Health Brief from The Washington Post

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By Megan R. Wilson

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In today’s issue:

CMS finalized 2.48 percent Medicare Advantage payment increase for insurers, an increase over the relatively flat amount that had been proposed earlier this year
Regulators are finalizing a proposed key reform to the way payments are calculated, but have put some others aside
The Senate HELP Committee plans to discuss generic drugs at a drug pricing hearing scheduled for next week

Happy Monday, and welcome to the Health Brief newsletter. Hope everyone had a relaxing weekend. We’re getting right back into the swing of things with breaking Medicare Advantage news.

Correction: A previous issue said that telehealth platform Hims & Hers Health had stopped offering compounded GLP-1 medications. The company has only ceased advertising them on their website but still allows patients to obtain copycat versions if “a provider determines that a compounded product is clinically necessary.”

Send your health policy tips, scoops and goss to megan.wilson@washpost.com. If you prefer to message me securely, I’m also on Signal at megan.434.

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Over the last decade, CMS has almost always finalized higher rates than it had originally proposed. (Pablo Martinez Monsivais/AP)


	The Lead Brief

For health insurers, a blitz of lobbying about Medicare Advantage payments has largely paid off.

The agency announced it would be giving insurers a 2.48 percent pay bump for Medicare Advantage, a boost over the 0.09 percent rate increase CMS proposed in January. This equates to an additional $13 billion in federal payments to Medicare Advantage plans next year, according to CMS.

Mary Beth Donahue, who leads the Better Medicare Alliance, called the finalized rate an “improvement.”

“This is a direct response to the thousands of beneficiaries and hundreds of organizations who spoke out to urge that Medicare Advantage be fully funded,” Donahue said.

The Medicare Advantage advocacy group, which is partially funded by insurers, heavily lobbied the Trump administration to increase the payment rate.

Chris Klomp, the director of Medicare, told reporters on Monday that the finalized policies are meant to ensure that “the money that we spend on Medicare flows directly to better care and more access for our seniors, not to administrative waste or gaming of the system.”

Although the insurance industry has argued a payment bump closer to 4 percent or 5 percent would more closely align with the financial reality of increasing health care costs, companies and investors were tentatively pleased with the change from the original proposal.

Stock prices for the top three Medicare Advantage health insurance companies — UnitedHealthcare, Humana and CVS Health — jumped in after-hours trading following the release of the updated figure.

Insurers are expected to receive an overall payment increase of 4.98 percent after accounting for population changes and the way that plans document consumers’ diagnoses.

Top officials, including Klomp and CMS Administrator Mehmet Oz, have both sought to strike a balance between implementing some financial guardrails on the $615 billion program and keeping insurers from retreating from less profitable markets.

At an industry-sponsored event last month, Klomp told the audience that the proposed rate doesn’t reflect a negative view of the Medicare Advantage program. Rather, he emphasized that the administration sees it as an essential part of Medicare’s future and wants it to be fiscally sustainable in the long term.

Over the last decade, CMS has almost always finalized higher rates than it had originally proposed. Last year, the agency finalized a 5.06 percent rate increase, a 2.82 percentage point increase from the amount it had proposed. This year’s revised rate jumped by a similar amount.

Following the original proposal, stock prices for many health insurance companies dipped considerably, as Wall Street analysts had expected a much higher figure.

→ Regulators also moved to crack down on overpayments to insurers by curtailing how some plans bolster federal payments through a practice called unlinked chart reviews, in which insurers document diagnoses that are not treated.

How it works: Medicare Advantage plans aren’t paid based on how much care a beneficiary actually uses but on how much care they’re expected to need. Each person receives a “risk adjustment” score, which increases payments for older or sicker patients.

Regulators and industry watchdogs have criticized insurers for inflating risk scores by adding diagnoses for which patients don’t actually receive treatment. To get at the issue, CMS finalized its proposal to prohibit higher payments for conditions identified only through chart reviews unless the patient receives care for those conditions.

In recent months, many companies — including UnitedHealth Group and CVS Health — have said they largely supported the change.

The administration is delaying some other proposed changes to the risk-adjustment model, which is used to calculate reimbursement rates based on a person’s overall health.


	Market Moves

Insurers have warned that rising health care costs and regulatory changes are squeezing earnings. As a result, some have terminated plan options in certain regions, reduced benefits or increased costs for consumers.

Klomp said Monday that the finalized rates “will be sufficient to maintain choice and competition, and a vibrant, thriving Medicare Advantage program across the country."

"We will continue to watch and observe plan behavior,” he added.

Smaller health plans are particularly vulnerable as they are less able to absorb financial shocks. According to nonprofit research organization KFF, about half of Medicare Advantage beneficiaries whose plans were canceled in 2025 had been covered by small plans.

Overall, roughly 3 million people had to find a new Medicare Advantage plan for 2026 because theirs had left their specific region, according to research published in JAMA. Medicare Advantage, the version of Medicare administered by private plans, covers roughly 35 million older Americans and people with disabilities.

In January, nearly 70 percent of health plan executives said they expect Medicare Advantage benefits to be less “rich” in 2027, according to a survey of executives at more than 35 plans by consulting firm HealthScape Advisors.

Most cited expected cutbacks in pharmacy coverage and supplemental perks such as transportation and meals. By comparison, just 40 percent of executives in the prior year’s survey anticipated trimming plan benefits.


	Industry Rx

Insurers are also expected to get a nearly $19 billion windfall over the next decade following CMS’s overhaul of the stars rating system last week — which makes it easier for health plans to unlock bonus payments.

→ Aetna, which is owned by CVS Health, is the nation’s third-largest Medicare Advantage insurer and covers 4 million people in the program. More than 81 percent of Aetna’s members are in Medicare Advantage plans with 4 or more stars (out of 5), which triggers the higher bonus payments — a bigger share than its large competitors.

The nation’s two largest MA insurers — UnitedHealthcare and Humana — represent about 65 percent of the Medicare Advantage market, covering more than 16 million people.

UnitedHealthcare, the nation’s largest insurer, said it expects to have 78 percent of beneficiaries in plans with 4 or more stars. Just 20 percent of Humana’s membership is in Medicare Advantage plans with 4 or more stars this year.


	Health on the Hill

The Senate Health, Education, Labor and Pensions Committee plans to hold a hearing next week about drug prices — but it may not be the agenda that the panel’s ranking member, Bernie Sanders (I-Vermont), had envisioned.

The hearing is likely to focus on generic drugs and biosimilars, the cheaper equivalent to patented name-brand medications. Generic drugs make up 90 percent of the prescriptions taken by Americans.

The Food and Drug Administration has said it wants to streamline the approval process for generics and biosimilars to provide more access to the lower-cost drugs.

The hearing, scheduled for April 16, has not been officially announced and the detaild could change. A committee spokesperson declined to comment.

Sanders, who indicated he wanted to discuss high drug costs at the hearing, did not respond to a request for comment.

During a markup last month, Sanders submitted amendments to health-related bills that proposed to enact international reference pricing policies to lower prescription drug costs by linking medicine prices to wealthy countries abroad.

The concept is similar to President Donald Trump’s most-favored-nation (MFN) drug-pricing efforts, which he’s (thus far unsuccessfully) trying to convince skeptical Republicans on Capitol Hill to enact.

Sanders dropped his amendments, saying he’d reached an agreement with Chair Bill Cassidy (R-Louisiana) to have a hearing centered on the issue. At the time, Cassidy said the committee would “absolutely” have a hearing “about the high cost of prescription drugs.”


	Numbers Game

Research firm Trilliant Health issued a correction to a report cited in Health Brief on March 20 that had found hospitals earned an average of 34 percent of their overall revenue from providing patient care. The figure, the firm says, is actually about 91 percent.

→ The revised report — which pulled from CMS data instead of from the Agency for Healthcare Research and Quality that the original report had used — still found that a significant number of hospitals with negative operating margins generated positive overall income due to money from nonpatient sources.