and Monthly PDP Enrollment by SCC files. The analysis is conducted at the county level, allowing for geographic comparisons over time.

To assess changes by geographic area, the analysis incorporates the Urban Influence Codes (UICs) released by the U.S. Department of Agriculture in 2013 and 2024. 

For 2025, counties with UICs 1 and 4 are categorized as “urban” areas. Counties with UICs 7, 8, and 9 are designated as “rural,” while those with UICs 2, 3, 5, and 6 are classified as “rural adjacent to urban” areas. For 2015, the categorization differs slightly based on the 2013 codes: UICs 1 and 2 are labeled as “urban,” UICs 8, 11, and 12 as “rural,” and UICs 3 through 7, 9, and 10 as “rural adjacent to urban.”

Because Connecticut transitioned from county-based geography to planning regions in 2022, this analysis approximates its geographic classification using historical county data. Specifically, Litchfield County and Windham County are assigned UIC 2, placing them in the “rural adjacent to urban” category. The remaining counties are assigned UICs 1 and 4, consistent with “urban” classification.

Posted on in CMS Data Highlights

Major Health Insurers Boost Lobbying Spending Amid Policy Shifts

Major health plans and industry organizations increased their lobbying expenditures by 23% in the first quarter of 2025 compared to the same period in 2024, according to data compiled by OpenSecrets. Leading the spending surge were Blue Cross Blue Shield plans, AHIP, The Cigna Group, and UnitedHealth Group.

The spike in lobbying comes as President Donald Trump, now in his second term, focuses his health care agenda on reversing several Biden-era policies — particularly those involving the Affordable Care Act and Medicaid. Since January, lobbyists representing health insurers and insurance agents have invested millions in influencing federal policy.

Blues plans reported record-high quarterly lobbying expenditures, spending over $9.1 million in the first quarter of 2025 and collectively ranking as the top individual lobbying spender among the major health plans. Among all BCBS affiliates, Elevance Health, Inc. and Health Care Service Corp. led in lobbying investment.

Blues plans lobbied heavily for key legislations, including the Lower Costs, More Transparency Act (H.R.5378), SITE Act (S.1869), and FAIR Act (H.R.3417). These bills aim to promote site-neutral Medicare reimbursement and expand price and billing transparency for payers. Collectively, BCBS entities hired 114 lobbyists in the first quarter, with 65.8% of whom previously held positions in the federal government.

AHIP, the trade group representing health insurance companies, spent more than $4.8 million in the first quarter. Kaiser Permanente invested nearly $3.1 million, more than doubling its total lobbying expenditures for all of 2024. The group spent $3 million on Health Care Affordability Act of 2025 (H.R.247 and S.46). In addition to health coverage-related issues, Kaiser spent $60,000 on lobbying efforts related to value-based care and the appropriate use of artificial intelligence in health care, according to its public filing.

Lobbying expenditures in the health services/health maintenance organizations (HMO) sector have risen steadily over the past decade, though the industry saw an 8.8% year-over-year decline in 2024. OpenSecrets includes a variety of non-residential health care programs and health maintenance organizations in the sector. Several major health insurers are categorized separately, as part of the insurance industry, on OpenSecrets, and BCBS was listed in both industries. This analysis combined the lobbying spending by BCBS from both industries.

 

Posted on in ACA Marketplace, CMS Data Highlights

Analysis Tallies Impact of Enhanced Premium Tax Credits Expiration on 2026 ACA Premiums

An analysis of preliminary premium filings from ACA-regulated health plans across five states indicates an additional 5.58 percentage-point increase in premiums due to the projected expiration of enhanced subsidies under the Affordable Care Act. Insurers in Massachusetts highlighted their discontinuation of coverage for popular but costly anti-obesity GLP-1 drugs in their filings.

In May, House Republicans passed the “One Big Beautiful Bill Act,” which notably did not include an extension of the enhanced ACA subsidies. These enhanced subsidies increased the level of advance premium tax credits (APTCs) available to lower-income individuals (making $0-premium plans widely available to that group) and extended APTC eligibility to people with incomes at or above 400% of the federal poverty level. Without a permanent extension of the enhanced subsidies, subsidized ACA enrollees would see their premium payments rise sharply starting Jan. 1, 2026. 

Over half of the insurers included in this analysis indicated that the expiration of enhanced APTCs would lead to premium increases. Among the insurers who quantified the impact, the projected increases, in addition to annual rate changes, ranged from 1.0% to 13.7%, with an average projected premium impact of about 5.58%. The analysis is based on 36 early insurer premium filings from Oregon, New York, Maryland, Vermont and Massachusetts. 

Oregon

Six insurers have submitted rate change requests for 2026, ranging from an average increase of 3.9% to 12.9%, resulting in a weighted average increase of 9.7%, according to the Oregon Division of Financial Regulation. This average increase is slightly higher than last year’s requested weighted average increase of 9.3%. Four of the six insurers attributed part of the increases to the expiration of enhanced subsidies, which could raise premiums by 1.0% to 4.5%.

In 2025, the monthly average premium for all enrollees is $696 per person per month in the exchange. With the enhanced subsidies, the monthly average premium among those with allocated APTC amounts greater than $0 is $199. For the year 2025, about 80% of ACA enrollees received APTCs in Oregon, according to CMS. 

New York

Fourteen insurers have submitted rate change requests for 2026, ranging from an average increase of 0.9% to 66.4%, according to the New York Department of Financial Services. Only five insurers specified how much of their premium increases were driven by the expiration of enhanced subsidies. The largest insurer in the state, Fidelis Care, attributed 3.90% of its requested rate hike to the policy change. 

In 2025, the monthly average premium for all enrollees is $791 per person per month in New York’s state-based marketplace. With the enhanced subsidies, the monthly average premium among those with allocated APTC amounts greater than $0 is $340. For the year 2025, about 63% of ACA enrollees received APTCs in New York, according to CMS. 

Maryland

Six insurers have requested an overall average rate increase of 17.1% for 2026, with individual insurer requests ranging from 8.1% to 18.7%, according to the Maryland Insurance Administration. In the news release, the agency noted that the rate increases “are the highest since the implementation of Maryland’s reinsurance program in 2019 and reflect the anticipated loss of enhanced federal tax credits.” If the enhanced tax credits were to continue, the projected average rate increase would drop to 7.9%. 

The two largest insurers in the state, CareFirst BlueChoice and Optimum Choice, attributed 13.7% and 5.8% of their requested rate hikes to the anticipated policy change, respectively. In addition, CVS Health’s Aetna has announced plans to exit Maryland’s individual market in 2026, a move that will affect 4,939 enrollees.

In 2025, the monthly average premium for all enrollees is $492 per person per month in Maryland’s state-based marketplace. With the enhanced subsidies, the monthly average premium among those with allocated APTC amounts greater than $0 is $108. For the year 2025, about 76% of ACA enrollees received APTCs in Maryland, according to CMS. 

Vermont 

BlueCross and BlueShield of Vermont proposed a 23.3% average premium hike for 2026, while MVP Health Plan requested a 6.2% increase, according to Vermont’s Green Mountain Care Board. BCBSVT attributed 6.6% of its requested rate increase to the anticipated expiration of enhanced subsidies. MVP Health Plan noted that “a disproportionate share of healthy members are expected to leave the market,” resulting in an increased morbidity impact of 7.1%.

In 2025, the monthly average premium for all enrollees is $1,067 per person per month in Vermont’s state-based marketplace. With the enhanced subsidies, the monthly average premium among those with allocated APTC amounts greater than $0 is $192. For the year 2025, about 93% of ACA enrollees received APTCs in Vermont, according to CMS. 

Massachusetts

Eight insurers have submitted rate change requests for 2026, with proposed average increases ranging from 9.90% to 16.20%, according to the Massachusetts Division of Insurance. Of these, only Fallon Community Health Plan Inc. — which accounted for 5.6% of individual market membership statewide — specified that 3.5% of its requested rate increase was due to the anticipated expiration of enhanced federal subsidies. 

Unlike many other states, Massachusetts insurers also cited the rising costs of covering popular anti-obesity medications, specifically GLP-1 drugs, as a contributing factor to premium pressures. Five insurers — Tufts Health Plan, WellSense Health Plan (Boston Medical Center), Mass General Brigham Health Plan, Harvard Pilgrim Health Care and Blue Cross Blue Shield of Massachusetts HMO Blue, Inc. — announced they will no longer cover GLP-1 drugs for weight loss indications in 2026. Combined, these five insurers covered 92.2% of the state’s individual market. 

In 2025, the monthly average premium for all enrollees is $535 per person per month in Massachusetts’ state-based marketplace. With the enhanced subsidies, the monthly average premium among those with allocated APTC amounts greater than $0 is $126. For the year 2025, about 83% of ACA enrollees received APTCs in Massachusetts, according to CMS.