Health Care Matters | May 23, 2025
News You Can Use: HCP-LAN Reaffirms Commitment to Value-Based Care
The LAN is back online! The Health Care Payment Learning & Action Network (HCPLAN) has reaffirmed its commitment to value-based care with four new initiatives focused on health care choice, patient empowerment, preventative care, and technology-enabled solutions. While the organization is discontinuing its CMMI-funded APM Measurement Effort, they're exploring alternative pathways to continue tracking the important shift from fee-for-service to alternative payment models. Read more here.
ACO Reach
For PY2026, CMS will:
Modify risk score growth constraints
Reduce the regional component of the benchmark by 5%
Narrow the 1st risk Corridors to 10% (instead of 25%) for REACH ACOs in the Global risk option (100% risk)
Increase the Quality Withold from 2% to 5%
Remove two HCPCS codes associated with intermittent urinary catheter supplies and ostomy bags that were identified for anomalous billing activity
Why It Matters
For many REACH ACOs, especially those who were benefiting from substantial risk score growth, these changes are likely to reduce shared savings payments. Since the inception of the Global Direct Contracting Model (GPDC) and its eventual redesign to ACO REACH, CMS has been responsive to evaluation results and participant feedback, implementing changes to improve financial modeling and operational feasibility. The PY 2025 changes (released last year) and PY 2026 changes (released this week) reflect CMS' concerns with increased net spending over the course of the model. In the absence of changes, CMS likely would have sunsetted the model early. The updates align with CMMI's new strategic direction and may be an indicator of what we will see in any new ACO models to come with a greater focus on ensuring savings to CMS including features that seek to contain risk score growth for both the "standard" and "high needs" populations.
House Reconciliation Bill Advances with Significant Medicaid Implications
This week saw the House Republicans successfully pass their reconciliation package in the early hours of Thursday morning, following weeks of internal division and last-minute negotiations. The bill passed by a narrow 215-214 margin after an all-night session, with Speaker Mike Johnson keeping his promise to pass the measure before the Memorial Day recess. The bill now heads to the Senate, where Republicans are expected to make significant changes to many of the policy provisions sought by House GOP hard-liners. Read more here.
Why It Matters
The final bill includes substantial modifications that emerged from the Rules Committee's 21-hour markup, including moving up Medicaid work requirements from January 2029 to December 2026, expanding criteria for states that could lose federal payments for covering undocumented immigrants, and weakening clean energy tax credits. The legislation also includes a compromise raising the state and local tax deduction cap to $40,000 for households earning under $500,000, a provision that helped secure support from blue-state Republicans despite opposition from fiscal hawks.
The Medicaid provisions carry particularly severe fiscal and coverage implications, with 33 states and DC potentially facing $153 billion in shifted costs from federal to state governments over the next decade. Nine states with "trigger laws" face the most extreme consequences, potentially terminating ACA Medicaid expansion entirely and causing up to 840,000 people in Illinois alone to lose coverage. KFF reports that more than 1.9 million people currently enrolled in state-funded immigrant coverage programs could lose health insurance if states choose to eliminate these programs rather than absorb increased costs. With the bill now in the Senate, the focus shifts to how the upper chamber will reshape the measure, particularly given mounting concerns from governors in affected states about the Medicaid funding cuts and Republican senators' expected resistance to many House hard-liner provisions.
HHS, CMS Set Most-Favored-Nation Pricing Targets
HHS announced steps to implement President Trump's "Most-Favored-Nation Prescription Drug Pricing" Executive Order, with HHS Secretary Robert F. Kennedy Jr. and CMS Administrator Dr. Mehmet Oz targeting pharmaceutical manufacturers to lower American drug prices. The plan requires manufacturers to match the lowest prices found in OECD countries with at least 60% of U.S. GDP per capita, a much broader approach than previously anticipated that could drastically reduce U.S. drug prices that are three to five times higher than prices abroad. Read more here and here.
Why It Matters
This policy is moving forward rapidly but relies heavily on voluntary manufacturer commitments without clear enforcement mechanisms, raising questions about its ultimate effectiveness. The pharmaceutical industry is already pushing back strongly, with PhRMA CEO Stephen Ubl warning the plan would mean "less treatments and cures" while Roche has threatened to reconsider its planned $50 billion U.S. investment. Several critical details remain undefined, including which prices (list or net) will be compared, how patient population differences will be addressed, whether the approach exceeds legislative authority, and if it can withstand inevitable legal challenges especially given Trump's previous attempt at MFN pricing was blocked in court. The executive order's application to "all brand products across all markets" without generic or biosimilar competition significantly expands the scope beyond what many analysts initially expected, making implementation even more challenging while potentially putting billions in pharmaceutical revenue at risk.
Look for the Helpers: Building a Connected Community of Care in Dallas
In a recent NEJM Catalyst article, the Parkland Center for Clinical Innovation (PCCI) details its successful management of the Dallas Accountable Health Communities (DAHC) model, a five-year initiative aimed at addressing health-related social needs (HRSNs) among vulnerable populations. By screening over 12,500 individuals and coordinating with community-based organizations to provide essential services such as food assistance and utility support, PCCI demonstrated that a connected community of care model can effectively reduce emergency department visits and improve overall health outcomes. This collaborative effort exemplifies how integrating clinical and community resources can lead to meaningful improvements in health equity and patient well-being. Read here.
Where We Are Going
Generic Drug Repurposing: Exploring the Potential Role of the Regulator and Policy Solutions
The Duke Margolis Institute for Health Policy is hosting a hybrid workshop to discuss the potential role of the regulator as it relates to generic drug repurposing. To learn more and register, click here.
What We Are Reading
Gender Differences in Primary Care Physician Earnings and Outcomes Under Medicare Advantage Value-Based Payment
A recent study published in JAMA Health Forum reveals that female primary care physicians under Medicare Advantage value-based payment models achieved better quality outcomes and higher value-based earnings compared to their male counterparts, suggesting such payment models may help close the persistent gender wage gap in medicine. Read here.
Building Bridges to Value: Infrastructure Essentials for Community Health Centers
Milbank published a recent report, co-authored by Coral Ally Hope Glassberg, which offers community health centers a comprehensive framework for successfully navigating the transition to value-based payment models while maintaining their mission to provide high-quality, accessible care to all. Read here.
What We Are Listening To
Health Tech Talk Show
Tune in this Friday (5/23) at 4:30 pm ET to the Health Tech Talk Show for an insightful health tech discussion covering the CMS/ASTP RFI, Medicaid's future, and a candid conversation with special guest Michael Westover about practical interoperability challenges. Listen here or view the recording here.
New Resource
Making Health Care More Affordable: A Playbook for Implementing a State Health Care Cost Growth Target, 2025 Edition
Milbank published a 2025 version of their state health care cost growth target toolkit, which is a comprehensive playbook that provides states with a roadmap for implementing health care cost growth targets to increase transparency, enhance accountability, and ultimately make health care more affordable. View here.
podcast Spotlight
Caregiving in the United States – Challenges and Opportunities
In this episode, Coral Director Kate Freeman sits down with Hope Glassberg and Shira Hollander to unpack the challenges, promising prospects, and public policy that could support caregivers.