Health Care Matters | July 11
New Data Project Sharp Increase in U.S. Health Expenditures
A new analysis, released in Health Affairs, projects that U.S. health spending grew by 8.2% in 2024 and will grow another 7.1% in 2025, outpacing recent years and marking a significant rebound from pandemic-era trends. The growth is driven by rising prices for medical goods and services, increased utilization, and higher insurance enrollment. By 2033, national health expenditures are expected to reach $7.7 trillion, representing nearly 20% of the U.S. GDP. These findings underscore the mounting pressure on health systems, payers, and policymakers to manage accelerating costs. Read more here.
Why It Matters
Rapid growth in health spending could increase premiums, out-of-pocket costs, and strain public programs like Medicare and Medicaid. Employers may face tough decisions around cost-sharing, while state and federal budgets could see rising pressure. The projections reinforce the urgency of scaling value-based care efforts and policy solutions aimed at improving efficiency without compromising quality.
Clinician Participation in Advanced APMs Hits New High
According to new CMS data, more than 505,000 clinicians participated in Advanced Alternative Payment Models (APMs) in 2023, marking a 20% increase from the previous year. Of those participants, nearly 464,000 qualified for the "APM incentive payment" available to providers that participate to a sufficient degree in risk-based APMs and are also exempt from MIPS.
Read the full 2023 QPP Experience Report here.
Why It Matters
Participation in Advanced APMs reflects a growing commitment to care models that prioritize quality and value over volume. As more clinicians take on risk and accountability for patient outcomes, sustained policy support will be key to maintaining progress. The APM incentive payment, which was originally set to expire after 2022, was extended for performance years 2023 and 2024 but at a decreased level. There is currently no APM incentive payment authorized for 2025 or beyond, though a differential fee schedule update for those that are considered "Qualifying Participants" or "QPs" went into effect for 2024. Additionally, the thresholds to achieve "QP status" increase substantially in 2025. Where in past years of the Quality Payment Program, the advantages of participating in Advanced APMs were clear - MIPS exemption and APM bonus - the equation for providers is now more complex: will they meet the QP threshold? Do they want to or would strong performance in MIPS be better financially? As Congress and CMS consider future policies for Medicare reimbursement and APMs, it will be critical to ensure they include sufficient incentives to reinforce and build on the shift toward value-based care.
Expanding the Orphan Drug Exclusion in Medicare Negotiation
A provision in the federal budget bill (Section 71203) updates how orphan drugs are treated under the Medicare Drug Price Negotiation Program. These changes aim to balance price regulation with incentives for innovation in rare disease treatment. Here’s what the provision does:
Broadens the exemption for drugs used exclusively for one or more rare diseases, allowing them to remain excluded from Medicare price negotiation.
Clarifies the rule: If a drug later gains approval for a non-rare disease, it loses the exemption, but only going forward. Prior years won’t count toward negotiation eligibility.
Defines “rare disease” by tying the language to the Federal Food, Drug, and Cosmetic Act, adding consistency across agencies.
Applies starting in 2028 and only affects price applicability years beginning on or after January 1, 2028.
Read more here.
Why It Matters
This update removes a disincentive for drug developers to seek additional rare disease approvals. It ensures that drugs treating only rare conditions remain exempt from negotiation, supporting continued innovation in rare disease therapies. At the same time, it creates a clear pathway for drugs that expand into more common uses to eventually be subject to negotiation. By clarifying definitions and timing, the provision reduces regulatory uncertainty for manufacturers and Medicare alike.
Look for the Helpers: Evart School-Based Health Center Breaks Down Access Barriers
In early June, Evart Public Schools launched a full-scale school-based health center at the middle school, staffed by a physician assistant, behavioral therapist, and clinical navigators to offer same-day medical and mental health services to students and local children. The project includes shuttle service from other school buildings to reduce transportation hurdles, a unique feature within Michigan’s peer centers. Designed to minimize missed class time, eliminate stigma around behavioral care, and ease parental burdens, the center exemplifies community-driven innovation in population health. Plans are underway to expand offerings to dental care and extended hours, reinforcing Evart’s model as a beacon for rural health equity. Read more here.
What We Are Writing
Three Key Takeaways from the CMS Quality Conference
The prominence of program integrity discussions at this year's CMS Quality Conference signals a fundamental shift in how this administration is framing health care policy. Alongside the traditional focus areas of prevention, digital transformation, value-based care, and vulnerable populations, the emphasis on eliminating waste has become the connecting thread across all initiatives. Read the full blog post here.
Inside the WISeR Model: CMS’s First Tech-Only Innovation Initiative
CMS is launching a first-of-its-kind model that puts technology companies at the center of Medicare’s prior authorization process with the Wasteful and Inappropriate Service Reduction (WISeR) Model. The WISeR Model aims to focus health care spending on services that improve patient well-being, apply lessons learned from commercial payer prior authorization processes that may be faster, easier, and more accurate, increase transparency of existing Medicare coverage policy, and de-incentivize and reduce the use of medically unnecessary care. Read the full blog post here.
What We Are Reading
To Tackle Race in Clinical Guidelines, Researchers Seek Alternatives to Federal Dollars
Researchers are revisiting race-based variables in clinical guidelines, with new philanthropic funding helping fill gaps left by shifting public priorities. A recent $3 million initiative led by the Doris Duke Foundation and the Council of Medical Specialty Societies supports efforts to ensure clinical tools reflect current evidence and promote equity. Read more here.
Modernizing The Medicare Physician Fee Schedule, Part 1: The Role Of A Technical Expert Panel
A new Health Affairs Forefront article proposes creating a Technical Expert Panel to support CMS in modernizing the Medicare Physician Fee Schedule. The panel would offer guidance on valuation, transparency, and payment updates, aiming to make the decades-old system more responsive to current clinical practice. Read more here.
Policy Pulse: What We’re Reading on the Budget Bill
With the passage of the financial reconciliation bill last week, our team has rounded up the best summaries focused on impacts to Medicaid, Medicare, and the ACA Marketplace and what it will mean for states, patients, payers, and providers over the coming years. Read them here:
Health Provisions in the 2025 Federal Budget Reconciliation Bill (Kaiser Family Foundation)
Health-Related Provisions in the One Big Beautiful Bill Act (McDermott+)
What Health Care Provisions of the One Big Beautiful Bill Act Mean for States (NASHP)
Navigating H.R. 1 for Healthcare Organizations (Lisa Bari)
Pop Health Podcast
Unpacking CMS Reforms to ACO REACH for 2026
CMS rolled out major updates to the ACO REACH Model for Performance Year 2026, with new policies affecting benchmarks, risk scores, and quality incentives, we break down what’s changing with Coral’s own Maria Alexander and Joy Chen along with guest expert Noah Champagne from Milliman.